Exhibit K-1
CREDIT AGREEMENT
dated as of July 13, 2004
among
SPECIAL VALUE OPPORTUNITIES FUND, LLC,
as Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as Lenders,
AMBAC ASSURANCE CORPORATION,
as Insurer
CDC FINANCIAL PRODUCTS INC.,
as Administrative Agent
and
CDC FINANCIAL PRODUCTS INC.,
as Arranger
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND INTERPRETATION
Section 1.1 Defined Terms........................................................................1
Section 1.2 Use of Defined Terms.................................................................1
Section 1.3 Interpretation.......................................................................2
Section 1.4 Accounting Matters...................................................................2
Section 1.5 Collateral Documents.................................................................2
Section 1.6 Conflict Between Credit Documents....................................................3
Section 1.7 Legal Representation of the Parties..................................................3
Section 1.8 References to Definitions in the Collateral Valuation Schedules......................3
ARTICLE II COMMITMENTS
Section 2.1 Commitments..........................................................................3
Section 2.2 Optional Reductions of Total Maximum Commitment......................................5
Section 2.3 Extension of Facility................................................................7
Section 2.4 Fees.................................................................................9
ARTICLE III LOANS AND LENDER NOTES
Section 3.1 Borrowing Procedure..................................................................9
Section 3.2 Lender Notes........................................................................13
Section 3.3 Principal Payments..................................................................13
Section 3.4 Interest............................................................................15
Section 3.5 Method and Place of Payment.........................................................22
Section 3.6 Net Payments........................................................................22
Section 3.7 Other CP Conduit Lenders and Liquidity Providers; Designated CP Conduits and
Designated CP Conduit Committed Lenders.............................................25
Section 3.8 SPC Loans...........................................................................25
ARTICLE IV CONDITIONS TO CREDIT EXTENSIONS
Section 4.1 Initial Loans.......................................................................26
Section 4.2 All Loans...........................................................................31
ARTICLE V REPRESENTATIONS AND WARRANTIES
Section 5.1 Organization, etc...................................................................33
Section 5.2 Due Authorization, Non-Contravention, etc...........................................33
Section 5.3 Government Approval, Regulation, etc................................................33
Section 5.4 Validity, etc.......................................................................34
Section 5.5 Financial Information...............................................................34
Section 5.6 Litigation, etc.....................................................................34
Section 5.7 Regulations T, U and X..............................................................34
Section 5.8 Pension and Welfare Plans...........................................................34
Section 5.9 Subsidiaries........................................................................35
Section 5.10 Taxes...............................................................................35
Section 5.11 Absence of Default..................................................................35
Section 5.12 Capitalization; Ownership of Borrower...............................................35
Section 5.13 Ownership of Properties.............................................................35
Section 5.14 Real Property.......................................................................35
Section 5.15 [Reserved]..........................................................................36
Section 5.16 Environmental Warranties............................................................36
Section 5.17 Borrower's Business.................................................................36
Section 5.18 Collateral Documents................................................................36
Section 5.19 Investment Management Agreement.....................................................36
Section 5.20 Use of Proceeds.....................................................................37
Section 5.21 Compliance with Margin Requirements.................................................37
Section 5.22 Transaction Documents...............................................................37
Section 5.23 Restatement and Reaffirmation.......................................................38
Section 5.24 Accuracy of Information.............................................................38
ARTICLE VI COVENANTS
Section 6.1 Affirmative Covenants...............................................................38
Section 6.2 Negative Covenants..................................................................49
ARTICLE VII EVENTS OF DEFAULT
Section 7.1 Events of Default...................................................................59
Section 7.2 Action if Bankruptcy................................................................61
Section 7.3 Action if Other Event of Default....................................................61
Section 7.4 Notice of Default...................................................................62
ARTICLE VIII THE ADMINISTRATIVE AGENT
Section 8.1 Appointment.........................................................................62
Section 8.2 Nature of Duties....................................................................62
Section 8.3 Lack of Reliance on the Administrative Agent........................................62
Section 8.4 Certain Rights of the Administrative Agent..........................................63
Section 8.5 Reliance............................................................................63
Section 8.6 Indemnification.....................................................................64
Section 8.7 The Administrative Agent in Its Individual Capacity.................................64
Section 8.8 Holders of Lender Notes or Loans....................................................64
Section 8.9 Resignation by the Administrative Agent.............................................65
Section 8.10 Consultation with Experts...........................................................65
Section 8.11 Administrative Agent's Fees.........................................................65
ARTICLE IX MISCELLANEOUS
Section 9.1 Payment of Expenses, etc............................................................66
Section 9.2 Right of Setoff.....................................................................67
Section 9.3 Notices.............................................................................67
Section 9.4 Benefit of Agreement................................................................68
Section 9.5 No Waiver; Remedies Cumulative......................................................72
Section 9.6 Payments Pro Rata...................................................................73
Section 9.7 Calculations; Computations..........................................................73
Section 9.8 Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial..............74
Section 9.9 Counterparts........................................................................75
Section 9.10 Effectiveness.......................................................................75
Section 9.11 Headings Descriptive................................................................75
Section 9.12 Amendment or Waiver.................................................................75
Section 9.13 Survival............................................................................77
Section 9.14 Domicile of Loans...................................................................77
Section 9.15 Confidentiality.....................................................................77
Section 9.16 Register............................................................................78
Section 9.17 Lender Affiliate Securities.........................................................79
Section 9.18 Marshalling; Recapture..............................................................79
Section 9.19 Lender Representations, etc.; Non-Recourse Obligations..............................79
Section 9.20 No Petition.........................................................................80
Section 9.21 Integration.........................................................................81
Section 9.22 Acknowledgment......................................................................81
Section 9.23 Judgment Currency...................................................................81
Section 9.24 Collateral Valuation Schedule.......................................................82
Section 9.25 Consequences of Lender Ratings Downgrade............................................82
Section 9.26 Claims upon the Senior Facility Insurance Policy; Senior Facility Insurance
Policy Payment Account..............................................................82
Section 9.27 Insolvency Proceedings..............................................................84
Section 9.28 Effect of Payment by Insurer; Subrogation...........................................84
ANNEX X Definitions
EXHIBIT A Form of Borrowing Request
EXHIBIT B-1 Form of Revolving Note
EXHIBIT B-2 Form of Swingline Note
EXHIBIT C Form of Notice of Conversion
EXHIBIT D Form of Assignment Agreement
EXHIBIT E Form of Tax Certificate
EXHIBIT F Form of Investment Manager Letter
EXHIBIT G Form of Pledge and Intercreditor Agreement
EXHIBIT H Form of Compliance Certificate
EXHIBIT I Form of Custodial Agreement
EXHIBIT J Form of Valuation Statement
EXHIBIT K Form of Senior Facility Insurance Policy
EXHIBIT L Form of Preferred Shares Insurance Policy
SCHEDULE 1 Commitments and Percentages
SCHEDULE 2 Lending Offices and Notice Data
SCHEDULE 3 UCC-1 Filing Jurisdictions
SCHEDULE 4 Approved Dealers
SCHEDULE 5 Approved Investment Banking Firms
SCHEDULE 6 Approved Pricing Services
SCHEDULE 7 Industries
SCHEDULE 8 Approved Counterparties
SCHEDULE 9 ▇▇▇▇▇'▇ Collateral Valuation Schedule
SCHEDULE 10 S&P Collateral Valuation Schedule
SCHEDULE 11 Approved Third Party Appraisers
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of July 13, 2004 (this
"Agreement"), is entered into by and among SPECIAL VALUE OPPORTUNITIES FUND,
LLC, a limited liability company formed under the laws of the State of
Delaware (the "Borrower"), VARIOUS FINANCIAL INSTITUTIONS which are, or may
become, parties hereto as Lenders, AMBAC ASSURANCE CORPORATION, as Insurer
(the "Insurer"), CDC FINANCIAL PRODUCTS INC., as administrative agent for the
Lenders (in such capacity, the "Administrative Agent"), and CDC FINANCIAL
PRODUCTS INC., as arranger (in such capacity, the "Arranger").
W I T N E S S E T H :
WHEREAS, the Borrower is a newly organized limited liability
company formed to pursue a strategy of investing on a leveraged basis and
actively managing a diversified pool of Fund Investments;
WHEREAS, the Borrower desires to obtain Commitments from the
Lenders, pursuant to which Loans shall be made, subject to the terms and
conditions set forth herein, in a maximum aggregate principal amount not to
exceed at any time the lesser (a) of the Total Maximum Commitment and (b) the
Borrowing Base minus the aggregate outstanding liquidation preference of the
Preferred Shares at such time;
WHEREAS, the Lenders are willing, on the terms and
conditions hereinafter set forth, to extend such Commitments; and
WHEREAS, the Insurer is issuing its financial guaranty
insurance policy with respect to the Loans hereunder pursuant to the Insurance
Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 Defined Terms. As used in this Agreement, and
unless the context requires a different meaning, capitalized terms used but
not defined herein shall have the respective meanings set forth in Annex X
hereto. In the event of any inconsistency between the definition of any term
as set forth herein and the definition of such term as set forth in Annex X,
the definition of such term as set forth in Annex X shall control.
Section 1.2 Use of Defined Terms. Unless otherwise defined
or the context otherwise requires, terms for which meanings are provided in
this Agreement shall have such meanings when used in each Notice of
Conversion, Assignment Agreement, notice and other communication delivered
from time to time in connection with this Agreement or any other Credit
Document.
Section 1.3 Interpretation. In this Agreement, unless a
clear contrary/intention appears:
(a) the singular number includes the plural number
and vice versa;
(b) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and assigns
are permitted by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually;
(c) reference to any gender includes each other
gender;
(d) reference to any agreement (including this
Agreement and the Annex and Exhibits hereto), document or instrument means
such agreement, document or instrument as amended or modified and in effect
from time to time in accordance with the terms thereof and, if applicable, the
terms hereof and reference to any promissory note includes any promissory note
which is an extension or renewal thereof or a substitute or replacement
therefor;
(e) reference to any Applicable Law means such
Applicable Law as amended, modified, codified or reenacted, in whole or in
part, and in effect from time to time, including rules and regulations
promulgated thereunder;
(f) unless the context indicates otherwise,
reference to any Article, Section, Schedule, Annex or Exhibit means such
Article, Section or Schedule hereof or Annex or Exhibit hereto;
(g) "hereunder," "hereof," "hereto" and words of
similar import shall be deemed references to this Agreement as a whole and not
to any particular Article, Section or other provision hereof;
(h) "including" (and with correlative meaning
"include") means including without limiting the generality of any description
preceding such term; and
(i) relative to the determination of any period of
time, "from" means "from and including," "to" means "to but excluding," and
"through" means "through and including."
Section 1.4 Accounting Matters. For purposes of this
Agreement, all accounting terms not otherwise defined herein shall have the
meanings assigned to them in conformity with GAAP applied in the preparation
of the financial statements of the Borrower referred to in Section 6.1.2(a).
Section 1.5 Collateral Documents. References in this
Agreement to the Pledge and Intercreditor Agreement or any other Collateral
Document, in a case where such Collateral Document is or would be governed by
the laws of any jurisdiction other than the State of New York, shall mean and
be a reference to a document having a purpose and effect under the laws of
such other jurisdiction substantially similar to the purpose and effect of the
corresponding Collateral Document.
Section 1.6 Conflict Between Credit Documents. Except with
respect to matters covered in the Pledge and Intercreditor Agreement (where,
in such case, the provisions of the Pledge and Intercreditor Agreement shall
control), if there is any conflict between this Agreement and any other Credit
Document, this Agreement and such other Credit Document shall be interpreted
and construed, if possible, so as to avoid or minimize such conflict but, to
the extent (and only to the extent) of such conflict, this Agreement shall
prevail and control.
Section 1.7 Legal Representation of the Parties. This
Agreement was negotiated by the parties with the benefit of legal
representation and any rule of construction or interpretation otherwise
requiring this Agreement or any other Credit Document to be construed or
interpreted against any party shall not apply to any construction or
interpretation hereof or thereof.
Section 1.8 References to Definitions in the Collateral
Valuation Schedules. References to a term having the meaning set forth in both
Collateral Valuation Schedules shall be applied separately using such term as
defined in each of the Collateral Valuation Schedules; provided, however, that
(i) if at any time none of the Loans or Preferred Shares are then rated by
▇▇▇▇▇'▇ but some or all of the Loans and Preferred Shares are rated by S&P,
the ▇▇▇▇▇'▇ Collateral Valuation Schedule shall not be applicable for any
purpose hereunder and (ii) if at any time none of the Loans or Preferred
Shares are then rated by S&P but some or all of the Loans and Preferred Shares
are rated by ▇▇▇▇▇'▇, the S&P Collateral Valuation Schedule shall not be
applicable for any purpose hereunder.
ARTICLE II
COMMITMENTS
Section 2.1 Commitments. Subject to the terms and conditions
of this Agreement, each Lender severally and for itself alone agrees to
provide the Commitments described in this Section 2.1.
Section 2.1.1 Commitment of Each Lender.
(a) Each Lender shall, from the Closing Date to the
Commitment Termination Date and subject to the terms and conditions hereof,
severally, but not jointly, make revolving loans (each a "Revolving Loan" and,
collectively, the "Revolving Loans") to the Borrower equal to its Revolving
Percentage of the aggregate amount of any Revolving Borrowing requested from
all Lenders. The commitment of each Lender described in this Section 2.1.1(a)
is herein referred to as its "Revolving Commitment" and, together with its
Revolving Percentage, is set forth in Schedule 1 hereto. Each Revolving Loan
shall be denominated in Dollars and, except as provided below, each Loan made
by a Lender other than a CP Conduit, at the Borrower's option, may be incurred
and maintained as and/or converted into Base Rate Loans or Eurodollar Rate
Loans and each Loan made by a CP Conduit shall be incurred and maintained as a
Cost of Funds Rate Loan. Subject to the terms hereof, the Borrower may from
time to time borrow, prepay, repay and reborrow Revolving Loans pursuant to
the Revolving Commitments.
(b) Notwithstanding paragraph (a) of this Section
2.1.1 or any other provision of this Agreement or the other Transaction
Documents, no Lender that is a Designated CP Conduit shall be required to
make, purchase or maintain any Revolving Loan or purchase or participate in
any Swingline Loan; provided that upon any refusal of a Designated CP Lender
to make or purchase a Revolving Loan or purchase or participate in any
Swingline Loan hereunder, its corresponding Designated CP Conduit Committed
Lender shall purchase or participate in such Swingline Loan or, subject to
Article 4, make or purchase such Revolving Loan.
(c) Notwithstanding paragraphs (a) and (d) of this
Section 2.1.1, Section 3.1.2 or any other provision of this Agreement or the
other Transaction Documents, each Lender that is an Other CP Conduit shall
only be required to make Loans to the extent it has funds available therefor.
(d) The Swingline Lender shall, from the Closing
Date to the Swingline Expiry Date and subject to the terms and conditions
hereof, make a loan or loans (each, a "Swingline Loan" and, collectively, the
"Swingline Loans") to the Borrower in the aggregate amount of any Borrowing of
Swingline Loans requested from the Swingline Lender. Subject to the terms
hereof, the Borrower may from time to time borrow, prepay, repay and reborrow
Swingline Loans.
Section 2.1.2 Amount of Commitments.
(a) No Lender shall be required to make any
Revolving Loan under its Revolving Commitment if, after giving effect thereto
and the receipt and application by the Borrower of the proceeds of such
Revolving Loan, the then aggregate outstanding principal amount of Revolving
Loans made by such Lender (and, in the case of a Designated CP Conduit or
Designated CP Conduit Committed Lender, the Loans made by its corresponding
Designated CP Conduit Committed Lender or Designated CP Conduit, respectively,
and, in the case of an Other CP Conduit, the Loans made by its related
Liquidity Provider), when added to such Lender's Revolving Percentage of the
aggregate amount of all Swingline Loans (exclusive of Swingline Loans which
are repaid with the proceeds of, and simultaneously with the incurrence of,
the respective incurrence of Revolving Loans) would exceed (x) its respective
Revolving Percentage of the Total Revolving Commitments at such time or (y)
its respective Revolving Percentage of the aggregate principal amount of all
Revolving Loans (as if each Lender had funded all of its Revolving Loans in
accordance with this Agreement).
(b) The Swingline Lender shall not be required to
make, and shall not make, any Swingline Loan if (i) after giving effect
thereto, the then aggregate outstanding principal amount of Swingline Loans
would exceed the Maximum Swingline Amount, (ii) after giving effect thereto
and the receipt and application by the Borrower of the proceeds thereof, the
sum of the then aggregate outstanding principal amount of Revolving Loans and
the then aggregate outstanding principal amount of Swingline Loans would
exceed the Total Revolving Commitments at such time, (iii) a Default has
occurred and is continuing or (iv) to the Swingline Lender's knowledge, any
other condition set forth in Section 4.2 has not been satisfied. The Swingline
Lender shall not be permitted to make any Swingline Loan after it has received
a notice from the Borrower or any Lender that a Default has occurred unless
such Default has been cured or waived in accordance with the terms hereof.
Section 2.2 Optional Reductions of Total Maximum Commitment.
The Borrower may, from time to time on any Business Day (the "Commitment
Reduction Date"), voluntarily reduce the amount of the Total Maximum
Commitment; provided, that (i) all such reductions shall (x) require at least
five (5) Business Days' prior notice to the Administrative Agent, (y) apply
proportionately to the Total Revolving Commitments, each Lender's Revolving
Commitment (in accordance with its Revolving Percentage of the Total Revolving
Commitment) and (z) permanently reduce the Total Maximum Commitment by the
amount of such reduction (the "Commitment Reduction Amount") (such reduction
permanently reducing the amount resulting from each calculation of Total
Maximum Commitment thereafter), (ii) any partial reduction of the Total
Maximum Commitment shall be in a minimum amount of $3,000,000 and in an
integral multiple of $1,000,000 for amounts in excess thereof, (iii) no such
reduction shall reduce any Lender's Revolving Commitment to an amount less
than the sum of the aggregate outstanding Revolving Loans of such Lender and
such Lender's Revolving Percentage of the aggregate outstanding principal
amount of Swingline Loans, and (iv) if such reduction occurs on or prior to
June 30, 2007, the Borrower shall have paid the Commitment Reduction Premium
to the Lenders, ratably according to their respective Percentages as of the
related Commitment Reduction Date and the Insurer (so long as the Senior
Facility Insurance Policy is in effect) shall have consented thereto. With
respect to each Designated CP Conduit and its corresponding Designated CP
Conduit Lender, there shall be a single payment to the Designated CP Conduit
Lender. For the purposes of this Section 2.2, (i) "Commitment Reduction
Percentage" shall mean, as of any Commitment Reduction Date occurring on or
prior to June 30, 2007, the percentage obtained by dividing the Commitment
Reduction Amount by the Total Maximum Commitment as of such Commitment
Reduction Date, and (ii) "Commitment Reduction Premium" shall mean, with
respect to any Commitment Reduction Date occurring on or prior to June 30,
2007, an amount equal to the present value of the Commitment Reduction
Percentage of the remaining commitment fees calculated as follows:
(1) if the Commitment Reduction Date occurs during
the First Period (as defined in the definition of "Minimum Borrowing
Amount"), the remaining commitment fees will be the sum of (X) the
commitment fees for the remaining First Period in the amount equal to
the Total Maximum Commitment multiplied by 0.20% per annum, and (Y)
the commitment fees for the Second Period, the Third Period, the
Fourth Period and the Fifth Period (each, as defined in the
definition of "Minimum Borrowing Amount") determined in accordance
with clauses (2), (3), (4) and (5) below;
(2) if the Commitment Reduction Date occurs during
the Second Period, the remaining commitment fees will be the sum of
(X) the commitment fees for the remaining Second Period in the amount
equal to the sum of (a) 85% of the Total Maximum Commitment
multiplied by 0.20% per annum, and (b) 15% the Total Maximum
Commitment multiplied by 0.43% per annum, and (Y) the commitment fees
for the Third Period, the Fourth Period and the Fifth Period
determined in accordance with clauses (3), (4) and (5) below;
(3) if the Commitment Reduction Date occurs during
the Third Period, the remaining commitment fees will be the sum of
(X) the commitment fees for the remaining Third Period in the amount
equal to the sum of (a) 70% of the Total Maximum Commitment
multiplied by 0.20% per annum (until the 550th day from the Closing
Date) or 0.30% per annum (after the 550th day from the Closing Date),
as applicable, and (b) 30% of the Total Maximum Commitment multiplied
by 0.43% per annum, and (Y) the commitment fees for the Fourth Period
and the Fifth Period determined in accordance with clauses (4) and
(5) below;
(4) if the Commitment Reduction Date occurs during
the Fourth Period, the remaining commitment fees will be the sum of
(X) the commitment fees for the remaining Fourth Period in the amount
equal to the sum of (a) 60% of the Total Maximum Commitment
multiplied by 0.30% per annum and (b) 40% of the Total Maximum
Commitment multiplied by 0.43% per annum, and (Y) the commitment fees
for the Fifth Period determined in accordance with clause (5) below;
and
(5) if the Commitment Reduction Date occurs during
the Fifth Period, the remaining commitment fees for the remaining
Fifth Period will be the sum of (X) 25% of the Total Maximum
Commitment multiplied by 0.30% per annum and (Y) the amount equal to
75% of the Total Maximum Commitment multiplied by 0.43% per annum.
Any Commitment Reduction Premium payable under this Section
2.2 shall be determined by the Administrative Agent in accordance with
generally accepted financial practices (A) assuming the Fifth Period ends on
June 30, 2007, (B) assuming that each payment of such commitment fees will be
made on its related Quarterly Date and (C) discounting to such Commitment
Reduction Date, on a quarterly basis as of each Quarterly Date on the basis of
a 365-day year and the actual number of days elapsed, using a discount factor
equal to three-month Eurodollar Rate plus 0.43% per annum, as reasonably
determined by the Administrative Agent by no later than two (2) Business Days
prior to such Commitment Reduction Date.
The Administrative Agent shall notify the Lenders, ▇▇▇▇▇'▇,
S&P, and, so long as the Senior Facility Insurance Policy is in effect, the
Insurer of receipt of notice of any voluntary reduction of the Total Maximum
Commitment hereunder promptly following receipt of such notice. For the
purposes of this Section 2.2, the Commitment of a Designated CP Conduit and
the Commitment of its corresponding Designated CP Conduit Committed Lender
shall be treated as a single Commitment and shall each be reduced by an equal
amount, and the reduction of any Other CP Conduit's Commitment shall be deemed
to effect a corresponding reduction in the obligations of its related
Liquidity Provider.
Section 2.3 Extension of Facility.
Section 2.3.1 Notice of Extension. Subject to complying with
this Section 2.3.1, so long as no violation of Section 6.1.18 (without giving
effect to the grace periods provided for therein) shall have occurred and be
continuing under this Agreement, the Borrower may request a 364-day extension
of the Commitment Termination Date from the Scheduled Commitment Termination
Date to the date that is 364 days after the Scheduled Commitment Termination
Date (the "Extension Date"); provided, that any Extension Date that would
otherwise be a day that is not a Business Day shall be the preceding Business
Day. The Borrower may, by notice to the Administrative Agent and, so long as
the Senior Facility Insurance Policy is in effect, the Insurer (such notice
being an "Extension Notice") given no more than nine (9) months and no less
than five (5) months prior to the Scheduled Commitment Termination Date,
request that the Lenders extend the Commitment Termination Date from the
Scheduled Commitment Termination Date to the Extension Date. The Extension
Notice shall be accompanied by a certificate from the Borrower stating that no
Default has occurred and is continuing. The Administrative Agent shall notify
the Lenders of its receipt of any Extension Notice within five (5) Business
Days after the Administrative Agent's receipt thereof, and each Lender shall
notify the Administrative Agent of its decision regarding such Extension
Notice during the period commencing on the date such notice is received by the
Administrative Agent and terminating on the date which is thirty (30) days
thereafter (the "Consent Period"). Each Lender may, by an irrevocable notice
(a "Consent Notice") to the Administrative Agent at any time during the
Consent Period, consent to such extension, which consent may be given or
withheld by each Lender in its absolute and sole discretion (each Lender
giving a Consent Notice during the Consent Period being called a "Continuing
Lender"). Notwithstanding anything else to the contrary, any such extension
shall be subject to the conditions that (i) all Continuing Lender(s) have an
aggregate amount of Commitments representing more than 50% of the aggregate of
all Commitments (as in effect at the time of the delivery of the Extension
Notice), (ii) no Default shall have occurred and be continuing on the
Scheduled Commitment Termination Date, it being understood that any such
extension of the Scheduled Commitment Termination Date shall be deemed to be a
representation and warranty by the Borrower that the condition set forth above
in this clause (ii) has been satisfied, (iii) all representations and
warranties of the Borrower set forth in Article V shall be true and correct in
all material respects on the Scheduled Commitment Termination Date and (iv) so
long as the Senior Facility Insurance Policy is in effect, the Insurer shall
have consented in writing to such extension. The Administrative Agent shall
promptly notify the Borrower, ▇▇▇▇▇'▇, S&P, the Insurer (so long as the
Insurer is the Controlling Class) and each Continuing Lender of the
effectiveness of any extension of the Scheduled Commitment Termination Date
pursuant to this Section 2.3.1.
Section 2.3.2 Withdrawing Lenders. No extension pursuant to
Section 2.3.1 shall be effective with respect to a Lender that either (i) by a
notice (a "Withdrawal Notice") delivered to the Administrative Agent during
the Consent Period, declines to consent to such extension or (ii) has failed
to respond to the Administrative Agent within the Consent Period (each such
Lender giving a Withdrawal Notice or failing to respond in a timely manner
being called a "Withdrawing Lender").
Section 2.3.3 Termination of Commitment of Withdrawing
Lender. Unless its Commitment has been assigned pursuant to Section 2.3.4, the
Commitment of each Withdrawing Lender shall terminate on the Scheduled
Commitment Termination Date without giving effect to any extension, and any
Borrowing Request specifying a Business Day for a Borrowing occurring on or
after the Scheduled Commitment Termination Date or requesting an Interest
Period extending beyond such date shall have no effect in respect of such
Withdrawing Lender. The Administrative Agent shall promptly notify the
Borrower (and the Borrower shall promptly notify ▇▇▇▇▇'▇ and S&P) and, so long
as the Insurer is the Controlling Class, the Insurer of the termination of the
Commitments of Withdrawing Lenders and the aggregate Commitments of all
Lenders as of the close of business on the Scheduled Commitment Termination
Date.
Section 2.3.4 Assignment by Withdrawing Lender. A
Withdrawing Lender shall be obliged, at the request of the Borrower or the
Administrative Agent (and subject to the Withdrawing Lender receiving payment
in full of an amount equal to the sum of (1) the principal of, and all accrued
interest on, all outstanding Loans of the Withdrawing Lender, plus (2) all
accrued, but theretofore unpaid, fees owing to the Withdrawing Lender pursuant
to Section 2.4, plus (3) all other amounts due and owing to the Withdrawing
Lender under, or with respect to, this Agreement and the other Credit
Documents, or such other amount as to which the Withdrawing Lender shall
agree), as of the Scheduled Commitment Termination Date, to assign, without
recourse or warranty (other than a warranty as to unencumbered ownership of
the Loans so being assigned) all of its rights and obligations (including its
Commitment) hereunder to another financial institution chosen by the Borrower;
provided, that such assignment shall be made pursuant to and satisfy all the
requirements of Section 9.4(b) (it being understood that no Withdrawing Lender
shall be required to pay the assignment fee referred to therein), and such
assignment is otherwise consented to by the Administrative Agent and the
Borrower. Any such financial institution shall, pursuant to the terms of
Section 9.4(b), thereafter be a Lender for all purposes of this Agreement, and
the Commitment and Loans so assigned shall be extended pursuant to Section
2.3.1.
Section 2.3.5 Total Maximum Commitment After Extension. If
the Commitment Termination Date is extended pursuant to Section 2.3.1, the
Total Maximum Commitment and the Total Revolving Commitments shall be
permanently reduced (such reduction permanently reducing the amount resulting
from each calculation of the Total Maximum Commitment and the Total Revolving
Commitments thereafter) by an amount equal to the sum of the Commitments and
the Revolving Commitments, respectively, of each Withdrawing Lender that has
not assigned its Loans and Commitments in accordance with Section 2.3.4 on or
prior to the Scheduled Commitment Termination Date (without giving effect to
any extension).
Section 2.4 Fees.
Section 2.4.1 Commitment Fee. The Borrower agrees to pay on
each Quarterly Date after the Closing Date and on the Scheduled Commitment
Termination Date (if such Commitment Termination Date has not been extended
pursuant to Section 2.3.1 or if any principal otherwise becomes due in respect
of any Loans on the Scheduled Commitment Termination Date) and on the
Extension Date (if the Commitment Termination Date has been extended pursuant
to Section 2.3.1), to the Administrative Agent for the account of the Lenders,
ratably according to their respective Percentages for the period relating to
each such payment, a non-refundable fee equal to (i) if the daily average
aggregate outstanding amount of Revolving Loans during the period ending on
such date is equal to or greater than the Minimum Borrowing Amount, the daily
average Unutilized Commitment during the period ending on such date,
multiplied by, during the initial 550 days of the Ramp-Up Period, 0.20% per
annum (calculated on an actual/360-day basis), and thereafter, 0.30% per annum
(calculated on an actual/360-day basis) and (ii) if the daily average
aggregate outstanding amount of Revolving Loans during the period ending on
such date is less than the Minimum Borrowing Amount, the sum of (x) the
Minimum Borrowing Amount multiplied by 0.43% per annum (calculated on an
actual/360-day basis) and (y) (1) an amount equal to (A) the Total Maximum
Commitment minus (B) the Minimum Borrowing Amount, multiplied by, (2) during
the initial 550 days of the Ramp-Up Period, 0.20% per annum (calculated on an
actual/360-day basis), and thereafter, 0.30% per annum (calculated on an
actual/360-day basis). With respect to each Designated CP Conduit and its
corresponding Designated CP Conduit Lender, there shall be a single fee paid
to the Designated CP Conduit Lender.
Section 2.4.2 Administrative Agent's Fee. The Borrower shall
pay fees to the Administrative Agent in the amount and manner specified in the
Fee Letter.
ARTICLE III
LOANS AND LENDER NOTES
Section 3.1 Borrowing Procedure. Borrowings of Loans shall
be made in accordance with this
Section 3.1.
Section 3.1.1 Borrowing Requests.
(a) On any Business Day on or after the Closing
Date and prior to the Commitment Termination Date, the Borrower, on the terms
and conditions provided herein, may from time to time request that Revolving
Loans be made by all Lenders with Revolving Commitments. The aggregate amount
of such requested Loans shall be in a principal amount equal to (A) $5,000,000
or an integral multiple of $1,000,000 for amounts in excess thereof or (B) if
less than the amount specified in (A), the unused amount of the Commitments.
Revolving Loans shall be requested by the Borrower either (i) by delivering or
telecopying to the Administrative Agent a Borrowing Request or (ii) providing
to the Administrative Agent a telephonic request for a Borrowing (which
request shall be promptly confirmed by means of a delivered or telecopied
Borrowing Request) no later than the time specified in the next sentence. A
written or telephonic request for a Borrowing shall be received by the
Administrative Agent no later than (x) 12:00 noon (New York time) not less
than three (3) Business Days preceding the date of the requested Loans, in the
case of Eurodollar Rate Loans and Cost of Funds Rate Loans that are Revolving
Loans and (y) 3:00 p.m. (New York time) not less than one (1) Business Day
preceding the date of the requested Loans, in the case of Base Rate Loans that
are Revolving Loans. Subject to Section 3.4.4, each Borrowing Request (and
telephonic request for a Borrowing) shall be irrevocable and binding upon the
Borrower. All Borrowing Requests for Eurodollar Rate Loans and Cost of Funds
Rate Loans hereunder shall be made on a pro rata basis (based on the available
amounts of the Commitments of Lenders other than CP Conduits and of CP
Conduits, respectively), and all Borrowing Requests for Base Rate Loans shall
be made on a pro rata basis (based on the available amounts of the Commitments
of Lenders other than CP Conduits).
(b) Whenever the Borrower desires to make a
Borrowing of Swingline Loans hereunder, it shall give the Swingline Lender,
not later than 10:00 a.m. (New York time) on the date that a Swingline Loan is
to be made, written notice in the form of a Borrowing Request (or telephonic
notice promptly confirmed by means of a delivered or telecopied Borrowing
Request) of each Swingline Loan to be made hereunder; provided, that no more
than three Swingline Loans may be requested in any calendar month unless the
Swingline Lender otherwise consents. Each such notice shall be irrevocable and
specify in each case (A) the date of Borrowing (which shall be a Business Day)
and (B) the aggregate principal amount of Swingline Loans to be made pursuant
to such Borrowing. Each such Swingline Loan shall be (i) denominated in
Dollars in a principal amount of $1,000,000 or an integral multiple of
$100,000 for amounts in excess thereof and (ii) shall be made as Swingline
Rate Loans. Mandatory Borrowings shall be made upon the notice specified in
Section 3.1.1(c), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of the Mandatory Borrowings as set forth in
Section 3.1.1(c).
(c) On any Business Day, the Swingline Lender may,
in its sole discretion, give notice to the Revolving Lenders (or any other
Person as previously directed in writing by a Revolving Lender to the
Swingline Lender) that its outstanding Swingline Loans shall be funded with a
Borrowing of Revolving Loans (provided that such notice shall be deemed to
have been automatically given upon the occurrence of a Default under Section
7.1.9 or upon the exercise of any of the remedies provided in Section 7.3), in
which case, subject to the limitations on the obligations of CP Conduits and
the limitations with respect to Types of Loans that may be made by CP Conduits
and Lenders other than CP Conduits set forth in Section 2.1.1, a Borrowing of
Revolving Loans (each such Borrowing, a "Mandatory Borrowing") shall be made
on the third succeeding Business Day from all Revolving Lenders pro rata on
the basis of their respective Revolving Percentages (determined before giving
effect to any termination of the Commitments pursuant to Section 7.3) and the
proceeds thereof shall be applied directly to the Swingline Lender to repay
the Swingline Lender for such outstanding Swingline Loans. Each such Revolving
Lender hereby irrevocably agrees, subject to the limitations on the
obligations of CP Conduits and the limitations with respect to Types of Loans
that may be made by CP Conduits and Lenders other than CP Conduits set forth
in Section 2.1.1, to make Revolving Loans upon three (3) Business Days' notice
pursuant to each Mandatory Borrowing in the amount and in the manner specified
in the preceding sentence and on the date specified in writing by the
Swingline Lender notwithstanding (i) the amount of the Mandatory Borrowing may
not comply with the minimum amount for Borrowings otherwise required
hereunder, (ii) whether any conditions specified in Article IV are then
satisfied, (iii) whether a Default then exists (provided such Swingline Loan
did not violate the last sentence of Section 2.1.2(b) when made), (iv) the
date of such Mandatory Borrowing, and (v) the amount of the Total Maximum
Commitment at such time (provided, that such Swingline Loan met the
requirements of Section 2.1.2(b)(ii) when made). In the event that any
Mandatory Borrowing is required to be made and cannot for any reason be made
on the date otherwise required above (including, without limitation, as a
result of the commencement of a proceeding described in Section 7.1.9 with
respect to the Borrower), then each such Revolving Lender hereby agrees,
subject to the limitations on the obligations of CP Conduits and the
limitations with respect to Types of Loans that may be made by CP Conduits and
Lenders other than CP Conduits set forth in Section 2.1.1, that it shall
forthwith purchase (as of the date the Mandatory Borrowing would otherwise
have occurred, but adjusted for any payments received from the Borrower on or
after such date and prior to such purchase) from the Swingline Lender such
participations in the outstanding Swingline Loans as shall be necessary to
cause such Revolving Lender to share in such Swingline Loans ratably based
upon its respective Revolving Percentage (determined before giving effect to
any termination of the Commitments pursuant to Section 7.3); provided, that
(x) all interest payable on the Swingline Loans shall be for the account of
the Swingline Lender until the date as of which the respective participation
is required to be purchased and, to the extent attributable to the purchased
participation, shall be payable to the participant from and after such date
and (y) at the time any purchase of participations pursuant to this sentence
is actually made, the purchasing Revolving Lender shall be required to pay the
Swingline Lender interest on the principal amount of the participation
purchased for each day from and including the day upon which the Mandatory
Borrowing would otherwise have occurred to but excluding the date of payment
for such participation, at the Federal Funds Effective Rate for the first
Business Day and at the rate otherwise applicable to Revolving Loans
maintained as Base Rate Loans hereunder for each day thereafter.
(d) The Administrative Agent shall notify the
Lenders (or any other Person as previously directed in writing by a Lender to
the Administrative Agent) and, so long as the Senior Facility Insurance Policy
is in effect, the Insurer of the receipt of each Borrowing Request promptly,
and in no event later than the Business Day following receipt thereof. Such
notice shall be given in writing by facsimile. Each request for Loans made
pursuant to this Section 3.1.1 shall constitute the Borrower's representation
and warranty made to the Insurer, the Administrative Agent and the Lenders
that all of the applicable conditions contained in Article IV shall, after
giving effect to such Borrowing, be satisfied, and the making available of
such Loans to the Borrower shall be subject to the satisfaction of the
applicable conditions of Article IV.
(e) Any such notice of a Borrowing Request given to
a Designated CP Conduit under this Section 3.1.1 shall be effective with
respect to any Designated CP Conduit Committed Lender that assumes the
obligations of any Designated CP Conduit hereunder on or prior to the date of
the Borrowing specified therein.
Section 3.1.2 Funding of Borrowings.
(a) No later than 1:00 p.m. (New York time) on the
Business Day specified in each Borrowing Request (or (x) in the case of
Swingline Loans, no later than the close of business on the date specified
pursuant to Section 3.1.1(b) or (y) in the case of Mandatory Borrowings, not
later than 12:00 noon (New York time) on the date specified in Section
3.1.1(c)), each Lender shall make available its pro rata share (based on such
Lender's Revolving Percentage) of each Borrowing requested to be made on such
date (or, in the case of Swingline Loans, the Swingline Lender shall make
available the full amount thereof) in the manner provided below. All such
amounts shall be made available in Dollars and immediately available funds at
the Payment Office and the Administrative Agent promptly shall make available
to the Borrower by depositing to the Custodial Account the aggregate of the
amounts so made available in the type of funds received. Unless the
Administrative Agent shall have been notified by any Lender prior to the date
of Borrowing that such Lender does not intend to make available to the
Administrative Agent its portion of the Borrowing or Borrowings to be made on
such date, the Administrative Agent may assume that such Lender has made such
amount available to the Administrative Agent on such date of Borrowing, and
the Administrative Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrower
a corresponding amount. If such corresponding amount is not in fact made
available to the Administrative Agent by such Lender and the Administrative
Agent has made available same to the Borrower, the Administrative Agent shall
be entitled to recover such corresponding amount from such Lender (or if such
Lender is a Designated CP Conduit, from its Designated CP Conduit Commitment
Lender). If such Lender does not pay such corresponding amount forthwith upon
the Administrative Agent's demand therefor, the Administrative Agent shall
promptly notify the Borrower, and the Borrower shall as soon as practicable
pay such corresponding amount to the Administrative Agent. The Administrative
Agent shall also be entitled to recover on demand from such Lender (or the
Borrower, as the case may be, if such Lender fails to pay) interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower to the
date such corresponding amount is recovered by the Administrative Agent, at a
rate per annum equal to (x) if paid by such Lender, the overnight Federal
Funds Effective Rate or (y) if paid by the Borrower, the then applicable rate
of interest, calculated in accordance with Section 3.4, for the respective
Loans.
(b) Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its commitments hereunder or to
prejudice any rights which the Borrower may have against any Lender as a
result of any default by such Lender hereunder.
Section 3.2 Lender Notes. Each Loan made by a Lender shall
be evidenced by (i) if a Revolving Loan, a promissory note payable to the
order of such Lender in a maximum principal amount equal to such Lender's
Revolving Percentage of the Total Revolving Commitments and shall be dated the
Closing Date and substantially in the form of Exhibit B-1 (a "Revolving Note")
and (ii) if a Swingline Loan, a promissory note payable to the order of the
Swingline Lender in a maximum principal amount equal to the Maximum Swingline
Amount and dated the Closing Date and substantially in the form of Exhibit B-2
(the "Swingline Note").
The Borrower hereby irrevocably authorizes each Lender to
make (or cause to be made) appropriate notations on the grid attached to its
respective Lender Note (or on a continuation of such grid attached to such
Lender Note and made a part thereof), which notations shall evidence, inter
alia, the date of, the outstanding principal amount of, and the interest rate
(including any conversions thereof pursuant to Section 3.4.3) applicable to,
the Loans evidenced thereby. The notations on each such grid (and on each such
continuation) indicating the outstanding principal amount of the Loans made by
such Lender shall be prima facie evidence (absent manifest error) of the
principal amount thereof owing and unpaid, but the failure to record any such
amount on such grid (or on such continuation) shall not limit or otherwise
affect the obligations of the Borrower hereunder or under any Lender Note to
make payment of the principal of or interest on such Loans when due.
Notwithstanding the foregoing or any other provision of this
Agreement, a Lender may, by written request to the Borrower and the
Administrative Agent, elect not to have its Loans evidenced by a Lender Note,
in which case Loans made by such Lender shall be evidenced solely by the
Register.
Section 3.3 Principal Payments.
Section 3.3.1 Repayments and Prepayments. The Borrower shall
make payment in full of all unpaid principal of (x) each Revolving Loan on the
Commitment Termination Date and (y) each Revolving Loan made by a Withdrawing
Lender (and not assigned pursuant to Section 2.3.4) on the Scheduled
Commitment Termination Date and (z) each Swingline Loan on the Swingline
Expiry Date. Prior thereto, the Borrower:
(a) may, from time to time on any Business Day,
make a voluntary prepayment, in whole or in part, of the outstanding principal
amount of any Loans made as part of any particular Borrowing; provided, that:
(i) no such prepayment of any Borrowing of
Eurodollar Rate Loans or Cost of Funds Rate Loans may be made which,
after giving effect thereto, would result in the aggregate
outstanding principal amount of such Eurodollar Rate Loans and Cost
of Funds Rate Loans being less than $3,000,000 (unless repaid in
full) or other than an integral multiple of $1,000,000;
(ii) each such voluntary prepayment shall
require (A) in the case of Base Rate Loans or Swingline Rate Loans,
prior written notice (or telephonic notice promptly confirmed in
writing) to the Administrative Agent and, so long as the Senior
Facility Insurance Policy is in effect, the Insurer not later than
11:00 a.m. (New York time) on the Business Day prior to the proposed
date of the prepayment and (B) in the case of Eurodollar Rate Loans
and Cost of Funds Rate Loans, at least three (3) Business Days' prior
written notice (or telephonic notice promptly confirmed in writing)
to the Administrative Agent and, so long as the Senior Facility
Insurance Policy is in effect, the Insurer;
(iii) each such voluntary prepayment of a
Revolving Loan shall be in a minimum amount of $3,000,000 and an
integral multiple of $1,000,000 (or, if less, the outstanding
principal amount of all Loans then outstanding);
(iv) a prepayment of a Eurodollar Rate
Loan or a Cost of Funds Rate Loan on a day other than the last day of
the Interest Period for such Loan shall in all cases be subject to
the requirements of Section 3.4.5; and
(v) no such prepayment of a Revolving Loan
may be made if, after giving effect thereto, a Swingline Loan would
remain outstanding;
(b) shall, on each date when any reduction in the
Total Maximum Commitment shall become effective, make a mandatory prepayment
of all Loans equal to the excess, if any, of the aggregate outstanding
principal amount of all Loans over the Total Maximum Commitment as so reduced;
(c) shall make a prepayment of Loans as may be
required by Section 6.1.18;
(d) shall, immediately upon any acceleration of the
maturity of any Loans pursuant to Sections 7.2 and/or 7.3 as required by the
terms of the Pledge and Intercreditor Agreement, repay all Loans; and
(e) shall repay the outstanding amount of each
Swingline Loan on the earlier of (x) the fifteenth (15th) Business Day
following the making of such Swingline Loan or (y) the first day following the
making of such Swingline Loan that is the last day of an Interest Period for a
Eurodollar Rate Loan and is at least ten (10) Business Days following the
making of such Swingline Loan.
Each repayment and prepayment of any Loans made pursuant to this Section 3.3.1
shall be without premium or penalty, except as may be otherwise required by
this Agreement (including Section 3.4.5).
Section 3.3.2 Application. Prepayments shall be applied to
such Loans as may be specified by the Borrower (so long as any prepayment of
Revolving Loans being maintained as Eurodollar Rate Loans and Cost of Funds
Rate Loans is made on a pro rata basis among such Loans); provided, however,
that, during the occurrence and continuance of an Event of Default, or in the
event any Lender fails to acquire its pro rata share in any Swingline Loan
from the Swingline Lender, prepayments shall be applied first to the portion
of such Loans being maintained as Swingline Loans and then on a pro rata basis
among all remaining Loans but subject in any event to Section 9.6. Absent such
specification by the Borrower or the occurrence and continuance of an Event of
Default, any prepayment of any Loans shall be applied first to the portion of
such Loans being maintained as Swingline Rate Loans, then to the portion of
such Loans being maintained as Base Rate Loans and then to the portion of such
Loans being maintained as Eurodollar Rate Loans and Cost of Funds Rate Loans
(on a pro rata basis among such Loans being maintained as Eurodollar Rate
Loans and Cost of Funds Rate Loans).
Section 3.4 Interest.
Section 3.4.1 Interest Rules and Calculations.
(a) The unpaid principal amount of each Base Rate
Loan shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Base Rate in effect from time to time.
(b) (i) The unpaid principal amount of each
Eurodollar Rate Loan shall bear interest from the date of the Borrowing
thereof until maturity (whether by acceleration or otherwise) at a rate per
annum which shall at all times be the relevant Eurodollar Rate plus the
Applicable Margin and (ii) the unpaid principal amount of each Cost of Funds
Rate Loan shall bear interest from the date of the Borrowing thereof until
maturity (whether by acceleration or otherwise) at a rate per annum which
shall be the relevant Cost of Funds Rate plus the Applicable Margin.
(c) The unpaid principal amount of each Swingline
Rate Loan shall bear interest from the date of the Borrowing thereof until
maturity (whether by acceleration or otherwise) at a rate per annum which
shall at all times be the Swingline Rate in effect from time to time.
(d) All overdue principal and, to the extent
permitted by law, overdue interest in respect of each Loan and any other
overdue amount payable hereunder shall bear interest at a rate per annum equal
to the Base Rate in effect from time to time (or, in the case of Cost of Funds
Rate Loans, the applicable Cost of Funds Rate) plus 2%.
(e) Interest shall accrue from and including the
date of any Borrowing to but excluding the date of any repayment thereof and
shall be payable (i) in respect of each Base Rate Loan and each Swingline Rate
Loan, on each Quarterly Date, (ii) in respect of each Eurodollar Rate Loan and
each Cost of Funds Rate Loan, on the last day of each Interest Period
applicable thereto and, in the case of an Interest Period of six months, on
the date occurring three months after the first day of such Interest Period
and (iii) in respect of each Loan, on any prepayment or conversion (other than
the prepayment and conversion of Loans that are maintained as Base Rate Loans
or Swingline Rate Loans) (on the amount prepaid or converted), at maturity
(whether by acceleration or otherwise) and, after such maturity, on demand.
(f) The Borrower shall, no later than ten (10)
Business Days prior to each interest payment date, review the potential
sources available for the payment of amounts due on such interest payment date
(including, without limitation, borrowings under this Agreement, cash
(including from the sale of Collateral) and contributions of equity capital to
the Borrower, including any Subordinated Equity Security. The Borrower shall
thereupon make cash available from one or more such sources in order to pay in
full all amounts due on the applicable interest payment date.
(g) All computations of interest hereunder shall be
made in accordance with Section 9.7(b).
(h) The Administrative Agent, upon determining the
interest rate for any Borrowing of Eurodollar Rate Loans or Cost of Funds Rate
Loans for any Interest Period, shall promptly notify the Borrower, the Insurer
(so long as the Senior Facility Insurance Policy is in effect) and the Lenders
thereof; provided that in the case of Cost of Funds Rate Loans, such
determination may be based on a good faith estimate of the relevant Cost of
Funds Rate until the actual rate is determined.
Section 3.4.2 Interest Periods.
(a) At the time the Borrower gives a Borrowing
Request or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Rate Loans or Cost of Funds Rate Loans (in the
case of the initial Interest Period applicable thereto) or prior to 11:00 a.m.
(New York time) on the third (3rd) Business Day prior to the expiration of an
Interest Period applicable to a Borrowing of Eurodollar Rate Loans or Cost of
Funds Rate Loans, the Borrower shall have the right to elect by giving the
Administrative Agent written notice (or telephonic notice promptly confirmed
in writing) of the Interest Period applicable to such Borrowing, which
Interest Period shall, subject to the terms and conditions hereof, be a one,
two, three or six month period. Notwithstanding anything to the contrary
contained above:
(i) the initial Interest Period for any
Borrowing of Eurodollar Rate Loans or Cost of Funds Rate Loans shall
commence on the date of such Borrowing (including in the case of
Revolving Loans the date of any conversion from a Borrowing of Base
Rate Loans) and each Interest Period occurring thereafter in respect
of such Borrowing shall commence on the day on which the preceding
Interest Period expires;
(ii) there shall be no more than ten (10)
separate Interest Periods permitted with respect to all Revolving
Loans that are Eurodollar Rate Loans and Cost of Funds Rate Loans at
any particular time (other than any such Eurodollar Rate Loan or Cost
of Funds Rate Loan that results from the conversion of, or is used in
part or in whole to repay, any Mandatory Borrowing);
(iii) if any Interest Period begins on a
day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest
Period shall end on the last Business Day of such calendar month;
(iv) if any Interest Period would
otherwise expire on a day which is not a Business Day, such Interest
Period shall expire on the succeeding Business Day; provided, that if
any Interest Period would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire
on the preceding Business Day;
(v) no Interest Period shall extend beyond
the Commitment Termination Date (and, if the Commitment Termination
Date shall be the Extension Date, no Interest Period with respect to
a Loan made by a Withdrawing Lender that has not assigned such Loan
pursuant to Section 2.3.4 shall extend beyond the Scheduled
Commitment Termination Date); and
(vi) no Interest Period may otherwise be
elected at any time when an Event of Default is then in existence if
the Administrative Agent or the Controlling Class has determined that
such an election at such time would be disadvantageous to the Lenders
or, so long as the Senior Facility Insurance Policy is in effect, the
Insurer.
(b) If, upon the expiration of any Interest Period,
the Borrower has failed to (or may not) elect a new Interest Period to be
applicable to the respective Borrowing of Eurodollar Rate Loans or Cost of
Funds Rate Loans as provided above, the Borrower shall be deemed to have
elected to convert such Borrowing into a Borrowing of Base Rate Loans
effective as of the expiration date of such current Interest Period.
Section 3.4.3 Conversions. The Borrower shall have the
option to convert on any Business Day occurring on and after the date of the
initial Borrowing all or a portion of a Eurodollar Rate Loan or a Base Rate
Loan (in each case other than Swingline Loans which may not be converted
pursuant to this Section 3.4.3) in a minimum of $3,000,000 or an integral
multiple of $1,000,000 in excess thereof into a Base Rate Loan or a Eurodollar
Rate Loan, as the case may be; provided, that (i) except as otherwise provided
in Section 3.4.4, Eurodollar Rate Loans may be converted only on the last day
of an Interest Period applicable thereto and only on a pro rata basis among
such Eurodollar Rate Loans and no partial conversion of a Borrowing of
Eurodollar Rate Loans shall reduce the outstanding principal amount of the
Eurodollar Rate Loans made pursuant to such Borrowing to less than $3,000,000,
(ii) Base Rate Loans may not be converted into Eurodollar Rate Loans if an
Event of Default is in existence on the date of the conversion and the
Administrative Agent or the Controlling Class has determined that such
conversion at such time would be disadvantageous to the Lenders or the
Insurer, and (iii) Borrowings of Eurodollar Rate Loans resulting from this
Section 3.4.3 shall be limited in number as provided in Section 3.4.2(a)(ii);
provided, however, that notwithstanding anything to the contrary contained
herein, no Loan by a Lender who is not a CP Conduit shall be converted into a
Cost of Funds Rate Loan and no Loan by a Lender who is a CP Conduit shall be
converted into any Type of Loan other than a Cost of Funds Rate Loan. Each
such conversion shall be effected by the Borrower giving the Administrative
Agent (so long as the Senior Facility Insurance Policy is in effect, with a
copy to the Insurer), prior to 11:00 a.m. (New York time), at least three (3)
Business Days' (or two (2) Business Days', in the case of a conversion into
Base Rate Loans) prior written notice in the form of Exhibit C (or telephonic
notice promptly confirmed by such written notice) (each a "Notice of
Conversion"), specifying the Loans to be so converted, the Borrowing or
Borrowings pursuant to which such Loans were made, the Type of Loans to be
converted into and, if to be converted into a Borrowing of Eurodollar Rate
Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall give each Lender prompt notice of any such proposed
conversion affecting any of its Loans. In addition, notwithstanding anything
to the contrary contained herein, any Cost of Funds Rate Loan assigned by a CP
Conduit to a Lender who is not a CP Conduit shall automatically convert, at
the election of the Borrower, into a Eurodollar Rate Loan (so long as the
Borrower gives at least three (3) Business Days' prior written notice) or a
Base Rate Loan (it being understood that the foregoing shall not apply to any
assignment by an Other CP Conduit to its related Liquidity Provider). In the
absence of any such election by the Borrower, and so long as the Borrower
gives at least three (3) Business Days' prior written notice, such assigned
Loan shall convert into a Eurodollar Rate Loan.
Section 3.4.4 Increased Costs, Illegality, etc.
(a) In the event that (x) in the case of Section
3.4.4(a)(i) below, the Administrative Agent or (y) in the case of Sections
3.4.4(a)(ii) and (iii) below, any Lender, shall have determined (which
determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto):
(i) on any date for determining the
Eurodollar Rate for any Interest Period that, by reason of any
changes arising after the date of this Agreement affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for
in the definition of Eurodollar Rate; or
(ii) at any time, that such Lender or SPC
shall incur increased costs or reductions in the amounts received or
receivable hereunder with respect to any Eurodollar Rate Loans or
Cost of Funds Rate Loans (other than any increased cost or reduction
in the amount received or receivable resulting from the imposition of
or a change in the rate of taxes or similar charges) because of (x)
any change since the Closing Date in any applicable law, governmental
rule, regulation, guideline or order (or in the interpretation or
administration thereof and including the introduction of any new law
or governmental rule, regulation, guideline or order) (such as, for
example, but not limited to, a change in official reserve
requirements) and/or (y) other circumstances occurring after the
Closing Date materially affecting the interbank Eurodollar market, or
the position of such Lender in such market, in the case of Eurodollar
Rate Loans, or the commercial paper market generally, in the case of
Cost of Funds Rate Loans; or
(iii) at any time, that the making or
continuance of any Eurodollar Rate Loan has become unlawful by
compliance by such Lender in good faith with any law, governmental
rule, regulation, guideline (or would conflict with any such
governmental rule, regulation, guideline or order not having the
force of law but with which such Lender customarily complies even
though the failure to comply therewith would not be unlawful);
then, and in any such event, such Lender (or the Administrative Agent in the
case of Section 3.4.4(a)(i) above) shall, (x) on or after such date and (y)
within ten (10) Business Days of the date on which such event no longer
exists, give notice (by telephone, confirmed in writing) to the Borrower and
to the Administrative Agent and, so long as the Senior Facility Insurance
Policy is in effect, the Insurer of such determination (which notice the
Administrative Agent shall promptly transmit to each of the other Lenders).
Thereafter (A) in the case of Section 3.4.4(a)(i) above, Eurodollar Rate Loans
shall no longer be available until such time as the Administrative Agent
notifies the Borrower and the Lenders that the circumstances giving rise to
such notice by the Administrative Agent no longer exist, and any Borrowing
Request or Notice of Conversion given by the Borrower with respect to
Eurodollar Rate Loans which have not yet been incurred shall be deemed
rescinded by the Borrower, (B) in the case of Section 3.4.4(a)(ii) above, the
Borrower shall pay to such Lender, upon written demand therefor, such
additional amounts (in the form of an increased rate of, or a different method
of calculating, interest or otherwise as such Lender in its reasonable
discretion shall determine) as shall be required to compensate such Lender for
such increased costs or reductions in amounts receivable hereunder (a written
notice as to the additional amounts owed to such Lender, showing the basis for
the calculation thereof, submitted to the Borrower by such Lender shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto) and (C) in the case of Section 3.4.4(a)(iii) above, the Borrower shall
take one of the actions specified in Section 3.4.4(b) as promptly as possible
and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Rate Loan or
Cost of Funds Rate Loan is affected by the circumstances described in Section
3.4.4(a)(ii) or (iii), the Borrower may (and in the case of a Eurodollar Rate
Loan affected pursuant to Section 3.4.4(a)(iii), upon receipt of the notice
referred to in subsection (a) above, the Borrower shall) either (i) if the
affected Eurodollar Rate Loan or Cost of Funds Rate Loan is then being made
pursuant to a Borrowing, cancel said Borrowing by giving the Administrative
Agent telephonic notice (confirmed promptly in writing) thereof on the same
date that the Borrower was notified by a Lender pursuant to Section
3.4.4(a)(ii) or (iii), or (ii) if the affected Eurodollar Rate Loan or Cost of
Funds Rate Loan is then outstanding, upon at least three (3) Business Days'
notice to the Administrative Agent and, so long as the Senior Facility
Insurance Policy is in effect, the Insurer, require the affected Lender to
convert each such Eurodollar Rate Loan or Cost of Funds Rate Loan into a Base
Rate Loan; provided, that if more than one Lender is affected at any time,
then all affected Lenders must be treated the same pursuant to this Section
3.4.4(b).
(c) If any Lender shall have determined that after
the Closing Date, the adoption or effectiveness of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority
(including any central bank or comparable agency charged with the
interpretation or administration thereof), or compliance by such Lender (or
any corporation controlling such Lender) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's (or such controlling
corporation's) capital or assets as a consequence of its Commitments or
obligations hereunder to a level below that which such Lender (or such
controlling corporation) would have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration such Lender's
(or such controlling corporation's) policies with respect to capital
adequacy), then from time to time, within fifteen (15) days after demand by
such Lender (with a copy to the Administrative Agent), the Borrower shall pay
to such Lender such additional amount or amounts as shall compensate such
Lender (or such controlling corporation) for such reduction. Each Lender, upon
determining in good faith and using averaging and attribution methods which
are reasonable that any additional amounts shall be payable pursuant to this
Section 3.4.4(c), shall give prompt written notice thereof to the Borrower,
which notice shall set forth the basis in reasonable detail of the calculation
of such additional amounts, although, subject to Section 3.4.6(b), the failure
to give any such notice shall not release or diminish any of the Borrower's
obligations to pay additional amounts pursuant to this Section 3.4.4(c) upon
the subsequent receipt of such notice.
Section 3.4.5 Compensation. The Borrower shall compensate
each Lender, upon written request by the Administrative Agent on behalf of any
such Lender (which request shall set forth the basis for requesting such
compensation), for all costs, losses, expenses and liabilities (including,
without limitation, any cost, loss, expense or liability incurred by reason of
the liquidation or reemployment of deposits or other funds required by such
Lender to fund its Eurodollar Rate Loans or Cost of Funds Rate Loans) which
such Lender may reasonably sustain: (i) if for any reason (other than a
default by such Lender or the Administrative Agent) a Borrowing of Eurodollar
Rate Loans or Cost of Funds Rate Loans does not occur on a date specified
therefor in a Borrowing Request or Notice of Conversion (whether or not
withdrawn by the Borrower or deemed withdrawn pursuant to Section 3.4.4(a));
(ii) if any prepayment, repayment or conversion of any of its Eurodollar Rate
Loans or Cost of Funds Rate Loans occurs on a date which is not the last day
of an Interest Period applicable thereto; (iii) if any prepayment of any of
its Eurodollar Rate Loans or Cost of Funds Rate Loans is not made on any date
specified in a notice of prepayment given by the Borrower; or (iv) as a
consequence of (x) any other default by the Borrower to repay its Eurodollar
Rate Loans or Cost of Funds Rate Loans when required by the terms of this
Agreement (including a default resulting in acceleration of the due date of
the Loans hereunder) or (y) an election made pursuant to Section 3.4.4(b). A
Lender's basis for requesting compensation pursuant to this Section 3.4.5 and
a Lender's calculation of the amount thereof, shall, absent demonstrable
error, be final and conclusive and binding on all parties hereto.
Section 3.4.6 Change of Lending Office; Limitation on
Indemnities.
(a) Each Lender agrees that, upon the occurrence of
any event giving rise to the operation of Section 3.4.4(a)(ii) or (iii),
3.4.4(c) or 3.6 with respect to such Lender, it shall, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by
such event; provided, that such designation is made on such terms that such
Lender and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section; and provided, further, that such
designation shall be made only if it would otherwise be permitted as a
participation under Section 9.4. Nothing in this Section 3.4.6 shall affect or
postpone any of the obligations of the Borrower or the right of any Lender
provided in Section 3.4.4 or 3.6.
(b) Notwithstanding anything in this Agreement to
the contrary, to the extent any notice required by Section 3.4.4 or 3.6 is
given by any Lender more than one hundred eighty (180) days after such Lender
obtained, or reasonably should have obtained, knowledge of the occurrence of
the event giving rise to the additional costs of the type described in such
Sections, such Lender shall not be entitled to compensation under Section
3.4.4 or 3.6 for any amounts incurred or accruing prior to the one hundred
eightieth (180th) day prior to the giving of such notice to the Borrower;
provided that, if the change in law giving rise to such increased costs or
reductions is retroactive, then the 180-day period referred to above shall be
extended to include the period of retroactive effect thereof.
Section 3.4.7 Replacement of Lenders. (x) Upon the
occurrence of any event giving rise to the operation of Section 3.4.4(a)(ii)
or (iii), Section 3.4.4(c) or Section 3.6 with respect to any Lender which
results in such Lender charging to the Borrower increased costs in excess of
those being generally charged by the other Lenders or becoming incapable of
making Eurodollar Rate Loans or Cost of Funds Rate Loans, (y) if a Lender
becomes a Defaulting Lender, and/or (z) in the case of a refusal by a Lender
to consent to a proposed change, waiver, discharge or termination with respect
to this Agreement which has been approved by the Required Lenders and, so long
as the Insurer is the Controlling Class, the Insurer as provided in Section
9.12(b), the Borrower shall have the right, if no Default or Event of Default
then exists, to replace such Lender (the "Replaced Lender") with one or more
other Eligible Transferee or Transferees reasonably acceptable to the
Administrative Agent, none of whom shall constitute a Defaulting Lender at the
time of such replacement (collectively, the "Replacement Lender"); provided,
that (i) at the time of any replacement pursuant to this Section 3.4.7, the
Replacement Lender shall enter into one or more Assignment Agreements pursuant
to Section 9.4(b) (and with all fees payable pursuant to said Section 9.4(b)
to be paid by the Replacement Lender) pursuant to which the Replacement Lender
shall acquire all of the Commitments and outstanding Loans of the Replaced
Lender and, in connection therewith, shall pay to the Replaced Lender in
respect thereof an amount equal to the sum of (1) an amount equal to the
principal of, and all accrued interest on, all outstanding Loans of the
Replaced Lender, and (2) an amount equal to all accrued, but theretofore
unpaid, fees owing to the Replaced Lender pursuant to Section 2.4, and shall
pay to the Swingline Lender an amount equal to the Replaced Lender's
Percentage of any Mandatory Borrowing to the extent that such amount was not
theretofore funded by such Replaced Lender, and (ii) all obligations of the
Borrower owing to the Replaced Lender (other than those specifically described
in clause (i) above in respect of which the assignment purchase price has
been, or is concurrently being, paid) shall be paid in full by the Borrower to
such Replaced Lender concurrently with such replacement. Upon the execution of
the respective Assignment Agreements, the payment of amounts referred to in
clauses (i) and (ii) above, the recordation of the assignment on the Register
by the Administrative Agent pursuant to Section 9.16 and, if so requested by
the Replacement Lender, delivery to the Replacement Lender of the appropriate
Lender Note or Lender Notes executed by the Borrower, the Replacement Lender
shall become a Lender hereunder and the Replaced Lender shall cease to
constitute a Lender hereunder, except with respect to indemnification
provisions applicable to the Replaced Lender under this Agreement, which shall
survive as to such Replaced Lender.
Section 3.5 Method and Place of Payment. Except as otherwise
specifically provided herein (or agreed among the Borrower, the Insurer (so
long as the Senior Facility Insurance Policy is in effect), the Administrative
Agent and any Lender with respect to payments to such Lender), all payments
under this Agreement shall be made to the Administrative Agent for the ratable
(based on their applicable Percentages) account of the Lenders entitled
thereto (which funds the Administrative Agent shall promptly forward to such
Lenders), not later than 11:00 a.m. (New York time) on the date when due and
shall be made in immediately available funds and in Dollars at the Payment
Office, it being understood that written notice (or telephonic notice promptly
confirmed in writing) by the Borrower to the Administrative Agent to make a
payment from the funds in the Borrower's account at the Payment Office shall
constitute the making of such payment to the extent of such funds held in such
account. Any payments under this Agreement which are made later than 11:00
a.m. (New York time) shall be deemed to have been made on the succeeding
Business Day. Except as otherwise provided in Section 3.4.2(a)(iv), whenever
any payment to be made hereunder shall be stated to be due on a day which is
not a Business Day, the due date thereof shall be extended to the succeeding
Business Day and, with respect to payments of principal, interest shall be
payable during such extension at the applicable rate in effect immediately
prior to such extension.
Section 3.6 Net Payments.
(a) All payments made by the Borrower hereunder or
under any Lender Note or Loan shall be made without setoff, counterclaim or
other defense. Except as provided in Section 3.6(b), all such payments shall
be made free and clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein with respect
to such payments (but excluding, except as provided in the second succeeding
sentence, any tax imposed on or measured by the net income or net profits of
and any franchise tax imposed on or in lieu of taxes on net income of a Lender
or the Administrative Agent pursuant to the laws of the jurisdiction in which
such Lender or the Administrative Agent, as the case may be (each a "Lending
Party"), is organized or managed and controlled or the jurisdiction in which
the principal office or applicable lending office of such Lending Party is
located, managed or controlled or any subdivision or taxing authority thereof
or therein) and all interest, penalties or similar liabilities with respect
thereto (all such non-excluded taxes, levies, imposts, duties, fees,
assessments or other charges being referred to collectively as "Taxes"). If
any Taxes are so levied or imposed, the Borrower agrees to pay the full amount
of such Taxes, and such additional amounts, if any, as may be necessary so
that every payment of all amounts due under this Agreement or under any Lender
Note or Loan, after withholding or deduction for or on account of any Taxes,
shall not be less than the amount provided for herein or in such Lender Note
or Loan. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence, the Borrower agrees to reimburse each Lending Party, upon
the written request of such Lender, for taxes imposed on or measured by the
net income or net profits of and any franchise tax imposed on or in lieu of
taxes on net income of such Lender pursuant to the laws of the jurisdiction in
which it is organized or managed and controlled or the jurisdiction in which
the principal office or applicable lending office of such Lender is located or
under the laws of any political subdivision or taxing authority of any such
jurisdiction in which it is organized or the jurisdiction in which the
principal office is organized or managed and controlled or the jurisdiction in
which the principal office or applicable lending office of such Lender is
located, managed or controlled, and for any withholding of taxes as such
Lending Party shall determine are payable by, or withheld from, such Lender,
in respect of such amounts so paid to or on behalf of such Lender pursuant to
the preceding sentence and in respect of any amounts paid to or on behalf of
such Lending Party pursuant to this sentence. The Borrower shall furnish to
the Administrative Agent within thirty (30) days after the date the payment of
any Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by the Borrower. The Borrower agrees to indemnify and
hold harmless each Lending Party, and reimburse such Lending Party upon its
written request, for the amount of any Taxes so levied or imposed and paid by
such Lending Party. Such indemnification shall be made within thirty (30) days
after the date any Lender makes written demand therefor.
(b) Each Lender that is not a United States person
(as such term is defined in Section 7701(a)(30) of the Code) agrees to deliver
to the Borrower and the Administrative Agent (A) on or prior to the Closing
Date, or (B) in the case of such a Lender that is an assignee or transferee of
an interest under this Agreement pursuant to Sections 3.4.7 or 9.4 (unless the
respective Lender was already a Lender hereunder immediately prior to such
assignment or transfer), on the date of such assignment or transfer to such
Lender, (i) two accurate and complete original signed copies of Internal
Revenue Service Form W-8 ECI or W-8 BEN (or successor forms) certifying to
such Lender's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Lender Note or Loan, or (ii) if the Lender is not a "bank" within
the meaning of Section 881(c)(3)(A) of the Code and cannot deliver either
Internal Revenue Service Form W-8 ECI or W-8 BEN pursuant to clause (i) above,
(x) a certificate substantially in the form of Exhibit E (any such
certificate, a "Tax Certificate") and (y) two accurate and complete original
signed copies of Internal Revenue Service Form W-8 BEN (or successor form)
certifying to such Lender's entitlement to a complete exemption from United
States withholding tax with respect to payments of interest to be made under
this Agreement and under any Lender Note or Loan. In addition, each Lender
agrees that from time to time after the Closing Date, when a lapse in time or
change in circumstances renders the previous certification obsolete or
inaccurate in any material respect, it shall deliver to the Borrower and the
Administrative Agent two new accurate and complete original signed copies of
Internal Revenue Service Form W-8 ECI or W-8 BEN (or successor forms), or Form
W-8 BEN (or successor form) and a Tax Certificate, as the case may be, and
such other forms as may be required in order to confirm or establish the
entitlement of such Lender to a continued exemption from or reduction in
United States withholding tax with respect to payments under this Agreement
and any Lender Note or Loan, or it shall immediately notify the Borrower and
the Administrative Agent of its inability to deliver any such form or Tax
Certificate, in which case such Lender shall not be obliged to deliver any
such form or Tax Certificate. Notwithstanding anything to the contrary
contained in Section 3.6(a), but subject to Section 9.4(b) and the immediately
succeeding sentence, (x) the Borrower shall be entitled, to the extent it is
required to do so by law, to deduct or withhold income or similar taxes
imposed by the United States (or any political subdivision or taxing authority
thereof or therein) from interest, fees or other amounts payable hereunder for
the account of any Lender which is not a United States person (as defined
above) for U.S. Federal income tax purposes to the extent that such Lender has
not provided to the Borrower U.S. Internal Revenue Service Forms that
establish a complete exemption from such deduction or withholding and (y) the
Borrower shall not be obligated pursuant to Section 3.6(a) to gross-up
payments to be made to a Lender in respect of income or similar taxes imposed
by the United States if (I) such Lender is not a United States person (as
defined above) and has not provided to the Borrower the Internal Revenue
Service Forms required to be provided to the Borrower pursuant to this Section
3.6(b) or (II) in the case of a payment (other than interest if and only if
such Lender complies with clauses (ii)(x) and (y) above) to a Lender described
in clause (ii) above, to the extent that such Forms do not establish a
complete exemption from withholding of such taxes. Notwithstanding anything to
the contrary contained in the preceding sentence or elsewhere in this Section
3.6 and except as set forth in Section 9.4, the Borrower agrees to pay
additional amounts and to indemnify each Lender in the manner set forth in
Section 3.6(a) (without regard to the identity of the jurisdiction requiring
the deduction or withholding) in respect of any amounts deducted or withheld
by it as described in the immediately preceding sentence as a result of any
changes after the Closing Date in any applicable law, treaty, governmental
rule, regulation, guideline or order, or in the interpretation thereof,
relating to the deducting or withholding of such Taxes; provided, such Lender
shall provide to the Borrower and the Administrative Agent, upon the request
of the Borrower, any reasonably available applicable IRS tax form (reasonably
similar in its simplicity and degree of detail to IRS Form W-8 ECI or W-8 BEN
or a Tax Certificate) necessary or appropriate for the exemption or reduction
in the rate of such U.S. Federal withholding tax.
(c) If the Borrower pays any additional amount
under this Section 3.6 to a Lender and such Lender determines in its sole
discretion that it has actually received any refund in respect of such
additional amount paid by the Borrower, such Lender shall repay such refund to
the Borrower, net of all out-of-pocket expenses of such Lender and without
interest (except to the extent such refund includes interest); provided that,
the Borrower, upon the request of such Lender, agrees to return such refund
(plus penalties, interest or other charges) to such Lender in the event such
Lender is required to repay such refund. Whether or not a Lender claims any
refund or credit or files any amended tax return shall be in the sole
discretion of such Lender. Nothing in this Section 3.6 shall require a Lender
to (i) disclose or detail the basis of its calculation of the amount of any
tax benefit or refund to the Borrower or any other party or (ii) disclose such
Lender's tax returns.
Section 3.7 Other CP Conduit Lenders and Liquidity
Providers; Designated CP Conduits and Designated CP Conduit Committed Lenders.
In the event that any Lender that is a CP Conduit shall become obligated to
make any payment of or make a claim for any payment of the types referred to
in Section 3.4.4, 3.4.5 or 3.6 to any Liquidity Provider for such Other CP
Conduit or any Designated CP Conduit Committed Lender for such Designated CP
Conduit, as the case may be, or such Liquidity Provider or Designated CP
Conduit Committed Lender is entitled to receive payments of such types, the
Borrower agrees that it will pay to such Lender the amounts that the Lender is
so obligated to pay to such Liquidity Provider or such Designated CP Conduit
Committed Lender or that such Liquidity Provider or Designated CP Committed
Lender is entitled to receive, but in each case solely to the extent that the
Borrower would have been obligated to make such payments to such Liquidity
Provider or such Designated CP Conduit Committed Lender pursuant to this
Agreement had such Liquidity Provider or such Designated CP Conduit Committed
Lender been a Lender under this Agreement in lieu of such Other CP Conduit or
such Designated CP Conduit and complied with the provisions of this Agreement.
In the event that the Liquidity Agreement or other support agreement with
respect to any Other CP Conduit does not specify any particular payment of the
types referred to in Section 3.4.4, 3.4.5 or 3.6, or does so only by reference
to the payments such Other CP Conduit is entitled to received hereunder, the
Borrower agrees that it will pay to such Other CP Conduit (for payment to the
related Liquidity Provider or other support provider, as applicable) the
amounts that the Borrower would have been obligated to pay to such Liquidity
Provider or other support provider pursuant to Section 3.4.4, 3.4.5 or 3.6 had
such Liquidity Provider or other support provider been a Lender under this
Agreement in lieu of such Other CP Conduit and complied with the provisions of
this Agreement.
Section 3.8 SPC Loans. Notwithstanding anything to the
contrary contained herein, any Lender may grant to a special purpose funding
vehicle (an "SPC") sponsored by such Lender, identified as such in writing
from time to time by such Lender to the Administrative Agent and the Borrower,
the option to provide to the Borrower all or any part of any Loan that the
Lender would otherwise be obligated to make to the Borrower pursuant to the
terms hereof; provided that (i) nothing herein shall constitute a commitment
to make any Loan by any SPC, and (ii) if an SPC elects not to exercise such
option or otherwise fails to provide all or any part of such Loan, the Lender
shall be obligated to make such Loan pursuant to the terms hereof. The making
of a Loan by an SPC hereunder shall utilize the Commitment of such Lender to
the same extent, and as if, such Loan were made by the Lender. Any SPC that
makes a Loan shall (i) have in regard to such Loan all of the rights
(exercisable, however, only through the Lender as its agent) that the Lender
would have had if it had made such Loan directly (including but not limited to
the rights under Sections 3.4.4, 3.4.5, 3.6 and 9.1) and (ii) be deemed to
have made the representations made herein by each Lender and comply with this
Agreement in regard to such Loan as if the SPC were a party hereto; provided
that all monetary obligations of a lender under this Agreement shall remain
solely with the Lender. Notwithstanding any Loans that may be provided by an
SPC hereunder, (i) the Administrative Agent, the Swingline Lender, the Insurer
and Borrower shall be entitled to continue to deal solely and directly with
the Lender in connection with this Agreement, (ii) the Lender shall remain
fully liable to the Administrative Agent, to the Swingline Lender and to the
Borrower for the timely performance of all obligations of the Lender under
this Agreement and (iii) none of the Administrative Agent, the Insurer or the
Borrower shall be obligated at any time to pay to any SPC or to the Lender any
greater amounts pursuant to the terms hereof than it would have been required
to pay had the Lender made such Loans directly (except to the extent that the
interest payable on a Cost of Funds Rate Loan may exceed the interest payable
on a Eurodollar Rate Loan and except as specified in the preceding sentence).
Each SPC that provides a Loan hereunder shall simultaneously provide the
Administrative Agent and the Borrower with a written undertaking to comply
with the confidentiality provisions specified in Section 9.15. The Borrower,
the Insurer, all the Lenders and the Administrative Agent each hereby agrees
(which agreement shall survive the termination of this Agreement) that, prior
to the date that is one (1) year and one (1) day after the payment in full of
all outstanding commercial paper or other senior indebtedness of any SPC, it
will not institute against, or join any other person in instituting against,
such SPC any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under the laws of the United States or any State
thereof. In addition, notwithstanding anything to the contrary contained in
this Section 3.8 or Section 9.4, any SPC may (i) with notice to, but without
the prior written consent of, the Borrower or the Administrative Agent,
without the payment of the processing fee therefor, assign all or a portion of
its interests in any Loans to the Lender or to any financial institutions
consented to by the Borrower and the Administrative Agent providing liquidity
and/or credit facilities to or for the account of such SPC to support the
funding or maintenance of Loans, and (ii) disclose on a confidential basis any
non-public information relating to its Loans to any rating agency. Nothing in
this section that would affect the rights or obligations of an SPC may be
amended without the written consent of any SPC that has Loans outstanding at
the time of the amendment.
ARTICLE IV
CONDITIONS TO CREDIT EXTENSIONS
Section 4.1 Initial Loans. Notwithstanding any other
provision of this Agreement, the obligations of the Lenders to fund the
initial Borrowing shall be subject to the prior or concurrent satisfaction of
each of the conditions precedent set forth in this Section 4.1.
Section 4.1.1 Evidence of Authority. The Administrative
Agent and the Insurer shall have received:
(a) a certificate of the Borrower, dated the
Closing Date, as to:
(i) the authority of the Borrower to
execute, deliver and perform this Agreement, the Lender Notes, the
Insurance Agreements, the Pledge and Intercreditor Agreement, each
other Credit Document to be executed by it, the Preferred Shares
Auction Agency Agreement and each other instrument, agreement or
other document to be executed in connection with the transactions
contemplated in connection herewith and therewith, and
(ii) the authority and signatures of those
Persons authorized to execute and deliver this Agreement, the Lender
Notes, the Insurance Agreements and the other Credit Documents and to
act with respect to this Agreement and each other Credit Document to
be executed by the Borrower, upon which certificate each Lender,
including each assignee (whether or not it shall have then become a
party hereto), may conclusively rely until it shall have received a
further certificate of the Borrower canceling or amending such prior
certificates;
(b) a copy of the Organic Documents of the
Borrower, each certified in a manner satisfactory to the Administrative Agent,
and the provisions of which shall be satisfactory to the Administrative Agent
and the Insurer, and a certificate of legal existence for the Borrower issued
by the Secretary of State of Delaware; and
(c) such other instruments, agreements or other
documents (certified if requested) as the Administrative Agent or the
Controlling Class may reasonably request.
Section 4.1.2 Agreement; Lender Notes. The Administrative
Agent shall have received executed counterparts of this Agreement from all of
the parties hereto and the Lender Notes, each duly executed and delivered.
Section 4.1.3 Collateral Documents and the Preferred Shares
Documents. The Administrative Agent shall have received:
(a) the Pledge and Intercreditor Agreement
substantially in the form of Exhibit G, dated as of the Closing Date, duly
executed and delivered by the Borrower and the other parties thereto, together
with:
(i) executed copies of Uniform Commercial
Code Financing Statements (Form UCC-1), dated a date reasonably near
to the Closing Date as may be acceptable to the Administrative Agent,
naming the Borrower as the debtor and the Secured Parties
Representative as the secured party or other similar instruments or
documents in a form suitable for filing in all jurisdictions
identified in Schedule 3; and
(ii) copies of search reports certified by
a party reasonably acceptable to the Administrative Agent, dated a
date reasonably near to the Closing Date, listing all effective
financing statements that name the Borrower as the debtor and which
are on file in the jurisdictions identified in Schedule 3, showing
that no financing statements (other than those filed pursuant to this
Agreement) cover any Collateral, except with respect to Liens
permitted by Section 6.2.3);
(b) evidence that all other actions that, in the
reasonable opinion of the Administrative Agent and the Insurer, are advisable
to perfect and protect the Liens in the Collateral created or purported to be
created by the Collateral Documents have been taken;
(c) a copy of the Custodial Agreement substantially
in the form of Exhibit I, dated as of the Closing Date, as executed and
delivered by the Borrower and the other parties thereto; and
(d) a copy, certified by the Borrower, of the
Preferred Shares Auction Agency Agreement, duly executed and delivered by the
Borrower and the other parties thereto.
Section 4.1.4 The Preferred Shares. The Borrower shall have:
(a) entered into the Preferred Shares Auction
Agency Agreement;
(b) delivered to the Insurer and the Administrative
Agent or its nominee or agent, a certificate, dated the Closing Date, of the
Borrower (and signed by an Authorized Officer), in form and substance
satisfactory to the Administrative Agent, to the effect that the Borrower has
sold or received commitments for the purchase of $238,000,000 in aggregate
liquidation preference of Money Market Preferred Shares, together with a
specimen of the Money Market Preferred Shares as actually executed by the
Borrower; and
(c) delivered to the Administrative Agent and the
Insurer copies of letters from ▇▇▇▇▇'▇ and S&P addressed to the Borrower,
confirming that the Preferred Shares have received ratings of "Aaa" by ▇▇▇▇▇'▇
and "AAA" by S&P (after giving effect to the Preferred Shares Insurance
Policy).
Section 4.1.5 Borrower Contributions. On the Closing Date,
(a) the Contributed Company Capital of the Borrower shall equal or exceed 20%
of the Equity Capital Commitments (which shall include at least $12,000,000
actually contributed directly or indirectly by TCO, Babson and their
respective Affiliates), and (b) Equity Capital Commitments shall be in place
with respect to at least $700,000,000, which shall include the amount actually
contributed as contemplated above in this sentence on the Closing Date and
$60,000,000 of which shall be from TCO, Babson and their respective Affiliates
directly or indirectly (including the $12,000,000 actually contributed as
contemplated above in this sentence on the Closing Date).
Section 4.1.6 Investment Management Agreement, Co-Management
Agreement and Operating Agreement. The Administrative Agent and the Insurer
shall have received a copy, certified by the Borrower, of the Investment
Management Agreement, the Co-Management Agreement and the Operating Agreement,
each duly executed and delivered by the Borrower and/or the Investment Manager
and/or the Co-Manager.
Section 4.1.7 No Litigation, etc. No litigation,
arbitration, governmental investigation, proceeding or inquiry shall, on the
date of the initial Loans, be pending or, to the knowledge of the Borrower,
threatened with respect to any of the transactions contemplated hereby which
would, in the reasonable opinion of the Controlling Class, be adverse to, or
be detrimental to the interests of, any of the parties hereto.
Section 4.1.8 Certificate as to Conditions, Warranties, No
Default, etc. The Administrative Agent and the Insurer shall have received a
certificate of the Borrower, dated the date of the initial Loans, in form and
substance satisfactory to the Administrative Agent and the Insurer, to the
effect that, as of such date:
(a) all conditions set forth in this Article IV
have been fulfilled;
(b) all representations and warranties of the
Borrower set forth in Article V are true and correct in all material respects;
and
(c) no Default has occurred and is continuing.
Section 4.1.9 Insurance Report, etc. The Administrative
Agent and the Insurer shall have received evidence that all insurance
policies, coverages and riders required pursuant to Section 6.1.6 are in
effect on the Closing Date.
Section 4.1.10 Opinions of Counsel. The Administrative Agent
and the Insurer shall have received the following opinion letters, each dated
the Closing Date, substantially in the form last delivered to the Lenders
prior to the Closing Date, and addressed to the Insurer, the Administrative
Agent, all Lenders, ▇▇▇▇▇'▇ and S&P:
(a) Opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP, special counsel to the Borrower;
(b) Opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP, special counsel to the Investment Manager;
(c) Opinion of in-house counsel to the Co-Manager;
(d) Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
LLP, special counsel to the Custodian; and
(e) Opinion of counsel to the Insurer.
Section 4.1.11 Investment Manager Letter. The Administrative
Agent and the Insurer shall have received from the Investment Manager a letter
addressed to the Insurer, the Administrative Agent and the Lenders,
substantially in the form of Exhibit F consenting to the provisions of Section
6.2.14.
Section 4.1.12 Closing Fees, Expenses, etc. The
Administrative Agent shall have received for its own account, or for the
account of each Lender and the Arranger, as the case may be, all fees, costs
and expenses then due and payable under this Agreement (including Section 9.1
and the Fee Letter).
Section 4.1.13 Federal Reserve Form U-1 or G-3. The
Administrative Agent shall have received on behalf of each Lender that is
subject to such regulations a Federal Reserve Form U-1 or Form G-3, as the
case may be, duly completed and executed by the Borrower and such Lender.
Section 4.1.14 Rating of Loans. The Administrative Agent and
the Insurer shall have received (i) a letter from ▇▇▇▇▇'▇ addressed to the
Borrower, the Insurer and the Administrative Agent, confirming that the Loans
hereunder and the Preferred Shares (treating, for this purpose only, the Loans
and Preferred Shares as a single investment class) have received ratings of
"Aaa" by ▇▇▇▇▇'▇ (after giving effect to the Insurance Policies) and "Aa2" by
▇▇▇▇▇'▇ (without giving effect to the Insurance Policies) and (ii) a letter
from S&P addressed to the Borrower, the Insurer and the Administrative Agent,
confirming that the Loans hereunder have received ratings of "AAA" by S&P
(after giving effect to the Senior Facility Insurance Policy) and "AA" by S&P
(without giving effect to the Senior Facility Insurance Policy).
Section 4.1.15 Satisfactory Legal Form. All limited
liability company and other actions or proceedings taken or required to be
taken in connection with the transactions contemplated hereby and all
agreements, instruments and documents executed or submitted pursuant to this
Section 4.1 by or on behalf of the Borrower shall be reasonably satisfactory
in form and substance to the Administrative Agent, the Insurer and their
respective counsel; all certificates and opinions delivered pursuant to this
Article IV shall be addressed to the Administrative Agent, the Insurer, and
each Lender, or the Administrative Agent, the Insurer, and each Lender shall
be expressly entitled to rely thereon; the Insurer, the Administrative Agent
and their respective counsel shall have received all information, and such
number of counterpart originals or such certified or other copies of such
information, as the Administrative Agent, the Insurer or their respective
counsel may reasonably request; and all legal matters incident to the
transactions contemplated by this Agreement shall be satisfactory to counsel
to the Administrative Agent.
Section 4.1.16 Key Individuals. The Administrative Agent and
the Insurer shall have received a list of the Key Individuals as of the
Closing Date.
Section 4.1.17 Independent Public Accountant. The
Administrative Agent shall have received a copy of an engagement letter
between the Borrower and the Independent Public Accountant pursuant to which
the Independent Public Accountant agrees for the period specified therein to
prepare the reports required to be prepared by it pursuant to Sections
6.1.1(f) and 6.1.2(d).
Section 4.1.18 CP Conduit Ratings; Liquidity Backstop. Each
Lender that is a CP Conduit:
(a) to the extent required of such CP Conduit,
shall have received copies of letters from each of Fitch, ▇▇▇▇▇'▇ and S&P
confirming the ratings assigned by each such rating agency to such CP
Conduit's commercial paper notes (copies of which shall be delivered to the
Borrower);
(b) solely in the case of each Designated CP
Conduit, shall have delivered to the Administrative Agent a Loan Purchase
Agreement in form and substance reasonably satisfactory to the Borrower, the
Swingline Lender and the Administrative Agent duly executed by such Designated
CP Conduit, one or more Designated CP Conduit Committed Lenders and the other
parties thereto, if any, which Loan Purchase Agreement shall provide for
commitments by the Designated CP Conduits Committed Lenders parties thereto to
purchase, or acquire participations in, the Loans of the Designated CP Conduit
party thereto; and
(c) to the extent required, shall have received an
executed program administration and fee letter or similar document.
Section 4.1.19 Senior Facility Insurance Policy. The
Administrative Agent shall have received the Senior Facility Insurance Policy
substantially in the form of Exhibit K hereto, dated the Closing Date, duly
executed and delivered by the Insurer.
Section 4.1.20 Preferred Shares Insurance Policy. The
Administrative Agent shall have received a copy of the Preferred Shares
Insurance Policy substantially in the form of Exhibit L hereto, dated the
Closing Date, as executed and delivered by the Insurer.
Section 4.2 All Loans. Notwithstanding any other provision
of this Agreement, without duplication of any conditions precedent required to
be satisfied pursuant to Section 4.1, the obligations of the Lenders to make
any Loan shall be subject to the satisfaction of each of the conditions
precedent set forth in this Section 4.2.
Section 4.2.1 Compliance with Warranties, Total Maximum
Commitment, Borrowing Base, No Default, etc. Both immediately before and after
giving effect to each Loan:
(a) the representations and warranties set forth in
Article V shall be true and correct in all material respects with the same
effect as if then made (unless stated to relate solely to an earlier date, in
which case such representations and warranties shall be true and correct as of
such earlier date);
(b) all representations and warranties set forth in
each of the Collateral Documents shall be true and correct in all material
respects with the same effect as if then made (unless stated to relate solely
to an earlier date, in which case such representations and warranties shall be
true and correct as of such earlier date);
(c) no Default shall have occurred and be
continuing;
(d) the aggregate amount of all Loans outstanding
and Loans requested to be made shall not exceed the lesser of (i) the Total
Maximum Commitment at such time and (ii) the Borrowing Base minus the
aggregate outstanding liquidation preference of the Preferred Shares at such
time (determined after giving effect to the receipt by the Borrower of the
proceeds of the requested Loan(s) and the use by the Borrower on such date of
such proceeds);
(e) the Uniform Commercial Code Financing
Statements (or other similar instruments or documents) referred to in Section
4.1.3(a)(i) shall have been filed in all jurisdictions identified in Schedule
3; and
(f) (i) no material default with respect to the
Borrower shall have occurred and be continuing under either Insurance
Agreement and (ii) no event of default with respect to the Borrower shall have
occurred and be continuing under either Insurance Agreement as a result of
which the Insurer is exercising any remedies thereunder.
Section 4.2.2 Borrowing Request, etc. The Administrative
Agent shall have received a Borrowing Request. Each of the delivery of any
such Borrowing Request and the acceptance by the Borrower of the proceeds or
other benefits of any Loan shall constitute a representation and warranty by
the Borrower that on the date of such request for a Loan, and immediately
before and after giving effect to the application of any proceeds of any Loans
requested thereby, all statements set forth in Section 4.2.1 are true and
correct in all material respects.
Section 4.2.3 Regulations T, U and X. Immediately after such
Borrowing, the Borrower shall be in compliance with Regulations T, U and X.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce each Lender, the Administrative Agent,
the Insurer and the Arranger to enter into this Agreement, to engage in the
transactions contemplated herein and in the other Credit Documents and, in the
case of the Lenders, to make the Loans hereunder, the Borrower represents and
warrants to the Insurer, each Lender, the Administrative Agent and the
Arranger as set forth in this Article V.
Section 5.1 Organization, etc.
Section 5.1.1 Organization, Power, Authority, etc. The
Borrower is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware, is duly qualified to do
business and is in good standing in each jurisdiction where the nature of its
business requires such qualification to the extent required pursuant to
Sections 6.1.3 and 6.1.4 (except for any failures to be so qualified, which,
in the aggregate would not have a Material Adverse Effect), and has full power
and authority and holds all requisite governmental licenses, permits and other
approvals to enter into and perform its Obligations under this Agreement, the
Lender Notes and each other Credit Document and each Transaction Document to
which it is a party and to own and hold under lease its property and to
conduct its business substantially as currently conducted by it (except for
any failure to hold any such licenses, permits and/or other approvals, which,
in the aggregate would not have a Material Adverse Effect).
Section 5.1.2 Exemption from Registration. Assuming
compliance by the Lenders with the restrictions and the accuracy of the
representations and warranties set forth in Section 9.19, all transactions
contemplated by this Agreement are exempt from registration under the
Securities Act or the "Blue Sky" laws of any state.
Section 5.2 Due Authorization, Non-Contravention, etc. The
execution and delivery by the Borrower of this Agreement, the Lender Notes,
each other Credit Document and each Transaction Document to which it is a
party, the performance by the Borrower of its obligations hereunder and
thereunder, all Loans obtained hereunder by the Borrower, the granting of the
Liens provided for in the Collateral Documents and the consummation of all
other actions incidental to any thereof have been duly authorized by all
necessary action, do not and shall not conflict with, result in any violation
of, or constitute any default under, any provision of any Organic Document or
Contractual Obligation of the Borrower (assuming the truth and accuracy of the
representations and warranties of the Lenders set forth herein and compliance
by them with their covenants hereunder) or any law or governmental regulation
or court decree or order (including, without limiting the foregoing, Section
18 of the Investment Company Act, or any successor provision thereto, and any
applicable "asset coverage" maintenance requirements set forth therein) and
shall not result in or require the creation or imposition of any Lien on any
of the Borrower's properties pursuant to the provisions of any Contractual
Obligation (other than the Liens provided for in the Collateral Documents and
the Liens permitted by Section 6.2.3).
Section 5.3 Government Approval, Regulation, etc. The
Borrower has been registered as an investment company under the Investment
Company Act and is a Closed-end Company for purposes of the Investment Company
Act. No other Approval is required for the due execution, delivery or
performance by the Borrower of this Agreement, the Lender Notes, or any other
Credit Document or any Transaction Document or the consummation of any
transactions contemplated hereby or thereby, except for authorizations,
approvals, actions, notices or filings which have been duly obtained or made
and are in full force and effect.
Section 5.4 Validity, etc. This Agreement has been duly
executed and delivered by the Borrower and constitutes the legal, valid and
binding obligation of the Borrower enforceable in accordance with its terms;
and the Lender Notes and each of the other Credit Documents and each
Transaction Document to which the Borrower is a party shall, on the due
execution and delivery thereof, constitute the legal, valid and binding
obligation of the Borrower, enforceable in accordance with their respective
terms, in each case, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally
or by general equitable principles relating to enforceability.
Section 5.5 Financial Information. With respect to any
representation and warranty which is deemed to be made after the date hereof
by the Borrower, the balance sheet and statements of operations, of Company
Equity, earnings and of cash flow, which as of such date shall most recently
have been furnished by or on behalf of the Borrower to each Lender and the
Administrative Agent for the purposes of or in connection with this Agreement
or any transaction contemplated hereby, shall have been prepared in accordance
with GAAP consistently applied (except as disclosed therein), and shall
present fairly the consolidated financial condition of the Borrower as at the
dates thereof for the periods then ended, subject, in the case of quarterly
financial statements, to normal year-end audit adjustments, purchase
accounting adjustments and such other exceptions specifically noted in the
notes thereto.
Section 5.6 Litigation, etc. There is no pending or, to the
best knowledge of the Borrower, threatened, litigation, action, proceeding,
order, investigation or claim, at law or in equity or before or by any
Governmental Authority affecting the Borrower or the Investment Manager or any
of their respective properties, assets or revenues which could reasonably be
expected to result in or constitute a Material Adverse Effect.
Section 5.7 Regulations T, U and X. The proceeds of any
Loans made hereunder have not been, and will not be, used for a purpose which
violates or would cause any Lender to violate, or would be inconsistent with,
Regulation T, U or X.
Section 5.8 Pension and Welfare Plans.
(a) Neither the Borrower nor any ERISA Affiliate
maintains, contributes to (or is obligated to contribute to) or has any
liability to any Pension Plan or Welfare Plan (other than with respect to a
fully-insured Welfare Plan), unless such maintenance, contribution or
liability, in the aggregate, would not have a Material Adverse Effect. Neither
the Borrower, nor any ERISA Affiliate has at any time maintained or
contributed to (or has been obligated to contribute to) any Pension Plan or
Welfare Plan (other than a fully-insured Welfare Plan), unless such
maintenance or contribution would not have a Material Adverse Effect.
(b) None of the assets of the Borrower constitute
Plan Assets.
(c) The formation of the Borrower, and the Fund
Investments from time to time effected or contemplated by the Borrower, do not
and will not constitute a nonexempt prohibited transaction (as such term is
defined in Section 4975 of the Code and/or Section 406 of ERISA) that could
subject the Administrative Agent and/or any Lender to any tax or penalty on
prohibited transactions imposed under Section 4975 of the Code and/or Section
502(i) of ERISA.
(d) There are no material collective bargaining
agreements covering any employees of any of the Borrower's ERISA Affiliates
(other than those entities which have become an ERISA Affiliate of the
Borrower as a result of the Borrower's investment in such entities) or with
respect to which the Borrower or any of its ERISA Affiliates (other than those
entities which have become an ERISA Affiliate of the Borrower as a result of
the Borrower's investment in such entities) has or could have any material
liability or responsibility.
Section 5.9 Subsidiaries. Except for any Hedging SPEs or
Investment Holding Subsidiaries, the Borrower has no Subsidiaries.
Section 5.10 Taxes. The Borrower has filed all tax returns
required by law to have been filed by it (except for such tax returns with
respect to which the failure to file timely would not have a Material Adverse
Effect); to the best of the Borrower's knowledge, all such tax returns are
true and correct in all material respects; and the Borrower has paid or
withheld (as applicable) all taxes and governmental charges thereby shown to
be owing or required to be withheld, except any such taxes or charges which
are being contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books.
Section 5.11 Absence of Default. No Default or Event of
Default exists or would result from the incurrence of any Obligations by the
Borrower or from the grant or perfection of the Liens on the Collateral
pursuant to the Pledge and Intercreditor Agreement. As of the Closing Date,
the Borrower is not in default under or with respect to (a) any Contractual
Obligation in any respect that, individually or together with all such
defaults, could reasonably be expected to have a Material Adverse Effect, or
that would, if such default had occurred after the Closing Date, create an
Event of Default under Section 7.1 or (b) any governmental regulation or court
decree or order or under any law, which default would be reasonably likely to
have a Material Adverse Effect.
Section 5.12 Capitalization; Ownership of Borrower. As of
the Closing Date, the Equity Capital Commitments equal or exceed $711,000,000.
Section 5.13 Ownership of Properties. The Borrower owns all
of its properties and assets, of any nature whatsoever, free and clear of all
Liens, except (i) as permitted pursuant to Section 6.2.3 and (ii) Liens on
properties and assets not included in the Collateral.
Section 5.14 Real Property. The Borrower owns no real
property, except for such real property as the Borrower may have acquired or
received as a distribution in connection with a workout, bankruptcy,
foreclosure, restructuring or other similar process or proceeding in respect
of a Fund Investment, which acquisition shall be promptly disclosed to the
Administrative Agent at the time of such acquisition.
Section 5.15 [Reserved]
Section 5.16 Environmental Warranties. The Borrower neither
owns nor leases, nor has it ever owned or leased, any facilities or property
the ownership of or leasehold interest in which, with the passage of time, or
the giving of notice or both, would give rise to liability (including any
contingent liability) under any Environmental Law except such liability, if
any, as would not reasonably be likely to result in or constitute a Material
Adverse Effect.
Section 5.17 Borrower's Business. The Borrower does not
engage in any business or activity other than (a) issuing the Lender Notes and
incurring Loans pursuant to this Agreement, issuing and selling the Preferred
Shares pursuant to the Operating Agreement (including any permitted
refinancings thereof), issuing Common Shares, issuing Subordinated Equity
Securities, acquiring, owning, holding, selling, exchanging, redeeming,
pledging, structuring, negotiating, originating, syndicating, contracting for
the management of and otherwise dealing with Fund Investments and other
instruments and property in connection therewith and in accordance with the
terms hereof (including acquiring majority or controlling interests in
operating companies as a result of such activities) and entering into Hedging
and Short Sale Transactions in accordance with the provisions of this
Agreement, (b) issuing or incurring obligations permitted by Section 6.2.2,
(c) owning the Capital Stock of any Hedging SPEs or Investment Holding
Subsidiaries, (d) entering into the Co-Management Agreement, (e) obtaining
financial guaranty insurance with respect to the Loans and the Preferred
Shares or portions thereof, (f) engaging in other activities permitted by the
Operating Agreement, including establishing investment committees and
investment policies, earning origination, management, funding, break-up and
similar fees with respect to Fund Investments, obtaining governance power with
respect to Fund Investments and co-investing with related parties and other
Persons and (g) engaging in any other activities which are necessary, suitable
or appropriate to accomplish the foregoing or are incidental thereto,
connected therewith or ancillary thereto.
Section 5.18 Collateral Documents. The provisions of the
Collateral Documents executed or to be executed by the Borrower shall, upon
the due execution and delivery thereof in accordance herewith, together with
the making of all filings and recordings in locations referred to in Schedule
3 and the taking of possession of the Collateral in accordance with the
provisions of the Collateral Documents, be effective to create a valid and
perfected first priority Lien in all right, title and interest of the Borrower
in the Collateral in accordance with the terms of the Pledge and Intercreditor
Agreement.
Section 5.19 Investment Management Agreement. The Investment
Management Agreement is in full force and effect and no default (other than
that which may arise as a result of the Borrower's compliance with Section
6.2.14) exists thereunder. The Investment Manager is authorized to act on
behalf of the Borrower in connection with the presentation of Borrowing
Requests and payment instructions, the making of the prepayment specifications
referred to in Section 3.3.2 and as otherwise authorized under the terms of
the Investment Management Agreement; provided, that the Borrower shall provide
a certificate of the Persons so authorized as provided in Section
4.1.1(a)(ii).
Section 5.20 Use of Proceeds. The proceeds of the Borrowings
hereunder shall be used by the Borrower for the purpose of making investments
in Fund Investments, entering into Secured Hedging Transactions, Defensive
Hedge Transactions and other Hedging and Short Sale Transactions permitted
hereunder, paying dividends on, redeeming and paying any liquidation
preference with respect to, Preferred Shares and Common Shares to the extent
such payments are permitted hereunder, capitalizing Hedging SPEs and
Investment Holding Subsidiaries, paying principal, interest, commitment fees
and other amounts on Debt and paying, or reimbursing others of the payment of,
fees and expenses incurred in connection with the formation and operation of
the Borrower, the Hedging SPEs and the Investment Holding Subsidiaries, the
arranging of the Loans and the execution, delivery and performance of this
Agreement and the other Transaction Documents including, but not limited to,
the payment of fees payable to, and reimbursement of expenses of, the
Investment Manager pursuant to the Investment Management Agreement and the
Co-Manager pursuant to the Co-Management Agreement and the payment of premiums
and the payment of other ongoing professional and administrative fees and
expenses associated with the business and operation of the Borrower, the
Hedging SPEs and Investment Holding Subsidiaries incurred in the ordinary
course of business, or as otherwise determined to be incurred by the Borrower.
Section 5.21 Compliance with Margin Requirements. The
Borrower is not in violation of any provision of Section 7 of the Exchange
Act, and no part of the proceeds of any Loans will be used, directly or
indirectly, either (i) for the purpose, whether immediate, incidental or
ultimate, of "buying" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U as now and from time
to time hereafter in effect or (ii) for any purpose if, in the case of either
clause (i) or (ii), as a result the provisions of the regulations of the FRS
Board are violated. If requested by any Lender or the Administrative Agent,
the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of
Federal Reserve Form G-3 or Federal Reserve Form U-1, as applicable, referred
to in Regulation U.
Section 5.22 Transaction Documents. Each of the Transaction
Documents to which it is a party has been duly authorized, executed and
delivered by each of the Borrower, the Investment Manager and the Co-Manager,
as the case may be, and is its valid and binding agreement. The Borrower has
delivered to the Administrative Agent a true, correct and complete copy of
each Transaction Document. Each Transaction Document is in full force and
effect in the form so delivered to the Administrative Agent except as amended
pursuant to Section 6.2.9.
Section 5.23 Restatement and Reaffirmation. The Borrower
hereby restates and reaffirms the representations and warranties set forth in
the Collateral Documents. Such representations and warranties shall be
incorporated by reference herein with the same effect as if fully set forth
herein.
Section 5.24 Accuracy of Information. All information
relating to the Borrower and its activities set forth in the Offering
Memorandum is true and accurate in all material respects on the date as of
which such information is dated or the date of the final Offering Memorandum,
as the case may be, and such information was not incomplete by omitting to
state any material fact necessary to make such information not misleading.
ARTICLE VI
COVENANTS
Section 6.1 Affirmative Covenants. The Borrower agrees with
the Administrative Agent, the Insurer and each Lender that, until all
Commitments have been terminated and all principal and interest on the Loans
and all other Obligations then due and payable have been paid and performed in
full, the Borrower shall perform the Obligations set forth in this Section
6.1.
Section 6.1.1 Collateral Valuation Covenant.
(a) On each Business Day (as of the close of
business on such day), the Borrower shall in good faith (i) calculate the
Advance Amount using the ▇▇▇▇▇'▇ Valuation Procedures using the most recent
Market Value for each Fund Investment as determined in accordance with the
▇▇▇▇▇'▇ Collateral Valuation Schedule and (ii) calculate the Advance Amount
using the S&P Valuation Procedures using the most recent Market Value for each
Fund Investment in accordance with the terms of the S&P Collateral Valuation
Schedule; provided that for the purposes of this Agreement, the Advance Amount
shall at all times be the lesser of the Advance Amounts calculated in
accordance with clauses (i) and (ii) above. The Market Value of each Fund
Investment shall be calculated by the Borrower (i) for purposes of the ▇▇▇▇▇'▇
Valuation Procedures, as set forth in the ▇▇▇▇▇'▇ Collateral Valuation
Schedule and (ii) for purposes of the S&P Valuation Procedures, as set forth
in the S&P Collateral Valuation Schedule.
(b) Within ten (10) Business Days of each Reporting
Date, the Borrower shall furnish to ▇▇▇▇▇'▇, S&P, the Insurer (so long as the
Senior Facility Insurance Policy is in effect) and the Administrative Agent
(which shall furnish to each Lender) a written statement substantially in the
form of Exhibit J hereto (a "Valuation Statement") certified by the Borrower
as of such Reporting Date, which shall include, in addition to other matters
specified in such Exhibit J:
(i) a schedule of all Fund Investments by
issue and by Asset Category included in the determination of the
Advance Amount, setting forth:
(1) the current Market Value of each
such Fund Investment and the original cost of each such Fund
Investment;
(2) the written quotations from
Approved Dealers, closing price or closing bid price on an
Approved Exchange, and any Approved Third-Party Appraisal or
quotation from an Approved Investment Banking Firm or other
means used for calculating the Market Value of each such
Fund Investment;
(3) to the extent applicable,
information as to rating, maturity, the Yield-to-Worst, and
whether each such Fund Investment was Performing; and
(4) the percentages applied to each
such Fund Investment to derive the portion of the Advance
Amount attributable to each such Fund Investment;
(ii) a schedule of all Unquoted
Investments owned by the Borrower, setting forth the Market Value of
each such Unquoted Investment and the date of the determination of
such Market Value, its Asset Category, its cost and, when applicable,
the value provided by an Approved Third-Party Appraisal or Approved
Investment Banking Firm and the date of determination of such value;
(iii) the aggregate Market Value of all
Eligible Investments, setting forth a list of Excluded Investments
and calculations of applicable Portfolio Limitations;
(iv) the calculation of the Advance Amount
under the ▇▇▇▇▇'▇ Collateral Valuation Schedule and the S&P
Collateral Valuation Schedule and the Borrowing Base as of such date;
(v) a schedule of the Secured Hedging Net
Exposure of each Secured Hedging Transaction then outstanding;
(vi) a schedule of the aggregate amount of
Debt of the Borrower incurred as permitted under Section 6.2.2 and
outstanding;
(vii) a schedule of all of the assets sold
with their respective purchase and sale prices and the date of such
purchase and sale of such assets sold; and
(viii) a statement certifying that, except
as otherwise indicated on the Valuation Statement, the Borrower had
determined the current Market Value of all Fund Investments using
quotations provided since the date of the immediately prior Valuation
Statement.
It is expressly understood by the Administrative Agent, the
Insurer and the Lenders that the information provided hereunder identifying
the Fund Investments, and Market Values and/or Market Value Prices therefor is
intended solely for the purpose of credit analysis by the Lenders and the
Insurer. The Administrative Agent, the Insurer and the Lenders agree that they
shall not use any such information for trading purposes or furnish such
information to trading personnel or to any other Person for any purpose which
is inconsistent with the foregoing restrictions or this Agreement.
(c) Notwithstanding the provisions of Section
6.1.1(b), in the event that the Borrower in good faith determines that a
market disruption makes it impracticable to deliver a Valuation Statement to
be provided hereunder on its due date, the Borrower may deliver such Valuation
Statement within four (4) Business Days after its due date set forth herein
and no Default in respect of this Section 6.1.1 shall occur or be deemed to
occur for such four (4) Business Days; provided that on such due date the
Borrower shall have furnished to ▇▇▇▇▇'▇, S&P, the Insurer (so long as the
Senior Facility Insurance Policy is in effect) and the Administrative Agent
(which shall furnish to each Lender) a written statement, certified by the
Borrower as of each such date, that the Borrower reasonably believes that it
is in compliance with the Over-Collateralization Test.
(d) Not later than the Business Day following any
Excess Date, the Borrower will deliver to the Administrative Agent (which
shall furnish to each Lender), the Insurer (so long as the Senior Facility
Insurance Policy is in effect) and ▇▇▇▇▇'▇ and S&P a supplement to the most
recent Valuation Statement setting forth each of the items included in the
Valuation Statement as of such Excess Date.
(e) The Borrower's determination of the Advance
Amount, the Market Value Price and the Market Value of Fund Investments
pursuant to Section 6.1.1(a) and (b), respectively, in good faith shall be
deemed correct for purposes of this Agreement, unless, within thirty (30) days
after receiving the applicable Valuation Statement, the Administrative Agent
or, so long as the Senior Facility Insurance Policy is in effect, the Insurer
shall object in writing that such determination was made in a manner
inconsistent with the provisions of this Agreement and disadvantageous to the
Lenders or as having been calculated in error. In the event of any such
dispute as to the calculation of the Advance Amount or Market Value, as the
case may be, the good faith, reasonable and mutually agreeable determination
of the Required Lenders and, so long as the Senior Facility Insurance Policy
is in effect, the Insurer shall be conclusive.
(f) (i) Concurrently with the delivery of the
consolidated financial statements of the Borrower as of each fiscal year-end
of the Borrower and for the fiscal year then ended (beginning with the fiscal
year ended December 31, 2004), pursuant to Section 6.1.2 and (ii) within
twenty (20) Business Days of a date mutually selected by the Required Lenders
and, so long as the Insurer is the Controlling Class, the Insurer that is
reasonably satisfactory to the Independent Public Accountant (or within such
other period of such date as may be reasonably required by the Independent
Public Accountant for the preparation thereof), the Borrower shall cause the
Independent Public Accountant to provide a report as of such fiscal year-end
or such selected date, as the case may be, containing information and
calculations with respect to the Borrowing Base and the aggregate outstanding
liquidation preference of the Preferred Shares as of such fiscal year-end or
such selected date, as the case may be, in a form acceptable to the
Administrative Agent, the Required Lenders and, so long as the Insurer is the
Controlling Class, the Insurer (an "Agreed-Upon Procedures Report") to the
Administrative Agent, the Lenders, the Insurer (so long as the Senior Facility
Insurance Policy is in effect), ▇▇▇▇▇'▇ and S&P. The Borrower shall be
responsible for the fees and expenses of the Independent Public Accountant for
each Agreed-Upon Procedures Report as of each fiscal year-end of the Borrower
and as of any one date selected by the Required Lenders and, so long as the
Insurer is the Controlling Class, the Insurer during any fiscal year of the
Borrower, and the Lenders shall be responsible for such fees and expenses for
each Agreed-Upon Procedures Report as of any additional date selected by the
Required Lenders and, so long as the Insurer is the Controlling Class, the
Insurer during any such fiscal year.
(g) The Borrower shall furnish in writing to the
Administrative Agent (which shall furnish to each Lender) and, so long as the
Insurer is the Controlling Class, the Insurer from time to time such
additional information regarding the determination of the Eligible
Investments, Market Value, the Advance Amount or regarding Fund Investments or
the financial position or business of the Borrower as the Administrative Agent
or, so long as the Insurer is the Controlling Class, the Insurer may
reasonably request.
Section 6.1.2 Information, etc. The Borrower shall promptly
furnish to ▇▇▇▇▇'▇, S&P, the Custodian, the Insurer (so long as the Senior
Facility Insurance Policy is in effect) and the Administrative Agent, and the
Administrative Agent shall furnish to the Lenders, copies of the following
financial statements, reports and information:
(a) as soon as available and in any event within
ninety (90) days after the end of each fiscal year of the Borrower (beginning
with the year ended December 31, 2004) a consolidated balance sheet of the
Borrower as of the end of such fiscal year and the related consolidated
statements of operations, members' equity and cash flows for such fiscal year
(including a schedule setting forth all investments of the Borrower and the
Market Value of each such investment at year end (regardless of whether such
investments are then required under GAAP to be set forth), setting forth in
comparative form the figures for the previous fiscal year, if any, reported on
without material qualification by Independent Public Accountant, it being
understood that a qualification relating only to valuation methodology shall
not be deemed a material qualification if the Borrower has otherwise complied
with Sections 6.1.1 and 6.1.18;
(b) as soon as available and in any event within
sixty (60) days after the end of each of the first three (3) fiscal quarters
of each fiscal year of the Borrower (beginning with the quarter ended
September 30, 2004, which shall be the only quarter in calendar year 2004 to
which such requirement applies) a consolidated balance sheet of the Borrower
as of the end of such fiscal quarter and the related consolidated statements
of operations, members' equity and cash flows for such fiscal quarter and for
the portion of the fiscal year ended at the end of such fiscal quarter
(including a schedule setting forth all investments of the Borrower and the
Market Value of each such investment at quarter end (regardless of whether
such investments are then required under GAAP to be set forth), setting forth
in the case of each fiscal quarter ending on or after September 30, 2005 in
comparative form the figures for the corresponding fiscal quarter and the
corresponding portion of the previous fiscal year, all certified (subject to
normal year-end adjustments) as to fairness of presentation, GAAP and
consistency by an Authorized Officer of the Borrower;
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b) above, (A) a
certificate of an Authorized Officer of the Borrower in the form of Exhibit H
hereto (x) setting forth (i) Company Equity as of the last day of the fiscal
quarter of the Borrower most recently ended; (ii) the aggregate amount of
Restricted Payments made during such fiscal quarter; (iii) the aggregate
principal amount of Debt of the Borrower described in clauses (ii), (iii) and
(iv) of Section 6.2.2 in each case as of the last day of such fiscal year or
quarter; (iv) the computations relating to the Borrower's compliance with
Section 6.1.15; and (v) for so long as Section 6.2.21 is in effect, the
leverage ratios and computations related thereto as required by Section 6.2.21
as of the last day of such fiscal quarter; and (y) stating whether any Default
exists on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which the Borrower is taking
or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of
financial statements referred to in clause (a) above, a statement of the
Independent Public Accountant which reported on such statements as to whether
anything has come to their attention to cause them to believe that any Default
existed on the date of such statements and, if such a Default has come to
their attention, a statement as to the nature thereof;
(e) promptly upon the execution thereof, copies of
any amendment to any Transaction Document;
(f) from time to time, such other information or
documents (financial or otherwise) as the Administrative Agent or, so long as
the Insurer is the Controlling Class, the Insurer may reasonably request; and
(g) promptly upon obtaining actual knowledge
thereof, any material correction, revision or restatement with respect to the
information referred to above.
Section 6.1.3 Maintenance of Borrower's Existence, etc. The
Borrower shall cause to be done at all times all things necessary to maintain
and preserve its existence and the rights (statutory and other) and franchises
(including licenses, authorizations and permits necessary to the operation of
its businesses) used in the conduct of its business, including preservation of
its status as a limited liability company in good standing under the laws of
the State of Delaware.
Section 6.1.4 Foreign Qualification. The Borrower shall
cause to be done at all times all things necessary to be duly qualified to do
business and be in good standing in each jurisdiction where the failure so to
qualify would have a Material Adverse Effect.
Section 6.1.5 Payment of Taxes and Other Claims. The
Borrower shall pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, all taxes, assessments and other governmental
charges levied or imposed upon the Borrower or upon any of its income, profits
or property; provided, that the Borrower shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment or
charge, (i) the amount, applicability or validity of which is being contested
in good faith by appropriate proceedings and for which disputed amounts
adequate reserves in accordance with GAAP have been made or (ii) the failure
of which to pay or discharge could not have a Material Adverse Effect or a
material adverse effect on the Collateral.
Section 6.1.6 Insurance. The Borrower shall maintain,
directly or through an Affiliate, with reputable, financially sound insurance
companies, insurance with respect to its properties and business against such
liabilities and contingencies and of such types and in such amounts as is
customary in accordance with prudent business practice in the case of similar
businesses engaged in the activities described in Section 5.17, including
fidelity bond coverage and director and officer (and manager) liability
insurance and shall furnish to the Administrative Agent (which shall furnish
to each Lender) and, so long as the Senior Facility Insurance Policy is in
effect, the Insurer on the Closing Date, and no later than January 31 of each
year (commencing January 31, 2005), a certificate of an Authorized Officer of
the Borrower setting forth the nature and extent of all insurance maintained
by the Borrower (or such Affiliate) in accordance with this Section 6.1.6. The
Borrower, directly or through an Affiliate, shall retain all the incidents of
ownership of the insurance maintained pursuant to this Section 6.1.6 and shall
not borrow upon or otherwise impair its right to receive the proceeds of such
insurance.
Section 6.1.7 Notice of Default, Litigation, etc. The
Borrower shall give prompt notice (with a description in reasonable detail of
the nature and period of existence thereof and of the actions which the
Borrower has taken and proposes to take with respect thereto) to ▇▇▇▇▇'▇, S&P,
the Insurer (so long as the Senior Facility Insurance Policy is in effect) and
the Administrative Agent, who shall furnish a copy thereof to the Lenders, of:
(a) the occurrence of (i) any known Default and (ii)
any known event of default (however denominated) or default which, with notice,
the passage of time or both, would constitute such an event of default, under
any Collateral Document or either Insurance Agreement;
(b) the receipt of any notice of any default which,
with notice, the passage of time or both, would constitute an event of default
under either Insurance Agreement or any Collateral Document;
(c) any litigation, arbitration or governmental
investigation or proceeding not previously disclosed by the Borrower to the
Insurer, the Administrative Agent or the Lenders which has been instituted or,
to the knowledge of the Borrower, is threatened against the Borrower or to
which any of its properties, assets or revenues is subject which (i) would be
reasonably likely to have a Material Adverse Effect or (ii) relates to this
Agreement, any Collateral Document, any other Credit Document or any
transactions contemplated hereunder or thereunder;
(d) the occurrence of any other circumstance which
has resulted, or will with the passage of time result, in a Trigger Event; and
(e) any material adverse development which shall
occur in any litigation, arbitration or governmental investigation or
proceeding previously disclosed by the Borrower to the Insurer, the
Administrative Agent or the Lenders.
Section 6.1.8 Performance of Obligations. The Borrower shall
(a) perform promptly and faithfully all of its Obligations under this
Agreement, each Collateral Document and each Credit Document executed by it
and (b) comply with the provisions of all other contracts or agreements to
which it is a party or by which it is bound and pay all obligations which it
has incurred or may incur pursuant to any such contract or agreement as such
obligations become due (excluding the Insurance Agreements, unless the Insurer
is exercising any remedies thereunder as a result of the failure to comply)
except to the extent the failure to comply with such contracts and agreements
could not reasonably be expected to result in a Material Adverse Effect.
Section 6.1.9 Audits; Books and Records. The Administrative
Agent may (and, at the request of the Required Lenders or, so long as the
Insurer is the Controlling Class, the Insurer, shall) conduct physical audits,
using the Administrative Agent's own personnel and/or agents employed on the
Administrative Agent's behalf, of the assets of the Borrower as often as the
Administrative Agent may reasonably deem necessary or desirable, the results
of which the Administrative Agent shall (subject to the last proviso of this
sentence) promptly report to the Lenders; provided, that, at any time prior to
the occurrence of a Default, the Administrative Agent shall conduct not more
than one physical audit in any one fiscal year of the Borrower; and provided,
further, that upon the occurrence and during the continuance of a Default, the
Administrative Agent may engage in any number of physical audits which the
Administrative Agent, the Required Lenders or, so long as the Insurer is the
Controlling Class, the Insurer deem necessary or desirable; and provided,
further, that any of the CP Conduits, if an annual audit described above has
not been conducted or if such audit does not satisfy the requirements of its
internal guidelines with respect thereto (as so certified by such CP Conduit),
may, at its own cost and expense if such audit is as a result of an audit not
satisfying the requirements of its internal guidelines, request and conduct an
audit satisfying such requirements. The Borrower shall keep proper books and
records reflecting all of its business affairs and transactions in accordance
with GAAP and permit the Insurer (so long as the Insurer is the Controlling
Class), the Administrative Agent and the Lenders, on reasonable notice and at
reasonable times and intervals during ordinary business hours, to visit all of
its offices and to discuss its financial matters with officers of the Borrower
and its independent public accountants. The Borrower shall permit the
Administrative Agent and, so long as the Insurer is the Controlling Class, the
Insurer on reasonable notice and at reasonable times and intervals during
ordinary business hours, to examine and make copies of any of the books or
other records of the Borrower. The Borrower shall pay any reasonable fees of
such independent public accountants or otherwise incurred in connection with
the exercise by the Administrative Agent or, so long as the Insurer is the
Controlling Class, the Insurer of its rights pursuant to this Section 6.1.9.
Section 6.1.10 Compliance with Laws, etc. The Borrower shall
comply with all applicable statutes, rules, regulations, orders and
restrictions of any governmental authority, department, commission, board,
regulatory authority, bureau, agency and instrumentality, in respect of the
conduct of its business and the ownership of its properties, except such as
are being contested in good faith and by appropriate proceedings in such
manner as not to cause any Material Adverse Effect, and except for such
non-compliance as shall not, individually or in the aggregate, have a Material
Adverse Effect. Without limiting the foregoing, the Borrower shall comply with
Section 18 of the Investment Company Act or any successor provision thereto,
and any applicable "asset coverage" maintenance requirements set forth
therein.
Section 6.1.11 Environmental Matters. The Borrower shall use
and operate all of the Borrower's real properties, if any, in compliance with
all Environmental Laws.
Section 6.1.12 Maintenance of Property. The Borrower shall,
at its expense:
(a) acquire and maintain the Fund Investments
included or to be included in the Collateral in a manner that shall enable the
Borrower to cause such property to be subject to the Liens of the Collateral
Documents;
(b) obtain the consent or approval of any Person
whose consent or approval is required in connection with the grant of Liens by
the Borrower in any such property to or for the benefit of the Lenders; and
(c) maintain and keep its properties that are used
or useful to its business in good repair, working order and condition, and
from time to time make all necessary or desirable repairs, renewals and
replacements, so that its businesses may be properly and advantageously
conducted at all times.
Section 6.1.13 Delivery; Further Assurances. The Borrower
shall, at its expense:
(a) execute and deliver any and all instruments
necessary or as the Administrative Agent may reasonably request to grant and
perfect a first priority Lien on all of the Collateral, except for Permitted
Liens, and, without any request by the Administrative Agent or any Person,
deliver or cause to be delivered promptly to the Custodian, or any designee
thereof, in due form for transfer (duly endorsed in blank or, if appropriate,
accompanied by duly executed blank stock or bond powers or any instrument or
certificate accompanying or previously delivered to the Custodian permitting
the Custodian to exercise the Borrower's rights of transfer when permitted
hereunder or under the Pledge and Intercreditor Agreement) or issued in the
name of the Custodian or its nominee or agent (or any designee of the
Custodian), all certificated securities, chattel paper, instruments and
documents of title, if any, at any time representing all or any of the
Collateral, it being acknowledged by the parties hereto that such certificated
securities, chattel paper, instruments and documents of title may be subject
to restrictions on transfer either imposed by law or contained in their
governing documents or any related documents; and
(b) upon request of the Administrative Agent,
forthwith execute and deliver or cause to be executed by the Borrower and
delivered to the Administrative Agent, in due form for filing or recording
(and pay the cost of filing or recording the same in all public offices deemed
necessary by the Administrative Agent), such assignments, security agreements,
pledge agreements, consents, waivers, financing statements, stock or bond
powers, and other documents, and do such other acts and things, all as the
Administrative Agent may from time to time reasonably request, to establish
and maintain to the reasonable satisfaction of the Administrative Agent valid
perfected Liens of the first priority in all the Collateral in accordance with
the Pledge and Intercreditor Agreement (free of all other Liens, claims, and
rights of third parties whatsoever, except as and solely to the extent other
Liens are permitted by Section 6.2.3).
Section 6.1.14 Investment Manager, etc.
(a) The Administrative Agent shall at all times be
entitled to accept and act upon Borrowing Requests and payment instructions
received from an Authorized Officer of the Borrower or the Investment Manager
designated in a certificate of the Borrower to that effect provided from time
to time to the Administrative Agent (in the form provided in Section
4.1.1(a)(ii)).
(b) The Borrower shall at all times maintain (i)
TCP as its primary investment manager, except as otherwise provided under the
Investment Management Agreement and permitted hereunder and (ii) Babson as
co-manager, except as otherwise provided under the Investment Management
Agreement or the Co- Management Agreement and permitted hereunder.
(c) The Custodian shall at all times be the
custodian of all of the Fund Investments and the Collateral, except as
provided under the Custodial Agreement.
(d) The Borrower's auditors shall be a nationally
recognized firm of independent public auditors that is reasonably acceptable
to the Administrative Agent and, so long as the Insurer is the Controlling
Class, the Insurer.
Section 6.1.15 Minimum Net Worth. The Company Equity shall,
at the end of each fiscal quarter (determined on the date the related
quarterly or annual financial statements are required to be delivered
hereunder by reference to such related quarterly or annual financial
statements), equal or exceed 60% of Contributed Company Capital.
Section 6.1.16 Affirmative Hedging Requirement. The Borrower
shall, and/or shall cause the Hedging SPEs to, maintain at all times any
interest rate or currency rate protection arrangements which, in the
Borrower's good faith judgment, are advisable to reduce the Borrower's
exposure to material interest rate or currency rate risk.
Section 6.1.17 Use of Proceeds. The proceeds of the Loans
made hereunder will be used by the Borrower for the purpose of making
investments in Fund Investments, entering into Secured Hedging Transactions,
Defensive Hedge Transactions and other Hedging and Short Sale Transactions
permitted hereunder, paying dividends on, redeeming and paying any liquidation
preference with respect to, Preferred Shares and Common Shares to the extent
such payments are permitted hereunder, capitalizing Hedging SPEs and
Investment Holding Subsidiaries, paying principal, interest, commitment fees
and other amounts on Debt and paying, or reimbursing others for the payment
of, fees and expenses incurred in connection with the formation and operation
of the Borrower, the Hedging SPEs and the Investment Holding Subsidiaries, the
arranging of the Loans and the execution, delivery and performance of this
Agreement and the other Transaction Documents including, but not limited to,
the payment of the fees payable to, and reimbursement of expenses of, the
Investment Manager pursuant to the Investment Management Agreement and the
Co-Manager pursuant to the Co-Management Agreement and the payment of premiums
and all other amounts due to the Insurer and any other insurer and the payment
of other ongoing professional and administrative fees and expenses associated
with the business and operation of the Borrower, incurred in the ordinary
course of business, or as otherwise determined to be incurred by the Borrower,
the Hedging SPEs and Investment Holding Subsidiaries. None of such proceeds
will be used in violation of applicable law or, directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
any Margin Stock for purposes of the regulations of the FRS Board.
Section 6.1.18 Compliance with Over-Collateralization Test.
Upon the occurrence of an Excess Date, the Borrower shall promptly notify the
Administrative Agent (which shall provide a copy of such notice to each
Lender), the Insurer (so long as the Senior Facility Insurance Policy is in
effect), ▇▇▇▇▇'▇ and S&P thereof and, at its option (provided, that it is
required to take the actions described in clause (i) or clause (ii) below),
within ten (10) Business Days of such Excess Date, either:
(i) prepay the Debt under this Agreement
(as provided herein) or redeem Preferred Shares as provided in the
Operating Agreement in such amounts or take such other actions as
shall be necessary so that the sum of the aggregate outstanding
principal amount of Senior Indebtedness and the aggregate outstanding
liquidation preference of the Preferred Shares shall be equal to or
less than the Advance Amount then in effect; or
(ii) provide a written statement to the
Administrative Agent (which shall provide a copy to each Lender) and,
so long as the Senior Facility Insurance Policy is in effect, the
Insurer as of any date (a "Statement Date") showing projected
compliance with the Over-Collateralization Test as of any subsequent
date within such twenty (20) Business Days of such Excess Date (and
continuing compliance with the Over-Collateralization Test during the
remainder of such twenty (20) Business Day period) based upon
reasonably expected settlements of all committed purchases and sales
of Fund Investments pledged as Collateral, all anticipated additions
to, and removals from, the Collateral of Cash and of Fund Investments
that are not pledged as Collateral and all anticipated prepayments of
its Debt (including sources of funds therefor) to be completed within
such twenty (20) Business Days, calculated by reference to the Market
Value, Market Value Prices, Over-Collateralization Test and Debt in
effect or outstanding, as the case may be, as of such Statement Date.
The calculation of the Excess Amount, if any, is referred to
herein as the "Over-Collateralization Test," and the Borrower will be deemed
to be in compliance with such test so long as there is no positive Excess
Amount. In the event that the Borrower fails to complete the transactions
described in a statement delivered pursuant to clause (ii) above or otherwise
come into compliance with the Over-Collateralization Test (including as a
result of changes in the value of the Collateral) within the twenty (20)
Business Day period specified therein, the Borrower shall make the prepayments
required pursuant to clause (i) above not later than the last day of such
twenty (20) Business Day period.
Notwithstanding the foregoing, in the event that immediately
following, and after giving effect to, any proposed prepayment of the Senior
Indebtedness or redemption of the Preferred Shares pursuant to this Section
6.1.18, the Borrower determines that it would not be in compliance with the
Over-Collateralization Test, the Borrower shall instead, to the extent it
makes any prepayment pursuant to this Section 6.1.18, prepay such Senior
Indebtedness on a pro rata basis and no Preferred Shares shall be redeemed or
repurchased unless the aggregate outstanding principal amount of Senior
Indebtedness has been reduced to zero. The preceding sentence shall not in any
way limit the ability of the Borrower to take other actions to come into
compliance with the Over-Collateralization Test.
Section 6.1.19 Regulations T, U, and X. The Borrower shall
provide a duly completed and executed Federal Reserve Form U-1 or Form G-3, as
applicable, to each Person becoming a Lender after the Closing Date pursuant
to the terms of this Agreement. If at any time the Borrower acquires any
Margin Stock, the Borrower will take any and all actions as may be necessary,
or as may be reasonably requested by the Administrative Agent, to establish
compliance with Regulations T, U, and X of the FRS Board, including, without
limitation, furnishing such information relating to such Margin Stock acquired
as is required to register and file periodic reports with the FRS Board.
Section 6.1.20 Plan Assets. The Borrower and its ERISA
Affiliates will do, or cause to be done, all things necessary to ensure that
the Borrower will not be deemed to hold Plan Assets at any time.
Section 6.1.21 Key Individuals. The Borrower shall provide
the Administrative Agent with an updated list of Key Individuals whenever the
previously delivered list is no longer complete or accurate.
Section 6.1.22 Regulated Investment Company. The Borrower
shall promptly notify the Administrative Agent (who shall provide a copy of
such notice to each Lender, ▇▇▇▇▇'▇ and S&P) and, so long as the Senior
Facility Insurance Policy is in effect, the Insurer when the Borrower elects
not to be treated as, or becomes ineligible to be treated as, a regulated
investment company for U.S. federal income tax purposes.
Section 6.1.23 Closed-end Company Status. The Borrower shall
use commercially reasonable efforts to at all times maintain its
classification as a Closed-end Company for purposes of the Investment Company
Act and shall promptly notify the Administrative Agent (who shall provide a
copy of such notice to each Lender) and, so long as the Senior Facility
Insurance Policy is in effect, the Insurer, when it at any time fails to
maintain its classification as a Closed-end Company.
Section 6.2 Negative Covenants. The Borrower agrees with the
Insurer, the Administrative Agent and each Lender that, until all Commitments
have been terminated and all principal and interest on the Loans and all other
Obligations then due and payable have been paid and performed in full, the
Borrower shall perform the Obligations set forth in this Section 6.2.
Section 6.2.1 No Other Business; Subsidiaries. The Borrower
shall not engage in any business or activity other than (a) issuing the Lender
Notes and incurring Loans pursuant to this Agreement, issuing, selling,
redeeming and repurchasing Preferred Shares (including any permitted
refinancings thereof), issuing and selling Common Shares, issuing and selling
Subordinated Equity Securities, acquiring, owning, holding, selling,
exchanging, redeeming, pledging, structuring, negotiating, originating,
syndicating, contracting for the management of and otherwise dealing with Fund
Investments and other instruments and property in connection therewith and in
accordance with the terms hereof (including acquiring majority or controlling
interests in operating companies as a result of such activities) and entering
into Secured Hedging Transactions and Structured Product Transactions, (b)
issuing or incurring any other obligations permitted by Section 6.2.2, (c)
owning the Capital Stock of any Hedging SPEs or Investment Holding
Subsidiaries, , (d) entering into the Co-Management Agreement, (e) obtaining
financial guaranty insurance with respect to the Loans and the Preferred
Shares or portions thereof, (f) engaging in other activities permitted by the
Operating Agreement, including establishing investment committees and
investment policies, earning origination, management, funding, break-up and
similar fees with respect to Fund Investments, obtaining governance power with
respect to certain Fund Investments and co-investing with related parties and
other Persons and (g) engaging in any other activities which are necessary,
suitable or appropriate to accomplish the foregoing or are incidental thereto,
connected therewith or ancillary thereto. Notwithstanding anything to the
contrary contained in this Section 6.2.1 or elsewhere in this Agreement, the
Borrower shall have no Subsidiaries other than any Hedging SPEs or Investment
Holding Subsidiaries.
Section 6.2.2 Limitations on Debt or Equity Securities. The
Borrower shall not, and shall not permit any Subsidiary (other than a Hedging
SPE) to, create, incur, assume or suffer to exist or otherwise directly or
indirectly become or be liable (collectively, "Incur" and, with correlative
meanings, "Incurred" and "Incurrence") in respect of any Debt or issue any
equity securities, other than:
(i) Debt in respect of the Loans and other
Obligations in an aggregate principal amount not to exceed the Total
Maximum Commitment (including refinancings, refundings or
replacements thereof);
(ii) the Preferred Shares and the Common
Shares;
(iii) any other equity securities which
(1) are fully subordinated and junior in right of payment (including
upon liquidation) to the Senior Indebtedness and the Preferred
Shares; (2) contain a Non-Petition Covenant by the holder thereof;
and (3) expressly provide that each holder thereof does not have
recourse to any Collateral pledged under the Pledge and Intercreditor
Agreement for amounts payable to such holder in respect of such
equity securities until all obligations under each Insurance
Agreement and all of the Obligations hereunder and the Preferred
Shares have been paid in full (an "Subordinated Equity Security");
(iv) Debt arising from the honoring by a
bank or other financial institution of a check, draft or similar
instrument drawn against insufficient funds in the ordinary course of
business; provided, that such Debt is extinguished within five
Business Days of its incurrence;
(v) with respect to any Fund Investment,
any funding obligation of the Borrower to the issuer of such Fund
Investment; and
(vi) in the case of Investment Holding
Subsidiaries, equity securities issued to and held by the Borrower.
Section 6.2.3 Liens. The Borrower shall not, and shall not
permit any Subsidiary (other than a Hedging SPE or Investment Holding
Subsidiary) to, Incur any Lien upon any property or assets included in the
Collateral, whether now owned or hereafter acquired, except the following
(collectively, the "Permitted Liens"):
(i) Liens in favor, or for the benefit, of
the Administrative Agent or the Lenders granted pursuant to this
Agreement or any Collateral Document, including the Lien in favor of
the Secured Parties Representative created by the Pledge and
Intercreditor Agreement;
(ii) any Lien or other encumbrance for
taxes, assessments or other governmental charges or levies not yet
subject to penalties for non-payment or the validity, applicability
or amount of which is being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been established by the Borrower;
(iii) Liens of broker-dealers and clearing
corporations Incurred in the ordinary course of business, but
excluding Liens created in connection with the purchase of securities
on margin, the short sale of securities on margin or Securities
Lending Transactions (other than Securities Lending Transactions
involving U.S. Government Securities incurred as Interest Rate
Hedging Transactions); provided, that in the case of broker-dealer
Liens relating to trades not settled in the ordinary course of
business, such Liens shall be Permitted Liens under this clause (iv)
only if such Liens are discharged within five (5) Business Days of
the Borrower's obtaining actual knowledge thereof;
(iv) judgment Liens in existence less than
thirty (30) days after the entry thereof or with respect to which
execution has been stayed, in each case, so long as the aggregate
amount of all such judgment Liens at any time does not exceed 1.5% of
the Net Asset Value or judgment Liens the payment of which is covered
in full (subject to a customary deductible) by insurance; and
(v) any other Lien granted in favor of the Secured Parties Representative
for its benefit and the benefit of the
Lenders, the Insurer, the
Custodian (and any subcustodian appointed by or on behalf of the
Custodian), the Administrative Agent or the Hedging Representative
and Secured Hedging Creditors (each as defined in the Pledge and
Intercreditor Agreement) granted under the Pledge and Intercreditor
Agreement, the Custodial Agreement or any Secured Hedging Agreement
(as defined in the Pledge and Intercreditor Agreement).
Section 6.2.4 Performance of Obligations. The Borrower is
hereby authorized to contract with other Persons, including the Investment
Manager and the Co-Manager, for the performance of actions and obligations to
be performed by the Borrower hereunder by such Persons and the performance of
the actions and other obligations with respect to the Collateral by the
Investment Manager of the nature set forth in the Investment Management
Agreement. In such event, the performance of such actions and obligations by
such Persons shall be deemed to be performance of such actions and obligations
by the Borrower, except that, to the extent an officer's certificate is
required to be delivered by or on behalf of the Borrower, an Authorized
Officer of the Borrower must execute such officer's certificates on behalf of
the Borrower.
Section 6.2.5 Limitations on Restricted Payments. Except as
provided in Section 6.1.18, the Borrower shall not make any Restricted
Payment; provided, that the Borrower may, at any time, (i) make distributions
(including dividends) to the Common Shareholders or repurchase, or make
payments or distributions on account of the purchase, redemption, retirement
or acquisition of, the Common Shares in the Borrower pursuant to and in
accordance with the Operating Agreement or (ii) repurchase, or make payments
or distributions on account of the purchase, redemption, retirement or
acquisition of, the Preferred Shares or make similar payments or distributions
of their stated liquidation preference pursuant to and in accordance with the
Operating Agreement and the Preferred Shares Auction Agency Agreement and the
Preferred Shares Broker-Dealer Agreement, in each case, so long as,
immediately after such payments, distributions or repurchases (x) no Default,
Event of Default or violation of Section 6.1.18 (without giving effect to the
grace periods provided for therein) shall have occurred and be continuing
under this Agreement, (y) all representations and warranties in Article V
hereof are true and correct in all material respects, and (z) Company Equity
(after giving effect to any Subordinated Equity Security) shall be equal to or
greater than (1) Adjusted Contributed Company Capital or (2) in the case of
Company Tax Distributions, Adjusted Contributed Company Capital minus
$35,000,000; provided that the Borrower may, in connection with the issuance
of any Subordinated Equity Securities, make distributions to its Common
Shareholders and the holders of Subordinated Equity Securities in an amount
which does not exceed the net proceeds to the Borrower of such issuance of
Subordinated Equity Securities. Distributions (including dividends) or other
payments or distributions on account of the purchase, redemption, retirement
or acquisition of any Subordinated Equity Security may be made pursuant to and
in accordance with the Operating Agreement at any time only so long as (x) all
representations and warranties in Article V hereof are true and correct in all
material respects and (y) immediately after giving effect thereto, no Default,
Event of Default or violation of Section 6.1.18 (without giving effect to the
grace periods provided for therein) shall have occurred or be continuing under
this Agreement. For the avoidance of doubt, dividends on the Preferred Shares
shall not be treated as Restricted Payments and may be paid by the Borrower at
any time in accordance with the terms of the Operating Agreement.
Notwithstanding the foregoing, in the event that any payment
or other distribution (including, without limitation, any dividend) in respect
of the Borrower's Common Shares would be required to be made in order to
preserve the U.S. federal income tax status of the Borrower as a regulated
investment company or to avoid the imposition of the excise tax under Section
4882 of the Code (e.g., because the requisite consents from the Common
Shareholders for a "consent dividend" (as defined in Section 565 of the Code)
for U.S. federal income tax purposes have not been obtained by the Borrower in
accordance with the terms of the Operating Agreement), such payment or
distribution (a "RIC Distribution") may be distributed for the benefit of the
Common Shareholders and deposited into the Common Shareholders' Escrow Account
established pursuant to the Custodial Agreement. Funds deposited in the Common
Shareholders' Escrow Account shall not be released to the Common Shareholders
unless and until the Borrower shall have provided to the Administrative Agent
and, so long as the Senior Facility Insurance Policy is in effect, the Insurer
a certificate stating that (x) such violation of the Over-Collateralization
Test, occurrence of Default or Event of Default or breach of representation or
warranty in Article V hereof, as applicable, has been cured and is no longer
continuing or, so long as the Insurer is the Controlling Class, has been
waived by the Insurer and (y) Company Equity (including, for this purpose, any
Subordinated Equity Security) is equal to or greater than Adjusted Contributed
Company Capital. If the requisite consents from the Common Shareholders for a
"consent dividend" have been obtained, the Borrower shall be permitted to pay
any U.S. withholding taxes ("RIC Withholding Taxes") arising in respect of
such "consent dividend".
Section 6.2.6 Change of Name, etc. The Borrower shall not
change (a) the location of its principal place of business, chief executive
office, major executive office, chief place of business or its records
concerning its business and financial affairs, (b) without the prior consent
of the Controlling Class, its name or the name under or by which it conducts
its business or (c) its jurisdiction of organization, in each case without
first giving ▇▇▇▇▇'▇, S&P, the Insurer (so long as the Senior Facility
Insurance Policy is in effect), the Administrative Agent and the Secured
Parties Representative thirty (30) days' prior written notice thereof and
taking any and all actions that may be necessary, or which the Administrative
Agent or, so long as the Insurer is the Controlling Class, the Insurer may
reasonably request, to maintain and preserve all Liens granted pursuant to the
Collateral Documents.
Section 6.2.7 Merger, Consolidation; Successor Entity
Substituted. The Borrower shall not consolidate or merge with or into any
other Person or sell, lease or otherwise transfer its respective properties
and assets substantially as an entirety to any Person, unless the Borrower
provides ten (10) days' prior written notice thereof to the Insurer (so long
as the Senior Facility Insurance Policy is in effect), the Administrative
Agent (which shall provide a copy of such notice to each Lender), ▇▇▇▇▇'▇ and
S&P and unless:
(i) the Borrower shall be the surviving
entity, or the Person (if other than the Borrower) formed by such
consolidation or into which the Borrower is merged or to which the
properties and assets of the Borrower are transferred substantially
as an entirety shall be a Person organized and existing under the
laws of the United States of America, any state thereof or the
District of Columbia, and shall expressly assume, by an amendment or
supplement, executed and delivered to the Insurer (so long as the
Senior Facility Insurance Policy is in effect), the Administrative
Agent and each Lender (with a copy to ▇▇▇▇▇'▇ and S&P), in the case
of a Person succeeding the Borrower, the due and punctual payment of
the principal of and premium and interest on all Loans and other
Obligations and, in the case of a Person succeeding the Borrower, the
performance of every covenant and every other obligation or liability
of this Agreement and the other Credit Documents on the part of the
Borrower to be performed or observed, all as provided herein;
(ii) immediately after giving effect to
such transaction, no Default or Event of Default shall have occurred
and be continuing;
(iii) the Borrower shall have delivered to
the Administrative Agent and, so long as the Senior Facility
Insurance Policy is in effect, the Insurer an officer's certificate
stating that such consolidation, merger, conveyance or transfer and
such amendment or supplement to this Agreement comply with this
Section 6.2.7;
(iv) the Controlling Class shall have
consented to such merger, consolidation, sale, lease or transfer
(which consents shall not be unreasonably withheld);
(v) the Borrower shall have taken all
steps necessary to preserve the effectiveness, perfection and
priority of the Liens created under the Pledge and Intercreditor
Agreement;
(vi) the Borrower shall have delivered to
the Administrative Agent and, so long as the Insurer is the
Controlling Class, the Insurer evidence satisfactory to them that the
Rating Agency Condition shall be met; and
(vii) the Borrower shall have delivered to
the Insurer (so long as the Senior Facility Insurance Policy is in
effect), the Administrative Agent and each Lender an opinion of
counsel concerning such of the foregoing matters described in clauses
(i) and (v) and such other matters as the Administrative Agent may
reasonably require.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all
of the assets of the Borrower in accordance with this Section 6.2.7, the
successor entity formed by such consolidation or into which the Borrower is
merged or into which such sale, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Borrower under this Agreement with the same
effect as if such successor entity had been named as the Borrower herein.
Section 6.2.8 Investment Dispositions, etc. The Borrower
shall not sell, transfer, lease or otherwise dispose of, or grant options,
warrants or other rights with respect to, any of its assets to any Person,
other than in compliance with the provisions of this Agreement, the other
Transaction Documents and all Applicable Laws. The Borrower shall not transfer
any Fund Investment or other asset from the Custodial Account to any Hedging
SPE or Investment Holding Subsidiary, to any counterparty under a Structured
Product Transaction or to any other account of the Borrower unless (i) after
giving effect to such transfer, (x) the sum of the aggregate Outstanding
Principal Amount of the Loans and the aggregate outstanding liquidation
preference of the Preferred Shares would not exceed (y) the Advance Amount
(calculated on a pro forma basis giving effect to such transfer) and (ii) the
Borrower shall have delivered to the Administrative Agent and, so long as the
Senior Facility Insurance Policy is in effect, the Insurer a certificate
evidencing its compliance with the foregoing clause (i).
Section 6.2.9 Modification of Certain Instruments, Organic
Documents, Agreements, etc. The Borrower shall not:
(a) consent to any amendment, supplement, waiver,
termination or other modification of any of the terms or provisions of either
Insurance Agreement, the Preferred Shares Auction Agency Agreement or the
Collateral Documents that would (x) change the scheduled mandatory redemption
date of any Preferred Shares to a date earlier than July 13, 2014, increase
the amount of dividend or any other sum payable in respect of any Preferred
Shares after issuance or (y) adversely affect the Insurer (so long as the
Insurer is the Controlling Class) or the Lenders, in each case, other than any
amendment, supplement or other modification which (i) extends the date or
reduces the amount of any required payment, repurchase or redemption in
respect of any Preferred Shares, (ii) is consented to or approved by the
Required Lenders and, so long as the Insurer is the Controlling Class, the
Insurer (which consent or approval shall not be unreasonably withheld or
delayed), and as to which the Rating Agency Condition is met, or (iii) with
the consent of the Administrative Agent and, so long as the Insurer is the
Controlling Class, the Insurer, serves to correct manifest error or
inconsistencies that are otherwise not material; the Borrower will give
▇▇▇▇▇'▇, S&P, the Insurer (so long as the Senior Facility Insurance Policy is
in effect) and the Administrative Agent (which shall provide a copy of such
notice to each Lender) ten (10) Business Days' prior written notice (or if ten
(10) Business Days' prior written notice is not reasonably practicable, the
maximum amount of prior written notice that is reasonably practicable) of any
such modification, supplement, waiver or termination; or
(b) to the extent permitted by the Investment
Company Act, without the prior written consent of the Administrative Agent and
the Controlling Class (which consent or approval shall not be unreasonably
withheld or delayed) and unless the Rating Agency Condition is met, (i)
terminate the Investment Manager, appoint a replacement Investment Manager or
consent to an assignment of the Investment Management Agreement (except in
connection with (x) an assignment that results from a change in control
(within the meaning of the Investment Advisers Act of 1940, as amended) or (y)
an assignment to the Co-Manager or an Affiliate of the Investment Manager or
the Co-Manager pursuant to the Investment Management Agreement) or (ii)
consent to any material amendment, supplement or other modification of any of
the terms or provisions of (A) its Organic Documents if such change would have
a Material Adverse Effect, or (B) the Investment Management Agreement (except
in connection with a change of Investment Manager that otherwise complies with
clause (i) above).
Notwithstanding any other provision of this Agreement or any
other Transaction Document, each of the Lenders, the Insurer and the
Administrative Agent hereby acknowledges that in order to preserve the
economics of the Carried Interest (as defined in the Operating Agreement)
payable to the Special Member, the Borrower may desire to establish a
partnership, limited liability company or other business entity through which
it would conduct substantially all its investment activities, and in order to
achieve that desired objective, each of the Lenders, the Insurer and the
Administrative Agent agrees to reasonably cooperate with the Borrower and the
Special Member, at the sole expense of the Borrower, to amend, supplement or
otherwise modify the terms or provisions of this Agreement, either Insurance
Agreement, the Operating Agreement, the Preferred Shares Auction Agency
Agreement, any of the Collateral Documents or any other Transaction Document,
in each case in a manner that would not have any Material Adverse Effect;
provided that upon any such amendment, supplement or modification, the Rating
Agency Condition shall be satisfied.
Section 6.2.10 Agreements Restricting Liens. The Borrower
shall not enter into any agreement which prohibits the creation or assumption
of any Lien upon its properties, revenues or assets (other than Liens upon
specific properties or assets that are not included in the Collateral),
whether now owned or hereafter acquired, other than the Insurance Agreements,
the Preferred Shares Auction Agency Agreement and the Collateral Documents.
Section 6.2.11 Inconsistent Agreements. The Borrower shall
not enter into any agreement containing any provision which would be violated
or breached by the performance by the Borrower of its obligations under this
Agreement or under any other Credit Document.
Section 6.2.12 Environmental Matters. Except with respect to
violations which could not reasonably be expected to have a Material Adverse
Effect, the Borrower shall not violate any Environmental Law. In any case, the
Borrower shall not intentionally violate any Environmental Law.
Section 6.2.13 Pension and Welfare Plans. The Borrower shall
not Incur any liability or obligation with respect to any Pension Plan or any
Welfare Plan (other than with respect to a fully-insured Welfare Plan). The
Borrower shall not maintain or contribute to (or become obligated to
contribute to) any Pension Plan or Welfare Plan (other than a fully-insured
Welfare Plan).
Section 6.2.14 Payment of Management or Advisory Fees. At
any time after an Acceleration Notice, a Final Payment Default Notice or the
occurrence of a Liquidation Acceleration under the Pledge and Intercreditor
Agreement, the Borrower shall not pay, or cause or permit to be paid, any
management or advisory fees (excluding expense reimbursements) of any type to
the Investment Manager unless otherwise consented to by the Controlling Class
pursuant to the terms of the Pledge and Intercreditor Agreement.
Section 6.2.15 Limitation on Bank Loans. The Borrower shall
not hold Bank Loans that obligate the Borrower, whether currently or upon the
happening of any contingency, to make any revolving extensions of credit to a
borrower, unless the Borrower has at all times available to it, within the
notification period specified by the documentation governing such Bank Loans
for the making of any extensions of credit thereunder, any combination of (i)
Cash, (ii) Cash Equivalents and (iii) availability under this Agreement such
that the Borrower, upon "regular way" settlement, will have funds that are
sufficient to cover the amount of any such extensions of credit.
Section 6.2.16 Commodities; Real Estate. The Borrower shall
not purchase or otherwise acquire or receive as a distribution any commodities
or any fee interest in real property, except for such commodities or fee
interest in real property as the Borrower shall have acquired or received as a
distribution in connection with a workout, bankruptcy, foreclosure,
restructuring or similar process or proceeding in respect of a Fund
Investment; provided, that (i) the Borrower shall disclose such acquisition or
receipt of any such commodities or fee interest in real property to the
Administrative Agent or the Insurer promptly following the acquisition or
receipt thereof and (ii) the Borrower shall dispose of such commodities or fee
interest in real property as soon as practicable in a commercially reasonable
manner.
Section 6.2.17 Margin Stock. The Borrower shall not use any
of the proceeds of the Borrowings (i) to extend "purpose credit" within the
meaning given to such term in Regulation U or (ii) directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of purchasing,
otherwise acquiring or carrying any Margin Stock.
Section 6.2.18 Limitations on Hedging and Short Sale
Transactions.
(a) The Borrower will not, and will not permit any
Hedging SPE to, enter into or otherwise effect or permit to remain outstanding
any Hedging and Short Sale Transaction except as follows: (i) Secured Hedging
Transactions entered into, in the judgment of the Borrower, to hedge or
mitigate interest rate or currency rate risks to which the Borrower is exposed
in the conduct of its business or management of its liabilities; (ii)
Structured Product Transactions entered into by the Borrower; (iii) Defensive
Hedge Transactions entered into by the Borrower, intended to protect the
Borrower against fluctuations in the market value of a Fund Investment; and
(iv) other Hedging and Short Sale Transactions entered into by any Hedging SPE
or, so long as the Borrower has no ongoing payment obligations thereunder, the
Borrower.
(b) The Borrower will not, and will not permit any
Hedging SPE to, enter into any Hedging and Short Sale Transaction with any
Person unless (i) the documentation for such Hedging and Short Sale
Transaction contains a Non-Petition Covenant from such Person and (ii) (x) in
the case of the Borrower, unless such Hedging and Short Sale Transaction is a
Defensive Hedge Transaction or a Hedging and Short Sale Transaction under
which the Borrower has no ongoing payment obligations, such Person is a
Lender, an Affiliate of a Lender or a bank, investment bank or other financial
institution having (a)(1)(A) in the case of Currency Hedging Transaction, a
long term rating of at least "Aa3" by ▇▇▇▇▇'▇ and a short term rating of at
least "P-1" by ▇▇▇▇▇'▇ (and, if rated "Aa3" or "P-1" by ▇▇▇▇▇'▇, then such
rating has not been placed on a credit watch with negative implications by
▇▇▇▇▇'▇) and (B) all other cases, a long term rating of at least "A1" by
▇▇▇▇▇'▇ and a short term rating of at least "P-1" by ▇▇▇▇▇'▇ (and, if rated
"A1" or "P-1" by ▇▇▇▇▇'▇, then such rating has not been placed on a credit
watch with negative implications by ▇▇▇▇▇'▇) or, (2) if no short term rating
is available, (A) in the case of Currency Hedging Transaction, a long term
rating of "Aa2" or better by ▇▇▇▇▇'▇ (and, if rated "Aa2" by ▇▇▇▇▇'▇, such
rating has not been placed on a credit watch with negative implications by
▇▇▇▇▇'▇) and (B) all other cases, a long term rating of "Aa3" or better by
▇▇▇▇▇'▇ (and, if rated "Aa3" by ▇▇▇▇▇'▇, such rating has not been placed on a
credit watch with negative implications by ▇▇▇▇▇'▇) and (b) a long-term rating
of "A+" by S&P and (y) in the case of any Hedging SPE, the documentation for
such Hedging and Short Sale Transaction provides that the counterparty thereto
does not have recourse to the Borrower or the assets of the Borrower for
amounts owing to such counterparty thereunder.
(c) The Borrower will not enter into any Interest
Rate Hedging Transaction if, as a result of entering into such transaction,
the notional amount of all Interest Rate Hedging Transactions would be greater
than the aggregate Market Value of all Eligible Investments.
(d) The Borrower will not permit the aggregate
liabilities of the Hedging SPEs under all Hedging and Short Sale Transactions
(calculated with respect to each such Hedging and Short Sale Transaction net
of the amounts payable to the Hedging SPE by the counterparty under that
Hedging and Short Sale Transaction but without any reduction for any amounts
payable to the Hedging SPE under any other Hedging and Short Sale
Transactions) to exceed 2.0% of the Net Asset Value at any time.
Section 6.2.19 [Reserved]
Section 6.2.20 Limitations on Transactions with Affiliates.
Except as expressly contemplated by the Transaction Documents (including the
Borrower entering into and performing its obligations under the Investment
Management Agreement and the Co-Management Agreement and establishing Hedging
SPEs and Investment Holding Subsidiaries), the Borrower shall not, directly or
indirectly: (i) make an investment in any of its Affiliates; (ii) sell, lease
or otherwise transfer any assets to any of its Affiliates; (iii) purchase or
acquire assets from any of its Affiliates; or (iv) enter into any other
transaction directly or indirectly with or for the benefit of any of its
Affiliates (including, without limitation, guarantees and assumptions of
obligations of any of its Affiliates); provided, that the Borrower may, in
compliance with the Investment Company Act, enter into any such transaction
with any of its Affiliates or for the benefit of any of its Affiliates in the
ordinary course of its business if (x) the monetary or business consideration
arising therefrom are likely to be substantially as advantageous to the
Borrower as the monetary or business consideration with which it could obtain
in a comparable arm's length transaction with a Person not an Affiliate of the
Borrower and (y) written notice of such transaction is provided to the
Administrative Agent and, so long as the Senior Facility Insurance Policy is
in effect, the Insurer. Unless otherwise consented to by the Controlling
Class, the Borrower shall not purchase, directly or indirectly, any securities
issued by Special Value Bond Fund, LLC, Special Value Bond Fund II, LLC,
Special Value Absolute Return Fund, LLC or any other collateralized debt
obligation vehicle managed by the Investment Manager, the Co-Manager or any of
their respective Affiliates.
Section 6.2.21 Limitation on Hedging SPEs' Debt. In addition
to the limitations specified in Section 6.2.18, the Borrower shall not permit
any of the Hedging SPEs to incur any Debt unless the documentation for such
Debt (a) contains a Non-Petition Covenant by the applicable creditor and (b)
provides that such creditor does not have recourse to the Borrower or the
Collateral for amounts owing to such creditor thereunder.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 Events of Default. The term "Event of Default"
shall mean any of the events set forth in this Section 7.1.
Section 7.1.1 Non-Payment of Obligations. Without giving
effect to payments under the Senior Facility Insurance Policy, the Borrower
shall default in (i) the payment when due (whether at stated maturity or by
acceleration, mandatory prepayment or otherwise) of any principal hereunder,
(ii) the payment when due of interest or fees in respect of any Loan and such
default shall continue unremedied for a period of three (3) Business Days or
more and (iii) the payment of any other Obligation and such default shall
continue unremedied for three (3) Business Days or more after the Borrower's
receipt of notice of such default from the Insurer, the Administrative Agent
or any Lender.
Section 7.1.2 Over-Collateralization Test; Limitations on
Hedging and Short Sale Transactions.
(a) The Borrower shall fail to comply with its
obligations under Section 6.1.18.
(b) The Borrower shall fail to comply with its
obligations under Section 6.2.18 and such failure to comply shall continue
unremedied for ten (10) Business Days or more after the earlier of (x) notice
thereof having been given to the Borrower by the Insurer (so long as the
Insurer is the Controlling Class), the Administrative Agent or any Lender or
(y) the first date on which a portfolio manager, senior accounting officer or
controller of the Borrower or the Investment Manager had actual knowledge of
such default.
Section 7.1.3 Non Performance of Other Obligations. The
Borrower shall default in the due performance and observance of any covenant,
obligation, warranty or other agreement contained herein or in any other
Credit Document executed by it, and, if such default does not otherwise
constitute an Event of Default under this Article VII, such default shall
continue unremedied for a period of thirty (30) days (or, in the case of any
violation of Section 18 of the Investment Company Act, or any successor
provision thereto, and any applicable "asset coverage" maintenance
requirements set forth therein, a period of ninety (90) days) or more after
the earlier of (x) notice thereof having been given to the Borrower by the
Insurer (so long as the Insurer is the Controlling Class), the Administrative
Agent or any Lender or (y) the first date on which a portfolio manager, senior
accounting officer or controller of the Borrower or the Investment Manager had
actual knowledge of such default.
Section 7.1.4 Breach of Warranty. Any representation or
warranty of the Borrower hereunder (other than the representation and warranty
relating to any violation of Section 18 of the Investment Company Act, or any
successor provision thereto, and any applicable "asset coverage" maintenance
requirements set forth therein) or of the Borrower in any other Credit
Document or in any certificate delivered pursuant hereto or thereto is or
shall be incorrect in any material respect when made or deemed made.
Section 7.1.5 [Reserved]
Section 7.1.6 Default, Acceleration on Other Debt, etc. An
aggregate principal amount equal to or exceeding 0.80% of the Net Asset Value
of any Debt of the Borrower or any Subsidiary of the Borrower shall become due
and payable (whether at maturity, by acceleration or otherwise) and not be
paid or satisfied in full, or the holder of such Debt shall be entitled to
require the Borrower or any such Subsidiary to repay, repurchase, redeem,
defease or otherwise retire for value such Debt, in whole or in part, prior to
its scheduled payment date (in each case, after giving effect to any grace
periods applicable thereto).
Section 7.1.7 Secured Hedging Transaction Default. The
Borrower shall default in the payment when due (whether at stated maturity or
by acceleration, mandatory prepayment or otherwise) of any amount in excess of
3.0% of the Net Asset Value (after giving effect to any grace periods
applicable thereto) required to be paid by it under any Secured Hedging
Transaction (other than any such amount that is being contested in good faith
by appropriate proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on the Borrower's books), and such default
shall continue unremedied for a period of ten (10) Business Days or more.
Section 7.1.8 Judgments. Any final judgments or orders (not
subject to appeal) by one or more courts of competent jurisdiction for the
payment of money in an aggregate amount in excess of 1.5% of the Net Asset
Value (after giving effect to insurance, if any, available with respect
thereto) shall be rendered against the Borrower, and the same shall remain
unsatisfied, unvacated, unbonded or unstayed for a period of thirty (30) days
after the date on which the right to appeal has expired.
Section 7.1.9 Bankruptcy, Insolvency, etc. The Borrower
shall:
(a) become insolvent or generally fail to pay, or
admit in writing its inability to pay, Debts as they become due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other custodian for the
Borrower or any property of any thereof, or make a general assignment for the
benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower or for a
substantial part of the property of any thereof, and such trustee, receiver,
sequestrator or other custodian shall not be discharged within sixty (60)
days;
(d) permit or suffer to exist the commencement of
any bankruptcy, reorganization, Debt arrangement or other case or proceeding
under any bankruptcy or insolvency law, or any dissolution, winding up or
liquidation proceeding, in respect of the Borrower and, if such case or
proceeding is not commenced by the Borrower, such case or proceeding shall be
consented to or acquiesced in by the Borrower or shall result in the entry of
an order for relief or shall remain for sixty (60) days undismissed; or
(e) take any action authorizing, or in furtherance
of, any of the foregoing.
Section 7.1.10 Failure of Valid, Perfected, First-Priority
Lien. Any Lien on any Collateral granted shall, at any time after delivery of
the respective Collateral Documents, cease to be fully valid and perfected as
a first-priority Lien, except (i) for Permitted Liens, (ii) Liens on Fund
Investments the Market Value of which if excluded from the Collateral would
not cause a violation of the Over-Collateralization Test or the covenant in
Section 6.1.15 (in each case, without giving effect to any applicable grace
period) or (iii) as otherwise expressly permitted hereunder or under such
Collateral Documents.
Section 7.1.11 Investment Company Act. The Borrower ceases
to be a registered "investment company" under the Investment Company Act for
more than ninety (90) days.
Section 7.1.12 Dissolution or Termination of Borrower. The
Borrower shall be dissolved or terminated, and not reconstituted substantially
simultaneously therewith (and in no event later than the same day) in
accordance with the Operating Agreement.
Section 7.1.13 Removal of the Investment Manager. The
Investment Manager is removed or terminated pursuant to the Investment
Management Agreement and the Controlling Class has not approved the new
Investment Manager within thirty (30) days.
Section 7.2 Action if Bankruptcy. If any Event of Default
described in Section 7.1.9 shall occur with respect to the Borrower, then the
outstanding principal amount of all outstanding Loans and all other
Obligations shall automatically be and become immediately due and payable, and
all the Commitments shall be automatically terminated, without further notice,
demand or presentment, all of which are expressly waived.
Section 7.3 Action if Other Event of Default. If any Event
of Default (other than any Event of Default described in Section 7.1.9) shall
occur for any reason, whether voluntary or involuntary, and be continuing, the
Administrative Agent shall, upon the direction of the Controlling Class, by
notice or demand to the Borrower, declare a Commitment Termination Event,
declare the outstanding principal amount of the Loans and all other
Obligations to be due and payable and terminate all Commitments, whereupon the
full unpaid amount of such Loans and any and all other Obligations shall be
and become immediately due and payable, without further notice, demand, or
presentment, all of which are expressly waived.
Section 7.4 Notice of Default. If a Default occurs and is
continuing, the Administrative Agent shall provide to the Insurer (so long as
the Senior Facility Insurance Policy is in effect), the Lenders, ▇▇▇▇▇'▇ and
S&P written notice (or telephonic notice promptly confirmed in writing) of the
uncured Default promptly (and, in any event, within two (2) Business Days)
after the Administrative Agent becomes aware of such Default.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
Section 8.1 Appointment. The Lenders hereby designate CDC
Financial Products Inc. as Administrative Agent to act as specified herein and
in the other Credit Documents. Each Lender hereby irrevocably authorizes, and
each Holder of any Lender Note by the acceptance of such Lender Note or any
assignee or transferee of an interest under this Agreement pursuant to
Sections 3.4.7 or 9.4 shall be deemed irrevocably to authorize, the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement, the other Credit Documents and any other instruments and
agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to
or required of the Administrative Agent by the terms hereof and thereof and
such other powers as are reasonably incidental thereto. The Administrative
Agent may perform any of its duties hereunder or under the other Credit
Documents by or through its respective officers, directors, agents, employees
or affiliates.
Section 8.2 Nature of Duties. The Administrative Agent shall
not have any duties or responsibilities except those expressly set forth in
this Agreement and the Collateral Documents. Neither the Administrative Agent
nor any of its officers, directors, agents, employees or affiliates shall be
liable for any action taken or omitted by it or them hereunder or under any
other Credit Document or in connection herewith or therewith, unless caused by
its or their gross negligence or willful misconduct. The duties of the
Administrative Agent shall be mechanical and administrative in nature; the
Administrative Agent shall not have by reason of this Agreement or any other
Credit Document a fiduciary relationship in respect of any Lender or the
Holder of any Lender Note or Loan or the Insurer; and nothing in this
Agreement or any other Credit Document, expressed or implied, is intended to
or shall be so construed as to impose upon the Administrative Agent any
obligations in respect of this Agreement or any other Credit Document except
as expressly set forth herein or therein.
Section 8.3 Lack of Reliance on the Administrative Agent.
Independently and without reliance upon the Administrative Agent, the Insurer,
each Lender and the Holder of each Lender Note or Loan, to the extent it deems
appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of the Borrower in
connection with the making and the continuance of the Loans and the taking or
not taking of any action in connection herewith and (ii) its own appraisal of
the creditworthiness of the Borrower and, except as expressly provided in this
Agreement, the Administrative Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide the Insurer, any Lender,
or the Holder of any Lender Note or Loan with any credit or other information
with respect thereto, whether coming into its possession before the making of
the Loans or at any time or times thereafter. Neither the Administrative Agent
nor any of its Affiliates, directors, officers, agents, or employees shall be
responsible to or have any duty to ascertain, inquire into or verify for the
Insurer, any Lender, or the Holder of any Lender Note or Loan, any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, priority or sufficiency of this Agreement or any
other Credit Document or the financial condition of the Borrower or be
required to make any inquiry concerning either the performance or observance
of any of the terms, provisions or conditions of this Agreement or any other
Credit Document, or the satisfaction of any of the conditions precedent set
forth in Article IV or the financial condition of the Borrower or the
existence or possible existence of any Default or Event of Default.
Without limiting the generality of the foregoing, the
Administrative Agent shall not be responsible to any of the Lenders or the
Holders of each Lender Note or Loan or the Insurer for any mistake, omission
or error of judgment with respect to the value or valuation, genuineness,
enforceability, existence, perfection or priority of any of the Collateral.
Section 8.4 Certain Rights of the Administrative Agent. If
the Administrative Agent shall request instructions from the Controlling Class
or the Required Lenders, as applicable, with respect to any act or action
(including failure to act) in connection with this Agreement or any other
Credit Document, the Administrative Agent shall be entitled to refrain from
such act or taking such action unless and until the Administrative Agent shall
have received instructions from the Controlling Class, the Required Lenders or
all Lenders, as applicable, and the Administrative Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, none of any Lender, the Holder of any Lender Note or Loan or the
Insurer shall have any right of action whatsoever against the Administrative
Agent as a result of the Administrative Agent acting or refraining from acting
hereunder or under any other Credit Document in accordance with the
instructions of the Controlling Class or the Required Lenders, as applicable.
Section 8.5 Reliance. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other document or telephone
message signed, sent or made by any Person that the Administrative Agent
believed to be the proper Person, and, with respect to all legal matters
pertaining to this Agreement and any other Credit Document and its duties
hereunder and thereunder, upon advice of counsel selected by the
Administrative Agent (which may be counsel for the Borrower).
Section 8.6 Indemnification. To the extent the
Administrative Agent is not reimbursed and indemnified by the Borrower
pursuant to the provisions of Section 9.1 or otherwise, the Lenders shall
reimburse and indemnify the Administrative Agent in proportion to their
respective Voting Percentages as used in determining the Required Lenders, for
and against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, costs, expenses or disbursements of whatsoever
kind or nature which may be imposed on, asserted against or incurred by the
Administrative Agent in performing its respective duties hereunder or under
any other Credit Document, in any way relating to or arising out of this
Agreement or any other Credit Document; provided, that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Administrative Agent's gross negligence or willful
misconduct; provided, further, that any obligation to pay any amount required
to be paid under this Agreement by a Lender that is a CP Conduit, including
under this Section 8.6, shall be limited to the amounts available to the CP
Conduit after paying or making provision for the payment of its commercial
paper notes and shall be further limited to the amounts that such CP Conduit
obtains from its Designated CP Conduit Committed Lender or Liquidity
Providers, as applicable, to make such payment. Each of the other parties
hereto agrees that it will not have a claim under Section 101(5) of the
Bankruptcy Code if and to the extent that any such payment obligation owed to
it by the CP Conduit exceeds the amount available to the CP Conduit to pay
such amount after paying or making provision for the payment of its commercial
paper notes and that this provision shall survive the termination of this
Agreement.
Section 8.7 The Administrative Agent in Its Individual
Capacity. With respect to its obligation to make Loans under this Agreement,
the Administrative Agent shall have the rights and powers specified herein for
a "Lender" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Lenders," "Required
Lenders," "Controlling Class," "Holders of Lender Notes" or any similar terms
shall, unless the context clearly otherwise indicates, include the
Administrative Agent in its individual capacity. The Administrative Agent may
accept deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with the Borrower or any Affiliate as if it
were not performing the duties specified herein, and may accept fees and other
consideration from the Borrower for services in connection with this Agreement
and otherwise without having to account for the same to the Lenders.
Section 8.8 Holders of Lender Notes or Loans. The
Administrative Agent may deem and treat the payee of any Lender Note or Loan
as the owner thereof for all purposes hereof unless and until a written notice
of the assignment, transfer or endorsement thereof, as the case may be, shall
have been filed with the Administrative Agent. Any request, authority or
consent of any Person who, at the time of making such request or giving such
authority or consent, is the Holder of any Lender Note or Loan shall be
conclusive and binding on any subsequent holder, transferee, assignee or
indorsee, as the case may be, of such Lender Note or Loan or of any Lender
Note or Lender Notes issued in exchange therefor.
Section 8.9 Resignation by the Administrative Agent.
(a) The Administrative Agent may resign from the
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving thirty (30) Business Days' prior
written notice to the Borrower, the Insurer (so long as the Senior Facility
Insurance Policy is in effect), ▇▇▇▇▇'▇, S&P and the Lenders. Such resignation
shall take effect upon the appointment of a successor Administrative Agent
pursuant to Section 8.9(b) and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the
Required Lenders shall appoint a successor Administrative Agent hereunder or
thereunder (with notice of such appointment provided to the Insurer (so long
as the Senior Facility Insurance Policy is in effect), ▇▇▇▇▇'▇ and S&P), who
shall be a commercial bank, investment bank, financial institution or trust
company that is, unless an Event of Default has occurred and is continuing,
reasonably acceptable to the Borrower.
(c) If a successor Administrative Agent shall not
have been so appointed within such thirty (30) Business Day period, the
Administrative Agent, with (unless an Event of Default has occurred and is
continuing) the consent of the Borrower (which consent shall not be
unreasonably withheld), shall then appoint a successor Administrative Agent
who shall serve as Administrative Agent hereunder or thereunder until such
time, if any, as the Required Lenders appoint a successor Administrative Agent
as provided above.
(d) If no successor Administrative Agent has been
appointed pursuant to Section 8.9(b) or (c) above by the thirtieth (30th)
Business Day after the date such notice of resignation was given by the
Administrative Agent, the Administrative Agent's resignation shall become
effective and the Controlling Class shall thereafter perform all the duties of
the Administrative Agent hereunder and/or under any other Credit Document
until such time, if any, as the Controlling Class appoint a successor
Administrative Agent as provided above.
Section 8.10 Consultation with Experts. The Administrative
Agent may consult with legal counsel (who may be counsel for the Borrower),
independent public accountants and other experts, in each case of nationally
recognized standing, selected by it and shall not be liable for any action
taken or omitted to be taken by it in good faith in accordance with the advice
of such counsel, accountants or experts and this Agreement.
Section 8.11 Administrative Agent's Fees. The Borrower shall
pay to the Administrative Agent for the Administrative Agent's own account
fees for its services (or those of its Affiliates) in arranging and/or
administering this Agreement in the amounts and at the times heretofore
mutually agreed by the Borrower and the Administrative Agent.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Payment of Expenses, etc. The Borrower agrees
to: (i) whether or not the transactions herein contemplated are consummated,
pay all reasonable out-of-pocket costs and expenses (A) of the Insurer, the
Administrative Agent and the Arranger in connection with the negotiation,
preparation, execution and delivery of the Credit Documents and the documents
and instruments referred to therein and any amendment, waiver or consent
relating thereto (including the reasonable fees and disbursements of Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP) and (B) of the Insurer, the Administrative
Agent and the Arranger and each of the Lenders (and, in the case of a Lender
that is a Designated CP Conduit, its Designated CP Conduit Committed Lenders
and, in each case of a Lender that is an Other CP Conduit, its Liquidity
Providers) in connection with any Default under or the enforcement of the
Credit Documents and the documents and instruments referred to therein
(including the reasonable fees and disbursements of (1) one counsel for the
Insurer (which counsel shall be selected by the Insurer) and one counsel for
the Administrative Agent and the Arranger (which counsel shall be selected by
the Administrative Agent) and (2) upon prior written notice to the Borrower,
one counsel for all of the other Lenders); (ii) pay and hold each of the
Lenders (and, in the case of a Lender that is a Designated CP Conduit, its
Designated CP Conduit Committed Lenders and, in each case of a Lender that is
an Other CP Conduit, its Liquidity Providers) and the Administrative Agent
harmless from and against any and all present and future stamp and other
similar taxes with respect to the foregoing matters and hold each of the
Lenders harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
such Lender) to pay such taxes; and (iii) indemnify the Insurer, each Lender
and the Administrative Agent, their respective officers, directors, employees,
representatives and agents (and, in the case of a Lender that is a Designated
CP Conduit, its Designated CP Conduit Committed Lenders and, in each case of a
Lender that is an Other CP Conduit, its Liquidity Providers) from and hold
each of them harmless against any and all losses, liabilities, obligations,
penalties, actions, judgments, claims, damages, costs or expenses incurred by
any of them as a result of, or arising out of, or in any way related to, or by
reason of, (a) any investigation, litigation or other proceeding (whether or
not any Lender (or, in the case of a Lender that is a Designated CP Conduit,
its Designated CP Conduit Committed Lenders and, in each case of a Lender that
is an Other CP Conduit , its Liquidity Providers) or the Insurer is a party
thereto) related to the entering into and/or performance by the Borrower of
any Credit Document or the use by the Borrower of the proceeds of any Loans
hereunder or the consummation of any transactions contemplated in any Credit
Document or Loan Purchase Agreement, including the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified), (b) the
actual or alleged presence of Hazardous Materials in the air, surface water,
groundwater, surface or subsurface of any real property owned or at any time
operated by the Borrower, the generation, storage, transportation or disposal
of Hazardous Materials at any location whether or not owned or operated by the
Borrower, the noncompliance of any real property owned or at any time operated
by the Borrower with Federal, state and local laws, regulations, and
ordinances (including applicable permits hereunder) applicable to any such
real property, or any Environmental Claim asserted against the Borrower, or
any such real property, including, in each case, the reasonable disbursements
of counsel and other consultants incurred in connection with any such
investigation, litigation or other proceeding (but excluding in all cases any
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified) or (c) amounts payable by the Lenders pursuant to Section 8.6. To
the extent that the undertaking to indemnify, pay or hold harmless the
Insurer, the Administrative Agent, the Arranger or any Lender (or, in the case
of a Lender that is a Designated CP Conduit, its Designated CP Conduit
Committed Lenders and, in each case of a Lender that is an Other CP Conduit ,
its Liquidity Providers) set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, the Borrower shall
make the maximum contribution to the payment and satisfaction of each of the
indemnified liabilities which is permissible under applicable law. Neither the
Borrower nor any indemnified Person shall be liable for any indirect or
consequential damages in connection with its activities related to this
Agreement or any other Credit Documents. The agreements in this Section 9.1
shall survive repayment of the Loans and all other amounts payable hereunder.
Section 9.2 Right of Setoff. In addition to any rights now
or hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, if an Event of Default then exists, each Lender
is hereby authorized at any time or from time to time, without presentment,
demand, protest or other notice of any kind to the Borrower or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and apply any and all deposits (general or special) and any other
Debt at any time held or owing by such Lender (including by branches and
agencies of such Lender wherever located) to or for the credit or the account
of the Borrower against and on account of the Obligations and liabilities of
the Borrower to such Lender under this Agreement or under any of the other
Credit Documents, including all interests in Obligations of the Borrower
purchased by such Lender pursuant to Section 9.6(b), and all other claims of
any nature or description arising out of or connected with this Agreement or
any other Credit Document, irrespective of whether or not such Lender shall
have made any demand hereunder and although said Obligations, liabilities or
claims, or any of them, shall be contingent or unmatured.
Section 9.3 Notices.
(a) Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in
writing (including telecopier or cable communication) and mailed, telecopied,
cabled or delivered, if to the Borrower, ▇▇▇▇▇'▇, S&P, the Insurer, the
Administrative Agent, and/or any Lender, at its address specified on Schedule
2 hereto (provided, that any notice provided for hereunder to a Person that is
not in the United States shall be by facsimile transmission if such Person has
provided current facsimile contact information) or, in the case of any Lender
becoming party hereto after the Closing Date, the related Assignment
Agreement; or, at such other address as shall be designated by any party in a
written notice to the other parties hereto. Any such notice or communication
shall be deemed to have been given or made as of: the date so delivered, if
delivered personally or by overnight courier; when receipt is acknowledged, if
telecopied; and five (5) calendar days after mailing if sent by registered or
certified mail (except that a notice of change of address shall not be deemed
to have been given until actually received by the addressee). The Borrower and
the Administrative Agent hereby acknowledge that each CP Conduit has appointed
a Funding Agent to act as its agent under this Agreement and, if applicable,
the Loan Purchase Agreement or the Liquidity Agreement to which it is a party.
Unless otherwise instructed by a CP Conduit, copies of all notices, requests,
demands and other documents to be delivered to such CP Conduit pursuant to the
terms hereof shall be delivered to the Funding Agent with respect to such CP
Conduit at such address as has been notified in writing by such CP Conduit to
the Borrower and the Administrative Agent.
(b) Without in any way limiting the obligation of
the Borrower to confirm in writing any telephonic notice permitted to be given
hereunder, the Administrative Agent may, prior to receipt of written
confirmation, act without liability upon the basis of such telephonic notice
believed by the Administrative Agent in good faith to be from the Borrower
and/or the Investment Manager (including an Authorized Officer thereof). In
each such case, the Borrower hereby waives the right to dispute the
Administrative Agent's record of the terms of such telephonic notice absent
manifest error.
Section 9.4 Benefit of Agreement.
(a) This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and the respective
successors and assigns of the parties hereto to the extent permitted under
this Section 9.4 and (to the extent explicitly set forth herein) the Liquidity
Providers for each Lender that is an Other CP Conduit and Designated CP
Conduit Committed Lenders for each Lender that is a Designated CP Conduit;
provided, that, except as provided in Section 6.2.7, the Borrower may not
assign or transfer any of its rights or obligations hereunder without the
prior written consent of the Insurer (so long as the Insurer is the
Controlling Class), each Lender, the Administrative Agent and the Arranger.
Each Lender may at any time grant participations in any of its rights
hereunder or under any of the Lender Notes or Loans to another financial
institution or other Person (including any CP Conduit); provided, that (x)
unless such grant is to a Lender or a special purpose corporation administered
by a Lender, such Lender shall give notice to the Borrower of the identity of
such participant and (y) in the case of any such participation (other than a
participation to a Designated CP Conduit Committed Lender), the participant
shall not have any rights under this Agreement or any of the other Credit
Documents (the participant's rights against such Lender in respect of such
participation to be those set forth in the agreement executed by such Lender
in favor of the participant relating thereto) and all amounts payable by the
Borrower hereunder shall be determined as if such Lender had not sold such
participation, except that the participant shall be entitled to the benefits
of Sections 3.4.4 and 3.6 to the extent that such Lender would be entitled to
such benefits if the participation had not been entered into or sold; and
provided, further, no Lender shall transfer, grant or assign any participation
(other than to a Lender or a special purpose corporation administered by a
Lender) under which the participant shall have rights to approve any amendment
to or waiver of this Agreement or any other Credit Documents except to the
extent such amendment or waiver would (x) extend the final scheduled maturity
of any Loan or Lender Note in which such participant is participating or waive
any mandatory prepayment thereof, or reduce the rate or extend the time of
payment of interest or fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant's participating
interest in any Commitment over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or a mandatory
prepayment, shall not constitute a change in the terms of any Commitment), (y)
release all or substantially all of the Collateral (in each case except as
expressly provided in the Credit Documents), or (z) consent to the assignment
or transfer by the Borrower of any of its rights and obligations under this
Agreement (except as provided in Section 6.2.7).
(b) Notwithstanding the foregoing, with the consent
of the Administrative Agent and, so long as no payment Default or Event of
Default is then in existence, the consent of the Borrower (which consents
shall not be unreasonably withheld or delayed), any Lender may assign all or a
portion of its rights and obligations under this Agreement (including, such
Lender's Commitment, Loans, Lender Note and other Obligations) to one or more
commercial banks, savings and loan associations, insurance companies,
investment companies, business development companies, other financial
institutions or other corporations, business trusts, partnerships or funds not
formed for the specific purpose of acquiring the Loans (including one or more
Lenders); provided that, (i) in the event of an assignment by a Designated CP
Conduit to its Designated CP Conduit Committed Lender or by an Other CP
Conduit to its Liquidity Provider, no such consents shall be required provided
that such Designated CP Conduit Committed Lender or such Liquidity Provider
shall be an Approved Lender, and (ii) in the event of an assignment by any
Lender to a CP Conduit, such CP Conduit shall be an Approved Lender. No
assignment pursuant to the immediately preceding sentence shall be in an
aggregate amount less than (unless the entire Commitment and outstanding Loans
of the assigning Lender is so assigned) (x) if to (I) an Affiliate of such
Lender or (II) another Lender (or, in the case of a Lender that is a
Designated CP Conduit, its Designated CP Conduit Committed Lenders or, in the
case of a Lender that is an Other CP Conduit, its Liquidity Provider),
$1,000,000 or (y) if to an institution other than (I) an Affiliate of such
Lender or (II) another Lender, $10,000,000. If any Lender so sells or assigns
all or a part of its rights hereunder or under the Lender Notes or Loans, any
reference in this Agreement or the Lender Notes or Loans to such assigning
Lender shall thereafter refer to such Lender and to the respective assignee to
the extent of their respective interests and the respective assignee shall
have, to the extent of such assignment (unless otherwise provided therein),
the same rights and benefits as it would if it were such assigning Lender.
Each assignment pursuant to this Section 9.4(b) shall be effected (other than
in the case of an assignment by a Lender that is a Designated CP Conduit to
its Designated CP Conduit Committed Lenders or in the case of an assignment by
a Lender that is an Other CP Conduit to its Liquidity Providers) by the
assigning Lender and the assignee Lender executing an Assignment Agreement
(the "Assignment Agreement") substantially in the form of Exhibit D
(appropriately completed); provided, that in the case of any assignment to a
CP Conduit that is not already a Lender, the effectiveness of such assignment
shall be conditioned upon the execution and delivery of either (I) in the case
of an Other CP Conduit, a Liquidity Agreement supporting such Other CP Conduit
or (II) in the case of a Designated CP Conduit, a Loan Purchase Agreement or a
similar agreement pursuant to which the counterparty thereof will be obligated
to purchase such Designated CP Conduit's rights and obligations under this
Agreement in accordance with the terms therein. In the event of (and at the
time of) any such assignment, either the assigning Lender or the assignee
Lender shall pay to the Administrative Agent a nonrefundable assignment fee of
$3,500 (other than (i) in the case of an assignment by a Lender that is a
Designated CP Conduit to its Designated CP Conduit Committed Lenders or in the
case of an assignment by a Lender that is an Other CP Conduit to its Liquidity
Providers and (ii) in the case of an assignment to an Affiliate of a Lender),
and at the time of any assignment pursuant to this Section 9.4(b), (i) this
Agreement shall be deemed to be amended to reflect the Commitment of the
respective assignee (which shall result in a direct reduction to the
Commitment of the assigning Lender) and of the other Lenders, and (ii) the
Borrower shall, upon request, issue new Lender Notes to the respective
assignee and to the assigning Lender in conformity with the requirements of
Sections 3.2 and 9.16 and the Administrative Agent shall reflect such
assignment in the Register. No transfer or assignment under this Section
9.4(b) (other than in the case of an assignment by a Lender that is a
Designated CP Conduit to its Designated CP Conduit Committed Lenders or an
assignment by a Lender that is an Other CP Conduit to its Liquidity Providers)
shall be effective until recorded by the Administrative Agent on the Register
pursuant to Section 9.16. To the extent of any assignment pursuant to this
Section 9.4(b), the assigning Lender shall be relieved of its obligations
hereunder with respect to its assigned Commitments. At the time of each
assignment pursuant to this Section 9.4(b) to a Person which is not already a
Lender hereunder and which is not a United States person (as defined above)
for Federal income tax purposes, the respective assignee Lender shall provide
to the Borrower and the Administrative Agent the appropriate Internal Revenue
Service Forms (and, if applicable, a Tax Certificate) described in Section
3.6. To the extent that an assignment of all or any portion of a Lender's
Commitments and related outstanding Obligations pursuant to Section 3.4.7 or
this Section 9.4(b) (other than an assignment by a Designated CP Conduit to
its Designated CP Conduit Committed Lender) would, at the time of such
assignment, result in increased costs under Sections 3.4.4, 3.4.5 or 3.6 which
exceed those being charged, if any, by the respective assigning Lender prior
to such assignment, then the Borrower shall not be obligated to pay such
excess increased costs (although the Borrower shall be obligated to pay any
other increased costs of the type described above resulting from changes
giving rise to such increased costs after the date of the respective
assignment). Each Lender and the Borrower agree to execute such documents
(including amendments to this Agreement and the other Credit Documents) as
shall be reasonably necessary to effect the foregoing. Nothing in this
Agreement shall prevent or prohibit any Lender from pledging its Lender Notes
or Loans to a Federal Reserve Bank in support of borrowings made by such
Lender from such Federal Reserve Bank.
(c) Notwithstanding any other provisions of this
Section 9.4, any transfer or assignment of the interests or obligations of any
Lender hereunder (other than any assignment by a Withdrawing Lender pursuant
to Section 2.3.4) or any grant of participation therein shall not be permitted
and be absolutely null and void and shall vest no rights in the purported
transferee, assignee or participant (such purported transferee, assignee or
participant, a "Disqualified Transferee"), if such transfer, assignment or
grant (i) is consummated or attempted to be consummated in compliance with the
provisions of this Section 9.4 on the basis of incorrect or false
certifications by the purported transferee, assignee or participant or (ii)
would require the Borrower to (x) file a registration statement with the
Securities and Exchange Commission or (y) qualify the Loans under the "Blue
Sky" laws of any State. If any Disqualified Transferee shall become a Lender
or participant in violation of the provisions of this Section 9.4, then, upon
the discovery by or due notification of the Administrative Agent that such
transfer, assignment or participation was not in fact permitted by this
Section 9.4, the last preceding Lender (that owned the interest purported to
be owned by such Disqualified Transferee) that would not be a Disqualified
Transferee shall be restored to all rights in such interest retroactively to
the date of registration of transfer, assignment or participation. Any action
or non-action of a Disqualified Transferee taken while such Disqualified
Transferee was the holder of such interest shall be without effect hereunder,
but shall be deemed ratified by the such last preceding Lender unless such
last preceding Lender objects, by a superseding notice to the Administrative
Agent delivered within five (5) Business Days of the later of (x) it being
restored to its rights in such interest as described in the preceding sentence
or (y) its receipt of notice of such action or non-action by the Disqualified
Transferee. The Administrative Agent shall be under no liability for any
transfer, assignment or participation that is not in fact permitted by this
Section 9.4 or for making any payments in respect of the interest the subject
thereof or taking any other action with respect to such transfer, assignment
or participation, unless the Administrative Agent had actual knowledge of the
inaccuracy or insufficiency of any certification or representation upon which
such transfer, assignment or participation was based. The Administrative Agent
shall be entitled to recover from any Disqualified Transferee all payments
made to it in respect of the interest in the obligations it acquired. Any such
payments so recovered by the Administrative Agent shall be paid and delivered
by the Administrative Agent to the last preceding Lender that would not be a
Disqualified Transferee as aforesaid. Without limiting the foregoing, any
Lender that made a purported transfer, assignment or participation to a
Disqualified Transferee shall be required to cause the retransfer of such of
the interest so transferred within three (3) Business Days after first
becoming aware of such transfer, assignment or participation was to a
Disqualified Transferee.
(d) Each Lender initially party to this Agreement
hereby represents, and each Person that becomes a Lender pursuant to an
assignment permitted by this Section 9.4 shall, upon its becoming party to
this Agreement, represent that it is an Eligible Transferee (and, in the case
of a CP Conduit, it is also an Eligible Transferee) which makes loans in the
ordinary course of its business and that it shall make or acquire Loans for
its own account in the ordinary course of such business; provided, that
subject to the preceding Sections 9.4(a), (b) and (c), the disposition of any
promissory notes or other evidences of or interests in Debt under this
Agreement held by such Lender shall at all times be within its exclusive
control.
(e) Each of the parties hereto acknowledges that
each Lender which is a Designated CP Conduit may from time to time grant, or
agree to grant, an assignment of its interests in its Loans, this Agreement
and all of the other Transaction Documents, by way of collateral assignment or
conveyance, to its respective Designated CP Conduit Committed Lenders, subject
to the applicable requirements of this Section 9.4.
(f) Each of the parties hereto acknowledges that
each Lender which is an Other CP Conduit and each SPC may from time to time
grant, or agree to grant, an assignment of its interests in its Loans, this
Agreement and all of the other Transaction Documents, by way of collateral
assignment or conveyance, to its respective Liquidity Providers, subject to
the requirement that any assignee thereof must be an Approved Lender.
(g) Each Designated CP Conduit hereby agrees that
in the event such Designated CP Conduit or its Designated CP Conduit Committed
Lender shall cease to be an Approved Lender, it will transfer pursuant to
Section 9.4(b) all of its rights and obligations under this Agreement (and the
applicable Loan Purchase Agreement) to an Approved Lender (which is also an
Eligible Transferee) within 60 days after the date on which it first obtains
knowledge that such Designated CP Conduit or its Designated CP Conduit
Committed Lender, as the case may be, is not an Approved Lender, provided that
no Designated CP Conduit or Designated CP Conduit Committed Lender shall be
required to so transfer its rights and obligations unless its corresponding
Designated CP Conduit Committed Lender or Designated CP Conduit is permitted
to transfer simultaneously its rights and obligations hereunder. (h) Each
Other CP Conduit hereby agrees that in the event such Other CP Conduit shall
cease to be an Approved Lender, it will transfer pursuant to Section 9.4(b)
all of its rights and obligations under this Agreement to an Approved Lender
(which is also an Eligible Transferee) within 60 days after the date on which
it first obtains knowledge that such Other CP Conduits is not an Approved
Lender.
Section 9.5 No Waiver; Remedies Cumulative. No failure or
delay on the part of the Insurer, the Administrative Agent or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower and the Insurer, the
Administrative Agent or any Lender shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege
hereunder or under any other Credit Document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Insurer, the
Administrative Agent or any Lender would otherwise have. No notice to or
demand on the Borrower in any case shall entitle the Borrower or any other
Person to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Insurer, the
Administrative Agent or the Lenders to any other or further action in any
circumstances without notice or demand.
Section 9.6 Payments Pro Rata.
(a) The Administrative Agent agrees that promptly
after its receipt of each payment from or on behalf of the Borrower in respect
of any Obligations hereunder, it shall distribute such payment to the Lenders
(other than (x) any Lender that has expressly waived its right to receive its
pro rata share thereof or (y) solely with respect to payments to be made to
withdrawing Lenders, any Lender that has agreed to the extension contemplated
by Section 2.3) pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
(b) Each of the Lenders agrees that, if it should
receive any amount hereunder (whether by voluntary payment, by realization
upon security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the Credit
Documents, or otherwise) which is applicable to the payment of the principal
of, or interest on, the Loans or fees, of a sum which with respect to the
related sum or sums received by other Lenders is in a greater proportion than
the total of such Obligation then owed and due to such Lender bears to the
total of such Obligation then owed and due to all of the Lenders immediately
prior to such receipt, then such Lender receiving such excess payment shall
purchase for cash without recourse or warranty from the other Lenders an
interest in the Obligations to such other Lenders in such amount as shall
result in a proportional participation by all of the Lenders in such
disproportionate sum received; provided, that if all or any portion of such
excess amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
(c) Notwithstanding anything to the contrary
contained herein, the provisions of the preceding Sections 9.6(a) and (b)
shall be subject to the express provisions of this Agreement which require, or
permit, differing payments to be made to Non-Defaulting Lenders as opposed to
Defaulting Lenders.
Section 9.7 Calculations; Computations.
(a) The financial statements to be furnished to the
Insurer and the Lenders pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Insurer and the Lenders).
(b) All computations of interest hereunder shall be
made on the actual number of days elapsed over a year of 360 days (except, in
the case of Base Rate Loans and Swingline Loans with a Base Rate, 365/366
days).
Section 9.8 Governing Law; Submission to Jurisdiction;
Venue; Waiver of Jury Trial.
(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL
BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR
OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO IRREVOCABLY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES HERETO HEREBY
FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK JURISDICTION
OVER IT, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF
THE AFORESAID COURTS, THAT ANY SUCH COURT LACKS JURISDICTION OVER IT. EACH OF
THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, OR
BY HAND DELIVERY, AT ITS ADDRESS FOR NOTICES PURSUANT TO SECTION 9.3, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR
PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SERVICE
OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT
THE RIGHT OF ANY PARTY HERETO OR ANY LENDER TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE BORROWER IN ANY OTHER JURISDICTION.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS
REFERRED TO IN SECTION 9.8(a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
(d) This Section 9.8 shall survive the termination
of this Agreement and the payment of all obligations.
Section 9.9 Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall be
lodged with the Borrower, the Insurer and the Administrative Agent.
Section 9.10 Effectiveness. This Agreement shall become
effective on the Closing Date provided that the Borrower, the Insurer and each
of the Lenders shall have signed a copy hereof (whether the same or different
copies) and shall have delivered the same to the Administrative Agent or, in
the case of the Lenders, shall have given to the Administrative Agent
telephonic (confirmed in writing), or facsimile transmission notice (actually
received) at such office that the same has been signed and mailed to it.
Section 9.11 Headings Descriptive. The headings of the
several sections and subsections of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or construction
of any provision of this Agreement.
Section 9.12 Amendment or Waiver.
(a) Neither this Agreement, any other Credit
Document or the Senior Facility Insurance Policy nor any terms hereof or
thereof may be changed, waived, discharged or terminated unless such change,
waiver, discharge or termination is in writing signed by the Borrower, the
Insurer (so long as the Insurer is the Controlling Class) and, without
duplication in the case of Designated CP Conduits and their respective
Designated CP Conduit Committed Lenders, Lenders having, in the aggregate, a
Voting Percentage of more than 50% of the total Voting Percentages of all the
Lenders and unless the Rating Agency Condition is met; provided, that no such
change, waiver, discharge or termination shall, without the consent of each
Lender (other than a Defaulting Lender) (with Obligations being directly
affected thereby in the case of the following clause (i)), (i) extend any time
fixed for the payment of any principal of the Loans (other than as provided in
Section 2.3), or reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any post-default
increase in interest rates) or fees thereon, or reduce the principal amount
thereof, or change the currency of payment thereof, (ii) release all or a
substantial portion of the Collateral (in each case except as expressly
provided in the Credit Documents), (iii) amend, modify or waive any provision
of Section 9.6 or this Section 9.12(a), (iv) reduce the percentage specified
in the definition of Required Lenders (it being understood that, with the
consent of the Required Lenders, additional extensions of credit pursuant to
this Agreement may be included in the determination of the Required Lenders on
substantially the same basis as the extensions of Commitments are included on
the Closing Date), (v) consent to the assignment or transfer by the Borrower
of any of its rights and obligations under this Agreement (except as permitted
by Section 6.2.7), (vi) waive any mandatory prepayment of Loans required
pursuant to Section 3.3.1(b), (vii) amend, modify or waive any provision of
Section 9.20 or (viii) terminate or release the Senior Facility Insurance
Policy; provided, further, that no such change, waiver, discharge or
termination shall (x) increase the Commitments or (except as permitted
hereunder) change the ratable share of the Commitments of any Lender over the
amount thereof then in effect without the consent of such Lender (it being
understood that waivers or modifications (otherwise permitted hereunder) of
conditions precedent, covenants, Defaults or Events of Default shall not
constitute an increase of the Commitment of any Lender, and that an increase
in the available portion of any Commitment of any Lender shall not constitute
an increase in the Commitment of such Lender), (y) without the consent of the
Swingline Lender, amend, modify or waive any provision of this Agreement which
relates to the rights or obligations of the Swingline Lender in its capacity
as Swingline Lender or (z) without the consent of the Administrative Agent
amend, modify or waive any provision of Article VIII as same applies to the
Administrative Agent, or any other provision as same relates to the rights or
obligations of the Administrative Agent. In addition, any proposed change,
waiver, discharge or termination of any provisions of this Agreement or any
other Credit Document that would materially adversely affect any CP Conduit
shall, to the extent the program documents of such CP Conduit so require (as
notified to the Borrower and the Administrative Agent by such CP Conduit), be
subject to rating confirmation of such CP Conduit's commercial paper notes by
each of Fitch, ▇▇▇▇▇'▇ and S&P to the extent it is then rating such commercial
paper notes; provided, that to the extent any such rating confirmation that is
so required is not obtained, such CP Conduit shall be deemed to be a
non-consenting Lender for purposes of Section 9.12(b) and (c). Any such waiver
and any such amendment, supplement or modification shall apply equally to each
of the Lenders and shall be binding upon the Borrower, the Insurer, the
Lenders, the Administrative Agent and all future holders of the Loans and the
Lender Notes. In the case of any waiver, the Borrower, the Insurer, the
Lenders and the Administrative Agent shall be restored to their former
position and rights hereunder and under the other Credit Documents, and any
Default waived shall be deemed to be cured and not continuing, to the extent
so provided herein; but no such waiver shall extend to any subsequent or other
Default, or impair any right consequent thereon.
(b) If, in connection with any proposed change,
waiver, discharge or termination to any of the provisions of this Agreement or
the Lender Notes as contemplated by clauses (i) through (vi), inclusive, of
the first proviso of Section 9.12, the consent of the Required Lenders is
obtained but the consent of one or more of the other Lenders whose consent is
required is not obtained, then the Borrower shall have the right, subject to
clause (d) below, to replace each such non-consenting Lender or Lenders (so
long as all non-consenting Lenders are so replaced) with one or more
Replacement Lenders pursuant to Section 3.4.7 so long as at the time of such
replacement, each such Replacement Lender consents to the proposed change,
waiver, discharge or termination; provided, that the Borrower shall not have
the right to replace a Lender solely as a result of the exercise of such
Lender's rights (and the withholding of any required consent by such Lender)
pursuant to the second or third proviso of Section 9.12(a).
(c) If, in connection with any proposed amendment,
modification, termination or waiver to any of the provisions of this Agreement
or the Lender Notes as contemplated by clauses (i) through (vi), inclusive, of
the first proviso of Section 9.12(a), the consent of the Required Lenders is
obtained but the consent of one or more of such other Lenders whose consent is
required is not obtained, then the Borrower shall have the right to terminate
such non-consenting Lender's Commitment and repay in full its outstanding
Loans and satisfy all other Obligations to such non-consenting Lender;
provided, that the Borrower shall not have the right to terminate such
non-consenting Lender's Commitment and repay in full its outstanding Loans
pursuant to this Section 9.12(c) if, immediately after the termination of such
Lender's Commitment, the Loans of all Lenders would exceed the Total Maximum
Commitment. Any reduction in Commitments made pursuant to this Section 9.12(c)
shall permanently reduce the amount resulting from each calculation of Total
Maximum Commitment thereafter.
Section 9.13 Survival. All indemnities set forth herein
including in Sections 3.4.4, 3.4.5, 3.6, 8.6 and 9.1 shall survive the
termination of this Agreement and the making and repayment of the Loans.
Section 9.14 Domicile of Loans. Subject to the limitations
of Section 9.4, each Lender may transfer and carry its Loans at, to or for the
account of any branch office, Subsidiary or Affiliate of such Lender;
provided, that the Borrower shall not be responsible for costs arising under
Sections 3.4.4 and 3.6 resulting from any such transfer (other than a transfer
pursuant to Section 3.4.6) to the extent not otherwise applicable to such
Lender prior to such transfer.
Section 9.15 Confidentiality. Subject to Section 9.4, each
Lender shall (and shall cause its employees, directors, agents, attorneys,
accountants and other professional advisors to) hold all non-public
information obtained pursuant to the requirements of this Agreement, in
accordance with its customary procedure for handling confidential information
of this nature and in accordance with safe and sound banking practices, and in
any event may make disclosure (i) reasonably required by any bona fide actual
or potential transferee or participant in connection with this contemplated
transfer of any Loans or participation therein or an Affiliate, Designated CP
Conduit Committed Lender or Liquidity Provider of such Lender (including
attorneys, legal advisors, accountants and consultants of such Lender,
Affiliate, Liquidity Provider or Designated CP Conduit Committed Lender or any
rating agency then rating the commercial paper notes of such Lender if it is a
CP Conduit) (so long as such transferee, participant or Affiliate, Liquidity
Provider or Designated CP Conduit Committed Lender agrees to be bound by the
provisions of this Section 9.15), (ii) to such Lender's employees who have a
need to know such information, directors, agents, attorneys, accountants and
other professional advisors; provided that the confidential information shall
be used solely for the purpose of administrating this Agreement, and such
confidential information shall be used in compliance with the legal and
internal control requirements of such Lender, (iii) which has been publicly
disclosed other than in breach of this Agreement, (iv) as required or
requested by any governmental agency or representative thereof, (v) pursuant
to legal process, or (vi) in connection with the exercise of any remedy
hereunder; provided, that, in no event shall any Lender, any Affiliate thereof
or any Liquidity Provider be obligated or required to return any materials
furnished by the Borrower. A Person that ceases to be a Lender shall continue
to abide by the provisions of this Section 9.15.
Section 9.16 Register. The Borrower hereby designates the
Administrative Agent to serve as the Borrower's agent, solely for purposes of
this Section 9.16, to maintain a register (the "Register") on which it shall
record the Commitments from time to time of each of the Lenders, the Loans
made by each of the Lenders and each repayment in respect of the principal
amount of the Loans of each Lender. A Lender may also request that its Voting
Percentage be divided on a pro rata basis into two (or more) portions by
written notice delivered to the Administrative Agent, in which case the
Administrative Agent shall record the respective portions of such Lender's
Voting Percentage in the Register; provided, however, that in the event that a
Lender votes any portion of its Voting Percentage against any proposal
requiring the Lenders' consent hereunder, the Borrower shall be entitled to
treat such Lender as a non-consenting Lender for all purposes hereunder,
including Section 9.12 hereof, for so long as any portion of such Lender's
Voting Percentage remains in opposition to such proposal. Failure to make any
such recordation, or any error in such recordation, shall not affect the
Borrower's obligations in respect of such Loans. With respect to any Lender,
the transfer of the Commitments of such Lender and the rights to the principal
of, and interest on, any Loan made pursuant to such Commitments (other than in
the case of any transfer by a Lender that is a CP Conduit to its CP Conduit
Committed Lenders or Liquidity Provider) shall not be effective until such
transfer is recorded on the Register maintained by the Administrative Agent
with respect to ownership of such Commitments and Loans and prior to such
recordation all amounts owing to the transferor with respect to such
Commitments and Loans shall remain owing to the transferor. The registration
of assignment or transfer of all or part of any Commitments and Loans (other
than in the case of any transfer by a Lender that is a CP Conduit to its CP
Conduit Committed Lenders or Liquidity Provider) shall be recorded by the
Administrative Agent on the Register only upon the receipt and acceptance by
the Administrative Agent of (i) a properly executed and delivered Assignment
Agreement pursuant to Section 9.4(b) and (ii) the assigning or transferor
Lender's Lender Notes (if any) whereupon one or more new Lender Notes (upon
request) in the same aggregate principal amount shall be issued to the
assigning or transferor Lender and/or the new Lender and the old Lender Notes
shall be returned to the Borrower marked "canceled". Subject to the third
sentence of this Section 9.16, the entries in the Register shall be conclusive
in the absence of manifest error and the Borrower, the Insurer, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower, the Insurer (so long as the Senior Facility
Insurance Policy is in effect) and any Lender, at any reasonable time and from
time to time upon reasonable prior notice.
Section 9.17 Lender Affiliate Securities.
(a) The Administrative Agent may from time to time
give notice to the Borrower listing by name each person who is an affiliate of
any Lender for purposes of Section 23A.
(b) The Borrower agrees that it shall not transfer
any Affiliate Security as Collateral pursuant to the Pledge and Intercreditor
Agreement. Promptly following the time it shall have learned that an Affiliate
Security that should not have been transferred in accordance with the first
sentence of this Section 9.17(b) has been transferred, the Borrower shall
cause the Custodian to transfer such Affiliate Security to an account
established by the Borrower pursuant to the Custodial Agreement that does not
hold Collateral. Nothing in this Section 9.17(b) or in this Agreement shall be
construed to designate as an Excluded Investment ineligible as Collateral
under the Pledge and Intercreditor Agreement any investment that was not an
Affiliate Security at the time it was delivered to the Administrative Agent
pursuant to the Pledge and Intercreditor Agreement.
Section 9.18 Marshalling; Recapture. None of the
Administrative Agent, the Insurer or any Lender shall be under any obligation
to marshal any assets in favor of the Borrower or any other party or against
or in payment of any or all of the Obligations. To the extent any Lender
receives any payment by or on behalf of the Borrower, which payment or any
part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to the Borrower or its
estate, trustee, receiver, custodian or any other party under any bankruptcy
law, state or Federal law, common law or equitable cause, then to the extent
of such payment or repayment, the obligation or part thereof which has been
paid, reduced or satisfied by the amount so repaid shall be reinstated by the
amount so repaid and shall be included within the liabilities of the Borrower
to such Lender as of the date such initial payment, reduction or satisfaction
occurred.
Section 9.19 Lender Representations, etc.; Non-Recourse
Obligations.
(a) By executing this Agreement or an Assignment
Agreement, each Lender represents, warrants and covenants as of the Closing
Date, with respect to Lenders party hereto on such date, or as of the date of
the effectiveness of any assignment to such Lender, in the case of all other
Lenders (either such date, the "Relevant Date"), as follows:
(i) neither it nor any of its
representatives or agents has offered or shall offer any interest in
the Agreement by means of a general solicitation or general
advertising, including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar medium
or broadcast over television or radio or publicized through the
Internet, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising;
(ii) as of the Relevant Date with respect
to such Lender, it has not granted or transferred or agreed to grant
or transfer, any participation or other interest in this Agreement to
any person except in accordance with Section 9.4; and
(iii) its unsupported long-term senior
debt obligations are rated, or its claims paying or financial
strength rating is, at least (x)(1) "A2" by ▇▇▇▇▇'▇ or (2) "A3" by
▇▇▇▇▇'▇ and is placed on a credit watch with positive implications by
▇▇▇▇▇'▇, and (y)(1) "A" by S&P or (2) "A-" by S&P and is placed on a
credit watch with positive implications by S&P (or its obligations
are guaranteed by entities with such ratings), except in the case of
an CP Conduit, in which case its commercial paper notes have short
term ratings of at least "P-1" by ▇▇▇▇▇'▇ and "A-1" by S&P.
(b) The Administrative Agent, the Insurer and the
Lenders acknowledge and understand that in respect of the Obligations of the
Borrower (including indemnification Obligations), such Persons shall have
recourse only to the assets of the Borrower and that they shall have no
recourse to the assets of any incorporator, director, officer, employee,
agent, stockholder, manager or member of any holder of Preferred Shares, any
Common Shareholder, or any past, present or future manager or member of the
Borrower, any past, present or future stockholder, manager, member or partner
of any such member or any of their respective past, present or future
incorporators, directors, officers, employees, agents, stockholders, managers,
members or partners (including, without limitation, the Investment Manager or
the Co-Manager or any of their respective Affiliates (other than the
Borrower)), other than interests (or investments) in the Borrower and its
assets, and in no event shall any such Person be held liable, personally or
otherwise, with respect to the indebtedness evidenced by the Lender Notes, the
Loans or for any other obligations under this Agreement, whether by virtue of
any statute or rule of law, or by the enforcement of any assessment or penalty
or otherwise, all such liability being expressly waived and released by the
Administrative Agent, the Insurer and each Lender; provided that nothing set
forth herein shall limit any liability that the Investment Manager may have
pursuant to the Investment Management Agreement.
(c) No recourse shall be had for the payment of any
amount owing by a Lender under this Agreement, or for the payment by any such
Lender of any other obligation or claim of or against such Lender arising out
of or based on this Agreement against any stockholder, employee, officer,
director, agent or incorporator of such Lender; provided, however, that
nothing in this Section 9.19(c) shall relieve any of the foregoing Persons
from any liability which such Person may otherwise have in such capacity for
his/her or its gross negligence or willful misconduct. The agreements in this
Section 9.19(c) shall survive the termination of this Agreement.
Section 9.20 No Petition.
(a) Each of the parties hereto hereby covenants and
agrees that, prior to the date which is one year and one day after the payment
in full of all outstanding commercial paper notes and other indebtedness for
borrowed money of any CP Conduit or SPC, including the Swingline Lender if it
is a CP Conduit or SPC, such Person shall not institute against, or join any
other Person in instituting against, such CP Conduit or SPC, including the
Swingline Lender if it is a CP Conduit or SPC, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar
proceedings. This provision shall survive the termination of this Agreement
and the making and repayment of the Loans.
(b) Each of the parties hereto (other than the
Borrower) covenants and agrees that, prior to the date that is one year and
one day after the payment in full of all Senior Indebtedness and Preferred
Shares, no party hereto shall institute against the Borrower any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings. This provision shall survive the termination of this
Agreement.
Section 9.21 Integration. This Agreement and the other
Credit Documents represent the entire agreement of the Borrower, the
Administrative Agent and the Lenders with respect to the subject matter hereof
and thereof, and there are no promises, undertakings, representations or
warranties by the Administrative Agent or any Lender relative to the subject
matter hereof or thereof not expressly set forth or referred to herein or in
the other Credit Documents.
Section 9.22 Acknowledgment. The Borrower hereby
acknowledges that none of the parties hereto has any fiduciary relationship
with or fiduciary duty to the Borrower pursuant to the terms of this
Agreement, and the relationship between the Lenders and the Administrative
Agent, on the one hand, and the Borrower, on the other hand, in connection
herewith is solely that of debtor and creditor.
Section 9.23 Judgment Currency.
(a) If, for the purposes of obtaining judgment in
any court, it is necessary to convert a sum due hereunder in any currency (the
"Original Currency") into another currency (the "Other Currency"), the parties
hereto agree, to the fullest extent permitted by law, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Administrative Agent or a Lender could purchase the Original
Currency with such Other Currency in New York, New York on the Business Day
immediately preceding the day on which any such judgment, or any relevant part
thereof, is given.
(b) The obligations of the Borrower in respect of
any sum due from it to the Administrative Agent or any Lender hereunder shall,
notwithstanding any judgment in such Other Currency, be discharged only to the
extent that on the Business Day following receipt by the Administrative Agent
or any Lender of any sum adjudged to be so due in such Other Currency, the
Administrative Agent or any such Lender may in accordance with normal banking
procedures purchase the Original Currency with such Other Currency; if the
Original Currency so purchased is less than the sum originally due the
Administrative Agent or any such Lender in the Original Currency, the Borrower
agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify the Administrative Agent or any such Lender against such loss, and
if the Original Currency so purchased exceeds the sum originally due to the
Administrative Agent or any such Lender in the Original Currency, such Lender
shall remit such excess to the Borrower.
Section 9.24 Collateral Valuation Schedule. The ▇▇▇▇▇'▇
Collateral Valuation Schedule and S&P Collateral Valuation Schedule are hereby
incorporated by reference in its entirety into this Agreement, and, by signing
this Agreement, each party hereto hereby agrees to the terms and provisions of
the ▇▇▇▇▇'▇ Collateral Valuation Schedule and S&P Collateral Valuation
Schedule, which shall apply to the parties hereto in all respects as set forth
therein and in this Agreement.
Section 9.25 Consequences of Lender Ratings Downgrade.
Notwithstanding any provision herein to the contrary, in the event that the
unsupported long-term senior debt obligations or, if applicable, the claims
paying or financial strength rating of any Lender (or, alternatively, if
applicable, the guarantor of such Lender's obligations hereunder) is not, at
least (x)(1) "A2" by ▇▇▇▇▇'▇ or (2) "A3" by ▇▇▇▇▇'▇ and on a credit watch with
positive implications by ▇▇▇▇▇'▇, and (y)(1) "A" by S&P or (2) "A-" by S&P and
on a credit watch with positive implications by S&P (or its obligations are
not guaranteed by entities with such ratings) (or, in the case of a CP
Conduit, its commercial paper notes do have short term ratings of at least
"P-1" by ▇▇▇▇▇'▇ and "A-1" by S&P), the Borrower may, at its option upon at
least ten (10) Business Days' notice to the Administrative Agent and such
Lender, replace such Lender as contemplated by, and in the manner provided in
Section 3.4.7. The Administrative Agent shall notify ▇▇▇▇▇'▇ and S&P as soon
as practicable of such Lender who fails to have or maintain the ratings
described above.
Section 9.26 Claims upon the Senior Facility Insurance
Policy; Senior Facility Insurance Policy Payment Account.
(a) If, by 4:00 p.m. in the city in which the
Payment Office is located, on the Business Day preceding the date (x) on which
any interest, commitment fees or Commitment Reduction Premiums are due
pursuant to the terms of this Agreement or (y) which is the Scheduled
Commitment Termination Date (if the Commitment Termination Date has not been
extended pursuant to Section 2.3.1 with the consent of the Insurer or if any
principal otherwise becomes due in respect of any Loans on the Scheduled
Commitment Termination Date) or the Extension Date (if the Commitment
Termination Date has been extended pursuant to Section 2.3.1) on which the
principal of the Loans is due and payable (each such date specified in (x) and
(y) above, a "Scheduled Payment Date"), there are not on deposit in the
Custodial Account sufficient funds to pay the interest, commitment fees or
Commitment Reduction Premiums and/or principal (each such payment, a
"Scheduled Payment") due on such Scheduled Payment Date, the Administrative
Agent shall immediately (but, in any event, no later than 12:00 noon on such
Scheduled Payment Date) give written notice to the Insurer, in accordance with
the terms of the Senior Facility Insurance Policy, of the amount of such
deficiency.
(b) The Administrative Agent shall, prior to the
Closing Date, establish a single, segregated trust account which shall be
designated as the "Senior Facility Insurance Policy Payment Account", which
shall be established with ▇▇▇▇▇ Fargo Bank, National Association and shall be
held for the benefit of the Lenders, over which the Administrative Agent shall
have exclusive control and the sole right of withdrawal, in which none of the
Borrower, the Lenders or any other Person shall have any legal or beneficial
interest or right of withdrawal. The Administrative Agent shall deposit all
amounts received from the Insurer under the Senior Facility Insurance Policy
in the Senior Facility Insurance Policy Payment Account. The Senior Facility
Insurance Policy and any and all funds at any time on deposit in, or otherwise
to the credit of, the Senior Facility Insurance Policy Payment Account shall
be held in trust by the Administrative Agent for the benefit of the Lenders.
The only permitted withdrawal from or application of funds on deposit in, or
otherwise to the credit of, the Senior Facility Insurance Policy Payment
Account shall be to make the Scheduled Payments due on the Scheduled Payment
Date in respect of which such funds are paid, to the extent such Scheduled
Payments are not paid pursuant to this Agreement. All proceeds of the Senior
Facility Insurance Policy, if any, must be applied solely to make payments in
respect of the principal, interest, commitment fees or Commitment Reduction
Premiums on or with respect to the Loans and may not be applied to pay any
costs, expenses, liabilities or advances of the Administrative Agent. Any
money held in such Senior Facility Insurance Policy Payment Account after
payment in full of any Deficiency Amount (as defined in the Senior Facility
Insurance Policy) in respect of any Scheduled Payment Date shall promptly be
remitted to the Insurer.
(c) The Administrative Agent shall keep a complete
and accurate record of all funds deposited by the Insurer into the Senior
Facility Insurance Policy Payment Account and the allocation of such funds to
payment of interest, commitment fees or Commitment Reduction Premiums on and
principal paid in respect of any Loan. The Insurer shall have the right to
inspect such records at reasonable times upon one Business Day's prior written
notice to the Administrative Agent.
(d) Subject to and conditioned upon payment of any
interest commitment fees, Commitment Reduction Premiums or principal on or
with respect to the Loans by or on behalf of the Insurer, the Administrative
Agent shall assign to the Insurer all rights to the payments of interest,
commitment fees, Commitment Reduction Premiums or principal on or with respect
to the Loans which are due for payment to the extent of all payments made by
the Insurer, and the Insurer may exercise any option, vote, right or power to
the extent it has made a principal payment pursuant to the Senior Facility
Insurance Policy. The Administrative Agent and each Lender by making its
Commitment hereunder agrees that the Insurer shall be subrogated to all of the
rights to payment of such Lenders or in relation thereto to the extent that
any payment of interest, commitment fees, Commitment Reduction Premiums or
principal on or in respect of the Loans was made to such Lender with payments
made under the Senior Facility Insurance Policy by the Insurer.
(e) Upon the expiration of the Senior Facility
Insurance Policy in accordance with the terms thereof, the Administrative
Agent shall surrender the same to the Insurer for cancellation in accordance
with the terms thereof.
Section 9.27 Insolvency Proceedings.
(a) In the event that the Administrative Agent has
received a certified copy of an order of an appropriate court that any
Scheduled Payment on a Loan has been voided in whole or in part as a
preference payment under applicable moratorium of debts, bankruptcy,
insolvency or similar law, the Administrative Agent shall so notify the
Insurer, shall comply with the provisions of the Senior Facility Insurance
Policy to obtain payment by the Insurer of such voided Scheduled Payment, and
shall, at the time it provides notice to the Insurer, notify the Lenders that,
in the event that any such Lender's Scheduled Payment is so recovered, the
Insurer will be entitled to payment pursuant to the terms of the Senior
Facility Insurance Policy, a copy of which shall be made available through the
Administrative Agent or the Insurer, and the Administrative Agent shall
furnish to the Insurer or its fiscal agent its records evidencing the payments
of principal of and interest on the Loans, if any, which have been made by the
Administrative Agent and subsequently recovered from Lenders, and the dates on
which such payments were made.
(b) The Administrative Agent shall promptly notify
the Insurer of either of the following as to which it has actual knowledge:
(i) the commencement of any proceeding by or against the Borrower commenced
under applicable moratorium of debts, bankruptcy, insolvency or similar law
(an "Insolvency Proceeding") and (ii) the making of any claim in connection
with any Insolvency Proceeding seeking the avoidance as a preferential
transfer (a "Preference Claim") of any payment of the Scheduled Payments. Each
Lender by making its Commitment hereunder and the Administrative Agent hereby
agree that so long as the Insurer is the Controlling Class, the Insurer may at
any time during the continuation of an Insolvency Proceeding, direct all
matters relating to such Insolvency Proceeding, including, without limitation,
(i) all matters relating to any Preference Claim, (ii) the direction of any
appeal of any order relating to any Preference Claim at the expense of the
Insurer but subject to reimbursement as provided in the Senior Facility
Insurance Agreement and (iii) the posting of any surety, supersedes or
performance bond pending any such appeal. In addition, and without limitation
of the foregoing, as set forth in Section 9.28(a), the Insurer, as provider of
the Senior Facility Insurance Policy, shall be subrogated to, and each Lender
hereby delegates and assigns, to the fullest extent permitted by law, the
rights of each Lender in the conduct of any Insolvency Proceeding, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such Insolvency
Proceeding.
Section 9.28 Effect of Payment by Insurer; Subrogation.
(a) Anything herein to the contrary
notwithstanding, any payment with respect to the interest, commitment fees,
Commitment Reduction Premiums or principal on or in respect of the Loans which
is made with monies received pursuant to the terms of the Senior Facility
Insurance Policy shall not be considered payment by the Borrower of the Loans,
and shall not discharge the Borrower in respect of its obligations to make
such payment. The Borrower and the Administrative Agent acknowledge that,
without the need for any further action on the part of the Insurer, the
Borrower, the Administrative Agent or any other Person (i) to the extent the
Insurer makes payments, directly or indirectly, on account of interest,
commitment fees, Commitment Reduction Premiums or principal on or in respect
of the Loans to the Lenders, the Insurer will be fully subrogated to the
rights of such Lenders to receive such interest, commitment fees, Commitment
Reduction Premiums or principal from the Borrower and (ii) the Insurer shall
be paid such interest, commitment fees, Commitment Reduction Premiums or
principal in accordance with Article III hereof, in each case only after the
Lenders have received payment of all Scheduled Payments of interest,
commitment fees, Commitment Reduction Premiums or principal due thereon.
(b) Without limiting the provisions of Article VII
hereof or the rights or interest of the Lenders as otherwise set forth herein,
so long as no Insurer Default exists, the Administrative Agent shall cooperate
in all respects with any reasonable request by the Insurer for action to
preserve or enforce the Insurer's rights or interest under this Agreement,
including, without limitation, upon the occurrence and continuance of an Event
of Default, a request to take any one or more of the following actions:
(i) institute proceedings for the
collection of all amounts then payable on the Loans, or under this
Agreement in respect to the Loans, enforce any judgment obtained and
collect from the Borrower monies adjudged to be due;
(ii) institute proceedings from time to
time for the complete or partial foreclosure under the Pledge and
Intercreditor Agreement; and
(iii) exercise any remedies of a secured
party under the UCC and take any other appropriate action to protect
and enforce the rights and remedies of the Insurer hereunder.
[Signatures begin on the next page.]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.
SPECIAL VALUE OPPORTUNITIES FUND, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Secretary
CDC FINANCIAL PRODUCTS INC.
as Administrative Agent and Arranger
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Director
AMBAC ASSURANCE CORPORATION,
as Insurer
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: First Vice President
UNION BANK OF CALIFORNIA, National Association,
as Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
ALTAMIRA FUNDING LLC,
as Other CP Conduit
By: ALTAMIRA MEMBER, INC.,
its Managing Member
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
NIEUW AMSTERDAM RECEIVABLES CORPORATION,
as Other CP Conduit
By: /s/ ▇▇▇▇ ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: Vice President
EIFFEL FUNDING, LLC,
as Swingline Lender and Other CP Conduit
By: GLOBAL SECURITIZATION SERVICES, LLC,
its Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
ANNEX X
DEFINITIONS
Any defined terms used herein shall have the respective
meanings set forth herein.
"Acceleration Notice" means an Acceleration Notice under and
as defined in the Pledge and Intercreditor Agreement.
"Account Property" shall have the meaning set forth in the
Custodial Agreement..
"Adjusted Contributed Company Capital" means, at any date,
Contributed Company Capital at such date minus Expensed Transaction Fees.
"Administrative Agent" means CDC Financial Products Inc., in
its capacity as agent for the Lenders under this Agreement and under the other
Credit Documents and any successor thereto in such capacity.
"Administrative Expenses" has the meaning set forth in the
Pledge and Intercreditor Agreement.
"Advance Amount" means, at any date of determination,
subject to Section 1.8, the lower of (i) the Senior Advance Amount calculated
using the ▇▇▇▇▇'▇ Valuation Procedures and (ii) the Senior Advance Amount
calculated using the S&P Valuation Procedures.
"Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by, or under common control
with, such former Person, it being understood and agreed that TCP, TCO, the
Investment Manager and their respective Affiliates shall constitute Affiliates
of the Borrower. As used in this definition, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.
"Affiliate List" means a list of persons who are affiliates
of any Lender for purposes of Section 23A, as the same may from time to time
be delivered by the Administrative Agent to the Borrower in accordance with
Section 9.17.
"Affiliate Security" means any security issued by a Person
who is (a) an affiliate of any Lender for purposes of Section 23A, and (b)
listed in the most recent Affiliate List provided by the Administrative Agent
to the Borrower.
"Aggregate Percentage" means, with respect to any Lender, a
percentage equal to (x) the aggregate amount of such Lender's Revolving
Commitment divided by (y) the aggregate of the Total Revolving Commitments.
"Agreement" is defined in the preamble.
"Applicable Law" with respect to any Person or matter means
any law, rule, regulation, order, decree or other requirement having the force
of law relating to such Person or matter and, where applicable, any
interpretation thereof by any Person having jurisdiction with respect thereto
or charged with the administration or interpretation thereof.
"Applicable Margin" means: (a) with respect to any Base Rate
Loan, 0% per annum; (b) with respect to any Eurodollar Rate Loan, 0.43% per
annum; and (c) (i) with respect to any Cost of Funds Rate Loan bearing
interest a rate determined in accordance with clause (a) or (b) of the
definition of Cost of Funds Rate, 0.43%, provided, that in the event that the
rating of the Loans hereunder has been withdrawn or downgraded to "A1" or
lower by ▇▇▇▇▇'▇ or "A+" or lower by S&P or a general disruption to the
commercial paper market has occurred and is continuing, the Applicable Margin
for such Cost of Funds Rate Loan will increase by 0.09%; and (ii) with respect
to any Cost of Funds Rate Loan bearing interest at a rate determined in
accordance with clause (c) of the definition of Cost of Funds Rate, 0% per
annum.
"Approval" means each and every approval, consent, filing
and registration by or with any Federal, state or other Governmental Authority
necessary to authorize or permit the consummation of the transactions
contemplated by the Transaction Documents, including the execution, delivery
or performance of this Agreement or any other Credit Document or for the
validity or enforceability thereof.
"Approved Counterparty" has the meaning assigned to such
term in the applicable Collateral Valuation Schedule.
"Approved Dealer" has the meaning assigned to such term in
the applicable Collateral Valuation Schedule.
"Approved Exchange" has the meaning assigned to such term in
the applicable Collateral Valuation Schedule.
"Approved Investment Banking Firm" has the meaning assigned
to such term in the applicable Collateral Valuation Schedule.
"Approved Lender" means a financial institution (including a
securities broker-dealer or Affiliate thereof) or other institutional lender
(including any CP Conduit) with (i) short-term ratings of at least "P-1" by
▇▇▇▇▇'▇ and "A-1" by S&P or (ii) long-term ratings or, if applicable, claims
paying or financial strength ratings of at least (x)(1) "A2" by ▇▇▇▇▇'▇ or (2)
"A3" by ▇▇▇▇▇'▇ and is placed on a credit watch with positive implications by
▇▇▇▇▇'▇ and (y)(1) "A" by S&P or (2) "A-" by S&P and is placed on a credit
watch with positive implications by S&P (or, if such entity does not have debt
which is rated by ▇▇▇▇▇'▇ and S&P but such entity's obligations are
unconditionally and irrevocably guaranteed by entities with such ratings) or,
in the case of a CP Conduit, a commercial paper note short-term rating of
"P-1" by ▇▇▇▇▇'▇ and at least "A-1" by S&P ; provided that (a) in the case of
an Approved Lender that is a Designated CP Conduit, such Designated CP
Conduit's Commitments hereunder must be fully supported by one or more
Designated CP Conduit Committed Lenders which is an Approved Lender, and (b)
in the case of an Approved Lender that is an Other CP Conduit, such Other CP
Conduit shall have entered into a Liquidity Agreement with a Liquidity
Provider which is an Approved Lender.
"Approved Pricing Service" has the meaning assigned to such
term in the applicable Collateral Valuation Schedule.
"Approved Source" has the meaning assigned to such term in
the applicable Collateral Valuation Schedule.
"Approved Third-Party Appraisal" has the meaning assigned to
such term in the applicable Collateral Valuation Schedule.
"Arranger" is defined in the preamble.
"Asset Category" has the meaning assigned to such term in
the applicable Collateral Valuation Schedule.
"Assignment Agreement" has the meaning set forth in Section
9.4(b).
"Authorized Officer" means, with respect to the Borrower,
the Chief Executive Officer, the President, the Secretary, the Chief Financial
Officer or another Person whose signatures and incumbency shall have been
certified to the Lenders pursuant to Section 4.1.1 or such other
representatives or agents as are thereafter certified in a similar manner from
time to time and with respect to the Investment Manager, those of the
Investment Manager's officers, managing members, members, representatives and
agents whose signatures and incumbency shall have been certified to the
Lenders pursuant to Section 4.1.1 or such other representatives or agents as
are thereafter certified in a similar manner from time to time.
"Babson" means Babson Capital Management LLC, a Delaware
limited liability company (formerly ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company Inc.).
"Bank Loans" has the meaning assigned to such term in the
applicable Collateral Valuation Schedule.
"Bankruptcy Remote Entity" means a special purpose entity
formed under the laws of one of the States of the United States or the
District of Columbia which is organized and operated in a manner designed to
insulate it from the risk of becoming the subject of bankruptcy,
reorganization, liquidation or other similar proceedings under any bankruptcy
or insolvency law.
"Base Rate" means, for any period, the higher of (a) the
Federal Funds Effective Rate for such period, plus 0.50% per annum, and (b)
the Prime Lending Rate for such period, plus 0.43% per annum.
"Base Rate Loan" means a Loan bearing interest at a
fluctuating rate determined by reference to the Base Rate.
"Borrower" is defined in the preamble.
"Borrowing" means (a) the Revolving Loans made by all
Revolving Lenders on any Business Day and (b) the Swingline Loans made by the
Swingline Lender on any Business Day, in each case in accordance with Section
3.1.
"Borrowing Base" means, at any date of determination, an
amount equal to the Advance Amount as of such date (determined in accordance
with Section 6.1.1 and determined after giving effect to the application of
the proceeds of any Loan(s) requested on such date).
"Borrowing Request" means a loan request and certificate
duly executed by the Borrower substantially in the form of Exhibit A.
"Business Day" means (i) for all purposes other than as
covered by clause (ii) below, any day except a Saturday, Sunday or other day
on which commercial banks are authorized or obligated by law, regulation or
executive order to close in Columbia, Maryland, Minneapolis, Minnesota, New
York City or Los Angeles, California, and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
Eurodollar Rate Loans, any day which is a Business Day described in clause (i)
and which is also a day for trading by and between banks in Dollar deposits in
the interbank Eurodollar market.
"Capital Stock" has the meaning assigned to such term in the
applicable Collateral Valuation Schedule.
"Cash" has the meaning assigned to such term in the
applicable Collateral Valuation Schedule.
"Cash Equivalent" has the meaning assigned to such term in
the applicable Collateral Valuation Schedule.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. ss. 9601 et seq.
"Closed-end Company" means a "Closed-end company" as defined
in Section 5(a)(2) of the Investment Company Act.
"Closing Date" means July 13, 2004.
"Co-Management Agreement" means the Co-Management Agreement,
dated as of the Closing Date, among the Borrower, the Investment Manager and
the Co-Manager, as amended, supplemented or otherwise modified from time to
time pursuant to the terms thereof.
"Co-Manager" means Babson, in its capacity as co-manager
under the Co-Management Agreement, unless and until a replacement co-manager
shall have become co-manager pursuant to the Co-Management Agreement, and
thereafter "Co-Manager" shall mean such replacement co-manager.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to the Code are to the Code, as in effect at
the date of this Agreement and any subsequent provisions of the Code,
amendatory thereof, supplemental thereto or substituted therefor.
"Collateral" has the meaning set forth in the Pledge and
Intercreditor Agreement.
"Collateral Documents" means the Pledge and Intercreditor
Agreement, the Custodial Agreement and any other agreement, instrument or
document executed and delivered by or on behalf of the Borrower in connection
with the foregoing or pursuant to which a Lien is granted in accordance with
the terms of the Pledge and Intercreditor Agreement as security for any of the
Senior Lender Indebtedness.
"Collateral Valuation Schedule" means the ▇▇▇▇▇'▇ Collateral
Valuation Schedule and/or the S&P Collateral Valuation Schedule.
"Commitment" means each Revolving Commitment.
"Commitment Reduction Amount" is defined in Section 2.2.
"Commitment Reduction Date" is defined in Section 2.2.
"Commitment Termination Date" means the earliest of (a) the
Scheduled Commitment Termination Date (or, if an extension is made pursuant to
Section 2.3.1, the applicable Extension Date), (b) the date of any termination
of all of the Commitments in accordance with Section 2.2 and (c) the date of
occurrence of any Commitment Termination Event.
"Commitment Termination Event" means the earlier of (a)
automatically and without notice or further action, the occurrence of any
Event of Default described in Section 7.1.9 with respect to the Borrower or
(b) the occurrence and continuation of any other Event of Default under this
Agreement and the declaration of the Loans to be due and payable pursuant to
Section 7.3 or, in the absence of such declaration, a direction from the
Controlling Class to the Administrative Agent, to the extent permitted under
this Agreement, to give notice to the Borrower of the termination of the
Commitments of the Lenders.
"Common Shareholder" means, at any date, with respect to any
outstanding Common Share, the record holder of such Common Share as reflected
in the register held by the Borrower.
"Common Shareholders' Escrow Account" has the meaning set
forth in the Custodial Agreement.
"Common Shares" means the common shares issued by the
Borrower pursuant to the Operating Agreement.
"Company Equity" means, at any date, the equity of the
Borrower represented by the Common Shares (determined in accordance with GAAP
as of such date); provided, that for purposes of Section 6.1.15, Company
Equity will not be reduced by Expensed Transaction Fees of the Borrower or by
Interest Rate Hedging Transactions entered into pursuant to Section 6.1.16 and
will be increased by the net contributions from any Subordinated Equity
Security. For purposes of this Agreement, Company Equity shall be deemed to be
the Company Equity as of the end of the most recently completed fiscal quarter
for which financial statements are available as adjusted to give effect to any
capital contributions and distributions that occurred after such fiscal
quarter.
"Company Tax Distribution" means any distribution that the
Borrower reasonably and in good faith estimates should be made by it to the
Common Shareholders and/or the Special Member (i) to provide such Persons
funds to pay taxes in respect of the Preferred Shares or Common Shares held by
such Persons or (ii) in order to preserve the U.S. federal income tax status
of the Borrower as a regulated investment company.
"Computation Date" is defined in Section 3.8.
"Consent Notice" is defined in Section 2.3.1.
"Consent Period" is defined in Section 2.3.1.
"Continuing Lender" is defined in Section 2.3.1.
"Contractual Obligation" means, relative to any Person, any
provision of any security issued by such Person or of any instrument,
agreement or undertaking to which such Person is a party or by which it or any
of its property is bound.
"Contributed Company Capital" has the meaning assigned to
such term in the applicable Collateral Valuation Schedule.
"Controlling Class" means for so long as the Senior Facility
Insurance Policy is in effect and an Insurer Default has not occurred and is
not continuing, the Insurer, and otherwise, the Required Lenders.
"Cost of Funds Rate" means with respect to each Interest
Period for a Cost of Funds Rate Loan, (a) for that portion of the applicable
CP Conduit's Loans funded through the issuance of commercial paper, the per
annum rate equivalent (not to exceed the LIBOR Market Index Rate plus 0.200%
per annum) to the weighted average of the per annum rates paid or payable by
the applicable CP Conduit from time to time as interest on or otherwise (by
means of interest rate ▇▇▇▇▇▇ or otherwise taking into consideration any
incremental carrying costs associated with short-term promissory notes issued
by the applicable CP Conduit maturing on dates other than those certain dates
on which the applicable CP Conduit is to receive funds) in respect of the
promissory notes issued by the applicable CP Conduit that are reasonably
allocated, in whole or in part, by the applicable CP Conduit (or its agent) to
fund or maintain the applicable Loan hereunder during such period, as
reasonably determined by the applicable CP Conduit (or its agent), which rates
shall reflect and give effect to (i) the commissions of placement agents and
dealers in respect of such promissory notes, to the extent such commissions
are reasonably allocated, in whole or in part, to such promissory notes by the
applicable CP Conduit and (ii) other borrowings by the applicable CP Conduit,
including, without limitation, borrowings to fund small or odd dollar amounts
that are not easily accommodated in the commercial paper market (and notice of
which shall be delivered to the Borrower); provided, however, that if any
component of such rate is a discount rate, in calculating the Cost of Funds
Rate, the applicable CP Conduit (or its agent) shall for such component use
the rate resulting from converting such discount rate to an interest bearing
equivalent rate per annum, (b) for that portion of the applicable CP Conduit's
Loans funded by the CP Conduit's external liquidity or support facility
(including but not limited to any Loan Purchase Agreement or Liquidity
Agreement), the per annum rate of interest provided in such liquidity or
support facility (not to exceed at any time the LIBOR Market Rate Index plus
0.200% per annum), or, if no such per annum rate of interest is provided in
such liquidity or support facility, the per annum rate of interest equal to
the LIBOR Market Rate Index and (c) following the occurrence and during the
continuance of any Default, for that portion of the applicable CP Conduit's
Loans funded by the CP Conduit's external credit support facility, the per
annum rate of interest applicable from time to time under such credit support
facility (not to exceed at any time the Prime Lending Rate plus 2.00% per
annum).
"Cost of Funds Rate Loan" means any Revolving Loan or
Swingline Loan made by a Lender that is a CP Conduit or an SPC.
"CP Conduit" means a Lender which is a Bankruptcy Remote
Entity, and which obtains a portion of its financing, either directly or
indirectly, through the issuance of commercial paper notes.
"Credit Document" means this Agreement, the Lender Notes,
the Collateral Documents, each Borrowing Request and any other agreement,
instrument or document executed and delivered by or on behalf of the Borrower
in connection with the foregoing.
"Custodial Account" has the meaning set forth in the
Custodial Agreement.
"Custodial Agreement" means the custodial agreement dated as
of the Closing Date among the Borrower, the Custodian, the Administrative
Agent, and the Secured Parties Representative, as the same may be amended,
modified or supplemented from time to time pursuant to the terms hereof and
thereof.
"Custodian" means ▇▇▇▇▇ Fargo Bank, National Association,
acting in its capacity as Custodian under the Custodial Agreement and any
successor thereto in such capacity.
"Debt" of any Person means, at any date, without
duplication: (i) all obligations of such Person for borrowed money; (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments; (iii) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable arising
in the ordinary course of business; (iv) all obligations of such Person as
lessee under capital leases; (v) all non-contingent obligations of such Person
to reimburse or prepay any bank or other Person in respect of amounts paid
under a letter of credit, banker's acceptance or similar instrument; (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; and (vii) all Debt of others Guaranteed
by such Person, it being acknowledged and understood that Debt shall in no
event include any obligations under any Hedging and Short Sale Transactions.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived in accordance with the provisions of this
Agreement, become an Event of Default; provided, that a "Default" shall not
include a failure by the Borrower to comply with Section 6.1.18 of this
Agreement so long as such failure is cured within the applicable grace period
specified herein or therein.
"Defaulting Lender" means any Lender with respect to which a
Lender Default is in effect.
"Defensive Hedge Transaction" has the meaning assigned to
such term in the applicable Collateral Valuation Schedule.
"Designated CP Conduit" means any CP Conduit that is a party
to a Loan Purchase Agreement.
"Designated CP Conduit Committed Lender" means an Approved
Lender that has committed to purchase the Loans of a Designated CP Conduit and
make Loans to the Borrower pursuant to Section 2.1 in lieu of such Designated
CP Conduit in accordance with the terms of a Loan Purchase Agreement and any
permitted successor or assign.
"Determination Date" has the meaning assigned to such term
in the applicable Collateral Valuation Schedule.
"Disqualified Transferee" is defined in Section 9.4(c).
"Dollar" or "$" means dollars in lawful currency of the
United States of America.
"Eligible Counterparty" has the meaning assigned to such
term in the applicable Collateral Valuation Schedule.
"Eligible Investments" has the meaning assigned to such term
in the applicable Collateral Valuation Schedule.
"Eligible Transferee" means and includes a commercial bank,
savings and loan association, insurance company, investment company, business
development company, other financial institution or other corporation,
business trust, partnership or fund not formed for the specific purpose of
acquiring the Loans.
"Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, administrative investigations or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereafter, "Claims"),
including (a) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law and (b) any and all Claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law" means any applicable Federal, state,
foreign or local statute, law, rule, regulation, ordinance, code, rule of
common law or written and binding policy or guide, now or hereafter in effect
and in each case as amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, relating to the environment, health, safety or Hazardous Materials,
including CERCLA; RCRA; the Federal Water Pollution Control Act, as amended,
33 U.S.C. ss. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss.
7401 et seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe Drinking
Water Act, 42 U.S.C. ss. 3808 et seq.; the Oil Pollution Act of 1990, 33
U.S.C. ss. 2701 et seq.; and any applicable state and local or foreign
counterparts or equivalents.
"Equity Capital Commitments" means commitments of the Common
Shareholders to provide an aggregate amount of $711,000,000 to be contributed
as equity capital to the Borrower.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute from time to time, and the
regulations promulgated and rulings issued thereunder. Section references to
ERISA are to ERISA, as in effect at the date of this Agreement and any
subsequent provisions of ERISA, amendatory thereof, supplemental thereto or
substituted therefor.
"ERISA Affiliate" means each person (as defined in Section
3(9) of ERISA) which together with the Borrower would be deemed to be a
"single employer" within the meaning of Section 414 of the Code.
"Eurodollar Rate" means with respect to each Interest Period
for a Eurodollar Rate Loan the rate determined by the Administrative Agent in
accordance with the following provisions:
(i) Eurodollar Rate for any Interest Period shall
equal the rate, as determined by the Administrative Agent, for U.S.
dollar deposits with maturities comparable to the Eurodollar Rate
Loan for which an interest rate is then being determined with
maturities comparable to the Interest Period to be applicable to such
Eurodollar Rate Loan, which appears on the Telerate Page 3750 as of
11:00 a.m. (London time) on the applicable Eurodollar Rate
Determination Date, as reported by Bloomberg Financial Markets
Commodities News.
(ii) If, on any Eurodollar Rate Determination Date,
such rate does not appear on the Telerate Page 3750, the
Administrative Agent shall determine the arithmetic mean of the
offered quotations of the Eurodollar Rate Reference Banks to prime
banks in the London interbank market for Eurodollar deposits for the
relevant term by reference to requests for quotations as of
approximately 11:00 a.m. (London time) on such Eurodollar Rate
Determination Date made by the Administrative Agent to the Eurodollar
Rate Reference Banks. If, on any Eurodollar Rate Determination Date,
at least two of the Eurodollar Rate Reference Banks provide such
quotations, Eurodollar Rate shall equal such arithmetic mean. If, on
any Eurodollar Rate Determination Date, only one or none of the
Eurodollar Rate Reference Banks provide such quotations, Eurodollar
Rate shall be deemed to be the arithmetic mean of the offered
quotations that the leading banks in New York City selected by the
Administrative Agent (after consultation with the Borrower) are
quoting on the relevant Eurodollar Rate Determination Date for U.S.
dollar deposits for the relevant term, to the principal London
offices of leading banks in the London interbank market.
(iii) If the Administrative Agent is required but
is unable to determine a rate in accordance with at least one of the
procedures provided above, Eurodollar Rate with respect to such
Interest Period shall be the arithmetic mean of the Eurodollar Rate
Loan Base Rate for each day during such Interest Period.
For the purposes of clause (ii) above, all percentages
resulting from such calculations shall be rounded, if necessary, to the
nearest one thirty second of a percentage point and, for purposes of clause
(iii) above, all percentages resulting from such calculations shall be
rounded, if necessary, to the nearest one hundred thousandth of a percentage
point.
Notwithstanding the foregoing, in the case of any Swingline
Loan bearing interest at the Eurodollar Rate, the "Eurodollar Rate" means, for
any day, the rate at which Dollar deposits are offered for a one Business Day
period by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, on such day. In the event that any such rate is not
available, then the "Eurodollar Rate" with respect to such Loan for such
Interest Period shall be a rate per annum equal to the alternative rate
mutually agreed to by the Borrower and the Administrative Agent (or the
Swingline Lender, in the case of Swingline Loans) negotiating in good faith
or, if no such mutual agreement is reached, the Base Rate in effect on each
day of such Interest Period.
"Eurodollar Rate Determination Date" means, with respect to
any Interest Period, the second London Banking Day prior to the first day of
such Interest Period.
"Eurodollar Rate Loan" means a Loan bearing interest, at all
times during the Interest Period applicable to such Loan, at a rate of
interest determined by reference to the Eurodollar Rate.
"Eurodollar Rate Loan Base Rate" means a fluctuating rate of
interest determined by the Administrative Agent as being the rate of interest
most recently announced by the Eurodollar Rate Loan Base Rate Reference Bank
at its principal office as its base rate, prime rate, reference rate or
similar rate for U.S. dollar loans. The Eurodollar Rate Loan Base Rate is not
necessarily intended to be the lowest rate of interest offered by the
Eurodollar Rate Loan Base Rate Reference Bank in connection with extensions of
credit. Changes in the Eurodollar Rate Loan Base Rate will take effect
simultaneously with each change in the underlying rate.
"Eurodollar Rate Loan Base Rate Reference Bank" means ▇▇▇▇▇
Fargo Bank, National Association, or if such bank ceases to exist or is not
quoting a base rate, prime rate or reference rate, such other major money
center commercial bank in New York City as is selected by the Administrative
Agent.
"Eurodollar Rate Reference Banks" means four major banks in
the London interbank market selected by the Administrative Agent.
"Event of Default" is defined in Section 7.1.
"Excess Amount" as of any Business Day, for purposes of this
Agreement, means the amount, if any, by which the sum of the Outstanding
Principal Amount of the Loans and the outstanding liquidation preference of
the Preferred Shares as of the close of business of such Business Day exceeds
the Advance Amount as of such close of business.
"Excess Date" means any Business Day on which there is an
Excess Amount. An Excess Date shall always follow a Business Day (i) that does
not have an Excess Amount or (ii) on which the Borrower has satisfied the
Over-Collateralization Test by complying with clause (i) of Section 6.1.18.
"Exchange Act" means the United States Securities Exchange
Act of 1934, as amended, and any successor statute thereto.
"Excluded Investments" has the meaning assigned to such term
in the applicable Collateral Valuation Schedule.
"Expensed Transaction Fees" means, as of any date, all
legal, tax, accounting software and systems, and other organizational
expenditures incurred in connection with this Agreement, each Insurance
Agreement or the Preferred Shares Auction Agency Agreement and the Preferred
Shares Broker-Dealer Agreement, the formation of the Borrower and related
entities (including without limitation Special Value Opportunities Feeder Fund
and any other special purpose vehicles that issue securities backed by or
representing interests in the Preferred Shares, the Common Shares or the
securities issued by Special Value Opportunities Feeder Fund approved by the
Borrower) and the fees due to the placement agents and initial purchasers in
connection with obtaining the Equity Capital Commitments and the issuance of
the Preferred Shares and to the agents and Lenders in connection with the
placement of the Loans, to the extent such amounts have been expensed (or
capitalized and amortized) on or prior to such date.
"Extension Date" is defined in Section 2.3.1.
"Extension Notice" is defined in Section 2.3.1.
"Facility Commitment" means the aggregate amount of all
Commitments of the Lenders from time to time. The original Facility Commitment
is $473,000,000.
"Federal Funds Effective Rate" means, for any period, a
fluctuating interest rate equal for each day during such period to the
weighted average of the rates on overnight Federal Funds transactions with
members of the Federal Reserve System arranged by Federal Funds brokers, as
published for such day (or, if such day is not a Business Day, for the
preceding Business Day) by the FRB, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
"Fee Letter" means the fee letter dated as of the Closing
Date from the Administrative Agent to the Borrower.
"Final Maturity Payment Default Notice" means a Final
Maturity Payment Default Notice under and as defined in the Pledge and
Intercreditor Agreement.
"Fitch" means Fitch, Inc., or any successor thereto.
"FRB" means the Federal Reserve Bank of New York.
"FRS Board" means the Board of Governors of the Federal
Reserve System and, as applicable, the staff thereof.
"Fund Investments" has the meaning assigned to such term in
the applicable Collateral Valuation Schedule.
"Funding Agent" means, with respect to each CP Conduit, the
bank or other financial institution acting as the agent of such CP Conduit
under this Agreement and the Loan Purchase Agreement or the Liquidity
Agreement to which such CP Conduit and such agent are parties.
"GAAP" means generally accepted accounting principles in
effect from time to time in the United States of America.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled,
through stock or capital ownership or otherwise, by any of the foregoing.
"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, 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.
"Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment
that contained, electric fluid containing levels of polychlorinated biphenyls,
and radon gas; (b) any chemicals, materials or substances defined as or
included in the definition of "hazardous substances," "hazardous waste,"
"hazardous materials," "extremely hazardous waste," "restricted hazardous
waste," "toxic substances," "toxic pollutants," "contaminants," or
"pollutants," or words of similar import, under any applicable Environmental
Law; and (c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any Governmental Authority.
"Hedging and Short Sale Transaction" has the meaning
assigned to such term in the applicable Collateral Valuation Schedule.
"Hedging SPEs" has the meaning assigned to such term in the
applicable Collateral Valuation Schedule.
"High Yield Bonds" has the meaning assigned to such term in
the applicable Collateral Valuation Schedule.
"Holder" means, at any date, with respect to any outstanding
Lender Note or Loan, the Lender registered with the Administrative Agent on
the Register as the record owner of such Lender Note (or the Loans and
Obligations represented by such Lender Note) or Loan.
"Incur," "Incurred" and "Incurrence" have the meaning set
forth in Section 6.2.2 of this Agreement.
"Independent Public Accountant" means one of the five
largest independent public accounting firms in the United States as of the
Closing Date or any independent public accounting firm reasonably satisfactory
to the Administrative Agent.
"Industry" has the meaning assigned to such term in the
applicable Collateral Valuation Schedule.
"Insurance Agreements" means the Senior Facility Insurance
Agreement and the Preferred Shares Insurance Agreement.
"Insurance Policies" means the Senior Facility Insurance
Policy and the Preferred Shares Insurance Policy.
"Insurer" means Ambac Assurance Corporation, a monoline
insurance company incorporated under the laws of the State of Wisconsin.
"Insurer Default" means any one of the following events
shall have occurred and be continuing:
(i) the Insurer fails to make a payment required
under the Senior Facility Insurance Policy in accordance with its
terms;
(ii) the Insurer (A) files any petition or
commences any case or proceeding under any provision or chapter of
the United States Bankruptcy Code or other similar federal or state
law relating to insolvency, bankruptcy, rehabilitation, liquidation
or reorganization, (B) makes a general assignment for the benefit of
its creditors, or (C) has an order for relief entered against it
under the United States Bankruptcy Code or any other similar federal
or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization, which is final and nonappealable or
not dismissed or discharged within sixty (60) days; or
(iii) a court of competent jurisdiction, the
Wisconsin Department of Insurance or other competent regulatory
authority enters an order, judgment or decree (1) appointing a
custodian, trustee, agent or receiver for the Insurer or for all or
any material portion of its property or (2) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Insurer
(or the taking of possession of all or any material portion of the
property of the Insurer), which in each case is final and
nonappealable or continues undismissed or undischarged for a period
of sixty (60) days.
"Interest Period" with respect to any Eurodollar Rate Loan
or Cost of Funds Rate Loan means the interest period applicable thereto, as
determined pursuant to Section 3.4.2.
"Interest Rate Hedging Transaction" has the meaning assigned
to such term in the applicable Collateral Valuation Schedule.
"Investment Company Act" means the United States Investment
Company Act of 1940, as amended.
"Investment Holding Subsidiaries" has the meaning assigned
to such term in the applicable Collateral Valuation Schedule.
"Investment Management Agreement" means the Investment
Management Agreement dated as of the Closing Date between the Borrower and the
Investment Manager relating to the management of the investment portfolio of
the Borrower, as may be amended, supplemented or otherwise modified from time
to time pursuant to the terms thereof and Section 6.2.9.
"Investment Manager" means TCP, in its capacity as
investment manager under the Investment Management Agreement, unless
terminated in accordance with the Investment Company Act. In the event of any
such termination or otherwise "Investment Manager" shall mean a replacement
investment manager only if such replacement investment manager shall have
become investment manager pursuant to the Investment Management Agreement and
Section 6.2.9(b).
"IRS" means the Internal Revenue Service and any
Governmental Authority succeeding to any of its principal functions under the
Code.
"Key Individual" means any individual serving in high-level
management capacities for the Investment Manager identified in the list
delivered to the Administrative Agent and the Lenders pursuant to Section
4.1.16, as updated in accordance with Section 6.1.21.
"Lender" means (i) each financial institution or other
institutional lender (including any CP Conduit) listed on the signature pages
of this Agreement, (ii) each Designated CP Conduit Committed Lender upon
making or purchasing of the Loans requested of the related Designated CP
Conduit, and (iii) each Person which becomes an assignee pursuant to Section
9.4(b) and their respective successors.
"Lender Default" means (i) the refusal (which has not been
retracted) of a Lender to make available its portion of any incurrence of
Loans or (ii) a Lender having notified the Administrative Agent and/or the
Borrower that it does not intend to comply with its obligations under Section
2.1.1, in the case of either clause (i) or (ii) as a result of the appointment
of a receiver or conservator with respect to such Lender at the direction or
request of any regulatory agency or authority.
"Lender Note" means each Revolving Note and each Swingline
Note.
"Lending Party" is defined in Section 3.6.
"LIBOR Market Index Rate" with respect to any Cost of Funds
Rate Loan for any day, means the rate, as determined by the Administrative
Agent, for Dollar deposits with maturities comparable to such Cost of Funds
Rate Loan as reported on Telerate page 3750 as of 11:00 a.m. London time, for
such day, provided, if such day is not a London business day, the immediately
preceding London business day (or if not so reported, then as determined by
the Administrative Agent from another recognized source or interbank
quotation).
"Lien" means, with respect to any asset, any mortgage,
pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien
(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 relating
to such asset).
"Liquidation Acceleration" means a Liquidation Acceleration
under and as defined in the Pledge and Intercreditor Agreement.
"Liquidity Agreement" means each liquidity agreement, asset
purchase agreement or other similar agreement entered into from time to time
by a Lender which is an Other CP Conduit, one or more financial institutions
parties thereto as Liquidity Providers, a liquidity agent, a collateral agent
or such other persons as may be party thereto, if any, as the same may from
time to time be amended, restated, supplemented or otherwise modified,
providing for the Liquidity Providers parties thereto to make loans from time
to time to the Other CP Conduit to support the making and/or maintaining of
Loans by the Lender under this Agreement.
"Liquidity Provider" means any Person providing liquidity or
credit enhancement support for an Other CP Conduit in connection with the
transactions contemplated pursuant to this Agreement.
"Loan" means each Revolving Loan and each Swingline Loan.
"Loan Purchase Agreement" means each loan purchase
agreement, asset purchase agreement or other similar agreement entered into
from time to time by one or more Lenders which are CP Conduits or SPCs, one or
more Designated CP Conduit Committed Lenders, and the other parties thereto,
pursuant to which such Designated CP Conduit Committed Lenders shall be
committed to purchase, or acquire participation interests in, the Loans of
such CP Conduit or SPCs and make Loans requested of such CP Conduit by the
Borrower hereunder, as the same may from time to time be amended, restated,
supplemented or otherwise modified.
"London Banking Day" means any day on which commercial banks
are open for business (including dealings in foreign exchange and foreign
currency deposits) in London.
"Mandatory Borrowing" is defined in Section 3.1.1(c).
"Margin Stock" means "margin stock" as defined in Regulation
U of the FRS Board, as amended from time to time.
"Market Value" has the meaning assigned to such term in the
applicable Collateral Valuation Schedule.
"Market Value Price" has the meaning assigned to such term
in the applicable Collateral Valuation Schedule.
"Material Adverse Effect" means, relative to any occurrence
of whatever nature (including any adverse determination in any litigation,
arbitration, or governmental investigation or proceeding), a materially
adverse effect on:
(a) the financial condition or operations of the Borrower
taken as a whole;
(b) the ability of the Borrower to timely and fully perform
any of its payment or other material obligations under this Agreement or any
other Credit Document to which it is a party or under the Operating Agreement
and the Preferred Shares Auction Agency Agreement; or
(c) the perfected security interest of the Secured Parties
Representative in the Collateral, for the benefit of the Administrative Agent,
the Lenders and the Insurer.
"Maximum Swingline Amount" means $75,000,000.
"Minimum Borrowing Amount" means, with respect to any
commitment fee payable under Section 2.4.1 or any Commitment Reduction Premium
payable under 2.2 during the period set forth in the column entitled "Period"
in the table below, the corresponding amount set forth in the column entitled
"Minimum Borrowing Amount" therein.
Minimum
Period Borrowing Amount
--------------------------------------------- ------------------------------
From Closing Date to End of Month 10 (the 0% of Total Maximum Commitment
"First Period")
From Beginning of Month 11 to End of Month
15 (the "Second Period") 15% of Total Maximum Commitment
From Beginning of Month 16 to End of Month
20 (the "Third Period") 30% of Total Maximum Commitment
From Beginning of Month 21 to End of Month
24 (the "Fourth Period") 40% of Total Maximum Commitment
From Beginning of Month 25 to Maturity (the
"Fifth Period") 75% of Total Maximum Commitment
"Money Market Preferred Shares" means the money market
cumulative preferred shares issued by the Borrower pursuant to the Operating
Agreement and the Statement of Preferences (as defined in the Operating
Agreement) relating thereto.
"▇▇▇▇▇'▇" means ▇▇▇▇▇'▇ Investors Service, Inc. or any
successor thereto.
"▇▇▇▇▇'▇ Collateral Valuation Schedule" shall mean the
▇▇▇▇▇'▇ Collateral Valuation Schedule attached as Schedule 9 to this
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with this Agreement.
"▇▇▇▇▇'▇ Valuation Procedures" shall mean the procedures
prescribed by ▇▇▇▇▇'▇ for determining the Market Value of Fund Investments as
set forth in the ▇▇▇▇▇'▇ Collateral Valuation Schedule.
"Net Asset Value" means "Company Equity" as calculated in
the definition thereof determined by the Borrower, at any date, based upon
good faith estimates for accruals and expenses of the Borrower, which may, but
need not, be fully compliant with GAAP.
"Non-Defaulting Lender" means each Lender other than a
Defaulting Lender.
"Non-Petition Covenant" means a covenant by any Person to
the effect that, prior to the date that is one year (or, if longer, the
preference period then in effect under applicable federal and state law) and
one day after the payment in full of all Senior Indebtedness and Preferred
Shares, it will not commence or otherwise institute against the Borrower any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceedings.
"Notice of Conversion" is defined in Section 3.4.3.
"Obligations" means all obligations and liabilities of the
Borrower to the Administrative Agent or any of the Lenders or any Designated
CP Conduit Committed Lender or Liquidity Provider, howsoever created, arising
or evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, under or in connection with this
Agreement, the Loans, the Lender Notes, any other Credit Document or any
Secured Hedging Transaction.
"Offering Memorandum" means the Offering Memorandum dated
July 12, 2004 relating to the Money Market Preferred Shares.
"Operating Agreement" means the Second Amended and Restated
Operating Agreement of the Borrower dated as of July 12, 2004 among ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, as Initial Member, the Special Member and the Common Shareholders
as the same may be amended, supplemented or otherwise modified from time to
time pursuant to the terms thereof and Section 6.2.9.
"Organic Documents" of any Person means its certificate of
formation, limited liability company agreement, memorandum and articles of
association, charter and by-laws, operating agreement or similar constitutive
documents and includes all agreements, voting trusts and similar arrangements
with or among the holders of such Person's Capital Stock or other equity.
"Other CP Conduit" means any CP Conduit that is a Lender
(other than a Designated CP Conduit).
"Outstanding Principal Amount" has the meaning assigned to
such term in the applicable Collateral Valuation Schedule.
"Over-Collateralization Test" is defined in Section 6.1.18.
"Payment Office" means the office of the Administrative
Agent located at ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other
office as the Administrative Agent may designate to the Borrower and the
Lenders from time to time.
"Pension Plan" means a "pension plan," as such term is
defined in Section 3(2) of ERISA.
"Percentage" means, with respect to any Lender, such
Lender's Revolving Percentage.
"Performing" has the meaning assigned to such term in the
applicable Collateral Valuation Schedule.
"Permitted Liens" is defined in Section 6.2.3.
"Person" means an individual, a corporation, a partnership,
a limited liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
"Plan Assets" means such term within the meaning of the
Department of Labor Regulation 29 CFR ss. 2510.3-101, as amended, and the
advisory opinions and rulings issued thereunder.
"Pledge and Intercreditor Agreement" means the Pledge and
Intercreditor Agreement dated as of the Closing Date, among the Borrower, the
Custodian, the Insurer, the Administrative Agent and the Secured Parties
Representative, as the same may be amended, modified or supplemented from time
to time pursuant to the terms hereof and thereof.
"Portfolio Limitations" has the meaning assigned to such
term in the applicable Collateral Valuation Schedule.
"Preferred Shares" means any preferred shares issued by the
Borrower pursuant to the Operating Agreement.
"Preferred Shares Auction Agency Agreement" means the
Auction Agency Agreement dated as of the Closing Date between the Borrower and
the Preferred Shares Auction Agent, together with all exhibits, schedules and
annexes thereto, as amended, supplemented or otherwise modified from time to
time in accordance with its terms and Section 6.2.9.
"Preferred Shares Auction Agent" means Deutsche Bank Trust
Company Americas and any successor Preferred Shares Auction Agent thereto in
such capacity.
"Preferred Shares Broker-Dealer Agreement" means the
Broker-Dealer Agreement dated as of the Closing Date between the Preferred
Shares Auction Agent and ▇▇▇▇▇▇ Brothers Inc., together with all exhibits,
schedules and annexes thereto, as amended, supplemented or otherwise modified
from time to time in accordance with its terms and Section 6.2.9.
"Preferred Shares Insurance Agreement" means the Insurance
and Indemnity Agreement dated as of the Closing Date between the Borrower and
the Insurer, as amended or supplemented in accordance with the provisions
thereof, relating to the Money Market Preferred Shares.
"Preferred Shares Insurance Policy" means the Financial
Guaranty Senior Facility Insurance Policy No. AB0780BE issued by the Insurer
with respect to the Money Market Preferred Shares pursuant to the Preferred
Shares Insurance Agreement, including any endorsement thereto.
"Prime Lending Rate" means the rate which ▇▇▇▇▇ Fargo Bank,
National Association announces from time to time as its prime lending rate,
the Prime Lending Rate to change when and as such prime lending rate changes,
or if such bank ceases to exist or is not quoting a prime lending rate, such
other major money center commercial bank in New York City as is selected by
the Administrative Agent. The Prime Lending Rate is a reference rate and does
not necessarily represent the lowest or best rate actually charged to any
customer. ▇▇▇▇▇ Fargo Bank, National Association may make commercial loans or
other loans at rates of interest at, above or below the Prime Lending Rate.
"Proceeding" means the making of a trust, mortgage or
assignment for the benefit of creditors; the voluntary or involuntary
dissolution, winding up, total or partial liquidation, reorganization,
bankruptcy, insolvency, receivership or marshalling of assets or liabilities
of the Borrower; or any other statutory, common law or contractual proceeding
or arrangement for the postponement or adjustment of all or a substantial part
of the liabilities of the Borrower.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-306(l) of the UCC and, in any event shall include, without
limitation, all interest, dividends or other earnings, income or distributions
from or in respect of, or investments or reinvestments of, the Cash and Cash
Equivalents from time to time on deposit in the Custodial Account and the
Pledged Investments (as defined in the Pledge and Intercreditor Agreement) and
all other proceeds of Collateral (whether the same arise or are acquired
before or after commencement of a Proceeding in which the Borrower is a
debtor).
"Quarterly Date" means the last Business Day of each March,
June, September and December, commencing in December of 2004.
"Ramp-Up Period" means the period commencing on the Closing
Date and ending on July 13, 2006.
"Rating Agency" means a nationally recognized statistical
rating organization in the United States selected by the Borrower that will be
substituted, with the consent of the Insurer, (so long as the Insurer is the
Controlling Class) for ▇▇▇▇▇'▇ or S&P (or their respective successors) if any
such entity is no longer in the business of rating securities.
"Rating Agency Condition" means, with respect to any
specified action, that (a) each of ▇▇▇▇▇'▇ and S&P shall have been given prior
written notice thereof and (b) each of ▇▇▇▇▇'▇ and S&P shall have notified the
Borrower in writing that such action will not result at that time in a
downgrading or withdrawal of its then current ratings (without giving effect
to any Insurance Policy) of the Debt under this Agreement or the Preferred
Shares, as applicable.
"RCRA" means the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. ss. 6901 et seq.
"Register" is defined in Section 9.16.
"Regulation D" means, unless otherwise indicated, Regulation
D of the FRS Board as from time to time in effect and any successor to all or
a portion thereof establishing reserve requirements.
"Related Contract" has the meaning set forth in the Pledge
and Intercreditor Agreement.
"Related Person" has the meaning assigned to such term in
the applicable Collateral Valuation Schedule.
"Relevant Date" is defined in Section 9.19(a).
"Replaced Lender" is defined in Section 3.4.7.
"Replacement Lender" is defined in Section 3.4.7.
"Reporting Date" means the last Business Day of each
calendar week, commencing July 30, 2004.
"Required Lenders" means, at any time and without
duplication in the case of Designated CP Conduits and their respective
Designated CP Conduit Committed Lenders, Lenders having, in the aggregate, a
Voting Percentage of more than 50% of the total Voting Percentages of all the
Lenders at such time.
"Restricted Payment" means
(i) any payment or other distribution (including, without
limitation, dividends) to any Common Shareholder of the Borrower in respect of
its Common Shares;
(ii) any payment or other distribution on account of the
purchase, redemption, retirement or acquisition of any Common Share, Preferred
Share or other equity interest in the Borrower; or
(iii) any payment in respect of any Subordinated Equity
Securities.
For the avoidance of doubt, dividends on the Preferred Shares shall not be
treated as Restricted Payments and may be paid by the Borrower at any time in
accordance with the terms of the Operating Agreement.
"Revolving Borrowing" means a Borrowing of Revolving Loans.
"Revolving Commitment" has the meaning set forth in Section
2.1.1(a).
"Revolving Lender" means each Lender that has a Revolving
Commitment.
"Revolving Loan" is defined in Section 2.1.1(a).
"Revolving Note" is defined in Section 3.2.
"Revolving Percentage" of any Lender means, at any time: (a)
with respect to the aggregate amount of Revolving Commitments of all Lenders
to make Revolving Loans of any Type at such time, the percentage which such
Lender's Revolving Commitment to make Revolving Loans, if any, is of the
aggregate amount of Revolving Commitments of all Lenders to make Revolving
Loans at such time; and (b) with respect to the aggregate amount of Revolving
Loans which are outstanding at such time, the percentage which the aggregate
principal amount of such Lender's Revolving Loans of such Type is of the total
principal amount of Revolving Loans of such Type at such time; in each case as
shown on the Schedule 1 to this Agreement (or, in the case of any Lender which
becomes a Lender pursuant to any Assignment Agreement, as provided in such
Assignment Agreement) and in all cases as changed from time to time as a
consequence of Assignment Agreements pursuant to Section 9.4(b) and as
reflected in the books and records of the Administrative Agent at such time.
"RIC Distribution" is defined in Section 6.2.5.
"RIC Withholding Taxes" is defined in Section 6.2.5.
"S&P" means Standard & Poor's Ratings Services, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., a New York corporation, or any successor
thereto.
"S&P Collateral Valuation Schedule" means Schedule 10 to
this Agreement, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with this Agreement.
"S&P Valuation Procedures" means the procedures prescribed
by S&P for determining the Market Value of Fund Investments as set forth in
the S&P Collateral Valuation Schedule.
"Scheduled Commitment Termination Date" means July 13, 2012.
"Section 23A" means Section 23A of the Federal Reserve Act,
12 USC 371c, and any regulations, interpretations, rulings and opinions of the
FRS Board.
"Secured Hedging Advance Amount" has the meaning assigned to
such term in the applicable Collateral Valuation Schedule.
"Secured Hedging Net Exposure" has the meaning assigned to
such term in the applicable Collateral Valuation Schedule.
"Secured Hedging Transaction" has the meaning assigned to
such term in the applicable Collateral Valuation Schedule.
"Secured Parties Representative" means CDC Financial
Products Inc., as Secured Parties Representative under the Pledge and
Intercreditor Agreement, and any successor thereto in such capacity.
"Securities" has the meaning assigned to such term in the
applicable Collateral Valuation Schedule.
"Securities Act" means the United States Securities Act of
1933, as amended.
"Securities Lending Transactions" has the meaning assigned
to such term in the applicable Collateral Valuation Schedule.
"Senior Advance Amount" has the meaning assigned to such
term in the applicable Collateral Valuation Schedule.
"Senior Facility Insurance Agreement" means the Insurance
and Indemnity Agreement dated as of the Closing Date between the Borrower and
the Insurer, as amended or supplemented in accordance with the provisions
thereof, relating to the Loans hereunder.
"Senior Facility Insurance Policy" means the Financial
Guaranty Senior Facility Insurance Policy No. AB0779BE issued by the Insurer
with respect to the Loans hereunder pursuant to the Senior Facility Insurance
Agreement, including any endorsement thereto.
"Senior Indebtedness" means all Debt and other payment
obligations (including, without limitation, interest that would accrue but for
the filing of a petition initiating a Proceeding, whether or not a claim for
such interest is allowed in the Proceeding) of the Borrower arising under or
in respect of this Agreement, the Lender Notes, the Loans, or other Credit
Documents, the Secured Hedging Transactions or the Senior Facility Insurance
Agreement, whether outstanding on the Closing Date or thereafter created or
incurred including obligations owing to the Custodian under the Custodial
Agreement, to the Administrative Agent under this Agreement, to the Secured
Parties Representative under the Pledge and Intercreditor Agreement and the
Insurer under the Senior Facility Insurance Agreement; provided, however, that
Senior Indebtedness shall not include any Debt or such other obligations
incurred in violation of this Agreement.
"Senior Lender Indebtedness" means all Debt and other
payment obligations (including, without limitation, interest that would accrue
but for the filing of a petition initiating a Proceeding, whether or not a
claim for such interest is allowed in the Proceeding) of the Borrower arising
under or in respect of this Agreement, the Loans, the Lender Notes or the
Secured Hedging Transactions, whether outstanding on the Closing Date or
thereafter created or incurred.
"SPC" is defined in Section 3.8.
"Special Member" means SVOF MM, as the Special Member of the
Borrower, and any successor thereto in such capacity designated in accordance
with the Operating Agreement.
"Special Value Opportunities Feeder Fund" means Special
Value Opportunities Feeder Fund, a Delaware statutory trust and a holder of
Preferred Shares of the Borrower.
"Statement Date" is defined in Section 6.1.18.
"Structured Product Transaction" has the meaning assigned to
such term in the applicable Collateral Valuation Schedule.
"Subordinated Equity Securities" means any equity securities
issued by the Borrower following the Closing Date which are permitted pursuant
to Section 6.2.2(iii).
"Subsidiary" means at any time, with respect to any Person
(the "parent"), any corporation, association, partnership or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the ordinary voting power to elect the board of directors, general
partner, manager or comparable body of such corporation, association,
partnership or other business entity (irrespective of whether at the time
securities or other ownership interests of any other class or classes of such
corporation, association, partnership or other business entity shall or might
have voting power solely upon the occurrence of any contingency) are, at such
time owned directly or indirectly by the parent, by one or more Subsidiaries
of the parent or by the parent and one or more Subsidiaries of the parent and
(b) which is also required at such time under GAAP to be consolidated with the
parent. Notwithstanding the foregoing, with respect to the Borrower, any
corporation, association, partnership or other business entity that otherwise
meets the definition of "Subsidiary" shall not constitute a Subsidiary of the
Borrower, if the securities or other ownership interests representing more
than 50% of the ordinary voting power to elect the board of directors, general
partner, manager or comparable body of such corporation, association,
partnership or other business entity are obtained by the Borrower upon
foreclosure or exercise of remedies or in connection with a bankruptcy,
reorganization, restructuring or similar proceeding of the issuer or obligor
of such Fund Investment.
"SVOF MM" means SVOF MM, LLC, a Delaware limited liability
company.
"Swap Transaction" has the meaning assigned to such term in
the applicable Collateral Valuation Schedule.
"Swingline Expiry Date" means the date which is ten (10)
Business Days prior to the Scheduled Commitment Termination Date or such later
date as agreed to in writing by the Swingline Lender from time to time.
"Swingline Lender" means Eiffel Funding, LLC, and its
successors and assigns, in its capacity as the lender of Swingline Loans.
"Swingline Loans" is defined in Section 2.1.1(d).
"Swingline Note" is defined in Section 3.2.
"Swingline Rate" means, for any period, at the election of
the Borrower, (i) for any Swingline Loan that is a Cost of Funds Rate Loan,
the Cost of Funds Rate plus 0.43% per annum and (ii) for any other Swingline
Loan, the Eurodollar Rate plus 0.43% per annum or the Base Rate, as each such
rate may change from day to day during such period.
"Swingline Rate Loan" means a Loan bearing interest at a
fluctuating rate per annum determined by reference to the Swingline Rate.
"Tax Certificate" is defined in Section 3.6(b).
"Taxes" is defined in Section 3.6.
"TCO" means ▇▇▇▇▇▇▇▇▇▇ & Co., LLC.
"TCP" means ▇▇▇▇▇▇▇▇▇▇ Capital Partners, LLC, a Delaware
limited liability company.
"Telerate Page 3750" means the display page currently so
designated on the Bridge Telerate Market Report (or such other page as may
replace such page on such service for the purpose of displaying comparable
rates).
"Total Capitalization" has the meaning assigned to such term
in the applicable Collateral Valuation Schedule.
"Total Maximum Commitment" means, at any date of
determination, (a) on and after the Closing Date and prior to the Commitment
Termination Date, $473,000,000 and (b) on and after the Commitment Termination
Date, zero; provided, that (1) the calculations in this definition shall be
made after giving effect to all issuances, payments and other transactions
contemplated on the applicable date; (2) the Total Maximum Commitment may be
reduced as provided in Sections 2.2, 2.3.5 and 9.12(c); and (3) in no event
shall the Total Maximum Commitment at any time after the Ramp-Up Period exceed
the amount of the Total Maximum Commitment in effect on the last day of the
Ramp-Up Period.
"Total Revolving Commitments" means the sum of the Revolving
Commitments of each of the Lenders.
"Transaction Documents" means this Agreement, the other
Credit Documents, the Investment Management Agreement, the Insurance
Agreements, the Senior Facility Insurance Policy, the Preferred Shares Auction
Agency Agreement and the Preferred Shares Broker-Dealer Agreement, the Notes,
the Operating Agreement and any other agreement, instrument or document
executed and delivered by the Borrower in connection with the foregoing.
"Trigger Event" means any event specified in Section 11(b)
or 11(c) of the Investment Management Agreement pursuant to which a
"Replacement Principal" or "Ambac Replacement Principal" may be appointed in
accordance with the terms of the Investment Management Agreement.
"Type" means any type of Loan determined with respect to the
interest rate option applicable thereto (i.e., a Base Rate Loan, a Cost of
Funds Rate Loan, a Eurodollar Rate Loan or a Swingline Rate Loan).
"UCC" means, with respect to any jurisdiction, the Uniform
Commercial Code as from time to time in effect in such jurisdiction.
"United States" or "U.S." means the United States of
America, its 50 States, the District of Columbia and the Commonwealth of
Puerto Rico.
"Unquoted Investment" means any Fund Investment other than
Cash or Cash Equivalents for which the Market Value has not been obtained from
an Approved Source.
"Unutilized Commitment" means, at any time, the amount, if
any, by which the Total Maximum Commitment exceeds the then aggregate
outstanding principal amount of Revolving Loans.
"U.S. Government Securities" has the meaning assigned to
such term in the applicable Collateral Valuation Schedule.
"Valuation Statement" is defined in Section 6.1.1(b).
"Voting Percentage" of any Lender means, at any time:
(i) prior to the first Borrowing, the percentage which such
Lender's aggregate Commitments at such time is of the total aggregate
Commitments of all the Lenders at such time; and
(ii) on and after the first Borrowing, the percentage which
(i) the sum of the outstanding principal amount of such Lender's Loans (other
than Swingline Loans) plus such Lender's aggregate unused Commitments at such
time is of (ii) the sum of the outstanding principal amount of all Loans
(other than Swingline Loans) plus the aggregate amount of all unused
Commitments at such time, in each case as shown in the Register;
provided that a Lender may divide its Voting Percentage in accordance with
Section 9.16. If the Borrower or any Affiliate thereof or of TCP or SVOF MM
holds any Loans or Commitments, (x) neither the Borrower nor any such
Affiliate shall be included as a Lender for purposes of this definition, and
(y) the amount of such Loans or Commitments shall be subtracted from the total
amounts of such Loans and Commitments based on which the calculation of Voting
Percentages are made.
"Welfare Plan" means a "welfare plan," as such term is
defined in section 3(l) of ERISA.
"Withdrawal Notice" is defined in Section 2.3.2.
"Withdrawing Lender" is defined in Section 2.3.2.
"Yield-to-Worst" has the meaning set forth in the Collateral
Valuation Schedule.
EXHIBIT A
FORM OF BORROWING REQUEST
-------------------------
CDC Financial Products Inc.
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Re: Special Value Opportunities Fund, LLC
-------------------------------------
Ladies and Gentlemen:
This Borrowing Request is delivered to you pursuant to Section 3.1.1
of the Credit Agreement, dated as of July 13, 2004 (together with all
amendments, if any, from time to time made thereto, the "Credit Agreement"),
among Special Value Opportunities Fund, LLC, a limited liability company formed
under the laws of the State of Delaware (the "Borrower"), various financial
institutions identified therein (the "Lenders"), Ambac Assurance Corporation,
as Insurer (the "Insurer"), and CDC Financial Products Inc., as administrative
agent (the "Administrative Agent") and as arranger. Unless otherwise defined
herein or the context otherwise requires, terms used herein have the meanings
provided in the Credit Agreement.
Pursuant to Section 3.1.1 of the Credit Agreement, the undersigned
hereby give you irrevocable notice that the undersigned hereby request a
Borrowing under the Credit Agreement, and in that connection set forth below
the information relating to such Borrowing (the "Proposed Borrowing") as
required by Section 3.1.1 of the Credit Agreement:
(i) The aggregate principal amount of the Proposed Borrowing is
$_______.
(ii) The Business Day of the Proposed Borrowing is [Date].(1)
______________________
(1) A written or telephonic request for a Borrowing shall be received by
the Administrative Agent no later than (x) 12:00 noon (New York time)
not less than three (3) Business Days preceding the date of the
requested Loans, in the case of Eurodollar Rate Loans and Cost of
Funds Rate Loans that are Revolving Loans, and (y) 3:00 p.m. (New York
time) not less than one (1) Business Day preceding the date of the
requested Loans, in the case of Base Rate Loans that are Revolving
Loans. Whenever the Borrower desires to make a Borrowing of Swingline
Loans under the Credit Agreement, it shall give the Swingline Lender,
not later than 10:00 am. (New York time) on the date that a Swingline
Loan is to be made, written notice in the form of this Borrowing
Request (or telephonic notice promptly confirmed by means of a
delivered or telecopied Borrowing Request) of each Swingline Loan to
be made under the Credit Agreement; provided, that no more than three
Swingline Loans may be requested in any calendar month unless the
Swingline Lender otherwise consents.
(iii) The Loans to be made pursuant to the Proposed Borrowing shall be
initially maintained as [Base Rate Loans][Eurodollar Rate Loans
and Cost of Funds Rate Loans] [Swingline Rate Loans].
(iv) The initial Interest Period for the Proposed Borrowing is
[one/two/three/six] month(s).](2)
(v) The Proposed Borrowing is being made pursuant to the [Revolving
Commitments] [Swingline Loan Commitment].
The undersigned hereby certify that the following statements are true
on the date hereof, and will be true on the date of the Proposed Borrowing:
A. the representations and warranties contained in Article V of the
Credit Agreement and in the Collateral Documents are and will be true and
correct in all material respects, both before and after giving effect to the
Proposed Borrowing and to the application of the proceeds thereof, as though
made on such date, unless stated to relate to a specific earlier date, in which
case such representations and warranties shall be true and correct in all
material respects as of such earlier date;
B. no Default has occurred and is continuing, or would result from
such Proposed Borrowing or from the application of the proceeds thereof,
C. the Proposed Borrowing will not cause the aggregate principal
amount of all outstanding Loans to exceed the lesser of (i) the Total Maximum
Commitment and (ii) the Borrowing Base (determined after giving effect to the
application of proceeds from the Proposed Borrowing) minus the aggregate
outstanding liquidation preference of the Preferred Shares,
D. (1) no material default with respect to the Borrower shall have
occurred and be continuing under either Insurance Agreement and (2) no event of
default with respect to the Borrower shall have occurred and be continuing
under either Insurance Agreement as a result of which the Insurer is exercising
any remedies thereunder.
____________________
(2) To be included for a Proposed Borrowing of Eurodollar Rate Loans and
Cost of Funds Rate Loans only.
The undersigned hereby acknowledge that, pursuant to Section 3.1.1 of
the Credit Agreement, each of the delivery of this Borrowing Request and the
acceptance by the undersigned of the proceeds of the Loans requested hereby
constitute a representation and warranty by the undersigned that, on the date
of such Loan, and before and after giving effect thereto and to the application
of the proceeds therefrom, all applicable conditions contained in Article IV of
the Credit Agreement shall, both before and after giving effect to the Proposed
Borrowing, have been satisfied.
In addition to, and not in limitation of, the foregoing, the
undersigned hereby expressly represent and warrant to the Administrative Agent
and the Lenders that, as of the date hereof, it is in compliance with the
requirements of the Over-Collateralization Test of the Credit Agreement,
calculated as follows:
(a) Outstanding Principal Amounts of Loans
as of _______________.(3) $_________________
(b) Aggregate Outstanding Liquidation
Preference of the Preferred Shares as of
_______________.(3) $_________________
(c) Amount of Loan requested: $_________________
(d) Total of (a), (b) and (c): $_________________
(e) Advance Amount under the ▇▇▇▇▇'▇
Valuation Procedures:(4) $_________________
(f) Advance Amount under the S&P Valuation
Procedures:(5) $_________________
(g) lower of (e) and (f) $_________________
(h) (g) minus (d) $_________________
-------------------------
(3) Insert the date of the first Business Day preceding date hereof
(4) Determined using the most recent Market Value under the
▇▇▇▇▇'▇ Valuation Procedures for each Fund Investment and
after giving effect to the receipt by the Borrower of the
proceeds of the Proposed Borrowing and the application
thereof.
(5) Determined using the most recent Market Value under the S&P
Valuation Procedures for each Fund Investment and after
giving effect to the receipt by the Borrower of the proceeds
of the Proposed Borrowing and the application thereof.
The undersigned agree that if, prior to the time of the Proposed
Borrowing, any matter certified to herein by it will not be true and correct at
such time as if then made, it will immediately so notify the Administrative
Agent. Unless the Administrative Agent shall have received written notice to
the contrary from the undersigned prior to the time of the Proposed Borrowing,
each matter certified to herein shall be deemed once again to be certified as
true and correct at the date of the Proposed Borrowing as if then made.
SPECIAL VALUE OPPORTUNITIES FUND, LLC,
as Borrower
BY:____________________________________
Name:
Title:
EXHIBIT B-1
-----------
FORM OF REVOLVING NOTE
----------------------
New York, New York
$_______________ ____________, ____
FOR VALUE RECEIVED, the undersigned, SPECIAL VALUE OPPORTUNITIES FUND,
LLC, a limited liability company formed under the laws of the State of Delaware
(the "Borrower"), promises to pay to _____________________ (the "Lender") in
lawful money of the United States of America in immediately available funds, at
the Payment Office on the Commitment Termination Date (or if earlier, and the
Lender is a Withdrawing Lender, the Scheduled Commitment Termination Date) the
principal sum of________________ DOLLARS ($________) or, if less, the aggregate
unpaid principal amount of all Revolving Loans made by the Lender (as shown on
the grid (and any continuation thereof) attached hereto, which shall be prima
facie evidence (absent manifest error) of the outstanding principal amount of
such Loans) pursuant to that certain Credit Agreement, dated as of July 13,
2004 (together with all amendments and other modifications, if any, from time
to time thereafter made thereto, the "Credit Agreement"), among the Borrower,
the various financial institutions (including the Lender) as are, or may from
time to time become, parties thereto, Ambac Assurance Corporation, as Insurer
(the "Insurer"), and CDC Financial Products Inc., as Administrative Agent (the
"Administrative Agent") and as Arranger.
The Borrower also promises to pay interest on the unpaid principal
amount hereof in like money at the Payment Office from the date hereof until
maturity (whether by acceleration or otherwise) and, after maturity, until
paid, at the rates per annum and on the dates specified in the Credit
Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement. This Note is secured by the Pledge and Intercreditor Agreement and
is entitled to the benefits of the Pledge and Intercreditor Agreement and the
Custodial Agreement and will be entitled to the benefits of the Senior Facility
Insurance Policy with respect to Scheduled Payments. This Note is subject to
voluntary prepayment and mandatory repayments as provided in the Credit
Agreement and Revolving Loans may be converted from one Type into another Type
to the extent provided in the Credit Agreement. Unless otherwise defined
herein, capitalized terms used herein have the meanings provided in the Credit
Agreement.
In case an Event of Default shall occur and be continuing, the
principal of and accrued interest on this Note may become or be declared to be
due and payable in the manner and with the effect provided in the Credit
Agreement.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of dishonor
in connection with this Note.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SPECIAL VALUE OPPORTUNITIES FUND, LLC,
as Borrower
BY:____________________________________
Name:
Title:
LOANS AND PRINCIPAL PAYMENTS
Amount and Interest Amount of Unpaid
Type of Loan Period (if Principal Principal Notation
Date Made applicable) Balance Balance Total Made by
EXHIBIT B-2
-----------
FORM OF SWINGLINE NOTE
----------------------
$75,000,000 New York, New York
July 13, 2004
FOR VALUE RECEIVED, SPECIAL VALUE OPPORTUNITIES FUND, LLC, a limited
liability company formed under the laws of the State of Delaware (the
"Borrower"), promises to pay to _____________________ or its registered assigns
(the "Bank"), in lawful money of the United States of America in immediately
available funds, at the office of CDC Financial Products Inc. located at ▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, on the Swingline Expiry Date (as
defined in the Credit Agreement referred to below) the principal sum of
SEVENTY-FIVE MILLION DOLLARS ($75,000,000) or, if less, the unpaid principal
amount of all Swingline Loans made by the Bank pursuant to the Credit
Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates and at the times specified in the Credit Agreement.
This Note is the Swingline Note referred to in the Credit Agreement,
dated as of July 13, 2004 (together with all amendments and other
modifications, if any, from time to time thereafter made thereto, the "Credit
Agreement"), among the Borrower, the various financial institutions (including
the Bank) as are, or may from time to time become, parties thereto, Ambac
Assurance Corporation, as Insurer (the "Insurer"), and CDC Financial Products
Inc., as Administrative Agent (the "Administrative Agent") and as Arranger, and
is entitled to the benefits thereof and of the other Credit Documents. This
Note is secured by the Pledge and Intercreditor Agreement and is entitled to
the benefits of the Pledge and Intercreditor Agreement and the Custodial
Agreement and will be entitled to the benefits of the Senior Facility Insurance
Policy with respect to Scheduled Payments. This Note is subject to voluntary
prepayment and mandatory repayment prior to the Swingline Expiry Date, in whole
or in part, as provided in the Credit Agreement. Unless otherwise defined
herein, capitalized terms used herein have the meanings provided in the Credit
Agreement.
In case an Event of Default shall occur and be continuing, the
principal of and accrued interest on this Note may become or be declared to be
due and payable in the manner and with the effect provided in the Credit
Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
SPECIAL VALUE OPPORTUNITIES FUND, LLC,
as Borrower
BY:____________________________________
Name:
Title:
EXHIBIT C
---------
FORM OF NOTICE OF CONVERSION/CONTINUATION
-----------------------------------------
CDC Financial Products Inc.
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Re: Special Value Opportunities Fund, LLC
Ladies and Gentlemen:
This Notice of Conversion/Continuation is delivered to you pursuant to
Section 3.4.3 of the Credit Agreement, dated as of July 13, 2004 (together with
all amendments, if any, from time to time made thereto, the "Credit
Agreement"), among Special Value Opportunities Fund, LLC, a limited liability
company formed under the laws of the State of Delaware (the "Borrower"),
certain financial institutions identified therein (the "Lenders"), Ambac
Assurance Corporation, as Insurer (the "Insurer"), and CDC Financial Products
Inc., as Administrative Agent (the "Administrative Agent") and as Arranger.
Unless otherwise defined herein or the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.
The Borrower hereby requests that on [__________](1) (the
Conversion/Continuation Date"),
1. [_____________] of the presently outstanding principal amount of
the Loans originally made on _____ _, ____,
2. and all presently being maintained as [Base Rate Loans] [Eurodollar
Rate Loans and/or Cost of Funds Rate Loans],
3. be [converted into] [continued as],
4. [Eurodollar Rate Loans and/or Cost of Funds Rate Loans] having an
Interest Period of [one/two/three/six] months] [Base Rate Loans].
____________________
(1) Shall be a Business Day at least two Business Days after the date
hereof (in the case of a conversion into/continuation of Base Rate
Loans) or three Business Days after the date hereof (in the case of a
conversion into/continuation of Eurodollar Rate Loans or Cost of Funds
Rate Loans), in each case to the extent this Notice of
Conversion/Continuation is delivered to the Administrative Agent prior
to 11:00 a.m. (New York time) on such initial Business Day.
The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the proposed Conversion/Continuation Date,
both before and after giving effect thereto and to the application of the
proceeds therefrom:
(a) the foregoing [conversion] [continuation] complies with the terms
and conditions of the Credit Agreement (including, without limitation, Section
3.4.3 of the Credit Agreement);
[(b) no Event of Default has occurred and is continuing, or would
result from such proposed [conversion] [continuation].](2)
SPECIAL VALUE OPPORTUNITIES FUND, LLC,
as Borrower
BY:____________________________________
Name:
Title:
_____________________
(2) To be included for conversions into or continuation of Eurodollar Rate
Loans or Cost of Funds Rate Loans.
EXHIBIT D
---------
FORM OF ASSIGNMENT AGREEMENT
----------------------------
DATE: _____________, ____
Reference is made to the Credit Agreement described in Item 2 of Annex
I attached hereto (as such Credit Agreement may hereafter be amended, modified
or supplemented from time to time, the "Credit Agreement"). Unless defined in
Annex I attached hereto, terms defined in the Credit Agreement are used herein
as therein defined. ______________________ (the "Assignor") and
______________________ (the "Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without
recourse and without representation or warranty (other than as expressly
provided herein), and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights and obligations
under the Credit Agreement as of the date hereof which represents the
percentage interest specified in Item 4 of Annex I attached hereto (the
"Assigned Share") of all of the outstanding rights and obligations under the
Credit Agreement indicated in Item 4 of such Annex I, including, without
limitation, all rights and obligations with respect to the Assigned Share of
the Total Maximum Commitment and of any outstanding Loans.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any liens or security interests; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the other Credit Documents or the execution legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or the other Credit Documents or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or any of its Subsidiaries or the performance or observance by the
Borrower of any of its obligations under the Credit Agreement or the other
Credit Documents or any other instrument or document furnished pursuant
thereto.
3. The Assignee (i) represents and warrants that it is duly authorized
to enter into and perform the terms of this Assignment Agreement; (ii) confirms
that it has received a copy of the Credit Agreement and the other Credit
Documents, together with copies of the financial statements referred to therein
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment Agreement;
(iii) agrees that it will, independently and without reliance upon the
Administrative Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iv) appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement and the other Credit Documents as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; [and] (v) agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Credit Agreement
are required to be performed by it as a Lender [; and (vi) attaches the
Internal Revenue Service Forms (and, if applicable, a Tax Certificate)
described in Section 9.4(b) of the Credit Agreement].(1)
The Assignee further represents and warrants that (i) it is an
Eligible Transferee, (ii) neither it nor any of its representatives or agents
has offered or shall offer any interest in the Agreement by means of a general
solicitation or general advertising, including advertisements, articles,
notices or other communications published in any newspaper, magazine or similar
medium or broadcast over television or radio or publicized through the
internet, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising; (iii) as of the date of the
effectiveness of this Assignment Agreement, it has not granted or transferred
or agreed to grant or transfer, any participation or other interest in this
Agreement to any person except in accordance with Section 9.4 of the Credit
Agreement; and (iv) its unsupported long-term senior debt obligations are
rated, or its claims paying or financial strength rating is, at least (x)(1)
"A2" by ▇▇▇▇▇'▇ or (2) "A3" by ▇▇▇▇▇'▇ and is placed on a credit watch with
positive implications by ▇▇▇▇▇'▇, and (y)(1) "A" by S&P or (2) "A-" by S&P and
is placed on a credit watch with positive implications by S&P (or its
obligations are guaranteed by entities with such ratings), except in the case
of an CP Conduit, in which case its commercial paper notes have short term
ratings of at least "P-1" by ▇▇▇▇▇'▇ and "A-1" by S&P.
4. Following the execution of this Assignment Agreement by the
Assignor and the Assignee, an executed original hereof (together with all
attachments) will be delivered to the Administrative Agent. Subject to the
terms and conditions hereof and the Credit Agreement, the effective date of
this Assignment Agreement shall be (x) the first date on which each of the
following conditions shall have occurred: (i) execution hereof by the Assignor
and the Assignee, (ii) to the extent required by Section 9.4(b) of the Credit
Agreement, the receipt of the consent of the Administrative Agent and the
Borrower (which consent shall not be unreasonably withheld), (iii) the
recordation by the Administrative Agent of the assignment effected hereby in
the Register and (iv) the receipt by the Administrative Agent of the applicable
assignment fee referred to in Section 9.4(b) of the Credit Agreement or (y)
such later date is otherwise specified in Item 5 of Annex I attached hereto
(the "Settlement Date").
5. Upon the delivery of a fully executed original hereof to the
Administrative Agent and subject to the terms and conditions hereof and the
Credit Agreement, as of the Settlement Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment
Agreement, have the rights and obligations of a Lender thereunder and under
the other Credit Documents and (ii) the Assignor shall, to the extent
provided in this Assignment Agreement, relinquish its rights and
______________________
(1) Include if the Assignee is organized under laws of a jurisdiction
outside the Untied States
be released from its obligations under the Credit Agreement and the other
Credit Documents.
6. It is agreed that upon the effectiveness hereof, the Assignee shall
be entitled to (x) all interest on the Assigned Share of the Loans at the rates
specified in Item 6 of Annex I attached hereto and (y) all commitment fees
payable to the Assignee under Section 2.4.1 of the Credit Agreement specified
in Item 7 of Annex I attached hereto, which, in each case, accrue on and after
the Settlement Date, such interest and commitment fees, to be paid by the
Administrative Agent, upon receipt thereof from the Borrower, directly to the
Assignee. It is further agreed that all payments of principal made by the
Borrower on the Assigned Share of the Loans which occur on and after the
Settlement Date will be paid directly by the Administrative Agent to the
Assignee. Upon the Settlement Date, the Assignee shall pay to the Assignor an
amount specified by the Assignor in writing which represents the Assigned Share
of the principal amount of the Loans which are outstanding on the Settlement
Date, net of any closing costs. The Assignor and the Assignee shall make all
appropriate adjustments in payments under the Credit Agreement for periods
prior to the Settlement Date directly between themselves.
7. The Assignor and the Assignee each covenants and agrees that, prior
to the date that is one year and one day after the payment in full of all
Senior Indebtedness, such Person shall not institute against the Borrower or
the Special Member any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceedings. [The Assignee hereto
further covenants and agrees that, prior to the date which is one year and one
day after the payment in full of all outstanding commercial paper notes and
other indebtedness for borrowed money of the Assignor, the Assignee shall not
institute against, or join any other Person in instituting against, the
Assignor, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceedings.](2) This provision shall
survive the termination of the Credit Agreement and the making and repayment of
the Assigned Share.
8. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
____________________
(2) To be included if the Assignor is a CP Conduit or SPC.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
[NAME OF ASSIGNOR],
as Assignor
By:_____________________________________
Name:
Title:
[NAME OF ASSIGNEE],
as Assignee
By:_____________________________________
Name:
Title:
Consented to by:
CDC Financial Products Inc.
as Administrative Agent
By:______________________________
Name:
Title:
SPECIAL VALUE OPPORTUNITIES FUND, LLC,
as Borrower
BY:______________________________
Name:
Title:
ANNEX 1
-------
ANNEX FOR ASSIGNMENT AGREEMENT
ANNEX I
1. The Borrower:
Special Value Opportunities Fund, LLC
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of July 13, 2004 among the Borrower, Ambac
Assurance Corporation, as Insurer, and CDC Financial Products Inc., as
Administrative Agent and as Arranger.
3. Date of Assignment Agreement:
_____________ ___, ______
4. Amounts (as of date of item #3 above):
Total Revolving
Commitment
----------
(a) Aggregate Amounts for all Lenders $________
(b) Amount of Assignor's share prior
to Assignment $________
(c) Amount of Assigned Share $________
(d) Amount of Assignor's share after
Assignment $________
(e) Amount of Assignee's share after
Assignment $________
5. Settlement Date: ________ __, ____
6. Rate of Interest As set forth in Section 3.4 of the Credit
to the Assignee: Agreement (unless otherwise agreed to
by the Assignor and the Assignee)
7. Commitment Fees: As set forth in Section 2.4.1 of the
Credit Agreement (unless otherwise agreed
to by the Assignor and the Assignee).(1)
8. Notices:
ASSIGNOR:
_____________
_____________
_____________
_____________
Attention:
Telephone No.:
Facsimile No.:
ASSIGNEE:
_____________
_____________
_____________
_____________
Attention:
Telephone No.:
Facsimile No.:
9. Payment Instructions:
ASSIGNOR:
_____________
_____________
_____________
_____________
ABA No.: ________________
Account No.: _____________
Reference: _______________
Attention: _______________
____________________
(1) The Borrower and the Administrative Agent shall direct the entire
amount of the commitment fees to the Assignee at the rate set forth in
Section 2.4.1 of the Credit Agreement, with the Assignor and the
Assignee effecting any agreed upon sharing of the commitment fees
through payment by the Assignee to the Assignor, unless the
Administrative Agent shall agree to an alternative arrangement.
ASSIGNEE:
_____________
_____________
_____________
_____________
ABA No.: ______________
Account No.: ___________
Reference: _____________
Attention: ______________
ACCEPTED AND AGREED:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By:_______________________________ By:_____________________________
EXHIBIT E
---------
FORM OF TAX CERTIFICATE
-----------------------
Reference is hereby made to the Credit Agreement, dated as of July 13,
2004, among Special Value Opportunities Fund, LLC, various financial
institutions identified therein, Ambac Assurance Corporation, as Insurer, and
CDC Financial Products Inc., as Administrative Agent and as Arranger (as
amended, supplemented or modified from time to time, the "Credit Agreement").
Pursuant to the provisions of Section 3.6(b) of the Credit Agreement, the
undersigned hereby certifies that it is not a "bank" as such term is used in
Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended.
[NAME OF LENDER]
By:________________________
Name:
Title:
Date:_____________, _____
EXHIBIT F
---------
Letter from the Investment Manager
▇▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, LLC
To: The Administrative Agent and the Lenders under the Credit Agreement
(the "Credit Agreement"), dated as of July 13, 2004, among Special
Value Opportunities Fund, LLC, a limited liability company organized
under the laws of the State of Delaware, various financial
institutions identified therein as Lenders, Ambac Assurance
Corporation, as Insurer, and CDC Financial Products Inc., as
Administrative Agent and as Arranger.
This is to confirm that we consent to the provisions of Section 6.2.14
of the Credit Agreement. This consent, however, shall not be deemed to
constitute a waiver of the undersigned's rights to terminate or assign the
Investment Management Agreement (as defined in the Credit Agreement).
▇▇▇▇▇▇▇▇▇▇ CAPITAL PARTNERS, LLC
By: ▇▇▇▇▇▇▇▇▇▇ & Co., LLC, as its Managing Member
By:_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Member
Dated: July 13, 2004
EXHIBIT G
---------
FORM OF PLEDGE AND INTERCREDITOR AGREEMENT
See Tab 17
EXHIBIT H
---------
FORM OF [ANNUAL] [QUARTERLY]
COMPLIANCE CERTIFICATE
----------------------
To: CDC Financial Products Inc. as Administrative Agent under the Credit
Agreement referred to below.
Reference is hereby made to the Credit Agreement (as in effect on the
date of this certificate, the "Credit Agreement"), dated as of July 13, 2004,
by and among SPECIAL VALUE OPPORTUNITIES FUND, LLC, as Borrower, various
financial institutions from time to time party thereto, Ambac Assurance Corp.,
as Insurer, and CDC Financial Products Inc., as Administrative Agent and as
Arranger. Capitalized terms used herein and not defined herein shall have the
meanings provided therefor in the Credit Agreement.
Pursuant to Section 6.1.2 [(a)][(b)] of the Credit Agreement, we are
delivering to you on the date hereof our [annual] [quarterly] financial
statements for the fiscal [year][quarter] ended ________ ___, _____ (such
period, the "Fiscal Period").
As required by Section 6.1.2(c) of the Credit Agreement, the
undersigned, as an Authorized Officer of the Borrower, hereby certifies as to
the following:
1. The Company Equity as of the last day of the fiscal quarter of the Borrower
most recently ended equals: $___________________
2. The aggregate amount of Restricted Payments made in accordance with Section
6.2.5 of the Credit Agreement during such Fiscal Period equals $____________
3. The aggregate principal amount of the Subordinated Equity Securities as of
the last day of the Fiscal Period of the Borrower most recently ended equals:
$___________.
4. Set forth below are the calculations demonstrating compliance with the
minimum net worth test in Section 6.1.15 of the Credit Agreement for such
Fiscal Period:
-------------------------------------------------------------------------------
(1) Company Equity $___________
-------------------------------------------------------------------------------
(2) Contributed Company Capital $___________
-------------------------------------------------------------------------------
(3) 60% of (2) $___________
-------------------------------------------------------------------------------
5. As of the date hereof, [no Default] [the following Defaults exist, and set
forth below with respect to each such Default a description of the details
thereof and what action the Borrower proposes to take in respect thereof].
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed as of the _____ day of ___________, _____.
SPECIAL VALUE OPPORTUNITIES FUND, LLC,
as Borrower
BY:____________________________________
Name:
Title:
EXHIBIT I
---------
FORM OF CUSTODIAL AGREEMENT
---------------------------
See Tab 18
EXHIBIT J
---------
[FORM OF VALUATION STATEMENT]
-----------------------------
Certificate of Special Value Opportunities Fund, LLC
Pursuant to Section 6.1.1 (Collateral Valuation Covenant) of the
Credit Agreement, dated as of July 13, 2004 (as the same may be amended,
restated, replaced, refinanced or otherwise supplemented from time to time, the
"Credit Agreement"), among Special Value Opportunities Fund, LLC (the
"Borrower"), the lenders from time to time parties thereto, Ambac Assurance
Corp., as Insurer, and CDC Financial Products Inc., as Administrative Agent and
as Arranger, the Borrower hereby certifies that the calculations set forth in
the attached Annex I are true and accurate calculations of the Advance Amount,
the Over-Collateralization Test, the Borrowing Base, the Facility Commitment
and the Total Maximum Commitment as of [DATE], in each case, determined in
accordance with the requirements set forth in the Credit Agreement.
Attached hereto as Annex II is the information required pursuant to
Section 6.1.1(b) of the Credit Agreement.
Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.
Dated:
SPECIAL VALUE OPPORTUNITIES FUND, LLC,
as Borrower
BY:____________________________________
Name:
Title:
ANNEX I TO
VALUATION STATEMENT
-------------------
Special Value Opportunities Fund, LLC
Calculation of the Advance
Amount, the Over-Collateralization Test,
Borrowing Base, Facility Commitment
and Total Maximum Commitment
(As of [DATE])
-------------------------------------------------------------------------------------------------------
1. Advance Amount/Borrowing Base: $________________
[As determined pursuant to the Collateral Valuation Schedule.]
-------------------------------------------------------------------------------------------------------
2. Outstanding Principal Amount under the Credit Agreement: $________________
-------------------------------------------------------------------------------------------------------
3. Aggregate Outstanding Liquidation Preference of the Preferred Shares $________________
-------------------------------------------------------------------------------------------------------
4. Over-Collateralization Test: $
[the remainder of the difference of (i) 1 minus (ii) the sum of 2 and
3 above; satisfied if greater than 0.]
-------------------------------------------------------------------------------------------------------
5. Facility Commitment: $
-------------------------------------------------------------------------------------------------------
6. Total Maximum Commitment $
-------------------------------------------------------------------------------------------------------
ANNEX II TO
VALUATION STATEMENT
Schedule of Information Required
Pursuant to Section 6.1.1(b) [1]
_______________________
{1} Section 6.1.1(b) includes the following:
(i) a schedule of all Fund Investments by issue and by Asset
Category included in the determination of the Advance Amount
pursuant to Section 6.1.1(b)(i) of the Credit Agreement;
(ii) a schedule of all Unquoted Investments owned by the Borrower,
setting forth the information required by Section
6.1.1(b)(ii) of the Credit Agreement;
(iii) the aggregate Market Value of all Eligible Investments,
setting forth a list of Excluded Investments and calculations
of applicable Portfolio Limitations pursuant to Section
6.1.1(b)(iii) of the Credit Agreement;
(iv) the calculation of the Advance Amount under the ▇▇▇▇▇'▇
Collateral Valuation Schedule and the S&P Collateral
Valuation Schedule and the Borrowing Base as of such date;
(vii) a schedule of the Secured Hedging Net Exposure of each
Secured Hedging Transaction then outstanding;
(viii) a schedule of the aggregate amount of Debt of the Borrower
incurred as permitted under Section 6.2.2 of the Credit
Agreement and outstanding;
(vii) a schedule of all of the assets sold with their respective
purchase and sale prices and the date of such purchase and
sale of such assets sold; and
(viii) a statement certifying that, except as otherwise indicated on
this Valuation Statement, the Borrower had determined the
current Market Value of all Fund Investments using quotations
provided since the date of the immediately prior Valuation
Statement.
EXHIBIT K
---------
FORM OF SENIOR FACILITY INSURANCE POLICY
----------------------------------------
See Tab 14
EXHIBIT L
---------
FORM OF PREFERRED SHARES INSURANCE POLICY
-----------------------------------------
AMBAC ASSURANCE CORPORATION
FINANCIAL GUARANTY INSURANCE POLICY
Policy Number: AB0780BE
Re: Special Value Opportunities Fund, LLC
(the "Issuer")
Insured Obligations: Preferred Shares (as defined
herein) with an aggregate liquidation
preference not to exceed initially
$37,500,000 (subject to increase as
described herein) plus the amount, if any,
of all accumulated but unpaid dividends
thereon (whether or not earned or
declared) and with a mandatory final
redemption date of July 13, 2014 (the
"Final Redemption Date")
Beneficiary: Deutsche Bank Trust Company Americas, as
Paying Agent under the Auction Agency
Agreement and any successor in such
capacity, for the benefit of each Holder
of the Preferred Shares (each a "Holder")
under and as defined in the Statement of
Preferences (as defined herein)
AMBAC ASSURANCE CORPORATION ("Ambac"), a Wisconsin stock insurance
corporation, for consideration received, hereby unconditionally and irrevocably
guarantees to each Holder, subject only to the terms of this financial guaranty
insurance policy (this "Policy"), that the full and complete Insured Amount (as
defined herein) will be paid to the Paying Agent, a Designated Recipient (as
defined herein), a Holder or a Bankruptcy Trustee (as defined herein), as
provided for herein, after a claim is made by the Paying Agent during the Term
of the Policy in accordance with the procedures set forth herein.
Insured Amounts shall be paid only at the times set forth in this
Policy and no payment in respect of the Redemption Price of any Preferred
Shares shall be paid prior to the Final Redemption Date, regardless of any
notice of an optional or mandatory early redemption of the Preferred Shares,
other than payments made in respect of (i) an early redemption or payment in
respect of Insured Obligations at the sole option of Ambac, (ii) an Amount
Subject to Recall (as defined herein) or (iii) a Preference Amount (as defined
herein). In the event that Ambac elects, in its sole discretion, to make any
payment described in clause (i) above in respect of the Redemption Price of any
Preferred Shares prior to the Final Redemption Date, such payment shall be made
on the related Redemption Payment Date specified by Ambac in writing delivered
to the Paying Agent in the manner provided for under the Auction Agency
Agreement. Ambac's obligations with respect to a particular Insured Amount
shall be discharged to the extent funds equal to the applicable Insured Amount
are paid to the Paying Agent (or a Holder, a Designated Recipient or a
Bankruptcy Trustee as applicable), whether or not such funds are properly
applied by the Paying Agent, such Designated Recipient or such Bankruptcy
Trustee, as applicable.
For all purposes of this Policy, unless otherwise defined herein,
capitalized terms used herein with respect to any Preferred Shares shall have
the meanings provided in the Statement of Preferences.
This Policy is irrevocable and not cancelable for any reason
(including non- payment of the premium) and may not be modified, altered,
amended or endorsed (other than by an Increase Endorsement as contemplated by
the terms of this Policy) by Ambac without the prior unanimous consent of the
Holders.
Ambac will pay any Insured Amount (other than Preference Amounts
and Amounts Subject to Recall) payable under this Policy no later than 12:00
noon New York City time on the later of (i) any Payment Date with respect to
the Insured Obligations on which the related Distribution Amount (as defined
herein) is due or (ii) the second Business Day following actual receipt on a
Business Day by Ambac, of a Notice (as defined herein), which Notice may be
transmitted by telephone, telecopy or telex and shall be effective when
received; provided that, if such Notice is received after 12:00 noon New York
City time on such Business Day, it shall be deemed to be received on the
following Business Day. If any such Notice received by Ambac is not in the form
of Exhibit A, or the information given by the Paying Agent in the Notice is
incomplete for the purpose of making claims hereunder, it shall be deemed not
to have been received by Ambac for purposes of this paragraph, and Ambac shall
by 2:00 p.m. New York City time on the date received or deemed received,
promptly so advise the Paying Agent of such deficiency and of the nature of the
deficiency and the Paying Agent may submit an amended or corrected Notice by
4:00 p.m. New York City time on such date. If such an amended Notice in the
form of Exhibit A and otherwise sufficient for the purpose of making claim
under this Policy is so received by Ambac, it shall be deemed to have been
timely received on such Business Day.
Ambac will pay to the Bankruptcy Trustee or the Holders, as
applicable, any Insured Amount that is a Preference Amount on the third
Business Day following receipt on a Business Day by Ambac of (i) a certified
copy of an order (of the type described in the definition of Preference Amount)
related to such Preference Amount (the "Bankruptcy Order"), (ii) a certificate
by or on behalf of the Bankruptcy Trustee or the Holders, as applicable, that
the Bankruptcy Order has been entered and is not subject to any stay, (iii) an
assignment at a time a claim is made for a Preference Amount under this Policy,
conditional upon payment in full of such Insured Amount and otherwise in such
form as is reasonably required by Ambac from each applicable Holder,
irrevocably assigning to Ambac all rights (including voting rights) and claims
of each applicable Holder, if any, relating to or arising under the Insured
Obligations against the debtor which made such preference payment, to the
extent of such preference payment, and (iv) a Notice (in the form attached
hereto as Exhibit A) appropriately completed and executed by the Paying Agent;
provided that if such documents are received after 12:00 noon New York City
time on such Business Day, they will be deemed to be received on the following
Business Day. Such payments shall be disbursed to the Bankruptcy Trustee named
in the Bankruptcy Order and not to any Holder directly unless such Holder
provides certification or other evidence reasonably satisfactory to Ambac that
it has returned the liquidation preference and/or the dividends paid on the
Insured Obligations and subject to the preference claim to such Bankruptcy
Trustee, in which case such payment shall be disbursed to such Holder.
Ambac will pay to the Holders or a Designated Recipient, any
Insured Amount that is an Amount Subject to Recall on the third Business Day
following receipt on a Business Day by Ambac of (i) a certified copy of an
order (of the type described in the definition of Amount Subject to Recall)
related to such Amount Subject to Recall (the "Court Order"), (ii) a
certificate by or on behalf a Holder that the Court Order has been entered and
is not subject to any stay, and (iii) a Notice (in the form attached hereto as
Exhibit A) appropriately completed and executed by the Paying Agent; provided
that if such documents are received after 12:00 noon New York City time on such
Business Day, they will be deemed to be received on the following Business Day.
Such payments shall be disbursed to the Person named in the Court Order (a
"Designated Recipient") and not to any Holder directly unless such Holder
provides certification or other evidence reasonably satisfactory to Ambac that
it has returned the liquidation preference and/or dividends paid on the Insured
Obligations and subject to the recall claim to the Issuer or such Designated
Recipient, in which case such payment shall be disbursed to such Holder.
Insured Amounts due under this Policy will be disbursed by Ambac to
the Paying Agent, a Designated Recipient, a Bankruptcy Trustee or the Holders,
as the case may be, by wire transfer of immediately available funds in the
amount of the Insured Amount.
As used herein, the following terms shall have the following
meanings:
"Amount Subject to Recall" means any amount payable to a Holder on
the Insured Obligations which has become due for payment and otherwise would
have been covered with respect to such Insured Obligation under the terms of
this Policy on or prior to the Final Redemption Date and in respect of which
payment has been made to a Holder by or on behalf of the Paying Agent which is
required to be returned to the Issuer as an unlawful distribution under Section
18-607 of the Delaware Limited Liability Company Act (as amended from time to
time, the "Delaware LLC Act"), in accordance with a final non-appealable order
of a court, administrator, authority or other tribunal having competent
jurisdiction.
"Auction Agency Agreement" means the Auction Agency Agreement,
dated as of July 13, 2004 relating to the Money Market Cumulative Preferred
Shares of the Issuer between the Issuer and Deutsche Bank Trust Company
Americas, as Auction Agent, as such agreement may be amended, supplemented or
modified from time to time in accordance with its terms.
"Available Funds" means the amount of funds that the Paying Agent
has available from the Issuer for disbursement pursuant to Section 3.4 of the
Auction Agency Agreement with respect to any Payment Date for the payment of
the Distribution Amount due to the Holders on such Payment Date.
"Bankruptcy Trustee" means the bankruptcy trustee or receiver
(including the debtor as debtor in possession) named in the order of a court,
administrator, authority or tribunal exercising competent jurisdiction in an
insolvency proceeding which order permits such bankruptcy trustee or receiver
to recover amounts of the liquidation preference and/or dividends paid on the
Insured Obligations to a Holder.
"Business Day" shall have the meaning given to such term in the
Statement of Preferences; provided that if an event or determination is to be
made on a day that is not a Business Day, then such event shall occur or be
determined on the next following Business Day.
"Deficiency Amount" means, for any Payment Date, the excess, if
any, of the Distribution Amount over Available Funds for such date.
"Dividend Payment Date" means, with respect to any Deficiency
Amount, the Business Day immediately preceding each date on which dividends are
scheduled for payment (whether or not declared or earned) on any Insured
Obligations in accordance with the Statement of Preferences.
"Distribution Amount" means, (a) with respect to any Dividend
Payment Date, the aggregate amount of dividends accumulated (whether or not
declared or earned) on the Insured Obligations and not deposited by the Issuer
with the Paying Agent prior to such Dividend Payment Date, (b) with respect to
any Redemption Payment Date that is the Final Redemption Date, the Redemption
Price on such Redemption Payment Date and (c) with respect to any Redemption
Payment Date other than the Final Redemption Date, the total amount Ambac has
elected to pay in respect of an early redemption of Insured Obligations.
"Increase Endorsement" means an endorsement to this Policy,
substantially in the form of Exhibit B hereto, which identifies additional
Insured Obligations hereunder.
"Insured Amount" means (i) as of any Payment Date, any Deficiency
Amount (excluding any early redemption payment made at the sole option of
Ambac), (ii) any Preference Amount and (iii) any Amount Subject to Recall.
Insured Amount shall not include any taxes, withholding or other charge imposed
by any governmental authority (including interest and penalties in respect of
such charge or taxes) with respect to any payment due with respect to the
Insured Obligations or this Policy.
"Insured Obligations" has the meaning set forth on the first page
of this Policy.
"LLC Agreement" means the amended and restated limited liability
company agreement of the Issuer, dated as of July 13, 2004, as further amended,
supplemented or modified from time to time in accordance with the terms
thereof.
"Notice" means the telephonic, telecopy or telex notice, promptly
confirmed in writing substantially in the form of Exhibit A hereto, from the
Paying Agent making a claim under this Policy and specifying the Insured
Amount.
"Paying Agent" means Deutsche Bank Trust Company Americas appointed
pursuant to the Auction Agency Agreement and any successor thereto appointed in
accordance with terms of the Auction Agency Agreement.
"Payment Date" means any Dividend Payment Date or any Redemption
Payment Date.
"Preference Amount" means any amount payable to a Holder of the
Insured Obligations which has become due for payment and otherwise would have
been covered with respect to such Insured Obligation under the terms of this
Policy on or prior to the Final Redemption Date and in respect of which payment
is made to a Holder by or on behalf of the Paying Agent which is recoverable
and sought to be recovered as an avoidable preference by a Bankruptcy Trustee
in accordance with a final non-appealable order of a court, administrator,
authority or other tribunal having competent jurisdiction.
"Preferred Shares" means collectively (i) the "Series A" money
market cumulative preferred shares issued pursuant to the Statement of
Preferences on July 13, 2004 and (ii) additional series of the money market
cumulative preferred shares, if any, issued pursuant to the LLC Agreement and
the Statement of Preferences after July 13, 2004 and before July 13, 2006 and
identified by series, date of original issue and liquidation preference amount
in any Increase Endorsement to this Policy.
"Redemption Payment Date" means (i) the Final Redemption Date and
(ii) if Ambac elects in its sole discretion to make payment in respect of an
early redemption of Preferred Shares, then each date upon which such payment is
to be made.
"Redemption Price" means the product of (x) $25,000 and (y) the
number of Preferred Shares subject to the applicable redemption or, on the
Final Redemption Date, all Preferred Shares that are outstanding, plus in each
case, the amount, if any, of all accumulated but unpaid dividends (whether or
not earned or declared) on such Preferred Shares to (but not including) the
related Redemption Payment Date.
"Statement of Preferences" means the Statement of Preferences of
Money Market Cumulative Preferred Shares of Special Value Opportunities Fund,
LLC, dated July 12, 2004, as amended, modified or supplemented from time to
time in accordance with its terms.
"Term of the Policy" means the period from and including the date
hereof to and including the first date on which (i) all of the Preferred Shares
have been fully redeemed in accordance with the Statement of Preferences, or
all Insured Amounts have been paid or deemed to be paid under the Statement of
Preferences, (ii) the period, if any, during which any Insured Amount could be
avoided under any applicable bankruptcy, insolvency, receivership or similar
law, has expired and (iii) the period, if any, during which any Insured Amount
could be required to be returned to the Issuer pursuant to Section 18-607 of
the Delaware LLC Act, has expired; provided that (a) if an insolvency
proceeding by or against the Issuer exists during the period referred to in the
preceding clause (ii), then the term of this Policy shall terminate on the date
of the conclusion or dismissal of such bankruptcy, insolvency, receivership or
similar proceeding without continuing jurisdiction by the court in such
proceeding or (b) if a judicial proceeding by or against a Holder under Section
18-607 of the Delaware LLC Act exists during the period referred to in the
preceding clause (iii), then the term of this Policy shall terminate on the
date of the conclusion or dismissal of judicial proceeding without continuing
jurisdiction by the court in such proceeding; provided, further, that if the
Paying Agent or the Holders are required to return (x) any Preference Amount as
a result of such insolvency proceeding or (y) any Amount Subject to Recall as a
result of such judicial proceeding pursuant to Section 18-607 of the Delaware
LLC Act, then the Term of the Policy shall terminate on the date on which Ambac
has made all payments required to be made under the terms of this Policy in
respect of all such Preference Amounts or Amount Subject to Recall, as
applicable.
All notices, presentations, transmissions, deliveries and
communications made by the Paying Agent to Ambac with respect to this Policy
shall specifically refer to the number of this Policy, shall be in writing
(except as otherwise specifically provided herein) and shall be mailed by
registered mail or personally delivered or telecopied to Ambac as follows:
Ambac Assurance Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Risk Management, Structured Finance
and Credit Derivatives
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address, officer, telephone number or facsimile number as may
be designated by Ambac in writing from time to time. Each such notice,
presentation, delivery and communication shall be effective only upon receipt
by Ambac (in each case in which notice or other communication to Ambac refers
to a claim on this Policy or any other event with respect to which failure on
the part of Ambac to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of the General Counsel and shall be marked to indicate
"URGENT MATERIAL ENCLOSED").
The obligations of Ambac under this Policy are irrevocable,
primary, absolute and unconditional (except as expressly provided herein), and
neither the failure of the Paying Agent, the Issuer or any other Person to
perform any covenant or obligation in favor of Ambac (or otherwise), nor any
failure or omission to make a demand permitted hereunder, nor any failure to
make any payment of premium, nor the commencement of any bankruptcy,
insolvency, receivership or similar proceeding by or against the Issuer or any
other Person, nor any other circumstance (other than indefeasible payment in
full of the Insured Amounts) that might constitute a legal or equitable
discharge or defense of or to a surety or guarantor shall in any way affect or
limit Ambac's obligations under this Policy.
Ambac's obligations to make payment under this Policy are
irrevocable, absolute and unconditional, irrespective of the value,
genuineness, validity, legality or enforceability of the Insured Obligations or
any other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of or security for the
amounts due for payment hereunder, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance which might constitute a
legal or equitable defense to payment of a surety or guarantor, including fraud
in the inducement or fraud in the fact. Ambac hereby expressly waives
diligence, presentment, protest and any requirement that the Paying Agent, the
Bankruptcy Trustee or any Holder, as applicable, exhaust any right, power or
remedy or proceed against the Issuer, or against any other person under any
other guarantee of, or security for, the Insured Obligations, provided that the
Paying Agent shall be required to deliver a Notice as contemplated by this
Policy. None of the foregoing waivers shall prejudice any claim Ambac may have,
whether directly or as subrogee of the Paying Agent or any Holder, subsequent
to making such payment to the Paying Agent or any Holder in accordance with
this Policy. If an action or proceeding to enforce this Policy is brought, the
Paying Agent, the Bankruptcy Trustee or the Holder, as applicable, shall be
entitled to recover from Ambac costs and expenses reasonably incurred by the
Paying Agent, the Bankruptcy Trustee or the Holder, as applicable, including,
without limitation, reasonable fees and expenses of counsel.
The premiums paid in respect of this Policy are nonrefundable for
any reason whatsoever, including payment, or provisions being made for payment,
of the Insured Amounts prior to maturity.
Ambac shall be subrogated to the rights of each Holder to receive
payments under the Insured Obligations to the extent of any Insured Amounts
paid by Ambac hereunder to or on behalf of such Holder. By acceptance of any
amounts paid by Ambac under this Policy, each Holder shall be deemed to have
agreed that Ambac shall be entitled to vote such Holder's Preferred Shares with
respect to any matter unless Ambac's exercise of such rights would adversely
affect such Holder's right to receive payment in respect of the Insured
Obligations.
This Policy and the obligations of Ambac hereunder shall terminate
upon the expiration of the Term of the Policy. This Policy shall be returned to
Ambac upon expiration.
THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE
SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.
This Policy sets forth in full the undertaking of Ambac, and shall
not be modified, altered or affected by any other agreement or instrument,
including any modification or amendment thereto (other than the Increase
Endorsements contemplated by this Policy, or by the merger, consolidation or
dissolution of the Issuer or any other Person and may not be canceled or
revoked prior to the time it is terminated in accordance with the express terms
hereof.
This Policy shall be governed by and construed in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, Ambac has caused this Policy to be duly
executed on its behalf by its duly authorized officers on this 13th day of
July, 2004.
AMBAC ASSURANCE CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: First Vice President
EXHIBIT A
NOTICE OF CLAIM
Ambac Assurance Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
The undersigned, a duly authorized officer of [Name of Paying Agent], as
Paying Agent (the "Paying Agent"), hereby certifies to Ambac Assurance
Corporation ("Ambac"), with reference to Financial Guaranty Insurance Policy
No. AB0780BE (the "Policy") issued by Ambac in respect of Money Market
Cumulative Auction Preferred Shares issued by Special Value Opportunities
Fund, LLC (the "Issuer"), having an aggregate liquidation preference of up to
$[_________] plus an amount equal to accumulated but unpaid dividends (whether
or not earned or declared thereon) (the "Insured Obligations"), that:
(i) The Paying Agent is the Paying Agent under the Auction
Agency Agreement, dated as of July 13, 2004, between the Issuer and
the Paying Agent.
(ii) [A payment previously made on the Insured Obligations
has become a Preference Amount, as indicated by the attached order.]
[A payment previously made on the Insured Obligations has become an
Amount Subject to Recall, as indicated by the attached order.] OR
[Payment on the Insured Obligations in respect of the __________
Payment Date is payable on _________ under the Preferred Shares, in
an amount equal to $________.]
(iii) [The amount of the [Preference Amount] OR [Amount
Subject to Recall] is $______, and consists of dividends on the
Insured Obligations in the amount of $______ paid on _______,
_______, [and liquidation preference paid on the Insured Obligations
in the amount of $______ paid on ______, _______.]] OR [There is a
Deficiency Amount of $_______ in respect of the Insured Obligations,
which amount is due for payment pursuant to the terms of the
Preferred Shares.]
(iv) Neither the Paying Agent nor any Holder has heretofore
made a demand for such [Deficiency Amount][Preference Amount][Amount
Subject to Recall].
(v) The Paying Agent is making a claim under the Policy for
such [Deficiency Amount][Preference Amount] [Amount Subject to
Recall].
(vi) The Paying Agent hereby requests the payment of such
[Deficiency Amount][Preference Amount] [Amount Subject to Recall] be
made by Ambac under the Policy and directs that payment under the
Policy be made to the following account by bank wire transfer of
federal or other immediately available funds in accordance with the
terms of the Policy to:_____________.
(vii) The Paying Agent hereby agrees that, following receipt
of such [Deficiency Amount][Preference Amount] [Amount Subject to
Recall] from Ambac, it shall (a) hold such amounts in trust and apply
the same directly to the payment of the Insured Obligations when due
or as soon as possible thereafter; (b) not apply such funds for any
other purpose; and (c) maintain an accurate record of such payments
with respect to each Insured Obligation and the corresponding claim
on the Policy and proceeds thereof.
Unless the context otherwise requires, capitalized terms used in this Notice
of Claim and not defined herein shall have the meanings provided in the
Policy.
This Notice of Claim may be revoked by written notice by the Paying Agent to
Ambac at any time if and only to the extent that moneys are actually received
in respect of the Insured Amounts prior to such time from a source other than
Ambac.
ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY INSURANCE COMPANY OR
OTHER PERSON FILES AN APPLICATION FOR INSURANCE OR STATEMENT OF CLAIM
CONTAINING ANY MATERIALLY FALSE INFORMATION, OR CONCEALS, FOR THE PURPOSE OF
MISLEADING, INFORMATION CONCERNING ANY FACT MATERIAL THERETO, COMMITS A
FRAUDULENT INSURANCE ACT, WHICH IS A CRIME AND SHALL ALSO BE SUBJECT TO A
CIVIL PENALTY NOT TO EXCEED FIVE THOUSAND DOLLARS AND THE STATED VALUE OF THE
CLAIM FOR EACH SUCH VIOLATION.
IN WITNESS WHEREOF, the Paying Agent has executed and delivered this Notice of
Claim as of the [ ] day of [ ].
[NAME OF PAYING AGENT]
as Paying Agent
By:
-----------------------------------
Name:
Title
EXHIBIT B
---------
[Form of Increase Endorsement]
Increase Endorsement
Attached to and forming part of Financial
Guaranty Insurance Policy No. AB0780BE
Policy for: Deutsche Bank Trust Company Americas, as Paying Agent for the
Holders of the Preferred Shares (defined herein) of
Special Value Opportunities Fund, LLC
Effective Date of Increase Endorsement: [_______](1)
Financial Guaranty Insurance Policy No. AB0780BE (the "Policy") is hereby
amended as follows:
1. the definition of the term "Insured Obligations" in the Policy is hereby
amended to read as follows:
Insured Obligations: Preferred Shares (as defined
herein) with an aggregate liquidation
preference not to exceed $[________](2) plus
an amount equal to accumulated but unpaid
dividends (whether or not earned or
declared thereon) (subject to increase as
described herein) and with a mandatory
final redemption date of [June 30, 2014]
(the "Final Redemption Date")
2. the term "Preferred Shares" in the Policy shall include the following
securities:
[ ]. (3)
Nothing herein contained shall be held to vary, alter, waive or extend any of
the terms, conditions, provisions, agreements or limitations of the above
mentioned Policy other than as above stated.
In Witness Whereof, Ambac has caused this Endorsement to be affixed with a
facsimile of its corporate seal and to be signed by its duly authorized
officers in facsimile to become effective as its original seal and signatures
binding upon Ambac by virtue of the countersignature of its duly authorized
representative.
Ambac Assurance Corporation
___________________
{1} Insert Date
{2} Insert new limit, which should equal the sum of the liquidation preference
of all Preferred Shares covered by the Policy after giving effect to this
Increase Endorsement.
(3) Identify the preferred shares by series, date of original issue and amount.
SCHEDULE 1
COMMITMENTS AND PERCENTAGES
---------------------------
Revolving Revolving
Commitment Percentage
Lender ($ in million) (%) CP Conduit?
-------------------------------- -------------- ---------- -----------
Eiffel Funding, LLC as
Swingline Lender and an Other
CP Conduit 273 57.717 Yes
Nieuw Amsterdam Receivables
Corporation as Other CP Conduit 125 26.427 Yes
Altamira Funding LLC as Other
CP Conduit 50 10.571 Yes
Union Bank of California,
National Association 25 5.285 No
================================ ============== ========== ===========
Total 473 100.00
SCHEDULE 2
LENDING OFFICES AND NOTICE DATA
-------------------------------
LENDER
Revolving Loans:
Eiffel Funding, LLC
c/o CDC Financial Products, Inc.,
as program administrator
▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
NIEUW Amsterdam Funding as Other CP Conduit
c/o Global Securitization Services, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
With a copy to:
Cooperative Central Raiffeisen-Boerenleenbank B.A.
Rabobank
▇▇▇ ▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇ ▇▇▇ ▇▇▇▇
Fax: ▇▇▇ ▇▇▇ ▇▇▇▇
Altamira Funding LLC
c/o Banco Santander Central Hispano,
as administrative agent
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Union Bank of California
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Phone: ▇▇▇ ▇▇▇ ▇▇▇▇
Fax: ▇▇▇ ▇▇▇ ▇▇▇▇
Swing Line Loan:
CDC Financial Products Inc.
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
BORROWER
--------
Special Value Opportunities Fund, LLC
c/o SVOF MM, LLC
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and on or after August 1, 2004:
Special Value Opportunities Fund, LLC
c/o SVOF MM, LLC
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to the Investment Manager:
▇▇▇▇▇▇▇▇▇▇ Capital Partners, LLC
c/▇ ▇▇▇▇▇▇▇▇▇▇ & Co., LLC
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and on or after August 1, 2004:
▇▇▇▇▇▇▇▇▇▇ Capital Partners, LLC
c/▇ ▇▇▇▇▇▇▇▇▇▇ & Co., LLC
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to the Co-Manager:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
ADMINISTRATIVE AGENT
--------------------
CDC Financial Products Inc.
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
INSURER
-------
Ambac Assurance Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Risk Management, Structured Finance and Credit Derivative
E-mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
RATING AGENCIES
---------------
▇▇▇▇▇'▇ Investors Service, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: CBO/CLO Monitoring
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇'▇ Investors Service,
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Asset Backed Commercial Paper Group
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Standard & Poor's Ratings Services
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE 3
UCC - 1 FILING JURISDICTIONS
----------------------------
Delaware
Secretary of State of Delaware
SCHEDULE 4
APPROVED DEALERS
----------------
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. Liberty Brokerage
ABN AMRO Bank Libra Securities
▇▇▇▇▇ & Co. Lincoln Partners
Amroc Investments, LLC ▇.▇. ▇▇▇▇▇▇▇, LLC
APS Financial Corporation McDonald & Company
▇. ▇▇▇▇▇ & Co. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Bank of America Mesirow Financial
Bank of Montreal ▇▇▇▇▇▇ ▇▇▇▇▇ & Co., LLC
Barclays Capital ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co.
Bear ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Prudential Securities
BNP Paribas ▇▇▇▇▇▇▇ ▇▇▇▇▇
BNY Capital RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ & Company ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co
Cantor ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Capital
▇▇▇▇▇▇ Capital Partners ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney
Chicago Corporation ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
CIBC World Markets Scotia Capital Markets
CIT Group Citigroup ▇▇▇▇▇▇▇ Companies, The
Citimark Partners ▇▇ ▇▇▇▇▇
Commerzbank Credit Lyonnais Societe Generale
Credit Research & Trading Spear, Leeds & ▇▇▇▇▇▇▇
▇▇ First Boston SunTrust ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company
Delaware Bay, Inc. Swiss Bank Corporation
Deutsche Bank ▇▇▇▇ ▇▇▇▇▇ TD Securities
First Chicago Trust Company The Blackstone Group
First Security ▇▇▇ ▇▇▇▇▇▇ U. S. Bancorp
Fleet UBS Warburg
General Electric Union Bank of California
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. Wachovia Securities
Hellmond & Associates Wedbush ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇ Fargo
Imperial Capital ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company
Indosuez Capital
ING (Baring ▇▇▇▇▇▇ ▇▇▇▇) The Lenders under the Credit Agreement
▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇ and their Affiliates (other than ▇▇
▇▇▇▇▇▇▇▇▇ & Company, Inc. Conduits)
Ladenburg ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Freres & Co., LLC
▇▇▇▇▇▇ Brothers
SCHEDULE 5
APPROVED INVESTMENT BANKING FIRMS
---------------------------------
▇. ▇. ▇▇▇▇▇▇▇ & Sons, Inc. ▇▇▇▇▇▇ Brothers
ABN AMRO Bank Liberty Brokerage
▇▇▇▇▇ & Co. Lincoln Partners
Amroc Investments ▇.▇. ▇▇▇▇▇▇▇
Bank of America McDonald & Company
Bank of Montreal ▇▇▇▇▇▇▇ ▇▇▇▇▇
Bank One Mesirow Financial
Barclays Capital ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇
Bear ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Prudential Securities
Brown, Gibbons, Lang RBC Dain ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co
▇▇▇▇▇▇ Capital Partners ▇▇▇▇ Capital
JPMorgan Chase Manhattan Solomon ▇▇▇▇▇ ▇▇▇▇▇▇
Chicago Corporation ▇▇▇▇▇▇▇▇ Wertheim
CIBC World Markets Scotia Capital Markets
CIT Group ▇▇▇▇▇▇▇ Companies
Citibank Group ▇▇ ▇▇▇▇▇
Citimark Partners Sun Trust ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company
Credit Research & Trading Sutro & Co.
CS First Boston TD Securities
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ The Blackstone Group
Delaware Bay, Inc. Union Bank of California
Deutsche Bank ▇▇▇▇ ▇▇▇▇▇ US Bancorp Libra
EVEREN Securities US Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇
First Security ▇▇▇ ▇▇▇▇▇▇ UBS Warburg
Fleet National Bank Wachovia Securities
▇▇▇▇▇▇▇ Sachs & Co. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Securities Inc.
Grantchester Holdings Wedbush ▇▇▇▇▇▇
Greenwich NatWest ▇▇▇▇▇ Fargo
Gruntal ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Associates The Lenders under the Credit Agreement
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ and their Affiliates (other than CP
Imperial Capital Conduits)
ING (Baring ▇▇▇▇▇▇ ▇▇▇▇)
▇▇▇▇▇▇▇▇▇ & Company, Inc.
JPMorgan ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Lazard Freres
SCHEDULE 6
APPROVED PRICING SERVICES
-------------------------
Advantage Data, Inc.
Bloomberg
Bridge Information Systems, Inc.
Data Resources Inc.
Fixed Income Pricing System
Interactive Data Corp.
International Securities Market Association
▇▇ ▇▇▇▇▇▇
KDP
Loan Pricing Corp.
▇▇▇▇▇▇▇ ▇▇▇▇▇ Securities Pricing Service
▇▇▇▇▇▇ Data Corp.
Reuters (only for pricing Foreign Issuer Securities)
Societe Generale
Standard & Poor's
Telerate
Wood Gundy (only for pricing Securities issued by the Canadian federal or
Canadian provincial governments)
SCHEDULE 7
INDUSTRY CLASSIFICATIONS
------------------------
MOODY'S INDUSTRY CLASSIFICATIONS
--------------------------------
Asset Code Asset Description
---------- -----------------
1. Aerospace and Defense
2. Automobiles
3. Banking
4. Beverage, Food and Tobacco
5. Buildings and Real Estate
6. Chemicals, Plastics and Rubber
7. Containers, Packaging and Glass
8. Diversified/Conglomerate Manufacturing
9. Diversified/Conglomerate Service
10. Diversified Natural Resources, Precious Metals and Minerals
11. Ecological
12. Electronics
13. Finance
14. Farming and Agriculture
15. Grocery
16. Healthcare, Education and Childcare
17. Home and Office Furnishings, Housewares, and Durable Consumer
Products
18. Hotels, Motels, Inns and Gaming
19. Insurance
20. Leisure and Amusement
21. Machinery (Non-Agriculture, Non-Construction and Non-Electronic)
22. Mining, Steel, Iron and Non-Precious Metals
23. Oil and Gas
24. Personal and Non-Durable Consumer Products (Manufacturing Only)
25. Personal, Food and Miscellaneous Services
26. Printing and Publishing
27. Cargo Transport
28. Retail Stores
29. Telecommunications
30. Textiles and Leather
31. Personal Transportation
32. Utilities
33. Broadcasting and Entertainment
34. Structured Finance Obligations
S&P INDUSTRY CLASSIFICATIONS
----------------------------
Asset Code Asset Description
---------- -----------------
1 Aerospace & Defense
2 Air transport
3 Automotive
4 Beverage & Tobacco
5 Radio & Television
6 Brokers, Dealers & Investment houses
7 Building & Development
8 Business equipment & services
9 Cable & satellite television
10 Chemicals & plastics
11 Clothing/textiles
12 Conglomerates
13 Containers & glass products
14 Cosmetics/toiletries
15 Drugs
16 Ecological services & equipment
17 Electronics/electrical
18 Equipment leasing
19 Farming/agriculture
20 Financial intermediaries
21 Food/drug retailers
22 Food products
23 Food service
24 Forest products
25 Health care
26 Home furnishings
27 Lodging & casinos
28 Industrial equipment
29 Insurance
30 Leisure goods/activities/movies
31 Nonferrous metals/minerals
32 Oil & gas
33 Publishing
34 Rail industries
35 Retailers (except food & drug)
36 Steel
37 Surface transport
38 Telecommunications
39 Utilities
50 CDOs
51 ABS Consumer
52 ABS Commercial
58 Manufactured Housing
59 U.S. Agency (Explicitly Guaranteed)
60 Monoline/FER Guaranteed
61 Non-FER Company Guaranteed
SCHEDULE 8
APPROVED COUNTERPARTIES*
-----------------------
▇. ▇. ▇▇▇▇▇▇▇ & Sons, Inc. ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇
ABN AMRO Bank ▇▇▇▇▇▇▇▇▇ & Company, Inc.
▇▇▇▇▇ & Co. Ladenburg ▇▇▇▇▇▇▇▇
Allied Irish Bank Lazard Freres
Amroc Investments ▇▇▇▇▇▇ Brothers
Bank fur Arbeit und Wirtschaft Liberty Brokerage
Bank of America ▇.▇. ▇▇▇▇▇▇▇
Bank of New York McDonald & Company
Barclays Capital ▇▇▇▇▇▇▇ ▇▇▇▇▇
Bear ▇▇▇▇▇▇▇ Mesirow Financial
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
BNP Paribas ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇
CDC Financial Products Inc. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co
▇▇▇▇▇▇ Capital ▇▇▇▇▇▇▇▇ Wertheim
Chicago Corporation Scotia Capital Markets
CIBC World Markets Seaport Group
CIT Group ▇▇▇▇▇▇▇ Companies
Citigroup ▇▇ ▇▇▇▇▇
Citimark Partners Sun Trust ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company
Commerzbank Aktiengesellschaft Sutro & Co.
Credit Research & Trading Swiss Bank Corporation
CS First Boston TD Securities
Delaware Bay, Inc. The Blackstone Group
Deutsche Bank UBS Warburg
Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇ Union Bank
EVEREN Securities US Bancorp Libra
First Chicago Trust Company US Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇
First Security ▇▇▇ ▇▇▇▇▇▇ Variable Funding Capital Corp.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. Wachovia Securities
Grantchester Holdings Wedbush ▇▇▇▇▇▇
Greenwich NatWest ▇▇▇▇▇ Fargo
Gruntal ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company
Hellmold & Associates
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
Imperial Capital
ING
________________________
* Each entity on this schedule, unless it is a Lender or an Affiliate of
a Lender, must meet the rating requirement contained in clause (b) of
the definition of "Eligible Counterparty" to be an Approved
Counterparty.
SCHEDULE 9
MOODY'S COLLATERAL VALUATION SCHEDULE
-------------------------------------
SCHEDULE 10
S&P COLLATERAL VALUATION SCHEDULE
---------------------------------
SCHEDULE 11
APPROVED THIRD PARTY APPRAISERS
-------------------------------
▇. ▇. ▇▇▇▇▇▇▇ & Sons, Inc.
ABN AMRO Bank
▇▇▇▇▇ & Co.
Amroc Investments
Bank of America
Barclays Capital
Bear ▇▇▇▇▇▇▇
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇
Brown, Gibbons, Lang
Cantor ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Capital
Citimark Partners
Chicago Corporation
CIBC World Markets
CIT World Markets
Citigroup
Credit Research & Trading
CS First Boston
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Delaware Bay, Inc.
Deloitte & Touche
Deutsche Bank
Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇▇▇ Securities
First Chicago Trust Company
First Security Van ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Sachs & Co.
Grantchester Holdings
Greenwich NatWest
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Associates
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
Imperial Capital
▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & Company, Inc.
KPMG International
Ladenburg ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Freres
▇▇▇▇▇▇ Brothers
Liberty Brokerage
▇.▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Company
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Financial
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
PriceWaterhouseCoopers
▇▇▇▇▇▇▇ ▇▇▇▇▇
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Scotia Capital Markets
▇▇▇▇▇▇▇ Companies
Sun Trust ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company
Sutro & Co.
Swiss Bank Corporation
TD Securities
The Blackstone Group
UBS Warburg
Union Bank
US Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇
US Bancorp Libra
Wachovia Securities
Wedbush ▇▇▇▇▇▇
▇▇▇▇▇ Fargo
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company
MOODY'S COLLATERAL VALUATION SCHEDULE
-------------------------------------
Calculation of Moody's Advance Amount; Description of Over-Collateralization
Test.
"Moody's Advance Rate" means, for each Moody's Asset Category, the
percentage specified in the table below opposite such Moody's Asset Category:
Moody's Moody's
Asset Category Advance Rate
----------------------- ------------------------
A-1 100%
A-2 98.5%
A-3 94.0%
A-4 84.0%
A-5 75.0%
A-6 69.0%
B-1 91.5%
B-2 90.5%
B-3 80.5%
B-4 86.5%
B-5 84.5%
B-6 67.5%
B-7 80.0%
B-8 75.5%
B-9 63.0%
B-10 56.0%
C-1 94.0%
C-2 85.5%
C-3 88.0%
C-4 78.0%
C-5 73.0%
C-6 57.0%
D-1 85.0%
D-2 79.5%
D-3 76.0%
D-4 71.5%
D-5 53.0%
D-6 49.0%
E-1 78.5%
E-2 74.0%
E-3 68.0%
E-4 65.0%
E-5 40.0%
E-6 40.0%
F-1 62.0%
F-2 59.0%
F-3 50.0%
F-4 50.0%
F-5 30.0%
F-6 30.0%
G-1 62.0%
G-2 53.0%
G-3 48.0%
G-4 35.0%
H-1 32.0%
H-2 29.0%
H-3 26.0%
H-4 22.0%
I-1 64.0%
I-2 46.0%
I-3 25.0%
J-1 25.0%
J-2 21.0%
J-3 15.0%
J-4 27.5%
"Moody's Advance Amount" means, as of any date of
determination under the Over-Collateralization Test (as described in this
Schedule), an amount equal to the sum of (i) the sum for all Eligible
Investments (other than Warrant/Option Investments) of the product of (1) the
Market Value (determined as described below) of such Eligible Investment
(determined as described below) multiplied by (2) the Moody's Advance Rate for
the Moody's Asset Category applicable to such Eligible Investment under the
Over-Collateralization Test, (ii) the Secured Hedging Advance Amount as of such
date, (iii) the Defensive Hedge Advance Amount as of such date, (iv) the
Moody's Warrant/Option Advance Amount as of such date and (v) the Net Accrual
Amount as of such date.
Notwithstanding the foregoing, for purposes of determining
the Moody's Advance Amount,
(i) the Market Value of any Unhedged Foreign Investment shall be
95% of the Market Value thereof otherwise determined in
accordance with the above procedures; provided that, if the
Foreign Issuer of such Unhedged Foreign Investment is from a
country whose sovereign debt rating in a non-local currency
is not assigned a rating of "AA" or better by S&P or "Aa2" or
better by Moody's (and, if rated "Aa2" by Moody's, such
rating has not been placed on a credit watch with negative
implications by Moody's), the Market Value of such Unhedged
Foreign Investment shall be 85% of the Market Value thereof
otherwise determined in accordance with the above procedures;
(ii) the percentage applicable above to Cash in a currency other
than Dollars shall be 95% (and not 100%; provided that, if
such Cash is the currency of a country whose sovereign debt
rating in a non-local currency is not assigned a rating of
"AA" or better by S&P or "Aa2" or better by Moody's (and, if
rated "Aa2" by Moody's, such rating has not been placed on a
credit watch with negative implications by Moody's), the
applicable percentage shall be 85%, unless such Cash is
protected against currency fluctuations as a result of
Currency Hedging Transactions, in which case, the percentage
applicable shall be 100%;
(iii) the Market Value of any Structured Product Transaction shall
be 95% of the Market Value thereof otherwise determined in
accordance with the above procedures; and
(iv) with respect to any Fund Investments in any Foreign Issuer
from a country that becomes an Ineligible Country after the
Borrower has invested in such Fund Investment (and such Fund
Investment does not have a guarantor located in a currently
Eligible Country), so long as such Fund Investment is not an
Excluded Investment under clause (viii) of the definition
thereof, the Market Value of such Fund Investment shall be
90% of the Market Value thereof otherwise determined in
accordance with the above procedures.
"Over Collateralization Test" is a test that is satisfied as
of any Business Day if (a) the Outstanding Principal Amount of Debt under the
Credit Agreement and the aggregate outstanding liquidation preference of the
Preferred Shares, as of such Business Day, is less than or equal to (b) the
Moody's Advance Amount calculated using the Moody's Advance Rate as of such
Business Day.
For purposes of calculating the Moody's Advance Amount, the
Borrower shall assign each Fund Investment to one of the following categories
(each, a "Moody's Asset Category") commencing upon the initial acquisition
thereof (and, for purposes of this categorization, the Market Value Price of a
Fund Investment trading at par is equal to $1.00):
"Asset Category A-1 Investments" means (a) Cash and (b) Cash
Equivalents described in clause (vi) of the definition of such term and (c)
Cash Equivalents described in clauses (i), (ii), (iii) or (iv) of the
definition of such term that mature on the Business Day next following the date
of acquisition thereof.
"Asset Category A-2 Investments" means Cash Equivalents
(other than Cash in U.S. dollars, U.S. Government Securities and Cash
Equivalents described in clauses (b) or (c) of the definition of Asset Category
A-1 Investments) and U.S. Government Securities with maturities of less than or
equal to 183 days.
"Asset Category A-3 Investments" means U.S. Government
Securities with final maturities more than 183 days but less than or equal to
two (2) years.
"Asset Category A-4 Investments" means U.S. Government
Securities with final maturities more than two (2) years but less than or equal
to ten (10) years.
"Asset Category A-5 Investments" means U.S. Government
Securities with final maturities more than ten (10) years but less than or
equal to twenty (20) years.
"Asset Category A-6 Investments" means U.S. Government
Securities with final maturities more than twenty (20) years but less than or
equal to thirty (30) years.
"Asset Category B-1 Investments" means Bank Loans which (i)
are Performing, (ii) have a Market Value Price greater than or equal to $0.90
and (iii) are rated "Ba3" or better by Moody's.
"Asset Category B-2 Investments" means Bank Loans which (i)
are Performing, (ii) have a Market Value Price greater than or equal to $0.90
and (iii) are rated "B1", "B2" or "B3" by Moody's.
"Asset Category B-3 Investments" means Bank Loans which (i)
are Performing, (ii) have a Market Value Price greater than or equal to $0.90
and (iii) are rated "Caa1" or lower by Moody's or are not rated by Moody's.
"Asset Category B-4 Investments" means Bank Loans which (i)
are Performing, (ii) have a Market Value Price greater than or equal to $0.80
and less than $0.90 and (iii) are rated "Ba3" or better by Moody's.
"Asset Category B-5 Investments" means Bank Loans which (i)
are Performing, (ii) have a Market Value Price greater than or equal to $0.80
and less than $0.90 and (iii) are rated "B1", "B2" or "B3" by Moody's.
"Asset Category B-6 Investments" means Bank Loans which (i)
are Performing, (ii) have a Market Value Price greater than or equal to $0.80
and less than $0.90 and (iii) are rated "Caa1" or lower by Moody's or are not
rated by Moody's.
"Asset Category B-7 Investments" means Bank Loans which (i)
are Performing, (ii) have a Market Value Price greater than or equal to $0.70
and less than $0.80 and (iii) are rated "Ba3" or better by Moody's.
"Asset Category B-8 Investments" means Bank Loans which (i)
are Performing, (ii) have a Market Value Price greater than or equal to $0.70
and less than $0.80 and (iii) are rated "B1", "B2" or "B3" by Moody's.
"Asset Category B-9 Investments" means Bank Loans which (i)
are Performing, (ii) have a Market Value Price greater than or equal to $0.70
and less than $0.80 and (iii) are rated "Caa1" or lower by Moody's or are not
rated by Moody's.
"Asset Category B-10 Investments" means Bank Loans which (i)
are Performing and (ii) have a Market Value Price less than $0.70.
"Asset Category C-1 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a floating rate,
(iii) have a final maturity of five (5) years or less and (iv) are rated "Baa3"
or better by ▇▇▇▇▇'▇.
"Asset Category C-2 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a fixed rate,
(iii) have a final maturity of five (5) years or less and (iv) are rated "Baa3"
or better by ▇▇▇▇▇'▇.
"Asset Category C-3 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a floating rate,
(iii) have a final maturity of more than five (5) years and less than or equal
to ten (10) years and (iv) are rated "Baa3" or better by ▇▇▇▇▇'▇.
"Asset Category C-4 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a fixed rate,
(iii) have a final maturity of more than five (5) years and less than or equal
to ten (10) years and (iv) are rated "Baa3" or better by ▇▇▇▇▇'▇.
"Asset Category C-5 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a floating rate,
(iii) have a final maturity of more than ten (10) years and (iv) are rated
"Baa3" or better by ▇▇▇▇▇'▇.
"Asset Category C-6 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a fixed rate,
(iii) have a final maturity of more than ten (10) years and (iv) are rated
"Baa3" or better by ▇▇▇▇▇'▇.
"Asset Category D-1 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a floating rate,
(iii) have a final maturity of five (5) years or less and (iv) are rated "Ba1",
"Ba2" or "Ba3" by ▇▇▇▇▇'▇.
"Asset Category D-2 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a fixed rate,
(iii) have a final maturity of five (5) years or less and (iv) are rated "Ba1",
"Ba2" or "Ba3" by ▇▇▇▇▇'▇.
"Asset Category D-3 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a floating rate,
(iii) have a final maturity of more than five (5) years and less than or equal
to ten (10) years and (iv) are rated "Ba1", "Ba2" or "Ba3" by ▇▇▇▇▇'▇.
"Asset Category D-4 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a fixed rate,
(iii) have a final maturity of more than five (5) years and less than or equal
to ten (10) years and (iv) are rated "Ba1", "Ba2" or "Ba3" by ▇▇▇▇▇'▇.
"Asset Category D-5 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a floating rate,
(iii) have a final maturity of more than ten (10) years and (iv) are rated
"Ba1", "Ba2" or "Ba3" by ▇▇▇▇▇'▇.
"Asset Category D-6 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a fixed rate,
(iii) have a final maturity of more than ten (10) years and (iv) are rated
"Ba1", "Ba2" or "Ba3" by ▇▇▇▇▇'▇.
"Asset Category E-1 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a floating rate,
(iii) have a final maturity of five (5) years or less and (iv) are rated "B1",
"B2" or "B3" by ▇▇▇▇▇'▇.
"Asset Category E-2 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a fixed rate,
(iii) have a final maturity of five (5) years or less and (iv) are rated "B1",
"B2" or "B3" by ▇▇▇▇▇'▇.
"Asset Category E-3 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a floating rate,
(iii) have a final maturity of more than five (5) years and less than or equal
to ten (10) years and (iv) are rated "B1", "B2" or "B3" by ▇▇▇▇▇'▇.
"Asset Category E-4 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a fixed rate,
(iii) have a final maturity of more than five (5) years and less than or equal
to ten (10) years and (iv) are rated "B1", "B2" or "B3" by ▇▇▇▇▇'▇.
"Asset Category E-5 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a floating rate,
(iii) have a final maturity of more than ten (10) years and (iv) are rated
"B1", "B2" or "B3" by ▇▇▇▇▇'▇.
"Asset Category E-6 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a fixed rate,
(iii) have a final maturity of more than ten (10) years and (iv) are rated
"B1", "B2" or "B3" by ▇▇▇▇▇'▇.
"Asset Category F-1 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a floating rate,
(iii) have a final maturity of five (5) years or less and (iv) are rated "Caa1"
or lower by Moody's or are not rated by ▇▇▇▇▇'▇.
"Asset Category F-2 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a fixed rate,
(iii) have a final maturity of five (5) years or less and (iv) are rated "Caa1"
or lower by Moody's or are not rated by ▇▇▇▇▇'▇.
"Asset Category F-3 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a floating rate,
(iii) have a final maturity of more than five (5) years and less than or equal
to ten (10) years and (iv) are rated "Caa1" or lower by Moody's or are not
rated by ▇▇▇▇▇'▇.
"Asset Category F-4 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a fixed rate,
(iii) have a final maturity of more than five (5) years and less than or equal
to ten (10) years and (iv) are rated "Caa1" or lower by Moody's or are not
rated by ▇▇▇▇▇'▇ .
"Asset Category F-5 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a floating rate,
(iii) have a final maturity of more than ten (10) years and (iv) are rated
"Caa1" or lower by Moody's or are not rated by ▇▇▇▇▇'▇.
"Asset Category F-6 Investments" means High Yield Bonds and
Mezzanine Investments (other than Preferred Stock) which are not convertible
securities and which (i) are Performing, (ii) pay interest at a fixed rate,
(iii) have a final maturity of more than ten (10) years and (iv) are rated
"Caa1" or lower by Moody's or are not rated by ▇▇▇▇▇'▇.
"Asset Category G-1 Investments" means convertible High Yield
Bonds and convertible Mezzanine Investments (other than Preferred Stock) which
(i) are Performing and (ii) are rated "Baa3" or better by ▇▇▇▇▇'▇.
"Asset Category G-2 Investments" means convertible High Yield
Bonds and convertible Mezzanine Investments (other than Preferred Stock) which
(i) are Performing and (ii) are rated "Ba1", "Ba2" or "Ba3" by ▇▇▇▇▇'▇.
"Asset Category G-3 Investments" means convertible High Yield
Bonds and convertible Mezzanine Investments (other than Preferred Stock) which
(i) are Performing and (ii) are rated "B1", "B2" or "B3" by ▇▇▇▇▇'▇.
"Asset Category G-4 Investments" means all other convertible
High Yield Bonds and convertible Mezzanine Investments (other than Preferred
Stock) which are Performing.
"Asset Category H-1 Investments" means convertible Preferred
Stock which (i) is Performing and (ii) is publicly issued Preferred Stock.
"Asset Category H-2 Investments" means Preferred Stock which
is not convertible Preferred Stock and which (i) is Performing and (ii) is
publicly issued Preferred Stock.
"Asset Category H-3 Investments" means convertible Preferred
Stock which (i) is Performing and (ii) is privately issued Preferred Stock.
"Asset Category H-4 Investments" means Preferred Stock which
is not convertible Preferred Stock and which (i) is Performing and (ii) is
privately issued Preferred Stock.
"Asset Category I-1 Investments" means Bank Loans which (i)
are non-Performing and (ii) have a Market Value Price greater than or equal to
$0.85.
"Asset Category I-2 Investments" means Bank Loans which (i)
are non-Performing and (ii) have a Market Value Price less than $0.85.
"Asset Category I-3 Investments" means High Yield Bonds and
Mezzanine Investments (convertible and non-convertible) and Preferred Stock, in
each case, which are non-Performing.
"Asset Category J-1 Investments" means Equity Securities
(other than Preferred Stock) which are not Private Equity Securities.
"Asset Category J-2 Investments" means Private Equity
Securities (other than Preferred Stock).
"Asset Category J-3 Investments" means CDO Debt Securities
and Structured Product Transactions (other than Fully Collateralized Structured
Product Transactions) and Fund Investments (other than Preferred Stock) in
Mezzanine Investments not otherwise described in any of the preceding Asset
Categories.
"Asset Category J-4 Investments" means Fund Investments in
Bank Loans or High Yield Bonds not otherwise described in any of the preceding
Asset Categories.
Rating Procedures. References herein to any rating by Moody's
or S&P shall include ratings determined by such Rating Agency or in accordance
with guidelines approved by such Rating Agency (including, in the case of
Moody's, ▇▇▇▇▇'▇ Rating Correlation Procedures) and shall also be deemed to
include an equivalent rating in a successor rating category of Moody's or S&P,
as the case may be, or if neither of Moody's or S&P is in the business of
rating securities, an equivalent rating from another Rating Agency.
Notwithstanding the foregoing, for so long as ▇▇▇▇▇'▇ is in the business of
rating securities, unless the Rating Agency Condition with respect to Moody's
shall have been satisfied or the Fund Investment in question is issued by
Moody's or any Affiliate of Moody's, the ▇▇▇▇▇'▇ Rating Correlation Procedures
shall be applied.
Notwithstanding any other provision contained above:
(i) for purposes of determining whether a Fund Investment falls
within a specific Moody's Asset Category, to the extent that
any Fund Investment would fall in more than one of the
Moody's Asset Categories, such Fund Investment shall be
deemed to fall into the Moody's Asset Category with the
lowest specified Moody's Advance Rate;
(ii) Fund Investments that are CDO Debt Securities will be
assigned to an Asset Category for High Yield Bonds using a
rating that is (i) one rating category (i.e., three rating
subcategories) below the ▇▇▇▇▇'▇ rating, if such CDO Debt
Security is rated by Moody's, and (ii) two rating categories
(i.e., six rating subcategories) below the actual public
S&P's rating, if such CDO Debt Security is not rated by
Moody's but is publicly rated by S&P;
(iii) any Fund Investments constituting Busted Convertible Bonds
shall be deemed to fall into the ▇▇▇▇▇'▇ Asset Category into
which such Fund Investment would otherwise fall if it were
not a convertible security; provided that the Market Value of
any Busted Convertible Bonds shall be 95% of the Market Value
thereof otherwise determined in accordance with the valuation
procedures set forth herein;
(iv) for the purpose of determining the Moody's Advance Rate
applicable to a Fully Collateralized Structured Product
Transaction, such Fully Collateralized Structured Product
Transaction shall be deemed to fall into the Moody's Asset
Category of its reference obligation; all other Structured
Product Transactions shall be ▇▇▇▇▇'▇ Asset Category J-3
Investments; for the purpose of determining the Moody's
Advance Rate applicable to Investment Holding Subsidiary
Securities, such Investment Holding Subsidiary Securities
shall be deemed to fall into the Moody's Asset Category of
the related investments held by such Investment Holding
Subsidiary;
(v) for the purpose of determining the Moody's Advance Rate
applicable to Fund Investments that are Hedging and Short
Sale Transactions, at any time during the 60-day time period
described in clause (xiv) of the definition of Excluded
Investments below, the Moody's Advance Rate will be 90% of
the Moody's Advance Rate calculated for such Fund Investment
pursuant to the Moody's Advance Rate table in the definition
of ▇▇▇▇▇'▇ Advance Rate above; and
(vi) for the purpose of determining the ▇▇▇▇▇'▇ Advance Rate
applicable to Fund Investments in Bank Loan Participations at
any time during the 60-day time period described in clause
(vii) of the definition of Excluded Investments below, the
Moody's Advance Rate will be 90% of the Moody's Advance Rate,
calculated for such Fund Investment pursuant to the Moody's
Advance Rate table above.
Determination of Fund Investments Constituting Eligible Investments
"Eligible Investments" means, at any date, all Fund
Investments in the Collateral on such date other than Excluded Investments.
"Excluded Investments" means (without duplication):
(i) Fund Investments to the extent that they are (A) not subject
to a perfected security interest (subject in priority only to
any Liens permitted under the Credit Agreement) in favor of
the Secured Parties Representative for its benefit and the
benefit of the Lenders, the Insurer, Eligible Counterparties
party to Secured Hedging Transactions and other Secured
Parties (as defined in the Pledge and Intercreditor
Agreement) or (B) subject to any Liens (other than Permitted
Liens);
(ii) Excess Fund Investments;
(iii) Fund Investments that have been borrowed or lent;
(iv) Fund Investments denominated in any currency (A) that is not
a currency freely convertible into Dollars or (B) that is
subject to any currency exchange restrictions;
(v) Fund Investments denominated in any currency other than
Dollars or Eligible Foreign Currencies, unless at the time of
purchase of such Fund Investments denominated in any currency
other than Dollars or Eligible Foreign Currencies, at least
100% of the Market Value of such Fund Investments is
protected against currency fluctuations pursuant to Currency
Hedging Transactions;
(vi) Fund Investments in CDO Debt Securities unless the applicable
agreements governing such CDO Debt Securities do not permit
the issuer of such CDO Debt Securities to purchase a security
issued by a Foreign Issuer from a country whose unsupported
sovereign non-local currency debt obligations are not
assigned a rating of "Aa2" or better by Moody's if after
giving effect to such purchase more than 5% of the total
funded debt and contributed equity capitalization of the
issuer of such CDO Debt Securities would be invested in
countries whose unsupported sovereign non-local currency debt
obligations are not assigned a rating of "Aa2" or better by
Moody's;
(vii) Fund Investments in any Bank Loan Participation held by the
Borrower for more than 60 consecutive days during any period
while the participating entity has a long-term debt-rating of
below "A3" by Moody's (unless the obligation of such
participating entity is guaranteed by an entity whose
long-term debt obligations are rated "A3" or better by
Moody's (and, if rated "A3" by Moody's, such rating has not
been placed in a credit watch with negative implications by
▇▇▇▇▇'▇);
(viii) Fund Investments in any Foreign Issuer from an Ineligible
Country (unless the applicable Fund Investment is
unconditionally and irrevocably guaranteed by a guarantor
located in a currently Eligible Country); provided, that if a
country becomes an Ineligible Country after the Borrower has
invested in a Fund Investment relating to such country (and
such Fund Investment does not have a guarantor located in a
currently Eligible Country), such Fund Investment will not be
subject to this clause (viii) until such country has been an
Ineligible Country for 180 consecutive days;
(ix) Fund Investments that constitute Lender Affiliate Securities
(as defined in the Credit Agreement) at the time delivered to
the Secured Parties Representative pursuant to the Pledge and
Intercreditor Agreement;
(x) Fund Investments in "catastrophe" bonds;
(xi) Fund Investments in Non-Credit Risk Securities;
(xii) Fund Investments in CDO Debt Securities issued by an issuer
for which the Investment Manager or the Co-Manager or any
Affiliate of the Investment Manager or the Co-Manager acts as
the collateral manager or investment manager or in any
comparable capacity;
(xiii) Fund Investments in securities issued by the Borrower or any
Subsidiary of the Borrower (other than Investment Holding
Subsidiary Securities);
(xiv) Fund Investments in any Hedging and Short Sale Transaction
held by the Borrower for more than 60 consecutive days during
any period while the counterparty to such Hedging and Short
Sale Transaction has a long-term debt-rating of lower than
"A3" by Moody's (unless the obligations of such counterparty
are guaranteed by an entity whose long-term debt rating is
"A3" or higher by Moody's) (in each case, if rated "A3" by
Moody's, such rating has not been placed in a credit watch
with negative implications by Moody's);
(xv) Fund Investments in CDO Equity Securities; and
(xvi) Fund Investments in Interest Only Securities.
Excluded Investments are excluded from the calculation of the
Market Value of the Collateral for purposes of the Moody's Valuation
Procedures; however, the Collateral may include Excluded Investments.
Application of Portfolio Limitations
"Portfolio Limitations" means, at any applicable date of
determination (determined without duplication):
(i) the aggregate Market Value of Fund Investments in any single
issuer in excess of 5% of Total Capitalization; provided,
however, that the foregoing 5% limit will be increased, up to
a maximum of 7.5% (not to include any Non-Cash Pay
Instruments, any Non-Performing Instruments or any Company
Investments (other than Equity Securities) that are rated
"Caal" or lower by Moody's), for each of any three issuers;
(ii) the aggregate Market Value of Fund Investments in issuers in
any single Industry in excess of 15% of Total Capitalization;
provided, however, that the foregoing 15% limit will be
excepted, up to a maximum of 20%, for each of any two
Industry classifications;
(iii) the aggregate Market Value of Fund Investments in all
Semi-Liquid Investments, Illiquid Investments and Non-Cash
Pay Instruments in excess of 45% of Total Capitalization;
(iv) the aggregate Market Value of Fund Investments in all
Illiquid Investments in excess of 20% of Total Capitalization;
(v) the aggregate Market Value of Fund Investments consisting of
(a) Bank Loan Participations in excess of 20% of Total
Capitalization, (b) Bank Loan Participations wherein the
participating entities (or the entities guaranteeing the
obligations of such participating entities) with the same
rating by Moody's in excess of the applicable percentage of
Total Capitalization set forth in the table below (or such
greater percentage approved by the Insurer (so long as the
Insurer is the Controlling Class) and the Administrative
Agent and with respect to which the Rating Agency Condition
with respect to Moody's has been satisfied), and (c) Bank
Loan Participations wherein the total exposure to any single
participating entity is in excess of the applicable
percentage of Total Capitalization set forth in the table
below (or such greater percentage approved by the Insurer (so
long as the Insurer is the Controlling Class) and the
Administrative Agent and with respect to which the Rating
Agency Condition with respect to Moody's has been satisfied);
--------------------------------------------------------------------------------------------------
Long Term Rating of Any Single Aggregate
Participating Entities Participating Entity Limit Participating Entities Limit
--------------------------------------------------------------------------------------------------
Aaa 7.5% 20.0%
--------------------------------------------------------------------------------------------------
Aa1 7.5% 20.0%
--------------------------------------------------------------------------------------------------
Aa2 7.5% 20.0%
--------------------------------------------------------------------------------------------------
Aa3 7.5% 15.0%
--------------------------------------------------------------------------------------------------
A1 5.0% 15.0%
--------------------------------------------------------------------------------------------------
A2 2.5% 10.0%
--------------------------------------------------------------------------------------------------
A3* 2.5% 5.0%
--------------------------------------------------------------------------------------------------
Baa1 or lower 0.0% 0.0%
--------------------------------------------------------------------------------------------------
____________
* The percentages in this row apply only if such rating is not on a
credit watch with negative implications by Moody's. If such rating is
on a credit watch with negative implications by ▇▇▇▇▇'▇, both the
individual and the aggregate percentage limits shall be zero.
(vi) the aggregate Market Value of Fund Investments consisting of
(a) Hedging and Short Sale Transactions wherein the
counterparties (or the entities guaranteeing the obligations
of such counterparties) with the same rating by Moody's in
excess of the applicable percentage of Total Capitalization
set forth below (or such greater percentage approved by the
Insurer (so long as the Insurer is the Controlling Class) and
the Administrative Agent and with respect to which the Rating
Agency Condition with respect to Moody's has been satisfied)
and (b) Hedging and Short Sale Transactions wherein the total
exposure to any single counterparty is in excess of the
applicable percentage of Total Capitalization set forth in
the table below (or such greater percentage approved by the
Insurer (so long as the Insurer is the Controlling Class) and
the Administrative Agent and with respect to which the Rating
Agency Condition with respect to Moody's has been satisfied);
--------------------------------------------------------------------------------------------------
Long Term Rating of Any Single Aggregate
Counterparties Counterparty Limit Counterparties Limit
--------------------------------------------------------------------------------------------------
Aaa 7.5% 20.0%
--------------------------------------------------------------------------------------------------
Aa1 7.5% 20.0%
--------------------------------------------------------------------------------------------------
Aa2 7.5% 20.0%
--------------------------------------------------------------------------------------------------
Aa3 7.5% 15.0%
--------------------------------------------------------------------------------------------------
A1 5.0% 15.0%
--------------------------------------------------------------------------------------------------
A2 2.5% 10.0%
--------------------------------------------------------------------------------------------------
A3* 2.5% 5.0%
--------------------------------------------------------------------------------------------------
Baa1 or lower 0.0% 0.0%
--------------------------------------------------------------------------------------------------
____________
* The percentages in this row apply only if such rating is not on a
credit watch with negative implications by Moody's. If such rating is
on a credit watch with negative implications by ▇▇▇▇▇'▇, both the
individual and the aggregate percentage limits shall be zero.
(vii) the aggregate Market Value of Fund Investments consisting of
Structured Product Transactions in excess of 5% of Total
Capitalization;
(viii) the aggregate Market Value of Fund Investments consisting of
Non-Performing Instruments in excess of 20% of Total
Capitalization;
(ix) the aggregate Market Value of Fund Investments consisting of
convertible securities in excess of 25% of Total
Capitalization;
(x) the aggregate Market Value of Fund Investments consisting of
CDO Debt Securities in excess of 5% of Total Capitalization;
(xi) the aggregate Market Value of Fund Investments that are
Preferred Stock in excess of 15% of Total Capitalization;
(xii) the aggregate Market Value of Fund Investments consisting of
(A) Private Equity Securities of any single issuer in excess
of 3% of Total Capitalization; provided that the foregoing 3%
limit will be increased, up to a maximum of 4%, for each of
any two issuers of Private Equity Securities; provided,
further, that the foregoing 4% limit will be increased, up to
a maximum of 5%, for one of such two issuers of Private
Equity Securities; and (B) Private Equity Securities in
excess of 10% of Total Capitalization;
(xiii) the aggregate Market Value of Fund Investments that are
Asset-Backed Securities in excess of 5% of Total
Capitalization;
(xiv) the aggregate Market Value of Fund Investments that are
Dollar-denominated investments (A) in Foreign Issuers
domiciled in Designated Countries (other than Italy) in
excess of 10% of Total Capitalization, (B) in Foreign Issuers
domiciled in Italy in excess of 5% of Total Capitalization
and (C) in any single Foreign Issuer domiciled in a
Designated Country in excess of 5% of Total Capitalization;
(xv) the aggregate Market Value of Fund Investments that are
non-Dollar-denominated investments in excess of 10% of Total
Capitalization;
(xvi) the aggregate Market Value of Fund Investments that are
Equity Securities in excess of 20% of Total Capitalization;
(xvii) the aggregate Market Value of Fund Investments (other than
Distressed Debt, Non-Performing Instruments or Equity
Securities) that are rated "Caa1" or lower by Moody's in
excess of 20% of Total Capitalization; and
(xviii) the aggregate Market Value of Fund Investments that are
(determined without duplication) Non-Performing Instruments,
Equity Securities and Fund Investments that are rated "Caal"
or lower by Moody's in excess of 50% of Total Capitalization.
Notwithstanding the foregoing:
(A) in the event that a Fund Investment is reclassified after its
acquisition by the Borrower, for purposes of calculating the
Moody's Advance Amount, the exclusions described above in
clauses (iii) and (iv), that would otherwise become
applicable following such reclassification will not apply to
assets owned by the Borrower (or which the Borrower had
committed to purchase) on or prior to the date of such
reclassification until 30 days after such reclassification
but shall apply (on a pro forma basis giving effect to such
reclassification for all Fund Investments) to any asset
acquired by the Borrower after the date of such
reclassification which the Borrower had not committed to
purchase on or prior to the date of such reclassification;
(B) for purposes of clause (i) above, a Related Person of any
Person shall be considered the same "issuer" as such Person
unless such Person is a bankruptcy remote entity; and
(C) under no circumstances shall any Cash, Cash Equivalent or
U.S. Government Securities be excluded from Eligible
Investments based upon the Portfolio Limitations set forth
above.
Determination of the Market Value of Fund Investments
The Borrower shall calculate the Market Value (i) of each
Fund Investment that is not an Unquoted Investment on a weekly basis as of the
Determination Date for each calendar week and (ii) of each Fund Investment that
is an Unquoted Investment as set forth in the definition of "Market Value"
below.
"Market Value" means
(a) with respect to Cash, the current balance thereof;
(b) with respect to any Cash Equivalent (x) of the type described
in clause (ii) of the definition thereof (excluding banker's
acceptances), the current balance thereof, (y) of a type
described in clause (iii) of the definition thereof (and
banker's acceptances described in clause (ii) thereof), the
original purchase price thereof, and (z) of a type described
in clause (v) of the definition thereof, the aggregate
current net value thereof;
(c) with respect to any Fund Investment (other than Structured
Product Transactions, Unquoted Investments, Cash and Cash
Equivalents described in clause (b) above) at any date, an
amount determined by the Borrower that is not in excess of
the product of (x) the Market Value Price for each unit of
such Fund Investment on such date (and, with respect to any
Securities which have an amortizing principal amount, the
then current factor related thereto, if applicable) times (y)
the number of units of such Fund Investment held by the
Borrower; and
(d) with respect to any Fund Investment other than Cash and Cash
Equivalents which is an Unquoted Investment at any date, the
value thereof most recently determined by the Borrower in
accordance with the procedures described below;
provided, however, (x) for purposes of making such determinations,
(1) the frequency of determination of the Market Value
of any Illiquid Investment will be at least
quarterly as of each Quarterly Date and, except as
otherwise provided in the following clauses, the
frequency of determination of the Market Value of
any Semi-Liquid Investment will be at least monthly
as of the last Business Day of each calendar month;
(2) for Semi-Liquid Investment positions with a Market
Value of $35 million or greater but less than $70
million (and all positions subject to this clause
(x)(2) by reason of clause (y) below), a quotation
from an Approved Investment Banking Firm or an
Approved Third-Party Appraisal at least monthly;
(3) for Semi-Liquid Investment positions with a Market
Value of $70 million or greater, a quotation from an
Approved Investment Banking Firm or an Approved
Third-Party Appraisal at least monthly and an
Approved Third-Party Appraisal at least quarterly;
and
(4) for Illiquid Investment positions with a Market
Value of $35 million or greater (and all positions
subject to this clause (x)(4) by reason of clause
(y) below) an Approved Third-Party Appraisal at
least quarterly;
(y) notwithstanding the foregoing, the aggregate Market Value of
all Unquoted Investment positions whose value is determined
by the Borrower without relying on the methodology set forth
in subclauses (2), (3) or (4) of clause (x) above (it being
understood that such methodology may be used for Unquoted
Investments with Market Values below the thresholds set forth
in such subclauses) may not exceed 5% of Total Capitalization
and all such Unquoted Investment positions (i.e., those in
excess of such limit and as selected by the Borrower) will be
subject to subclauses (2) or (4) of clause (x) above
depending upon whether any such Unquoted Investment is a
Semi-Liquid Investment or an Illiquid Investment; and
(z) in no event will the Market Value of any Unquoted Investment
exceed the lesser of (1) any quotation or appraisal obtained
as provided in clauses (x) or (y) above and (2) the value
most recently determined by the Borrower.
Notwithstanding the foregoing, if the Investment Manager
shall on any day actually determine that (i) the Market Value of any
Semi-Liquid Investment determined as of the last Business Day of the preceding
calendar month or (ii) the Market Value of any Illiquid Investment determined
as of the last Quarterly Date has decreased since such last Business Day of the
preceding calendar month or last Quarterly Date, the Market Value of such Fund
Investment shall be such decreased value, and if the Investment Manager
subsequently actually determines on any day prior to the next determination of
its Market Value that the value of such Fund Investment has further decreased,
the Market Value of such Fund Investment shall be such decreased value. If, on
the other hand, the Investment Manager shall subsequently actually determine
that the value of such Fund Investment has increased, the Market Value of such
Fund Investment shall be such increased value; provided that in no event shall
the Market Value of any such Fund Investment whose value is so increased be
greater than the Market Value of such Fund Investment previously determined as
of the last Business Day of the preceding calendar month (in the case of
Semi-Liquid Investments) or as of the last Quarterly Date (in the case of
Illiquid Investments). It is expressly understood that the Investment Manager
shall have no duty whatsoever to specifically monitor or otherwise investigate
any value changes described in this paragraph.
Prior to the first available quotation or appraisal of any
Unquoted Investment obtained as provided above, the Market Value of such
Unquoted Investment will be the lower of the value thereof as most recently
determined by the Borrower and cost. In the event that the Borrower elects in
its discretion to book, for purposes of its own financial accounting records,
any Unquoted Investment at a value lower than that which would require a
valuation by an Approved Investment Banking Firm or an Approved Third-Party
Appraisal, as the case may be, then the Market Value of such Unquoted
Investment shall be such lower value used by the Borrower for purposes of its
own financial accounting records.
Notwithstanding the foregoing, the Market Value of any
Structured Product Transaction at any date will be equal to the net settlement
amount, if any, that the Borrower would receive if such Structured Product
Transaction was terminated or liquidated early in accordance with its terms on
such date as determined by the Borrower.
The Market Value of any CDO Debt Security shall be based upon
a quotation from an Approved Investment Banking Firm or an Approved Third-Party
Appraisal.
The Market Value of any Defensive Hedge Transaction where the
related Fund Investment is part of the Collateral shall be the amount, as
determined by the Borrower, by which the Protected Market Value with respect to
such Fund Investment exceeds the product of the Market Value of the Fund
Investment (or, if less, the portion thereof that is an Eligible Investment),
as otherwise determined in accordance with these procedures, and the applicable
Advance Rate for such Fund Investment. The Market Value of any Defensive Hedge
Transaction where the Fund Investment is not part of the Collateral shall be
the Protected Market Value with respect to such Fund Investment.
For purposes of the definition of Market Value, (i) accrued
interest on any interest-bearing Eligible Investment shall be excluded in the
determination of Market Value by the party making such determination and (ii)
the Market Value of all non-Dollar Fund Investments shall be converted into
Dollars at the then current spot rate (after taking into account the effect of
any Currency Hedging Transactions with respect to such Fund Investment).
"Market Value Price" means with respect to any Fund
Investment (other than Cash, Structured Product Transactions and Unquoted
Investments) at any date, the price for each unit of such Fund Investment at
such date obtained from an Approved Source, including any of (a) in the case of
an Approved Exchange, the closing price as of the most recent Determination
Date on such Approved Exchange, or if such Approved Exchange is NASDAQ, the
closing bid price at such date (or if such Approved Exchange is closed for
business at such date, then the most recent available closing price or closing
bid price, as the case may be), provided that bonds may not be priced based
upon the price on an Approved Exchange pursuant to this clause (a), (i) prior
to the termination (without replacement) of the Credit Agreement, without the
consent of the Administrative Agent and the Insurer (so long as the Insurer is
the Controlling Class) and (ii) after termination (without replacement) of the
Credit Agreement, without the consent of the Insurer, (b) the average of the
bid prices at such date quoted by two Approved Dealers, or (c) the price
obtained at such date from an Approved Pricing Service.
For the purpose of this Schedule, any calculation or other
determination required to be made by the Borrower shall be made by the
Investment Manager on behalf of the Borrower, subject to the provisions of the
Investment Management Agreement.
Certain Definitions
The following are definitions of certain terms used in this
Schedule and elsewhere in the Credit Agreement. Terms used in this Schedule and
not defined below have the meanings given them elsewhere in this Schedule or in
the Credit Agreement.
"Advance Rate" means the ▇▇▇▇▇'▇ Advance Rate.
"Approved Counterparty" means (i) any Lender or Affiliate of
any Lender or the Insurer, (ii) any financial institutions, banks or investment
banking firms having a long term rating of at least "A1" by ▇▇▇▇▇'▇ and a short
term rating of at least "P-1" by ▇▇▇▇▇'▇ (and, if rated "A1" or "P-1" by
▇▇▇▇▇'▇, then such rating has not been placed on a credit watch with negative
implications by ▇▇▇▇▇'▇) or (iii) any counterparty set forth in the Credit
Agreement (or any successor to any such listed counterparty) or any other
counterparty designated by the Borrower in writing and approved by the
Administrative Agent and the Insurer (so long as the Insurer is the Controlling
Class) in their reasonable discretion and with respect to which the Rating
Agency Condition with respect to ▇▇▇▇▇'▇ has been satisfied.
"Approved Dealer" means (a) in the case of any Fund
Investment that is not a U.S. Government Security, any bank or broker-dealer
set forth in the Credit Agreement (or any successor to any such listed bank or
broker-dealer) or any other bank or broker-dealer designated by the Borrower in
writing and approved by the Administrative Agent and the Insurer (so long as
the Insurer is the Controlling Class) in their reasonable discretion and with
respect to which the Rating Agency Condition with respect to ▇▇▇▇▇'▇ has been
satisfied and (b) in the case of a U.S. Government Security, any primary dealer
in U.S. Government Securities, as reported by the Federal Reserve Board, which
as of the date hereof maintains a website at ▇▇▇▇://▇▇▇.▇▇.▇▇▇.▇▇▇.
"Approved Exchange" means, with respect to any Security, any
major securities or options exchange, the NASDAQ or any other exchange or
quotation system providing regularly published securities prices designated by
the Borrower in writing and approved by the Administrative Agent and the
Insurer (so long as the Insurer is the Controlling Class) in their reasonable
discretion and with respect to which the Rating Agency Condition with respect
to ▇▇▇▇▇'▇ has been satisfied.
"Approved Investment Banking Firm" means any investment
banking firm set forth in the Credit Agreement (or any successor to any such
listed investment banking firm), including any investment banking firm
designated by the Borrower in writing and approved by the Administrative Agent
and the Insurer (so long as the Insurer is the Controlling Class) in their
reasonable discretion and with respect to which the Rating Agency Condition
with respect to ▇▇▇▇▇'▇ has been satisfied.
"Approved Pricing Service" means a pricing or quotation
service set forth in the Credit Agreement (or any successor to any such listed
pricing service) or any other pricing or quotation service designated by the
Borrower in writing and approved by the Administrative Agent and the Insurer
(so long as the Insurer is the Controlling Class) in their reasonable
discretion and with respect to which the Rating Agency Condition with respect
to ▇▇▇▇▇'▇ has been satisfied.
"Approved Source" means any of (i) two Approved Dealers, (ii)
an Approved Exchange or (iii) an Approved Pricing Service, provided, that, for
purposes of the Over-Collateralization Test, a Bank Loan, High Yield Bond or
Mezzanine Investment which is a Fund Investment shall be considered "quoted" or
"priced" by an Approved Source only if, in the reasonable judgment of the
Borrower, such Approved Source will continue to provide quotations with respect
to such Bank Loan, High Yield Bond or Mezzanine Investment on an on-going basis
in the ordinary course of its business as a pricing service or dealer, as the
case may be.
"Approved Third-Party Appraisal" means an appraisal by an
Approved Third-Party Appraiser.
"Approved Third-Party Appraiser" means a third-party
appraiser that is not an Affiliate of either the Borrower or the Investment
Manager (or subject to an agreement to become such an Affiliate) which is set
forth in the Credit Agreement (or any successor to any such listed appraiser)
or any other such appraiser designated by the Borrower in writing and approved
by the Administrative Agent and the Insurer (so long as the Insurer is the
Controlling Class) in their reasonable discretion and with respect to which the
Rating Agency Condition with respect to ▇▇▇▇▇'▇ has been satisfied.
"Asset-Backed Security" means any fixed income Security that
is (i) backed by and paid primarily from the proceeds (or payments or proceeds
of a disposition) of Eligible Assets, and (ii) issued in a transaction
structured to (A) isolate the Security and the Eligible Assets backing the
Security from the credit risk of the sponsor of the transaction and (B) result
in the creditworthiness of such Security being primarily dependent upon (x) the
creditworthiness of the Eligible Assets backing such Security and (y) any
credit support provided with respect to the creditworthiness of such Eligible
Assets; provided, however, that in no event shall an "Asset-Backed Security"
include any of the following: (a) a Security issued to provide
debtor-in-possession financing, (b) a Security issued in connection with a
receivables financing, an equipment trust certificate or similar Security, (c)
an Equity Security (including an Equity Security that is characterized as a
note), (d) a Structured Product Transaction, (e) a CDO Debt Security or (f) a
Defensive Hedge Transaction.
"Bank Loan Participation" means a Bank Loan in the form of a
participation.
"Bank Loans" means direct purchases of, assignments of,
participations in and other interests in senior debt (including term loans,
revolving credit lines and other similar loans and investments).
"Borrowing Base Deficiency" means the excess of the sum of
(a) the Outstanding Principal Amount of the Debt under the Credit Agreement and
(b) the aggregate outstanding liquidity preference of the Preferred Shares over
the Senior Advance Amount.
"Busted Convertible Bond" means any convertible bond that, in
the Borrower's determination, trades like a fixed income investment and has a
negligible option value.
"Capital Stock" of any Person means shares, equity interests
(including limited partnership interests and limited liability company
interests), participations or other equivalents (however designated) of
corporate stock of such Person.
"Cash" means any immediately available funds in U.S. dollars
or any currency other than U.S. dollars which is a freely convertible currency
(including amounts held in the Custodial Account or on deposit with the
Custodian pursuant to "sweep" arrangements linked to the Custodial Account).
"Cash Equivalents" means investments (other than Cash) that
are one or more of the following obligations or Securities (including
investments for which the Preferred Shares Auction Agent, the agents under the
Credit Agreement or any of their respective Affiliates provide services):
(i) U.S. Government Securities;
(ii) certificates of deposit of, banker's acceptances issued by or
money market accounts in any depository institution or trust
company (including the Preferred Shares Auction Agent, the
agents under the Credit Agreement or any of their respective
Affiliates) incorporated under the laws of the United States
of America or any state thereof and subject to supervision
and examination by Federal and/or state banking authorities,
so long as the deposits offered by such depository
institution or trust company at the time of such investment
are rated and have a rating of at least "P-1" if rated by
▇▇▇▇▇'▇ or "A-1+" if rated by S&P (and, if rated "P-1" by
▇▇▇▇▇'▇, such rating has not been placed on a credit watch
with negative implications by ▇▇▇▇▇'▇) (or, in the case of
the principal depository institution in a holding company
system whose deposits are not so rated, the long term debt
obligations of such holding company are rated and such rating
is at ▇▇▇▇▇ "▇▇" if rated by ▇▇▇▇▇'▇ and "A+" if rated by S&P
(or, if rated "A1 by ▇▇▇▇▇'▇, such rating has not been placed
on a credit watch with negative implications by ▇▇▇▇▇'▇));
(iii) commercial paper issued by any depository institution or
trust company (including the Preferred Shares Auction Agent,
the agents under the Credit Agreement or any of their
respective Affiliates) incorporated under the laws of the
United States of America or any state thereof and subject to
supervision and examination by Federal and/or state banking
authorities, or any corporation incorporated under the laws
of the United States of America or any state thereof, so long
as the commercial paper of such issuer is rated and has at
the time of such investment a short term rating of at least
"P-1" if rated by ▇▇▇▇▇'▇ or "A-1" if rated by S&P (and, if
rated "P-1" by ▇▇▇▇▇'▇, such rating has not been placed on a
credit watch with negative implications by ▇▇▇▇▇'▇);
(iv) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United
States of America or any state thereof the obligations of
which at the time of such investment are rated and that have
a credit rating of at least "P-1" if rated by ▇▇▇▇▇'▇ and
"A-1" if rated by S&P (and, if rated "P-1" by ▇▇▇▇▇'▇, such
rating has not been placed on a credit watch with negative
implications by ▇▇▇▇▇'▇) either at the time of such
investment or the making of a contractual commitment
providing for such investment;
(v) shares of any money market fund or similar investment vehicle
(including such funds or vehicles for which the Preferred
Shares Auction Agent, the agents under the Credit Agreement
or any of their respective Affiliates is investment manager
or advisor), so long as such money market fund is rated and
has at the time of such investment a short-term rating of at
least "Aaa" and "MR1+" if rated by ▇▇▇▇▇'▇ and "AAA" if rated
by S&P (and, if rated "Aaa" and "MR1+" by ▇▇▇▇▇'▇, such
rating has not been placed on a credit watch with negative
implications by ▇▇▇▇▇'▇);
(vi) unleveraged overnight repurchase obligations on customary
terms with respect to investments described in clauses (i)
through (v) above entered into with a depository institution,
trust company or corporation of the type described in clause
(iii) above or a Subsidiary of any such depository
institution, trust company or corporation if such depository
institution, trust company or corporation also has a rating
of at least "A1" and "P-1" if rated by ▇▇▇▇▇'▇ or "A+" if
rated by S&P (and, if rated "A1" and "P-1" by ▇▇▇▇▇'▇, such
rating has not been placed on a credit watch with negative
implications by ▇▇▇▇▇'▇); and
(vii) preferred shares rated in the highest investment rating
category by ▇▇▇▇▇'▇ and S&P or otherwise with respect to
which the Rating Agency Condition is satisfied;
provided, that: (i) in no event shall Cash Equivalents include any obligation
that provides for the payment of interest alone; (ii) Cash Equivalents referred
to in clauses (ii) and (iii) above shall mature within 183 days of issuance;
(iii) if any of ▇▇▇▇▇'▇ or S&P changes its rating system, then any ratings
included in this definition shall be deemed to be an equivalent rating in a
successor rating category of ▇▇▇▇▇'▇ or S&P, as the case may be; (iv) if any of
▇▇▇▇▇'▇ or S&P is not in the business of rating securities, then any ratings
included in this definition shall be deemed to be an equivalent rating from
another Rating Agency; (v) Cash Equivalents (other than U.S. Government
Securities or money market funds maintained by the Custodian) shall not include
any such investment of more than $100 million in any single issuer; (vi) in no
event shall Cash Equivalents include any obligation that is not denominated in
Dollars or Eligible Foreign Currencies; and (vii) none of the foregoing
obligations or securities will constitute Cash Equivalents (A) if all, or
substantially all, of the remaining amounts payable thereunder will consist of
interest and not principal payments, or (B) if such security has an assigned
rating from S&P with an "r" or "t" subscript, or (C) if such security is a
mortgage-backed security or (D) if such security is an inverse floater
security.
"CDO Debt Securities" means any Securities that entitle the
holders thereof to receive payments that depend primarily on cash flow from, or
proceeds upon the sale of a pool of Securities serving as collateral for such
Securities; provided that if more than one class or other similar designation
of such Securities receive payments that depend primarily on cash flow from all
or substantially all of the underlying collateral Securities, then the class or
other similar designation the payment of which is most deeply subordinated
(other than any class or other similar designation constituting only nominal
capital) and any class or other similar designation that, as indicated in any
relevant offering documentation, is stated to be at least reasonably likely to
be treated as equity for U.S. Federal income tax purposes will be excluded from
"CDO Debt Securities"; provided, further that (x) CDO Debt Securities shall not
include any Structured Product Transaction and (y) CDO Debt Securities shall
only include CDO Debt Securities issued in a "cash-flow" or "market value"
collateralized debt obligation transactions.
"CDO Equity Securities" means any Securities (other than CDO
Debt Securities) that entitle the holders thereof to receive payments that
depend primarily on cash flow from, or proceeds upon sale of a pool of
Securities serving as collateral for such Securities (whether or not such
Securities have been rated by a nationally recognized statistical rating
organization); provided that CDO Equity Securities shall not include any
Structured Product Transaction.
"Contributed Company Capital" means, at any date, the
aggregate gross amount of Cash contributed as equity capital (excluding, for
the avoidance of doubt, the Preferred Shares) to the Borrower by the holders of
the Common Shares on or prior to such date (without regard to any other changes
in Company Equity).
"Currency Hedging Transaction" means (i) any Swap Transaction
entered into by the Borrower with an Eligible Counterparty intended to convert
any payment on a Debt or other obligation of the Borrower or any Company
Investment denominated in one currency to another currency or to protect
against fluctuations in the exchange rate of a currency in which a payment to
be made or received by the Borrower is denominated and (ii) any Swap
Transaction entered into by the Borrower intended to convert any payment on a
Debt or other obligation of the Borrower or any Company Investment denominated
in one currency to another currency or to protect against fluctuations in the
exchange rate of a currency in which a payment to be made or received by the
Borrower is denominated and pursuant to which the Borrower has no on-going
payment obligations.
"Defensive Hedge Advance Amount" means, as of any date of
determination, 98% of the aggregate Market Value of all Defensive Hedge
Transactions; provided, however, that the Defensive Hedge Advance Amount shall
in no event exceed an amount equal to (x) 20% of the Total Capitalization as of
such date of determination less (y) the sum of the aggregate Market Value as of
such date of determination of all Fund Investments in Bank Loan Participations
and Structured Product Transactions and, if the Secured Hedging Advance Amount
is positive, the Secured Hedging Advance Amount.
"Defensive Hedge Transaction" means a Hedging and Short Sale
Transaction between the Borrower and an Eligible Counterparty intended to
protect the Borrower against fluctuations in the market value of a Fund
Investment and pursuant to which (i) the Eligible Counterparty has agreed for a
period of time, at the direction of the Borrower, to (a) purchase the Fund
Investment at an agreed strike price or (b) pay to the Borrower, at the
Borrower's election, an amount by which an agreed strike price exceeds the
current price of the Fund Investment; (ii) the Eligible Counterparty does not
have recourse to the Collateral or the Borrower for any amounts owing to such
counterparty thereunder; and (iii) the Borrower may (a) pay a fee to the
Eligible Counterparty in connection with the transaction, (b) remove the Fund
Investment from the Custodial Account (whereby it is no longer part of the
Collateral) and pledge the Fund Investment to the counterparty as security for
its obligations to the Eligible Counterparty and (c) agree to deliver the Fund
Investment to the Eligible Counterparty in satisfaction of all of its
obligations to the Eligible Counterparty in connection with the transaction.
"Designated Country" means (i) each of Canada, Great Britain,
Australia, Denmark, New Zealand, Sweden, Switzerland, Luxembourg, The
Netherlands and any G-7 nation (other than Japan) and (ii) each other country
identified by the Borrower from time to time and with respect to which the
Rating Agency Condition with respect to ▇▇▇▇▇'▇ has been satisfied.
"Determination Date" means (a) with respect to any regularly
scheduled Valuation Statement prepared pursuant to the Credit Agreement or the
Operating Agreement and any other Preferred Shares document, the related
Reporting Date, (b) for the purpose of determining the Market Value Price of a
Fund Investment at any date when the Borrower is in compliance, or reasonably
believes it is in compliance, with the covenants relating to the
Over-Collateralization Test, the last Business Day of the preceding calendar
week ending prior to such date and (c) for the purpose of determining the
Market Value Price of a Fund Investment at any date when the Borrower is not,
or reasonably believes that it is not, in compliance with any covenant relating
to the Over-Collateralization Test, the date on which the most current pricing
information with respect to such Fund Investment is reasonably available.
"Distressed Debt" means debt Securities and Bank Loans which
are, in the Investment Manager's reasonable business judgment, impaired in
fundamental ways due to credit, liquidity, interest rate or other issues, which
may not be performing or may be in default, and which are generally trading at
a substantial discount to par.
"Eligible Assets" means financial assets, either fixed or
revolving, that by their terms convert into cash within a finite time period
plus any rights or other assets designed to assure the servicing or timely
distribution of proceeds to security holders.
"Eligible Counterparty" means, with respect to any Hedging
and Short Sale Transaction, (a) any Approved Counterparty or (b) any Person (i)
(x) in the case of a Currency Hedging Transaction, having a long term rating of
at least "Aa3" by ▇▇▇▇▇'▇ and a short term rating of at least "P-1" by ▇▇▇▇▇'▇
(and, if rated "Aa3" or "P-1" by ▇▇▇▇▇'▇, then such rating has not been placed
on a credit watch with negative implications by ▇▇▇▇▇'▇) and (y) in all other
cases, having a long term rating of at least "A1" by ▇▇▇▇▇'▇ and a short term
rating of at least "P-1" by ▇▇▇▇▇'▇ (and, if rated "A1" or "P-1" by ▇▇▇▇▇'▇,
then such rating has not been placed on a credit watch with negative
implications by ▇▇▇▇▇'▇), (ii) if no short term rating is available, (x) in the
case of a Currency Hedging Transaction, having a long term rating of "Aa2" or
better by ▇▇▇▇▇'▇ (and, if rated "Aa2" by ▇▇▇▇▇'▇, such rating has not been
placed on a credit watch with negative implications by ▇▇▇▇▇'▇) and (y) all
other cases, having a long term rating of "Aa3" or better by ▇▇▇▇▇'▇ (and, if
rated "Aa3" by ▇▇▇▇▇'▇, such rating has not been placed on a credit watch with
negative implications by ▇▇▇▇▇'▇) or (iii) whose obligations in respect of all
Hedging and Short Sale Transactions entered into with the Borrower are
absolutely and unconditionally guaranteed by an Affiliate of such Person having
(x) (A) in the case of a Currency Hedging Transaction, having a long term
rating of at least "Aa3" by ▇▇▇▇▇'▇ and a short term rating of at least "P-1"
by ▇▇▇▇▇'▇ (and, if rated "Aa3" or "P-1" by ▇▇▇▇▇'▇, then such rating has not
been placed on a credit watch with negative implications by ▇▇▇▇▇'▇) and (B) in
all other cases, having a long term rating of at least "A1" by ▇▇▇▇▇'▇ and a
short term rating of at least "P-1" by ▇▇▇▇▇'▇ (and, if rated "A1" or "P-1" by
▇▇▇▇▇'▇, then such rating has not been placed on a credit watch with negative
implications by ▇▇▇▇▇'▇) or (y) if no short term rating is available, (A) in
the case of a Currency Hedging Transaction, having a long term rating of "Aa2"
or better by ▇▇▇▇▇'▇ (and, if rated "Aa2" by ▇▇▇▇▇'▇, such rating has not been
placed on a credit watch with negative implications by ▇▇▇▇▇'▇) and (B) in all
other cases, having a long term rating of "Aa3" or better by ▇▇▇▇▇'▇ (and, if
rated "Aa3" by ▇▇▇▇▇'▇, such rating has not been placed on a credit watch with
negative implications by ▇▇▇▇▇'▇); provided that with respect to any
counterparty with which the Borrower has entered into a Hedging and Short Sale
Transaction, such counterparty that would qualify as an "Eligible Counterparty"
pursuant to clause (b) above but for the fact that such counterparty had
suffered a ratings downgrade shall be deemed to be an "Eligible Counterparty"
for thirty 30 days after the day it would otherwise have ceased to qualify as
an Eligible Counterparty.
"Eligible Country" means each country (i) whose unsupported
sovereign debt obligations are rated "Aa1" or better by ▇▇▇▇▇'▇ (and, if rated
"Aa1" by ▇▇▇▇▇'▇, such rating has not been placed on a credit watch with
negative implications by ▇▇▇▇▇'▇) or (ii) that is a Designated Country whose
unsupported sovereign debt obligations are rated "A3" or better by ▇▇▇▇▇'▇
(and, if rated "A3" by ▇▇▇▇▇'▇, such rating has not been placed on a credit
watch with negative implications by ▇▇▇▇▇'▇).
"Eligible Foreign Currencies" means (i) Australian Dollars,
Canadian Dollars, Pounds Sterling and Euros and (ii) each other currency
identified by the Borrower from time to time and confirmed in writing as
acceptable by the Administrative Agent and, so long as the Insurer is the
Controlling Class, the Insurer and with respect to which the Rating Agency
Condition with respect to ▇▇▇▇▇'▇ has been satisfied.
"Eligible Investments" has the meaning assigned to such term
in this Schedule under "Determination of Fund Investments Constituting Eligible
Investments."
"Equity Securities" means equity securities (including, for
the avoidance of doubt, Private Equity Securities) that will generally consist
of common or preferred stock of small to medium capitalization companies that
have either (i) undergone leveraged buyouts or recapitalizations, yet are still
substantially leveraged, or (ii) been burdened by complex legal, financial or
ownership issues and are selling at a discount to the underlying asset or
business value.
"Excess Fund Investments" means any Fund Investments or
portion thereof having a Market Value in excess of the percentages of Total
Capitalization set forth in the definition of Portfolio Limitations (in each
case determined by the Borrower using the most recent Market Value for the
applicable Fund Investments).
"Excluded Investments" has the meaning assigned to such term
in this Schedule under "Determination of Fund Investments Constituting Eligible
Investments."
"Foreign Issuer" means any issuer of a Fund Investment that
is incorporated or otherwise formed or organized outside the United States
unless such Fund Investment is irrevocably and unconditionally guaranteed by
any United States corporation, company, trust or other business entity;
provided, however, that none of the following shall be a Foreign Issuer: (i) an
offshore holding company issuer whose operating subsidiaries principally do
business, and hold their assets, in the United States, (ii) a Hedging SPE, or
(iii) an issuer of a CDO Debt Security.
"Fully Collateralized Structured Product Transaction" means a
Structured Product Transaction relating to a single Bank Loan or High Yield
Bond pursuant to which the Borrower is required to pledge collateral in an
amount that is not less than 100% of the notional amount of such transaction.
"Fund Investments" means all Cash, Cash Equivalents, Bank
Loans, Securities and Structured Product Transactions owned by the Borrower.
Fund Investments which the Borrower has contracted to purchase shall not be
deemed for purposes of the Credit Agreement to be owned by the Borrower until
settlement of such purchase and Fund Investments which the Borrower has
contracted to sell shall not cease to be Fund Investments for purposes of the
Credit Agreement until settlement of such sale.
"Hedging and Short Sale Transaction" means any transaction
permitted under Section 6.2.18 of the Credit Agreement and entered into by the
Borrower or a Hedging SPE with an Eligible Counterparty that is (i) a Swap
Transaction; (ii) an Interest Rate Hedging Transaction; (iii) a Currency
Hedging Transaction; (iv) a transaction under which the Borrower or such
Hedging SPE borrows a Bank Loan or Security and sells or otherwise disposes of
such or any substantially similar Bank Loan or Security prior to the date on
which the same must be returned to the lender thereof (and commonly known as a
"short sale"), (v) a Securities Lending Transaction; (vi) a credit derivative
transaction or repurchase agreement; (vii) an obligation to enter into any of
the foregoing; or (viii) any combination of any of the foregoing.
"Hedging SPEs" means entities which have bankruptcy-remote
special purpose provisions in their organizational documents and which are
Subsidiaries of the Borrower organized for the purpose of (i) holding and
acquiring investments similar to Fund Investments, (ii) incurring indebtedness
on a secured or unsecured basis, (iii) entering into Hedging and Short Sale
Transactions and (iv) engaging in any other activity incidental, necessary,
ancillary or appropriate to the foregoing.
"High Yield Bonds" means debt Securities (including
convertible debt Securities) that are generally rated below "Baa3" by ▇▇▇▇▇'▇,
(a) which are issued pursuant to a public registration, Rule 144A or as a
private placement and (b) which are not Cash Equivalents, Bank Loans, Mezzanine
Investments or CDO Debt Securities.
"Illiquid Investments" means (a) Unquoted Investments that do
not qualify as Semi-Liquid Investments; and (b) CDO Debt Securities that are
either (A) not rated "Baa3" or better by ▇▇▇▇▇'▇ or (B) rated "Baa3" and placed
on a credit watch with negative implication by ▇▇▇▇▇'▇.
"Industry" means any industry category listed in Schedule 7
or any other such industry category designated by the Borrower in writing and
approved by the Administrative Agent and the Insurer (so long as the Insurer is
the Controlling Class) in their reasonable discretion and with respect to which
the Rating Agency Condition with respect to ▇▇▇▇▇'▇ has been satisfied.
"Ineligible Country" means any country other than the United
States or an Eligible Country.
"Interest Only Security" means any security that by its terms
provides for periodic payments of interest and does not provide for the
repayment of a stated principal amount.
"Interest Rate Hedging Transaction" means (i) any Swap
Transaction entered into by the Borrower with an Eligible Counterparty intended
to protect the Borrower against changes in the floating rate of interest
payable on all or a portion of any Debt or other obligation of the Borrower or
its subsidiaries or on any Fund Investment or to protect against fluctuations
in interest rates, or (ii) any Swap Transaction or repurchase agreement entered
into by the Borrower, in each case with an Eligible Counterparty, intended to
protect against changes in the market value of any Fund Investment resulting
from fluctuations in interest rates.
"Investment Holding Subsidiaries" means entities which are
wholly owned Subsidiaries of the Borrower organized for the purpose of (i)
facilitating the acquisition, holding and disposition of investments that would
otherwise qualify as Fund Investments and in cases where the Investment Manager
has reasonably determined that it would be substantially disadvantageous for
the Borrower to directly acquire or hold such a Fund Investment and (ii)
engaging in any other activity incidental, necessary, ancillary or appropriate
to the foregoing.
"Investment Holding Subsidiary Securities" means equity
securities issued by any Investment Holding Subsidiary to the Borrower.
"Market Value" has the meaning assigned to such terms in this
Schedule under "Determination of Market Value of Fund Investments."
"Market Value Price" has the meaning assigned to such term in
this Schedule under "Determination of Market Value of Fund Investments."
"Mezzanine Investments" means (i) debt Securities or other
obligations of an issuer (including convertible debt Securities and
obligations) that (A) are subordinated to other debt of such issuer and (B) may
be issued with equity participation features such as convertibility, senior
equity securities, common stock or warrants or (ii) Preferred Stock issued in
connection with management buyouts, acquisitions, refinancings,
recapitalizations and later stage growth capital financings.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or any
successor thereto.
"▇▇▇▇▇'▇ Rating Correlation Procedures" means the following
procedures, which shall be applied to any Fund Investment for which an Assigned
▇▇▇▇▇'▇ Rating is not otherwise required and does not have an Assigned ▇▇▇▇▇'▇
Rating:
(i) if another security or obligation of the same issuer has an
Assigned ▇▇▇▇▇'▇ Rating, then the applicable rating of such
Fund Investment shall be determined as follows: (a) if there
is an Assigned ▇▇▇▇▇'▇ Rating of a security of the issuer of
the same priority, then the rating of such Fund Investment
shall be such rating; (b) if the Assigned ▇▇▇▇▇'▇ Rating is
on a senior unsecured obligation of the issuer, then the
applicable rating of such Fund Investment (1) shall be one
subcategory above such Assigned ▇▇▇▇▇'▇ Rating, if such Fund
Investment is a senior secured obligation of the issuer, with
a rating of "Aaa" remaining the same; (2) shall be two
subcategories below such Assigned ▇▇▇▇▇'▇ Rating, if such
rating is "B1" or higher and if such Fund Investment is a
subordinated obligation of the issuer, (3) shall be one
subcategory below such Assigned ▇▇▇▇▇'▇ Rating if such rating
is between "B2" and "Ca," inclusive, and if such Fund
Investment is a subordinated obligation of the issuer; and
(4) otherwise shall be "C" if such Fund Investment is a
subordinated obligation of the issuer; (c) if the Assigned
▇▇▇▇▇'▇ Rating is on a subordinated obligation of the issuer
and if such Fund Investment is a senior secured obligation of
the issuer, then the applicable rating of such Fund
Investment (1) shall be one subcategory above such Assigned
▇▇▇▇▇'▇ Rating if such rating is "Baa3" or higher, (2) shall
be two subcategories above such Assigned ▇▇▇▇▇'▇ Rating if
such rating is "B2" or higher, but lower than "Baa3," (3)
shall be one subcategory above such Assigned ▇▇▇▇▇'▇ Rating
if such rating is "B3" and (4) otherwise shall equal such
rating; (d) if there is an Assigned ▇▇▇▇▇'▇ Rating on a
subordinated obligation of the issuer and if such Fund
Investment is a senior unsecured obligation of the issuer,
then the applicable rating of such Fund Investment (1) shall
be one subcategory above such Assigned ▇▇▇▇▇'▇ Rating if such
rating is "B3" or higher and (2) otherwise shall equal such
rating; and (e) if the Assigned ▇▇▇▇▇'▇ Rating is on a senior
secured obligation of the issuer, then the applicable rating
of such Fund Investment (1) shall be one subcategory below
such Assigned ▇▇▇▇▇'▇ Rating if such rating is "Ca" or higher
and such Fund Investment is a senior unsecured obligation of
the issuer; (2) shall be two subcategories below such
Assigned ▇▇▇▇▇'▇ Rating if such rating is "Caa2" or higher
and such Fund Investment is a subordinated obligation of the
issuer; and (3) otherwise shall be "C"; and
(ii) if no other security or obligation of the same issuer has an
Assigned ▇▇▇▇▇'▇ Rating, the applicable ratings of such Fund
Investment shall be determined using any one of the methods
below:
A. (1) if such Fund Investment has an Assigned S&P Rating,
then the applicable rating of such Fund Investment will
be (a) one subcategory below the Moody's equivalent of
the Assigned S&P Rating if such Fund Investment is
rated "BBB-" or higher by S&P; and (b) two
subcategories below the Moody's equivalent of the
Assigned S&P Rating if such Fund Investment is rated
"BB+" or lower by S&P; and
(2) if such Fund Investment does not have an Assigned
S&P Rating but another security or obligation of
the issuer has an Assigned S&P Rating ("parallel
security"), then the Borrower may elect (x) to
apply the Moody's equivalent of the rating of
such parallel security determined in accordance
with the methodology set forth in subclause (1)
above, in which case, the applicable rating of
such Fund Investment will be determined in
accordance with the methodology set forth in
clause (i) above (for such purpose treating the
parallel security as if it had an Assigned
▇▇▇▇▇'▇ Rating with the rating determined
pursuant to this subclause (2)) or (y) to present
such Fund Investment to Moody's for an estimate
of such Fund Investment's rating factor as
provided in clause B below;
B. if such Fund Investment does not have an Assigned
▇▇▇▇▇'▇ Rating or Assigned S&P Rating and (x) no other
security or obligation of the issuer has an Assigned
▇▇▇▇▇'▇ Rating or Assigned S&P Rating or (y) another
security or obligation of the issuer has an Assigned
S&P Rating, and the Borrower so elects as provided in
clause A(2)(y) above, then the Borrower may present
such Fund Investment to Moody's for an estimate of such
Fund Investment's rating factor, from which its
corresponding ▇▇▇▇▇'▇ rating may be determined, which
shall be the applicable rating; provided that pending
receipt from Moody's of such estimate, such Fund
Investment shall have an applicable rating of "B3" if
the Borrower certifies to the Administrative Agent that
the Borrower believes that such estimate will be at
least "B3";
C. with respect to a Fund Investment issued by a U.S.
issuer, if (1) neither the issuer nor any of its
Affiliates is subject to reorganization or bankruptcy
proceedings, (2) no debt securities or obligations of
the issuer are in default, (3) neither the issuer nor
any of its Affiliates have defaulted on the payment of
any debt during the past two years, (4) the issuer has
been in existence for the past four years, (5) the
issuer is current on any cumulative dividends, (6) the
fixed-charge ratio for the issuer exceeds 120% for each
of the past two fiscal years (and for the most recent
four quarters), (7) the issuer had a net profit before
tax in the past fiscal year and the most recent
quarter, and (8) the annual financial statements of the
issuer are unqualified and certified by a firm of
independent accountants of national reputation, and
quarterly statements are unaudited but signed by a
corporate officer, the applicable rating of such Fund
Investment will be "B3" if such Fund Investment is a
senior secured obligation and "Caa1" if such Fund
Investment is not a senior secured obligation;
D. with respect to a Fund Investment issued by a U.S.
issuer, if (1) neither the issuer nor any of its
Affiliates is subject to reorganization or bankruptcy
proceedings, (2) no debt security or obligation of the
issuer has been in default in payment during the past
two years, and (3) such Fund Investment does not fall
within the immediately preceding paragraph (C), the
applicable rating of such Fund Investment will be
"Caa2"; and
E. if a debt security or obligation of the issuer has been
in default in payment during the past two years, the
applicable rating of such Fund Investment will be "Ca".
For the purposes of this definition, "Assigned ▇▇▇▇▇'▇ Rating" means
the publicly available rating or the monitored estimated rating
expressly assigned to a debt obligation (or facility) by Moody's that
addresses the full amount of the principal and interest promised, and
"Assigned S&P Rating" means the publicly available rating assigned to
a debt obligation (or facility) by S&P that includes no subscripts,
asterisks or other qualifications, that is not stated to be an
unmonitored rating, and that addresses the full amount of the
principal and interest promised.
"Moody's Warrant/Option Advance Amount" means, as of any date
of determination, an amount equal to the sum for all Warrant/Option Investments
of the product of (i) the Warrant/Option Intrinsic Value of such Warrant/Option
Investment multiplied by (ii) the Moody's Advance Rate for the Moody's Asset
Category applicable to the Related Equity Securities of such Warrant/Option
Investment.
"NASDAQ" means the electronic inter-dealer quotation system
operated by NASDAQ, Inc., a subsidiary of the National Association of
Securities Dealers, Inc., or any successor thereto.
"Net Accrual Amount" means, as of any date, an amount, which
may be positive or negative, equal to (i) the aggregate amount of accrued
interest payable to the Borrower on all interest-bearing Eligible Investments
as of such date minus (ii) the aggregate amount of accrued interest and
dividends payable by the Borrower as of such date in respect of the Loans (as
defined in the Credit Agreement) and the Preferred Shares, respectively;
provided that until the earlier of two years after the Closing Date or the date
on which the Borrower shall have drawn $711 million of the Equity Capital
Commitments, the Net Accrual Amount shall not be less than zero.
"Non-Cash Pay Instrument" means a High Yield Bond which falls
in Asset Category C, D, E, F or G that (a) does not provide for the payment of
cash interest or preferred dividends, or provides for the total deferral of
interest until the final maturity thereof, (b) is a debt security that has an
initial current yield on the date of purchase or acquisition thereof of less
than 2.5% per annum and provides for an increase in the rate of interest
payable in respect thereof at any time after the date it was purchased or
acquired (other than any increase resulting from (i) a change in a generally
recognized floating rate interest rate index, (ii) a change in the weighted
average interest rate on underlying collateral in the case of Securities the
interest rate on which is based on such weighted average interest rate or (iii)
a change in an interest rate spread or margin resulting from an announced
change in the rating of the issuer's debt obligations) or (c) is a debt
security that provides for the partial deferral of interest until the final
maturity thereof and which has cash interest payable without deferral at a rate
per annum less than (x) with respect to Fund Investments bearing interest at a
fixed rate, 2.5% per annum and (y) with respect to Fund Investments bearing
interest at a floating rate, a eurodollar rate plus 2% per annum. For purposes
of clause (b) of this definition, if the current yield is increased to 2.5% or
more per annum, then at the time of the increase of such interest rate, the
Security will cease to be a "Non-Cash Pay Instrument."
"Non-Credit Risk Security" means a security with respect to
which an institutional money manager would evaluate its value primarily by
reference to factors other than (a) the coupon (or the coupon as adjusted for
any purchase discount or premium) in relation to prevailing market yields, (b)
the credit worthiness of the issuing entity or (c) the adequacy of the
underlying financial assets supporting such security to ensure the repayment of
the security according to its terms (which adequacy may be measured by a credit
analysis of the likelihood of the obligors of such underlying assets to pay
according to the terms of such underlying assets and/or an analysis of the
sufficiency of the income streams thereon to meet the payment terms of the
security).
"Non-Performing Instrument" means (i) any Fund Investment
that is debt and the issuer of which is in default of any principal or interest
payment obligations in respect thereof (without giving effect to any applicable
grace period or waiver), (ii) any Fund Investment that is Preferred Stock and
the issuer of which has failed to meet any scheduled redemption obligations or
to pay its latest declared cash dividend or (iii) any Fund Investment that is a
CDO Debt Security and the issuer of which has failed to pay any current
interest or principal in cash when due.
"Outstanding Principal Amount" means the outstanding total
borrowings under the Credit Agreement at any given time.
"Performing" means, (i) with respect to any Fund Investment
that is Bank Loan or other debt, the issuer of such Fund Investment is not in
default of any payment obligations in respect thereof, (ii) with respect to any
Fund Investment that is Preferred Stock, the issuer of such Fund Investment has
not failed to meet any scheduled redemption obligations or to pay its latest
declared cash dividend or (iii) with respect to any Fund Investment that is a
CDO Debt Security, the issuer of such Fund Investment has not failed to pay any
current interest or principal in cash when due.
"Person" means an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Pledge and Intercreditor Agreement" means the Pledge and
Intercreditor Agreement dated as of the Closing Date, among the Administrative
Agent, the Insurer, the Custodian, the Borrower and the Secured Parties
Representative identified therein, as amended, extended, restated, supplemented
or modified from time to time in accordance with the terms thereof.
"Portfolio Limitations" has the meaning assigned to such term
in this Schedule under "Application of Portfolio Limitations."
"Preferred Stock" means, as applied to the Capital Stock of
any Person, Capital Stock of such Person of any class or classes (however
designated) that ranks prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to any shares (or other interests) of
Capital Stock of such Person.
"Private Equity Securities" means, at any time of
determination any Equity Security which the Borrower believes in good faith
(based on the facts and circumstances available to it) is (i) commonly regarded
by investment professionals as a "private equity security" and (ii) not traded
or listed on any national or regional securities exchange, any designated
offshore Securities market (as defined in Regulation S under the Securities
Act) or on the NASDAQ National Market and is not actively quoted or traded on
any automated quotation system or in the over-the-counter market; provided,
however, that "Private Equity Securities" shall not include (a) any Equity
Securities convertible or exchangeable for any Equity Securities traded or
quoted in the markets described in clause (ii) above, (b) any equity Securities
which may be resold under an effective registration statement under the
Securities Act at the time of determination or (c) any Investment Holding
Subsidiary Securities.
"Protected Market Value" means, with respect to any Fund
Investment that is the subject of a Defensive Hedge Transaction, the Protected
Price of such Fund Investment times the number of units of such Fund Investment
that are held by the Borrower and are the subject of such Defensive Hedge
Transaction.
"Protected Price" means, with respect to any Defensive Hedge
Transaction, (i) the agreed strike price at which the Eligible Counterparty to
such Defensive Hedge Transaction has agreed to purchase the Fund Investment
that is the subject of such Defensive Hedge Transaction or (ii) the agreed
strike price under a Defensive Hedge Transaction pursuant to which the Eligible
Counterparty has agreed to pay the Borrower an amount equal to the excess of
the agreed strike price over the current price of the Fund Investment that is
the subject of such Defensive Hedge Transaction.
"Quarterly Date" means the last Business Day of each March,
June, September and December, commencing December of 2004.
"Related Person" means, with respect to any issuer, (a) any
Person of which such issuer is a Subsidiary, (b) any Person that is a
Subsidiary of such issuer, (c) with respect to a debt obligation, any Person
that relies on, or is relied upon for, the cash flows of such issuer to service
debt obligations or does not have a credit rating independent of such Person or
(d) with respect to a debt obligation, any Person that guarantees the issuer's
payment of such debt obligation; provided, however, that, in any such case, a
Person shall not be a Related Person of a second Person solely as a consequence
of the common control of such Persons by a single financial sponsor.
"Reporting Date" means the last Business Day of each calendar
week, commencing July 30, 2004.
"S&P" means Standard & Poor's Ratings Services, a Division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereto.
"Secured Hedging Advance Amount" means as of any date of
determination, (i) if the Secured Hedging Net Exposure is greater than zero and
the Secured Hedging Transactions entered into, in the judgment of the Borrower,
hedge or mitigate risks to which the Borrower is exposed in the conduct of its
business or the management of its liabilities, 90% of the Secured Hedging Net
Exposure, and (ii) if the Secured Hedging Net Exposure is less than zero, 100%
of the Secured Hedging Net Exposure; provided that any Secured Hedging
Transaction having a Secured Hedging Net Exposure greater than zero and a
counterparty with a rating of less than "A3" by Moody's shall be deemed, for
purposes of calculating the Secured Hedging Advance Amount, to have a Secured
Hedging Net Exposure of zero. Notwithstanding the foregoing, the Secured
Hedging Advance Amount, if positive, may not exceed 11.11% of the amount
calculated pursuant to clause (i) of the definition of "Moody's Advance
Amount," and to the extent that such amount exceeds 11.11%, the portion in
excess of 11.11% will have a Market Value of zero.
"Secured Hedging Net Exposure" as of any date, as to any
Secured Hedging Transaction for which a determination thereof is required to be
made, shall be determined as follows: (i) each Eligible Counterparty party to
each Secured Hedging Transaction shall determine, with respect to the Secured
Hedging Transactions entered into by it with the Borrower, an amount (the
"Secured Net Exposure Component") equal to the net current market value on the
bid side of the market if the position is long and on the ask/offer side of the
market if the position is short to the Borrower on such date of determination
of each such Secured Hedging Transaction and (ii) for each Secured Hedging
Transaction, the "Secured Hedging Net Exposure" will, as of any date, be equal
to the sum of all applicable Secured Net Exposure Components as of such date
and may, for purposes of this calculation, be less than zero.
"Secured Hedging Transaction" means any Interest Rate Hedging
Transaction or Currency Hedging Transaction entered into by the Borrower with
any Lender that is an Eligible Counterparty which is secured by Collateral
pursuant to the Pledge and Intercreditor Agreement and for avoidance of doubt
shall exclude Structured Product Transactions.
"Securities" means common and preferred stock, partnership
units and participations, member interests in limited liability companies,
notes, bonds, debentures, trust receipts and other obligations, instruments or
evidences of indebtedness, including debt instruments of public and private
issuers and tax-exempt securities (including, without limitation, warrants,
rights, put and call options and other options and rights relating thereto, or
any combination thereof), guarantees of indebtedness, choses in action, trade
claims, other property or interests commonly regarded as securities or any form
of interest or participation therein, but not including Bank Loans or Hedging
and Short Sale Transactions.
"Securities Lending Counterparty" means any bank,
broker-dealer or other financial institution (other than an insurance company)
that has:
(i) in the case of a loan with a term of 90 days or less,
short-term senior unsecured debt ratings of "P-1" from
Moody's (or a guarantor with such ratings);
(ii) in the case of a loan with a term of longer than 90
days but less than a year, either (x) a long-term
senior unsecured debt rating of at least "A1" by
Moody's or (y) both a long term senior unsecured debt
rating of "A2" by Moody's and a short term rating of
"P-1" by Moody's; and
(iii) in the case of a loan for a one year term or more, a
long-term senior unsecured debt rating that,
individually and together with all other Securities
Lending Counterparties' ratings, is consistent with the
limits set forth in the table below (or a guarantor
with such ratings).
No more than 50% of Total Capitalization may be loaned pursuant to Securities
Lending Transactions regardless of duration. At the time a Securities Lending
Transaction for a term of one year or more is entered into by the Borrower, the
percentage of the Fund Investments loaned to a single counterparty shall not
exceed the individual percentage set forth below for the credit rating of such
counterparty, and the percentage of the Fund Investments loaned by the Borrower
to counterparties having the same credit rating shall not exceed the aggregate
percentage set forth below for such credit rating:
-------------------------------------------------------------------------------
Long-Term Senior Unsecured Individual Aggregate
Debt Rating of Securities Securities Lending Securities Lending
Lending Counterparty Counterparty Limit Counterparty Limit
-------------------------------------------------------------------------------
Aaa 10% 20%
-------------------------------------------------------------------------------
Aa1 10% 20%
-------------------------------------------------------------------------------
Aa2 10% 20%
-------------------------------------------------------------------------------
Aa3 10% 15%
-------------------------------------------------------------------------------
A1 10% 10%
-------------------------------------------------------------------------------
A2* 5% 5%
-------------------------------------------------------------------------------
A3 or lower 0% 0%
-------------------------------------------------------------------------------
____________
* The percentages in this row apply only if such rating is not on a credit
watch with negative implications by Moody's. If such rating is on a credit
watch with negative implications by Moody's, both the individual and the
aggregate percentage limits shall be zero.
provided, that the Borrower may enter into a Securities Lending Transaction
with a Securities Lending Counterparty having, at such time, a long-term senior
unsecured debt rating below "A2" by Moody's, so long as the Rating Agency
Condition with respect to Moody's has been satisfied.
"Securities Lending Transactions" means all obligations of
the Borrower (i) to purchase investments which arise out of or in connection
with the sale of the same or substantially similar investments or other similar
transactions having the same economic effect (excluding Swap Transactions); and
(ii) incurred in connection with any security lending transactions described in
clause (i) with a Securities Lending Counterparty.
"Semi-Liquid Investments" means (i) Unquoted Investments that
are debt Securities rated "B3" or better by Moody's; (ii) Unquoted Investments
that are not subject to any enforceable agreement containing a material
condition to, or material restriction on, the ability of the holder of such
Unquoted Investment or an assignee of such holder to sell, assign, transfer or
otherwise liquidate the investment in a commercially reasonable time and manner
(other than in any such agreement contained in the Collateral Documents and
customary securities law arrangements or restrictions); (iii) Structured
Product Transactions; (iv) solely for purposes of the definition of Portfolio
Limitations, Unquoted Investments which are High Yield Bonds or Mezzanine
Investments and are part of an issue that is greater or equal to $40 million in
original principal amount; (v) solely for purposes of the definition of
Portfolio Limitations, Unquoted Investments which are High Yield Bonds that are
held by ten or more holders or the issuer thereof has a total capitalization in
excess of $150.0 million; or (vii) CDO Debt Securities which are rated "Baa3"
or better by Moody's (and, if rated "Baa3" by Moody's, such rating has not been
placed on a credit watch with negative implications by Moody's).
"Senior Advance Amount" means the Moody's Advance Amount
calculated using the Moody's Advance Rate.
"Specified Foreign Country" means each Designated Country
other than (x) a country whose sovereign debt rating in a non-local currency is
rated "Aaa" by Moody's or (y) a country whose sovereign debt rating in a
non-local currency is rated "Aa2" or better by Moody's (and, if rated "Aa2" by
Moody's, such rating has not been placed on a credit watch with negative
implications by Moody's) and in the case of (y) which is (a) a member of the
European Union that has adopted the Euro as its lawful currency, (b) Canada,
(c) Great Britain or (d) Australia.
"Structured Product Transaction" means a Hedging and Short
Sale Transaction between the Borrower and a counterparty that is on the date
such Hedging and Short Sale Transaction is entered into an Eligible
Counterparty, and pursuant to which (i) (a) the counterparty is entitled to
receive an amount equal to the sum of (1) periodic payments based on the
notional amount of such transaction for the term thereof at a specified rate
(which may be fixed or floating) and (2) the decrease over the term of such
transaction in the market value of a designated pool of one or more Bank Loans,
High Yield Bonds or a combination of Bank Loans and High Yield Bonds; and (b)
the counterparty is obligated to make payment to the Borrower in an amount
equal to the sum of (1) the interest, fees and other cash flows paid with
respect to the term of such transaction on such designated pool of Bank Loans
and/or High Yield Bonds and (2) the increase over the term of such transaction
in the market value of such designated pool of Bank Loans and/or High Yield
Bonds or (c) the counterparty and the Borrower agree to pay a net amount
calculated by reference to (a) or (b) above; (ii) the initial and minimum
amount of collateral that the Borrower is required to pledge as collateral for
such Hedging and Short Sale Transaction is not less than (x) if the pool of
Bank Loans and/or High Yield Bonds subject to such transaction includes
obligations of ten or more issuers, 10% of the notional amount of such Hedging
and Short Sale Transaction and (y) in all other cases, 20% of the notional
amount of such Hedging and Short Sale Transaction; and (iii) the counterparty
does not have recourse to the Collateral for amounts owing to such counterparty
thereunder. At the time a Bank Loan is made the subject of a Structured Product
Transaction, such Bank Loan must fall in Asset Category ▇-▇, ▇-▇ or B-3. At the
time a High Yield Bond is made the subject of a Structured Product Transaction,
such High Yield Bond must (i) fall in Asset Category C, D or E, (ii) not be a
Non-Cash Pay Instrument and (iii) not be a CDO Debt Security or a Mezzanine
Investment.
"Swap Transaction" means: (i) any rate, basis, debt or equity
swap; (ii) any put, cap, collar or floor agreement; (iii) any rate, basis, debt
or equity futures or forward agreement; (iv) any rate, basis, debt or equity
option representing an obligation to buy or sell a security, debt or equity;
and (v) any other similar agreement.
"Total Capitalization" means the sum of (a) Contributed
Company Capital plus aggregate undistributed net income of the Borrower (as
determined quarterly in accordance with GAAP and set forth in the Borrower's
financial statements) minus net loss of the Borrower (determined quarterly in
accordance with GAAP and set forth in the Borrower's financial statements), in
each case excluding any reduction in Company Equity as a result of placement or
structuring fees and organizational expenditures, (b) the aggregate outstanding
liquidation preference of the Preferred Shares and (c) the aggregate
Outstanding Principal Amount of the Loans under and as defined in the Credit
Agreement plus the amount, if any, by which the Total Maximum Commitment
exceeds the Outstanding Principal Amount of the Loans; provided, however, that
during the first 450 days following the Closing Date, for purpose of clauses
(i) through (vi) of the Portfolio Limitations, "Total Capitalization" will be
the greater of (i) the amount determined pursuant to clauses (a), (b) and (c)
above and (ii) $711 million; provided, further, that, for purposes of the
definition of Portfolio Limitations, Total Capitalization shall not exceed
$1.625 billion.
"Unhedged Foreign Investment" means any portion of any Fund
Investment denominated in a currency other than Dollars which is not protected
against currency fluctuations as a result of Currency Hedging Transactions.
"Unquoted Investments" means Fund Investments other than Cash
or Cash Equivalents for which the Market Value has not been obtained from an
Approved Source.
"U.S. Government Securities" means Securities that are direct
obligations of, or obligations the timely payment of principal and interest on
which is fully guaranteed by, the United States of America or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America and in the
form of conventional bills, bonds and notes. In no event shall U.S. Government
Securities include: (i) any security providing for the payment of interest
only; (ii) any Swap Transaction; or (iii) any obligation on which all or any
portion of the payments thereunder is based, directly or indirectly, on any
Swap Transaction.
"Warrant/Option Intrinsic Value" means, with respect to any
Warrant/Option Investment, the product of (x) an amount by which the current
price (based on the price from an Approved Source or an Approved Investment
Banking Firm) of such Warrant/Option Investment exceeds the agreed strike price
with respect to such Warrant/Option Investment, multiplied by (y) the number of
shares of the Related Equity Securities. For the avoidance of doubt, the
Warrant/Option Advance Value shall always be zero if the agreed strike price of
such Warrant/Option Investment is equal to or greater than the current price of
such Warrant/Option Investment.
"Warrant/Option Investments" means any Fund Investments held
by the Borrower that are warrants or call options or similar rights with
respect to Equity Securities (the "Related Equity Securities").
"Yield to Worst" means, in respect of any High Yield Bond or
other debt security, the lesser of (a) the yield-to-maturity and (b) the lowest
yield-to-call calculated on each scheduled call date.
S&P COLLATERAL VALUATION SCHEDULE
Calculation of S&P Advance Amount; Description of Over-Collateralization Test.
"S&P Advance Rate" means, for each S&P Asset Category:
(i) so long as the aggregate number of issuers
(without duplication) of the Eligible Investments is equal to or
greater than 68 and the aggregate number of Industries (without
duplication) in which the Eligible Investments are invested is equal
to or greater than 15, the percentage specified in the column entitled
"S&P Advance Rate - 68/15" in the table below opposite such S&P Asset
Category;
(ii) provided that clause (i) above is not
applicable, so long as the aggregate number of issuers (without
duplication) of the Eligible Investments is equal to or greater than
30 but less than 68 and the aggregate number of Industries (without
duplication) in which the Eligible Investments are invested is equal
to or greater than 9 but less than 15, the percentage specified in the
column entitled "S&P Advance Rate - 30/9" in the table below opposite
such S&P Asset Category; and
(iii) for all other cases, the percentage specified
in the column entitled "S&P Advance Rate - Others" in the table below
opposite such S&P Asset Category;
provided that, for purposes of this definition only, each $7.0 million in Cash
or Cash Equivalents held by the Borrower or each $7.0 million in available
unfunded amount of the Senior Loan Facility shall be treated as one issuer and
one Industry; provided, further, that a Related Person of any Person shall be
considered the same "issuer" as such Person unless such Person is a bankruptcy
remote entity; provided, further, that during the first 450 days following the
Closing Date only, the S&P Advance Rate for each S&P Asset Category may be, at
the election of the Investment Manager, the percentage specified in the column
entitled "S&P Advance Rate - 68/15" in the table below opposite such S&P Asset
Category regardless of the aggregate number of issuers of the Eligible
Investments or the aggregate number of Industries in which the Eligible
Investments are invested:
S&P Asset S&P Advance Rate S&P Advance Rate - S&P Advance Rate -
Category 68/15 30/9 Others
-------------- ------------------ ------------------- -------------------
A-1 100% 100% 100%
A-2 98% 98% 98%
A-3 97% 97% 97%
A-4 92% 92% 92%
B-1 91% 88% 86%
B-2 88% 84% 82%
C-1 90% 88% 86%
C-2 89% 87% 85%
C-3 88% 86% 84%
D-1 86% 83% 81%
D-2 84% 81% 78%
D-3 82% 78% 75%
E-1 78% 73% 69%
E-2 75% 70% 65%
E-3 72% 66% 61%
F-1 66% 61% 55%
F-2 61% 54% 48%
F-3 53% 45% 38%
G-1 83% 81% 79%
G-2 82% 80% 78%
G-3 81% 79% 77%
G-4 79% 76% 74%
G-5 77% 74% 71%
G-6 75% 71% 68%
G-7 71% 66% 62%
G-8 68% 63% 58%
G-9 65% 59% 54%
G-10 46% 38% 31%
H 62% 49% 38%
I-1 77% 73% 68%
I-2 71% 66% 61%
I-3 49% 40% 32%
J-1 60% 47% 36%
J-2 36% 23% 20%
"S&P Advance Amount" means, as of any date of determination
under the Over-Collateralization Test (as described in this Schedule), an
amount equal to the sum of (i) the sum for all Eligible Investments (other than
Warrant/Option Investments) of the product of (1) the Market Value (determined
as described below) of such Eligible Investment (determined as described below)
multiplied by (2) the S&P Advance Rate for the S&P Asset Category applicable to
such Eligible Investment under the Over-Collateralization Test, (ii) the
Secured Hedging Advance Amount as of such date, (iii) the Defensive Hedge
Advance Amount as of such date, (iv) the S&P Warrant/Option Advance Amount as
of such date and (v) the Net Accrual Amount as of such date.
Notwithstanding the foregoing, for purposes of determining
the S&P Advance Amount,
(i) the Market Value of any Unhedged Foreign Investment shall
be 95% of the Market Value thereof otherwise determined in accordance with the
above procedures; provided that, if the Foreign Issuer of such Unhedged Foreign
Investment is from a country whose sovereign debt rating in a non-local
currency is not assigned an S&P OC Test Rating of "AA" or better, the Market
Value of such Unhedged Foreign Investment shall be 85% of the Market Value
thereof otherwise determined in accordance with the above procedures;
(ii) the percentage applicable above to Cash in a currency
other than Dollars shall be (a) with respect to Cash in a currency other than
Dollars, held for a period less than five (5) Business Days, 95% (and not 100%)
and (b) with respect to Cash in a currency other than Dollars, held for a
period of more than five (5) Business Days, 0%, unless in either case such Cash
is protected against currency fluctuations as a result of Currency Hedging
Transactions, in which case, the percentage applicable shall be 100%;
(iii) the Market Value of any Preferred Stock or Structured
Product Transaction shall be 95% of the Market Value thereof otherwise
determined in accordance with the above procedures;
(iv) the Market Value of any CDO Debt Security that is not
assigned an S&P OC Test Rating of "CCC" or better shall be zero; and
(v) the Market Value of any Non-Cash Pay Instrument that is
not a U.S. Government Security shall be 95% of the Market Value thereof
otherwise determined in accordance with the above procedures.
"Over-Collateralization Test" is a test that is satisfied as
of any Business Day if the sum, as of such Business Day, of the Outstanding
Principal Amount of Debt under the Credit Agreement and the aggregate
outstanding liquidation preference of the Preferred Shares is less than or
equal to the S&P Advance Amount calculated using the S&P Advance Rate as of
such Business Day.
For purposes of the S&P Advance Amount, the Borrower shall
assign each Fund Investment to one of the following categories (each, an "S&P
Asset Category") commencing upon the initial acquisition thereof (and, for
purposes of this categorization, the Market Value Price of a Fund Investment
trading at par is equal to $1.00):
"Asset Category A-1 Investments" means (a) Cash and (b) Cash
Equivalents described in clause (vi) of the definition of such term and (c)
Cash Equivalents described in clauses (i), (ii), (iii) or (iv) of the
definition of such term that mature on the Business Day next following the date
of acquisition thereof.
"Asset Category A-2 Investments" means Cash Equivalents
(other than Cash in U.S. dollars, U.S. Government Securities and Cash
Equivalents described in clauses (b) or (c) of the definition of Asset Category
A-1 Investments) and U.S. Government Securities with maturities of less than or
equal to 183 days.
"Asset Category A-3 Investments" means U.S. Government
Securities with final maturities more than 183 days but less than or equal to
two (2) years.
"Asset Category A-4 Investments" means U.S. Government
Securities with final maturities more than two (2) years but less than or equal
to five (5) years.
"Asset Category B-1 Investments" means Bank Loans which (i)
are Performing and (ii) have a Market Value Price greater than or equal to
$0.90.
"Asset Category B-2 Investments" means Bank Loans which (i)
are Performing and (ii) have a Market Value Price greater than or equal to
$0.85 but less than $0.90.
"Asset Category C-1 Investments" means High Yield Bonds and
Mezzanine Investments which (i) are Performing and (ii) have an S&P OC Test
Rating of "BBB+" or better.
"Asset Category C-2 Investments" means High Yield Bonds and
Mezzanine Investments which (x) (i) are Performing and (ii) have an S&P OC Test
Rating of "BBB" or (y) Securities (other than securities issued by a Foreign
Issuer) which are fully defeased.
"Asset Category C-3 Investments" means High Yield Bonds and
Mezzanine Investments which (i) are Performing and (ii) have an S&P OC Test
Rating of "BBB-".
"Asset Category D-1 Investments" means High Yield Bonds
(other than convertible Securities) and Mezzanine Investments which (i) are
Performing and (ii) have an S&P OC Test Rating of "BB+".
"Asset Category D-2 Investments" means High Yield Bonds
(other than convertible Securities) and Mezzanine Investments which (i) are
Performing and (ii) have an S&P OC Test Rating of "BB".
"Asset Category D-3 Investments" means High Yield Bonds
(other than convertible Securities) and Mezzanine Investments which (i) are
Performing and (ii) have an S&P OC Test Rating of "BB-".
"Asset Category E-1 Investments" means High Yield Bonds
(other than convertible Securities) and Mezzanine Investments which (i) are
Performing and (ii) have an S&P OC Test Rating of "B+".
"Asset Category E-2 Investments" means High Yield Bonds
(other than convertible Securities) and Mezzanine Investments which (i) are
Performing and (ii) have an S&P OC Test Rating of "B".
"Asset Category E-3 Investments" means High Yield Bonds
(other than convertible Securities) and Mezzanine Investments which (i) are
Performing and (ii) have an S&P OC Test Rating of "B-".
"Asset Category F-1 Investments" means High Yield Bonds
(other than convertible Securities) and Mezzanine Investments which (i) are
Performing and (ii) have an S&P OC Test Rating of "CCC+".
"Asset Category F-2 Investments" means High Yield Bonds
(other than convertible Securities) and Mezzanine Investments which (a) are
Performing and (b) have an S&P OC Test Rating of "CCC".
"Asset Category F-3 Investments" means High Yield Bonds
(other than convertible Securities) and Mezzanine Investments which (i) are
Performing and (ii) have an S&P OC Test Rating of "CCC-" or lower or are not
rated.
"Asset Category G-1 Investments" means convertible bonds
which (i) are Performing and (ii) have an S&P OC Test Rating of at least
"BBB+".
"Asset Category G-2 Investments" means convertible bonds
which (i) are Performing and (ii) have an S&P OC Test Rating of "BBB".
"Asset Category G-3 Investments" means convertible bonds
which (i) are Performing and (ii) have an S&P OC Test Rating of "BBB-".
"Asset Category G-4 Investments" means convertible bonds
which (i) are Performing and (ii) have an S&P OC Test Rating of "BB+".
"Asset Category G-5 Investments" means convertible bonds
which (i) are Performing and (ii) have an S&P OC Test Rating of "BB".
"Asset Category G-6 Investments" means convertible bonds
which (i) are Performing and (ii) have an S&P OC Test Rating of "BB-".
"Asset Category G-7 Investments" means convertible bonds
which (i) are Performing and (ii) have an S&P OC Test Rating of "B+".
"Asset Category G-8 Investments" means convertible bonds
which (i) are Performing and (ii) have an S&P OC Test Rating of "B".
"Asset Category G-9 Investments" means convertible bonds
which (i) are Performing and (ii) have an S&P OC Test Rating of "B-".
"Asset Category G-10 Investments" means convertible bonds
(not covered by Asset Categories G-1 through G-9) which are Performing.
"Asset Category H Investments" means Preferred Stock which is
Performing.
"Asset Category I-1 Investments" means Bank Loans which (i)
are non-Performing and (ii) have a Market Value Price equal to or greater than
$0.85.
"Asset Category I-2 Investments" means (i) Bank Loans which
have a Market Value Price less than $0.85 and (ii) Bank Loans described in
Asset Categories ▇-▇, ▇-▇ or I-1 above that have an S&P OC Test Rating below
"B-" (including Bank Loans with an S&P OC Test Rating of "NR") to the extent
that the aggregate Market Value of such Bank Loans is in excess of 15% of Total
Capitalization; (iii) Bank Loans that would otherwise fall in Asset Categories
▇-▇, ▇-▇ or I-1 above that are originated under a credit agreement that
provided for aggregate credit facilities at origination of less than
$150,000,000 to the extent that the aggregate Market Value of such Bank Loans
is in excess of 15% of Total Capitalization; and (iv) Bank Loans that are
unsecured or subordinated.
"Asset Category I-3 Investments" means non-Performing High
Yield Bonds, Mezzanine Investments, convertible bonds and Preferred Stock.
"Asset Category J-1 Investments" means Equity Securities
which are not Private Equity Securities.
"Asset Category J-2 Investments" means Fund Investments in
Bank Loans, High Yield Bonds, Mezzanine Investments, Private Equity Securities
or CDO Debt Securities not otherwise described in any of the preceding Asset
Categories and Structured Product Transactions (other than Fully Collateralized
Structured Product Transactions).
Rating Procedures. References herein to any rating by ▇▇▇▇▇'▇
or S&P shall include shadow ratings and shall also be deemed to include an
equivalent rating in a successor rating category of ▇▇▇▇▇'▇ or S&P, as the case
may be, or if neither ▇▇▇▇▇'▇ nor S&P is in the business of rating securities,
an equivalent rating from another Rating Agency.
Notwithstanding any other provision contained in this
Schedule:
(i) with respect to Fund Investments that are Preferred Stock, if
such Preferred Stock does not have a public rating by S&P,
then such Preferred Stock shall be assigned a rating for
purposes hereof that is (a) two rating sub-categories below
the S&P OC Test Rating of the issuer if rated above "BB+" and
(b) one rating category (i.e., three rating sub-categories)
below the S&P OC Test Rating if the issuer is rated below
"BBB-";
(ii) Fund Investments that are CDO Debt Securities will be
assigned to an Asset Category for High Yield Bonds using a
rating that is (i) one rating category (i.e., three rating
subcategories) below the S&P rating, if such CDO Debt
Security is rated by S&P, and (ii) two rating categories
(i.e., six rating subcategories) below the actual public
▇▇▇▇▇'▇ rating (and not the rating assigned pursuant to the
S&P OC Test Rating), if such CDO Debt Security is not rated
by S&P but is publicly rated by ▇▇▇▇▇'▇;
(iii) Fund Investments that are Busted Convertible Bonds will be
assigned to an S&P Asset Category into which such Fund
Investments would otherwise fall if they were not convertible
securities provided that the Market Value of any Busted
Convertible Bonds shall be 95% of the Market Value thereof
otherwise determined in accordance with valuation procedures
set forth herein;
(iv) for the purpose of determining the S&P Advance Rate
applicable to a Fully Collateralized Structured Product
Transaction, such Fully Collateralized Structured Product
Transaction shall be deemed to fall into the S&P Asset
Category of its reference obligation; for the purpose of
determining the S&P Advance Rate applicable to Investment
Holding Subsidiary Securities, such Investment Holding
Subsidiary Securities shall be deemed to fall into the S&P
Asset Category of the related investments held by such
Investment Holding Subsidiary; for the purpose of determining
the S&P Asset Category of any Structured Product Transaction
(other than a Fully Collateralized Structured Product
Transaction), such Structured Product Transaction shall be
deemed to be in the S&P Asset Category for High Yield Bonds
having a rating that is (i) one rating category (i.e., three
rating sub-categories) below the S&P rating if such
Structured Product Transaction is rated by S&P, and (ii) two
rating categories (i.e., six rating sub-categories) below
▇▇▇▇▇'▇ actual public rating (and not the rating assigned
pursuant to the S&P OC Test Rating), if such Structured
Product Transaction is not rated by S&P but is publicly rated
by ▇▇▇▇▇'▇; all other Structured Product Transactions shall
be S&P Asset Category J-2 Investments;
(v) for the purpose of determining the S&P Advance Rate
applicable to Fund Investments that are Hedging and Short
Sale Transactions, at any time during the 60-day time period
or 30-day time period, as the case may be, described in
clause (xvii) of the definition of Excluded Investments
below, the S&P Advance Rate will be 90% of the S&P Advance
Rate calculated for such Fund Investment pursuant to the S&P
Advance Rate table in the definition of S&P Advance Rate
above;
(vi) for the purpose of determining the S&P Advance Rate
applicable to Fund Investments in Bank Loan Participations,
at any time during the 60-day time period described in clause
(viii) of the definition of Excluded Investments below, the
S&P Advance Rate will be 90% of the S&P Advance Rate
calculated for such Fund Investment pursuant to the S&P
Advance Rate table in the definition of S&P Advance Rate
above;
(vii) for the purpose of determining the S&P Advance Rate
applicable to Fund Investments in any Foreign Issuer, at any
time during the 180-day time period described in clause (ix)
of the definition of Excluded Investments below, the S&P
Advance Rate will be 85% of the S&P Advance Rate calculated
for such Fund Investment pursuant to the S&P Advance Rate
table in the definition of S&P Advance Rate above;
(viii) for the purpose of determining the S&P Advance Rate
applicable to Fund Investments (other than Asset Category I-3
Investments) that are not priced by an Approved Source, the
S&P OC Test Rating of such Fund Investments will be one
rating category (i.e., three rating sub-categories) below the
S&P OC Test Rating determined without giving effect to this
clause (viii); and
(ix) Fund Investments that are Asset-Backed Securities will be
assigned to an S&P Asset Category for High Yield Bonds using
a rating that is (i) one rating category (i.e., three rating
sub-categories) below the S&P rating if such Asset-Backed
Security is rated by S&P, and (ii) two rating categories
(i.e., six rating sub-categories) below the actual public
▇▇▇▇▇'▇ rating (and not the rating assigned pursuant to the
S&P OC Test Rating), if such Asset-Backed Security is not
rated by S&P but is publicly rated by ▇▇▇▇▇'▇.
Determination of Fund Investments Constituting Eligible Investments
"Eligible Investments" means, at any date, all Fund
Investments in the Collateral on such date other than Excluded Investments.
"Excluded Investments" means (without duplication):
(i) Fund Investments to the extent that they are (A) not subject
to a perfected security interest (subject in priority only to
any Liens permitted under the Credit Agreement) in favor of
the Secured Parties Representative for its benefit and the
benefit of the Lenders, the Insurer, Eligible Counterparties
party to Secured Hedging Transactions and other Secured
Parties (as defined in the Pledge and Intercreditor
Agreement) or (B) subject to any Liens (other than Permitted
Liens);
(ii) Excess Fund Investments;
(iii) Fund Investments that have been borrowed or lent;
(iv) Fund Investments denominated in any currency (A) that is not
a currency freely convertible into Dollars or (B) that is
subject to any currency exchange restrictions;
(v) Fund Investments denominated in any currency other than
Dollars or Eligible Foreign Currencies, unless at the time of
purchase of such Fund Investments denominated in any currency
other than Dollars or Eligible Foreign Currencies, at least
95% of the Market Value of such Fund Investments is protected
against currency fluctuations pursuant to Currency Hedging
Transactions;
(vi) Fund Investments in CDO Debt Securities unless the applicable
agreements governing such CDO Debt Securities deny borrowing
base credit to the issuer of such CDO Debt Securities to the
extent that more than 7.5% of the total funded debt and
equity capitalization of the issuer of such CDO Debt
Securities is invested in Foreign Issuers located in
Ineligible Countries (other than investments which are fully
guaranteed by a guarantor located in an Eligible Country);
(vii) Fund Investments in CDO Debt Securities unless the applicable
agreements governing such CDO Debt Securities deny borrowing
base credit to the issuer of such CDO Debt Securities to the
extent that more than 15% of the total funded debt and
contributed equity capitalization of the issuer of such CDO
Debt Securities would be invested in Foreign Issuers located
in countries whose unsupported sovereign non-local currency
debt obligations are not assigned a rating of "AA-" or better
from S&P (other than investments which are fully guaranteed
by an entity located in a country whose unsupported sovereign
non-local currency debt obligations are assigned a rating of
"AA-" or better by S&P);
(viii) (A) Fund Investments in any Bank Loan Participation held by
the Borrower for more than 60 consecutive days during any
period while any bank or other institution that sold such
Bank Loan Participation has a long-term debt-rating of below
an S&P OC Test Rating of "A-" (unless the obligation of such
bank or other institution are guaranteed by an entity whose
long-term debt obligations are assigned an S&P OC Test Rating
of "A-" or better); and (B) Fund Investments in any Bank Loan
Participation if at the date of acquisition of such Bank Loan
Participation the bank or other institution that sold such
Bank Loan Participation had a long-term debt rating of below
an S&P OC Test Rating of "A-" (unless the obligations of such
bank or other institution are guaranteed by an entity whose
long-term debt obligations are assigned an S&P OC Test Rating
of "A-" or better);
(ix) Fund Investments in any Foreign Issuer from an Ineligible
Country (unless the applicable Fund Investment is fully
guaranteed by a guarantor located in a currently Eligible
Country), provided that if a country becomes an Ineligible
Country after the Borrower has invested in a Fund Investment
relating to such country (and such Fund Investment does not
have a guarantor located in a currently Eligible Country),
such Fund Investment will not be subject to this clause (ix)
until such country has been an Ineligible Country for 180
consecutive days;
(x) Fund Investments that constitute Lender Affiliate Securities
(as defined in the Credit Agreement) at the time delivered to
the Secured Parties Representative pursuant to the Pledge and
Intercreditor Agreement;
(xi) Fund Investments in "catastrophe" bonds;
(xii) Fund Investments in Non-Credit Risk Securities;
(xiii) Fund Investments in CDO Debt Securities issued by an issuer
for which the Investment Manager or any Affiliate of the
Investment Manager acts as the collateral manager or
investment manager or in any comparable capacity;
(xiv) Fund Investments in securities issued by the Borrower or any
Subsidiary of the Borrower (other than Investment Holding
Subsidiary Securities);
(xv) Fund Investments in Asset-Backed Securities which are neither
rated by S&P nor publicly rated by ▇▇▇▇▇'▇;
(xvi) Fund Investments in Bank Loans that obligate the Borrower,
whether currently or upon the happening of any contingency,
to make any revolving extensions of credit to a borrower;
(xvii) Fund Investments in any Hedging and Short Sale Transaction
held by the Borrower for more than (i) 60 consecutive days
during any period while the counterparty to such Hedging and
Short Sale Transaction has a long-term debt-rating of lower
than "A-" by S&P (unless the obligations of such counterparty
are guaranteed by an entity whose long-term debt rating is
"A-" or higher by S&P) or has a short-term debt-rating of
"A-2" by S&P (unless the obligations of such counterparty are
guaranteed by an entity whose short-term debt rating is "A-1"
or higher by S&P) or (ii) 30 consecutive days during any
period while the counterparty to such Hedging and Short Sale
Transaction has a short-term debt-rating of lower than "A-2"
by S&P (unless the obligations of such counterparty are
guaranteed by an entity whose short-term debt rating is "A-1"
or higher by S&P);
(xviii) Fund Investments in CDO Equity Securities; and
(xix) Fund Investments that do not fall into any S&P Asset Category
as provided herein.
Excluded Investments are excluded from the calculation of the
Market Value of the Collateral for purposes of the S&P Valuation Procedures;
however, the Collateral may include Excluded Investments.
Application of Portfolio Limitations
"Portfolio Limitations" means, at any applicable date of
determination (determined without duplication):
(i) the aggregate Market Value of Fund Investments in any single
issuer in excess of 5% of Total Capitalization; provided,
however, that the foregoing 5% limit will be increased, up to
a maximum of 7.5% (not to include any Non-Cash Pay
Instruments, any Non-Performing Instruments or any Company
Investments (other than Equity Securities) that are rated
"CCC+" or lower by S&P), for each of any three issuers;
(ii) the aggregate Market Value of Fund Investments in issuers in
any single Industry in excess of 15% of Total Capitalization;
provided, however, that the foregoing 15% limit will be
excepted, up to a maximum of 20 %, for each of any two
Industry classifications;
(iii) the aggregate Market Value of Fund Investments in all
Semi-Liquid Investments, Illiquid Investments and Non-Cash
Pay Instruments in excess of 45% of Total Capitalization;
(iv) the aggregate Market Value of Fund Investments in all
Illiquid Investments in excess of 20% of Total
Capitalization;
(v) the aggregate Market Value of Fund Investments consisting of
(a) Bank Loan Participations in excess of 20% of Total
Capitalization, (b) Bank Loan Participations wherein the
participating entities are rated "A-" or lower by S&P in
excess of 5% (or such greater percentage approved by the
Insurer (so long as the Insurer is the Controlling Class) and
the Administrative Agent and with respect to which Rating
Agency Condition with respect to S&P has been satisfied) of
Total Capitalization, (c) Bank Loan Participations wherein
the total exposure to any one participating entity is in
excess of 5% (or such greater percentage approved by the
Insurer (so long as the Insurer is the Controlling Class) and
the Administrative Agent and with respect to which Rating
Agency Condition with respect to S&P has been satisfied) of
Total Capitalization; (d) Hedging and Short Sale Transactions
wherein the counterparties have a long term debt rating of
lower than "A-" by S&P (unless the obligations of such
counterparty are guaranteed by an entity whose long term debt
rating is "A-" or higher by S&P) in excess of 7.5 % (or such
greater percentage approved by the Insurer (so long as the
Insurer is the Controlling Class) and the Administrative
Agent and with respect to which Rating Agency Condition with
respect to S&P has been satisfied) of Total Capitalization;
(e) Hedging and Short Sale Transactions wherein the total
exposure to any one counterparty is in excess of 7.5% (or
such greater percentage approved by the Insurer (so long as
the Insurer is the Controlling Class) and the Administrative
Agent and with respect to which Rating Agency Condition with
respect to S&P has been satisfied) of Total Capitalization;
and (f) Hedging and Short Sale Transactions of the kind
described in clause (iv) of the definition of "Hedging and
Short Sale Transactions" wherein the counterparties have a
short term debt rating of "A-1" by S&P (unless the
obligations of such counterparty are guaranteed by an entity
whose short term debt rating is higher than "A-1" by S&P) in
excess of 25% (or such greater percentage approved by the
Insurer (so long as the Insurer is the Controlling Class) and
the Administrative Agent and with respect to which Rating
Agency Condition with respect to S&P has been satisfied) of
Total Capitalization;
(vi) the aggregate Market Value of Fund Investments consisting of
Structured Product Transactions in excess of 5% of Total
Capitalization;
(vii) the aggregate Market Value of Fund Investments consisting of
Non-Performing Instruments in excess of 20% of Total
Capitalization;
(viii) the aggregate Market Value of Fund Investments consisting of
convertible securities in excess of 25% of Total
Capitalization;
(ix) the aggregate Market Value of Fund Investments consisting of
CDO Debt Securities in excess of 5% of Total Capitalization;
(x) the aggregate Market Value of Fund Investments that are
Preferred Stock in excess of 15% of Total Capitalization;
(xi) the aggregate Market Value of Fund Investments consisting of
(A) Private Equity Securities of any single issuer in excess
of 3% of Total Capitalization; provided that the foregoing 3%
limit will be increased, up to a maximum of 4%, for each of
any two issuers of Private Equity Securities; provided,
further, that the foregoing 4% limit will be increased, up to
a maximum of 5%, for one of such two issuers of Private
Equity Securities; and (B) Private Equity Securities in
excess of 10% of Total Capitalization;
(xii) the aggregate Market Value of Fund Investments that are
Asset-Backed Securities in excess of 5% of Total
Capitalization;
(xiii) the aggregate Market Value of Fund Investments that are
Dollar-denominated investments (A) in Foreign Issuers
domiciled in Designated Countries in excess of 10% of Total
Capitalization, and (B) in any single Foreign Issuer
domiciled in a Designated Country in excess of 5% of Total
Capitalization;
(xiv) the aggregate Market Value of Fund Investments that are
non-Dollar-denominated investments in excess of 10% of Total
Capitalization;
(xv) the aggregate Market Value of Fund Investments that are
Equity Securities in excess of 20% of Total Capitalization;
(xvi) the aggregate Market Value of Fund Investments (other than
Distressed Debt, Non-Performing Instruments or Equity
Securities) that are rated "CCC+" or lower by S&P in excess
of 20% of Total Capitalization; and
(xvii) the aggregate Market Value of Fund Investments that are
(determined without duplication) Non-Performing Instruments,
Equity Securities and Fund Investments that are rated "CCC"
or lower by S&P in excess of 50% of Total Capitalization.
Notwithstanding the foregoing:
(A) in the event that a Fund Investment is reclassified after its
acquisition by the Borrower, for purposes of calculating the
S&P Advance Amount, the exclusions described above in clauses
(iii) and (iv), that would otherwise become applicable
following such reclassification will not apply to assets
owned by the Borrower (or which the Borrower had committed to
purchase) on or prior to the date of such reclassification
until 30 days after such reclassification but shall apply (on
a pro forma basis giving effect to such reclassification for
all Fund Investments) to any asset acquired by the Borrower
after the date of such reclassification which the Borrower
had not committed to purchase on or prior to the date of such
reclassification;
(B) for purposes of clause (i) above, a Related Person of any
Person shall be considered the same "issuer" as such Person
unless such Person is a bankruptcy remote entity; and
(C) under no circumstances shall any Cash, Cash Equivalent or
U.S. Government Securities be excluded from Eligible
Investments based upon the Portfolio Limitations set forth
above.
Determination of the Market Value of Fund Investments
The Borrower shall calculate the Market Value (i) of each
Fund Investment that is not an Unquoted Investment on a weekly basis as of the
Determination Date for each calendar week and (ii) of each Fund Investment that
is an Unquoted Investment as set forth in the definition of "Market Value"
below.
"Market Value" means
(a) with respect to Cash, the current balance thereof;
(b) with respect to any Cash Equivalent (x) of the type described
in clause (ii) of the definition thereof (excluding banker's
acceptances), the current balance thereof, (y) of a type
described in clause (iii) of the definition thereof (and
banker's acceptances described in clause (ii) thereof), the
original purchase price thereof, and (z) of a type described
in clause (v) of the definition thereof, the aggregate
current net value thereof;
(c) with respect to any Fund Investment (other than Unquoted
Investments, Structured Product Transactions, Cash and Cash
Equivalents described in clause (b) above) at any date, an
amount determined by the Borrower that is not in excess of
the product of (x) the Market Value Price for each unit of
such Fund Investment on such date (and, with respect to any
Securities which have an amortizing principal amount, the
then current factor related thereto, if applicable) times (y)
the number of units of such Fund Investment held by the
Borrower; and
(d) with respect to any Fund Investment other than Cash and Cash
Equivalents which is an Unquoted Investment at any date, the
value thereof most recently determined by the Borrower in
accordance with the procedures described below;
provided, however, (x) for purposes of making such determinations,
(1) the frequency of determination of the Market Value
of any Illiquid Investment will be at least
quarterly as of each Quarterly Date and, except as
otherwise provided in the following clauses, the
frequency of determination of the Market Value of
any Semi-Liquid Investment will be at least monthly
as of the last Business Day of each calendar month;
(2) for Semi-Liquid Investment positions with a Market
Value of $35 million or greater but less than $70
million (and all positions subject to this clause
(x)(2) by reason of clause (y) below), a quotation
from an Approved Investment Banking Firm or an
Approved Third-Party Appraisal at least monthly;
(3) for Semi-Liquid Investment positions with a Market
Value of $70 million or greater, a quotation from an
Approved Investment Banking Firm or an Approved
Third-Party Appraisal at least monthly and an
Approved Third-Party Appraisal at least quarterly;
and
(4) for Illiquid Investment positions with a Market
Value of $35 million or greater (and all positions
subject to this clause (x)(4) by reason of clause
(y) below) an Approved Third-Party Appraisal at
least quarterly;
(y) notwithstanding the foregoing, the aggregate Market Value of
all Unquoted Investment positions whose value is determined
by the Borrower without relying on the methodology set forth
in subclauses (2), (3) or (4) of clause (x) above (it being
understood that such methodology may be used for Unquoted
Investments with Market Values below the thresholds set forth
in such subclauses) may not exceed 5% of Total
Capitalization, and all such Unquoted Investment positions
(i.e., those in excess of such limit and as selected by the
Borrower) will be subject to subclauses (2) or (4) of clause
(x) above depending upon whether any such Unquoted Investment
is a Semi-Liquid Investment or an Illiquid Investment; and
(z) in no event will the Market Value of any Unquoted Investment
exceed the lesser of (1) any quotation or appraisal obtained
as provided in clauses (d)(x) or (d)(y) above and (2) the
value most recently determined by the Borrower.
Notwithstanding the foregoing, if the Investment Manager
shall on any day actually determine that (i) the Market Value of any
Semi-Liquid Investment determined as of the last Business Day of the preceding
calendar month or (ii) the Market Value of any Illiquid Investment determined
as of the last Quarterly Date has decreased since such last Business Day of the
preceding calendar month or last Quarterly Date, the Market Value of such Fund
Investment shall be such decreased value, and if the Investment Manager
subsequently actually determines on any day prior to the next determination of
its Market Value that the value of such Fund Investment has further decreased,
the Market Value of such Fund Investment shall be such decreased value. If, on
the other hand, the Investment Manager shall subsequently actually determine
that the value of such Fund Investment has increased, the Market Value of such
Fund Investment shall be such increased value; provided that in no event shall
the Market Value of any such Fund Investment whose value is so increased be
greater than the Market Value of such Fund Investment previously determined as
of the last Business Day of the preceding calendar month (in the case of
Semi-Liquid Investments) or as of the last Quarterly Date (in the case of
Illiquid Investments). It is expressly understood that the Investment Manager
shall have no duty, in the absence of actual knowledge on its part, to
implement any value changes described in this paragraph.
Prior to the first available quotation or appraisal of any
Unquoted Investment obtained as provided above, the Market Value of such
Unquoted Investment will be the lower of the value thereof as most recently
determined by the Borrower and cost. In the event that the Borrower elects in
its discretion to book, for purposes of its own financial accounting records,
any Unquoted Investment at a value lower than that which would require a
valuation by an Approved Investment Banking Firm or an Approved Third-Party
Appraisal, as the case may be, then the Market Value of such Unquoted
Investment shall be such lower value used by the Borrower for purposes of its
own financial accounting records.
Notwithstanding the foregoing, the Market Value of any
Structured Product Transaction at any date will be equal to the net settlement
amount, if any, that the Borrower would receive if such Structured Product
Transaction was terminated or liquidated early in accordance with its terms on
such date, as determined by the Borrower.
The Market Value of any CDO Debt Security will be based upon
a quotation from an Approved Investment Banking Firm or an Approved Third-Party
Appraisal, as applicable.
The Market Value of any Defensive Hedge Transaction where the
related Fund Investment is part of the Collateral shall be the amount, as
determined by the Borrower, by which the Protected Market Value with respect to
such Fund Investment exceeds the product of the Market Value of the Fund
Investment (or, if less, the portion thereof that is an Eligible Investment),
as otherwise determined in accordance with these procedures, and the applicable
Advance Rate for such Fund Investment. The Market Value of any Defensive Hedge
Transaction where the Fund Investment is not part of the Collateral shall be
the Protected Market Value with respect to such Fund Investment.
For purposes of the definition of Market Value, (i) accrued
interest on any interest-bearing Eligible Investment shall be excluded in the
determination of Market Value by the party making such determination and (ii)
the Market Value of all non-Dollar Fund Investments shall be converted into
Dollars at the then current spot rate (after taking into account the effect of
any Currency Hedging Transaction with respect to such Fund Investment).
"Market Value Price" means with respect to any Fund
Investment (other than Cash, Structured Product Transactions and Unquoted
Investments) at any date, the price for each unit of such Fund Investment at
such date obtained from an Approved Source, including any of:
(a) in the case of an Approved Exchange, the closing
price as of the most recent Determination Date on such Approved
Exchange, or if such Approved Exchange is NASDAQ, the closing bid
price at such date (or if such Approved Exchange is closed for
business at such date, then the most recent available closing price or
closing bid price, as the case may be), provided that bonds may not be
priced based upon the price on an Approved Exchange pursuant to this
clause (a), (i) prior to the termination (without replacement) of the
Credit Agreement, without the consent of the Administrative Agent and
the Insurer (so long as the Insurer is the Controlling Class) and (ii)
after termination (without replacement) of the Credit Agreement,
without the consent of the Insurer;
(b) the lower of the bid prices at such date quoted
by two Approved Dealers;
(c) the average of the bid prices at such date
quoted by three Approved Dealers;
(d) the average of the bid prices at such date
quoted by two Approved Dealers; provided that the Market Value Price
of any Fund Investment may be determined pursuant to this clause (d)
only if the following four conditions are met: (1) such Fund
Investment is a Special Situations Investment, (2) using the lower bid
price of the two bid prices for such Fund Investment, the
Over-Collateralization Test would be satisfied, (3) other than the
Borrower's initial determination of the Market Value Price for such
Fund Investment, the lower bid price of such Fund Investment must be
greater than 85% of, and less than 115% of, the immediately previous
lowest bid price obtained by the Borrower from the Approved Dealers
for such Fund Investment, and (4) the aggregate Market Value of Fund
Investments the Market Value Prices of which are determined by
applying this clause (d) shall not exceed 10% of Total Capitalization;
or
(e) the price obtained at such date from an Approved
Pricing Service.
Certain Definitions
The following are definitions of certain terms used in this
Schedule and elsewhere in the Credit Agreement. Terms used in this Schedule and
not defined below have the meanings given them elsewhere in this Schedule or in
the Credit Agreement.
"Advance Rate" means the S&P Advance Rate.
"Approved Counterparty" means (i) any Lender or Affiliate of
any Lender or the Insurer, (ii) any financial institutions, banks or investment
banking firms having a long term rating of at least "A+" by S&P and a short
term rating of at least "A-1" by S&P or (iii) any counterparty set forth in the
Credit Agreement (or any successor to any such listed counterparty) or any
other counterparty designated by the Borrower in writing and approved by the
Administrative Agent and the Insurer (so long as the Insurer is the Controlling
Class) in their reasonable discretion and with respect to which the Rating
Agency Condition with respect to S&P has been satisfied.
"Approved Dealer" means (a) in the case of any Fund
Investment that is not a U.S. Government Security, any bank or broker-dealer
set forth in the Credit Agreement (or any successor to any such listed bank or
broker-dealer) or any bank or broker-dealer designated by the Borrower in
writing and approved by the Administrative Agent and the Insurer (so long as
the Insurer is the Controlling Class) in their reasonable discretion and with
respect to which the Rating Agency Condition with respect to S&P has been
satisfied and (b) in the case of a U.S. Government Security, any primary dealer
in U.S. Government Securities, as reported by the Federal Reserve Board, which
as of the date hereof maintains a website at ▇▇▇▇://▇▇▇.▇▇.▇▇▇.▇▇▇.
"Approved Exchange" means, with respect to any Security, any
major securities or options exchange, the NASDAQ or any other exchange or
quotation system providing regularly published securities prices designated by
the Borrower in writing and approved by the Administrative Agent and the
Insurer (so long as the Insurer is the Controlling Class) in their reasonable
discretion and with respect to which the Rating Agency Condition with respect
to S&P has been satisfied.
"Approved Investment Banking Firm" means any investment
banking firm set forth in the Credit Agreement (or any successor to any such
listed investment banking firm), including any investment banking firm
designated by the Borrower in writing and approved by the Administrative Agent
and the Insurer (so long as the Insurer is the Controlling Class) in their
reasonable discretion and with respect to which the Rating Agency Condition
with respect to S&P has been satisfied.
"Approved Pricing Service" means a pricing or quotation
service set forth in the Credit Agreement (or any successor to any such listed
pricing service) or any other pricing or quotation service designated by the
Borrower in writing and approved by the Administrative Agent and the Insurer
(so long as the Insurer is the Controlling Class) in their reasonable
discretion and with respect to which the Rating Agency Condition with respect
to S&P has been satisfied.
"Approved Source" means any of (i) two Approved Dealers (so
long as the lower of two bid prices is being used and three Approved Dealers
(if the average of three bid prices is being used), (ii) an Approved Exchange
or (iii) an Approved Pricing Service, provided, that, for purposes of the
Over-Collateralization Test, a Bank Loan, High Yield Bond or Mezzanine
Investment which is a Fund Investment shall be considered "quoted" or "priced"
by an Approved Source only if, in the reasonable judgment of the Borrower, such
Approved Source will continue to provide quotations with respect to such Bank
Loan, High Yield Bond or Mezzanine Investment on an on-going basis in the
ordinary course of its business as a pricing service or dealer, as the case may
be.
"Approved Third-Party Appraisal" means an appraisal by an
Approved Third-Party Appraiser.
"Approved Third-Party Appraiser" means a third-party
appraiser that is not an Affiliate of either the Borrower or the Investment
Manager (or subject to an agreement to become such an Affiliate) which is set
forth in the Credit Agreement (or any successor to any such listed appraiser)
or any other such appraiser designated by the Borrower in writing and approved
by the Administrative Agent and the Insurer (so long as the Insurer is the
Controlling Class) in their reasonable discretion and with respect to which the
Rating Agency Condition with respect to S&P has been satisfied.
"Asset-Backed Security" means any fixed income Security that
is (i) backed by and paid primarily from the proceeds (or payments or proceeds
of a disposition) of Eligible Assets, and (ii) issued in a transaction
structured to (A) isolate the Security and the Eligible Assets backing the
Security from the credit risk of the sponsor of the transaction and (B) result
in the creditworthiness of such Security being primarily dependent upon (x) the
creditworthiness of the Eligible Assets backing such Security and (y) any
credit support provided with respect to the creditworthiness of such Eligible
Assets; provided, however, that in no event shall an "Asset-Backed Security"
include any of the following: (a) a Security issued to provide
debtor-in-possession financing, (b) a Security issued in connection with a
receivables financing, an equipment trust certificate or similar Security, (c)
an Equity Security (including an Equity Security that is characterized as a
note), (d) a Structured Product Transaction, (e) a CDO Debt Security or (f) a
Defensive Hedge Transaction.
"Bank Loan Participation" means a Bank Loan in the form of a
participation.
"Bank Loans" means direct purchases of, assignments of,
participations in and other interests in senior debt (including term loans,
revolving credit lines and other similar loans and investments).
"Borrowing Base Deficiency" means the excess of the sum of
(a) the Outstanding Principal Amount of the Debt under the Credit Agreement and
(b) the aggregate outstanding liquidity preference of the Preferred Shares over
the Senior Advance Amount.
"Busted Convertible Bond" means any convertible bond that
trades like a fixed income investment.
"Capital Stock" of any Person means shares, equity interests
(including limited partnership interests and limited liability company
interests), participations or other equivalents (however designated) of
corporate stock of such Person.
"Cash" means any immediately available funds in U.S. dollars
or any currency other than U.S. dollars which is a freely convertible currency
(including amounts held in the Custodial Account or on deposit with the
Custodian pursuant to "sweep" arrangements linked to the Custodial Account).
"Cash Equivalents" means investments (other than Cash) that
are one or more of the following obligations or Securities (including
investments for which the Preferred Shares Auction Agent, the agents under the
Credit Agreement or any of their respective Affiliates provide services):
(i) U.S. Government Securities;
(ii) certificates of deposit of, banker's acceptances issued by or
money market accounts in any depository institution or trust
company (including the Preferred Shares Auction Agent, the
agents under the Credit Agreement or any of their respective
Affiliates) incorporated under the laws of the United States
of America or any state thereof and subject to supervision
and examination by Federal and/or state banking authorities,
so long as the deposits offered by such depository
institution or trust company at the time of such investment
are rated and have a rating of at least "P-1" if rated by
▇▇▇▇▇'▇ or "A-1+" if rated by S&P (or, in the case of the
principal depository institution in a holding company system
whose deposits are not so rated, the long term debt
obligations of such holding company are rated and such rating
is at ▇▇▇▇▇ "▇▇" if rated by ▇▇▇▇▇'▇ and "A+" if rated by
S&P);
(iii) commercial paper issued by any depository institution or
trust company (including the Preferred Shares Auction Agent,
the agents under the Credit Agreement or any of their
respective Affiliates) incorporated under the laws of the
United States of America or any state thereof and subject to
supervision and examination by Federal and/or state banking
authorities, or any corporation incorporated under the laws
of the United States of America or any state thereof, so long
as the commercial paper of such issuer is rated and has at
the time of such investment a short term rating of at least
"P-1" if rated by ▇▇▇▇▇'▇ or "A-1" if rated by S&P;
(iv) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United
States of America or any state thereof the obligations of
which at the time of such investment are rated and that have
a credit rating of at least "P-1" if rated by ▇▇▇▇▇'▇ and
"A-1" if rated by S&P either at the time of such investment
or the making of a contractual commitment providing for such
investment;
(v) shares of any money market fund or similar investment vehicle
(including such funds or vehicles for which the Preferred
Shares Auction Agent, the agents under the Credit Agreement
or any of their respective Affiliates is investment manager
or advisor), so long as such money market fund is rated and
has at the time of such investment a short-term rating of at
least "Aaa" and "MR1+" if rated by ▇▇▇▇▇'▇ and "AAAm" or
"AAAg" if rated by S&P;
(vi) unleveraged overnight repurchase obligations on customary
terms with respect to investments described in clauses (i)
through (iv) above entered into with a depository
institution, trust company or corporation that has a rating
of at least "P-1" by ▇▇▇▇▇'▇ and at least "A+" by S&P; and
(vii) preferred shares with a maturity of not more than 35 days and
rated in the highest investment rating category by ▇▇▇▇▇'▇
and S&P or otherwise with respect to which the Rating Agency
Condition is satisfied;
provided, that: (i) in no event shall Cash Equivalents include any obligation
that provides for the payment of interest alone; (ii) Cash Equivalents referred
to in clauses (i), (ii) and (iii) above shall mature within 183 days of
issuance; (iii) if any of ▇▇▇▇▇'▇ or S&P changes its rating system, then any
ratings included in this definition shall be deemed to be an equivalent rating
in a successor rating category of ▇▇▇▇▇'▇ or S&P, as the case may be; (iv) if
any of ▇▇▇▇▇'▇ or S&P is not in the business of rating securities, then any
ratings included in this definition shall be deemed to be an equivalent rating
from another Rating Agency; (v) Cash Equivalents (other than U.S. Government
Securities or money market funds maintained by the Custodian) shall not include
any such investment of more than $100 million in any single issuer; (vi) in no
event shall Cash Equivalents include any obligation that is not denominated in
Dollars or Eligible Foreign Currencies; and (vii) none of the foregoing
obligations or securities will constitute Cash Equivalents (A) if all, or
substantially all, of the remaining amounts payable thereunder will consist of
interest and not principal payments, or (B) if such security has an assigned
rating from S&P with an "r" or "t" subscript, or (C) if such security is a
mortgage-backed security or (D) if such security is an inverse floater
security.
"CDO Debt Securities" means any Securities that entitle the
holders thereof to receive payments that depend primarily on cash flow from, or
proceeds upon the sale of a pool of Securities serving as collateral for such
Securities; provided that if more than one class or other similar designation
of such Securities receive payments that depend primarily on cash flow from all
or substantially all of the underlying collateral Securities, then the class or
other similar designation the payment of which is most deeply subordinated
(other than any class or other similar designation constituting only nominal
capital) and any class or other similar designation that, as indicated in any
relevant offering documentation, is stated to be at least reasonably likely to
be treated as equity for U.S. Federal income tax purposes will be excluded from
"CDO Debt Securities"; provided, further that (x) CDO Debt Securities shall not
include any Structured Product Transaction and (y) CDO Debt Securities shall
only include CDO Debt Securities issued in a "cash-flow" or "market value"
collateralized debt obligation transactions.
"CDO Equity Securities" means any Securities (other than CDO
Debt Securities) that entitle the holders thereof to receive payments that
depend primarily on cash flow from, or proceeds upon sale of a pool of
Securities serving as collateral for such Securities (whether or not such
Securities have been rated by a nationally recognized statistical rating
organization); provided that CDO Equity Securities shall not include any
Structured Product Transaction.
"Contributed Company Capital" means, at any date, the
aggregate gross amount of Cash contributed as equity capital (excluding, for
the avoidance of doubt, the Preferred Shares) to the Borrower by the holders of
the Common Shares on or prior to such date (without regard to any other changes
in Company Equity).
"Currency Hedging Transaction" means (i) any Swap Transaction
entered into by the Borrower with an Eligible Counterparty intended to convert
any payment on a Debt or other obligation of the Borrower or any Company
Investment denominated in one currency to another currency or to protect
against fluctuations in the exchange rate of a currency in which a payment to
be made or received by the Borrower is denominated and (ii) any Swap
Transaction entered into by the Borrower intended to convert any payment on a
Debt or other obligation of the Borrower or any Company Investment denominated
in one currency to another currency or to protect against fluctuations in the
exchange rate of a currency in which a payment to be made or received by the
Borrower is denominated and pursuant to which the Borrower has no on-going
payment obligations.
"Defensive Hedge Advance Amount" means, as of any date of
determination, 98% of the aggregate Market Value of all Defensive Hedge
Transactions; provided, however, that the Defensive Hedge Advance Amount shall
in no event exceed an amount equal to (x) 20% of the Total Capitalization as of
such date of determination less (y) the sum of the aggregate Market Value as of
such date of determination of all Fund Investments in Bank Loan Participations
and Structured Product Transactions and, if the Secured Hedging Advance Amount
is positive, the Secured Hedging Advance Amount.
"Defensive Hedge Transaction" means a Hedging and Short Sale
Transaction between the Borrower and an Eligible Counterparty intended to
protect the Borrower against fluctuations in the market value of a Fund
Investment and pursuant to which (i) the Eligible Counterparty has agreed for a
period of time, at the direction of the Borrower, to (a) purchase the Fund
Investment at an agreed strike price or (b) pay to the Borrower, at the
Borrower's election, an amount by which an agreed strike price exceeds the
current price of the Fund Investment; (ii) the Eligible Counterparty does not
have recourse to the Collateral or the Borrower for any amounts owing to such
counterparty thereunder; and (iii) the Borrower may (a) pay a fee to the
Eligible Counterparty in connection with the transaction, (b) remove the Fund
Investment from the Custodial Account (whereby it is no longer part of the
Collateral) and pledge the Fund Investment to the counterparty as security for
its obligations to the Eligible Counterparty and (c) agree to deliver the Fund
Investment to the Eligible Counterparty in satisfaction of all of its
obligations to the Eligible Counterparty in connection with the transaction.
"Designated Country" shall mean (i) each of Canada, Great
Britain, Australia, Denmark, New Zealand, Sweden, Switzerland, Luxembourg, The
Netherlands and any G-7 nation (other than Japan) and (ii) each other country
identified by the Borrower from time to time and confirmed as acceptable by
S&P.
"Determination Date" means (a) with respect to any regularly
scheduled Valuation Statement prepared pursuant to the Credit Agreement or the
Operating Agreement and any other Preferred Shares document, the related
Reporting Date, (b) for the purpose of determining the Market Value Price of a
Fund Investment at any date when the Borrower is in compliance, or reasonably
believes it is in compliance, with the covenants relating to the
Over-Collateralization Test, the last Business Day of the preceding calendar
week ending prior to such date and (c) for the purpose of determining the
Market Value Price of a Fund Investment at any date when the Borrower is not,
or reasonably believes that it is not, in compliance with any covenant relating
to the Over-Collateralization Test, the date on which the most current pricing
information with respect to such Fund Investment is reasonably available.
"Distressed Debt" means debt Securities and Bank Loans which
are, in the Investment Manager's reasonable business judgment, impaired in
fundamental ways due to credit, liquidity, interest rate or other issues, which
may not be performing or may be in default, and which are generally trading at
a substantial discount to par.
"Eligible Assets" means financial assets, either fixed or
revolving, that by their terms convert into cash within a finite time period
plus any rights or other assets designed to assure the servicing or timely
distribution of proceeds to security holders.
"Eligible Counterparty" means, with respect to any Hedging
and Short Sale Transaction, (a) any Approved Counterparty or (b) any person (i)
having an unsecured, unguaranteed and unsupported long-term debt rating of
"AA-" or better under the S&P OC Test Rating or (ii) whose obligations in
respect of all Hedging and Short Sale Transactions entered into with the
Borrower are absolutely and unconditionally guaranteed by an Affiliate of such
Person having an unsecured, unguaranteed and unsupported long-term debt rating
of "AA-" or better under the S&P OC Test Rating; provided that with respect to
any Eligible Counterparty with which the Borrower has entered into a Hedging
and Short Sale Transaction, any counterparty that would qualify as an "Eligible
Counterparty" pursuant to clause (b) above but for the fact that such
counterparty had suffered a ratings downgrade shall be deemed to be an
"Eligible Counterparty" for thirty 30 days after the day it would otherwise
have ceased to qualify as an Eligible Counterparty.
"Eligible Country" shall mean each country (i) whose
unsupported sovereign debt obligations are rated "AA+" or better by S&P or (ii)
that is a Designated Country whose unsupported sovereign debt obligations are
rated "A-" or better by S&P.
"Eligible Foreign Currencies" means (i) Australian Dollars,
Canadian Dollars, Pounds Sterling and Euros and (ii) each other currency
identified by the Borrower from time to time and confirmed in writing as
acceptable by the Administrative Agent and, so long as the Insurer is the
Controlling Class, the Insurer and with respect to which Rating Agency
Condition with respect to S&P has been satisfied.
"Eligible Investments" has the meaning assigned to such term
in this Schedule under "Determination of Fund Investments Constituting Eligible
Investments."
"Equity Securities" means equity securities (including, for
the avoidance of doubt, Private Equity Securities) that will generally consist
of common or preferred stock of small to medium capitalization companies that
have either (i) undergone leveraged buyouts or recapitalizations, yet are still
substantially leveraged, or (ii) been burdened by complex legal, financial or
ownership issues and are selling at a discount to the underlying asset or
business value.
"Excess Fund Investments" means any Fund Investments or
portion thereof having a Market Value in excess of the percentages of Total
Capitalization set forth in the definition of Portfolio Limitations (in each
case determined by the Borrower using the most recent Market Value for the
applicable Fund Investments).
"Excluded Investments" has the meaning assigned to such term
in this Schedule under "Determination of Fund Investments Constituting Eligible
Investments."
"Foreign Issuer" means any issuer of a Fund Investment that
is incorporated or otherwise formed or organized outside the United States
unless such Fund Investment is irrevocably and unconditionally guaranteed by
any United States corporation, company, trust or other business entity;
provided, however, that none of the following shall be a Foreign Issuer: (i) an
offshore holding company issuer whose operating subsidiaries principally do
business, and hold their assets, in the United States, (ii) a Hedging SPE, or
(iii) an issuer of a CDO Debt Security.
"Fully Collateralized Structured Product Transaction" means a
Structured Product Transaction relating to a single Bank Loan or High Yield
Bond pursuant to which the Borrower is required to pledge collateral in an
amount that is not less than 100% of the notional amount of such transaction.
"Fund Investments" means all Cash, Cash Equivalents, Bank
Loans, Securities and Structured Product Transactions owned by the Borrower.
Fund Investments which the Borrower has contracted to purchase shall not be
deemed for purposes of the Credit Agreement to be owned by the Borrower until
settlement of such purchase and Fund Investments which the Borrower has
contracted to sell shall not cease to be Fund Investments for purposes of the
Credit Agreement until settlement of such sale.
"Hedging and Short Sale Transaction" means any transaction
entered into by the Borrower or a Hedging SPE with an Eligible Counterparty
that is (i) a Swap Transaction; (ii) an Interest Rate Hedging Transaction;
(iii) a Currency Hedging Transaction; (iv) a transaction under which the
Borrower or such Hedging SPE borrows a Bank Loan or Security and sells or
otherwise disposes of such or any substantially similar Bank Loan or Security
prior to the date on which the same must be returned to the lender thereof (and
commonly known as a "short sale"), (v) a Securities Lending Transaction; (vi) a
credit derivative transaction or repurchase agreement; (vii) an obligation to
enter into any of the foregoing; or (viii) any combination of any of the
foregoing.
"Hedging SPEs" means entities which have bankruptcy-remote
special purpose provisions in their organizational documents and which are
Subsidiaries of the Borrower organized for the purpose of (i) holding and
acquiring investments similar to Fund Investments, (ii) incurring indebtedness
on a secured or unsecured basis, (iii) entering into Hedging and Short Sale
Transactions and (iv) engaging in any other activity incidental, necessary,
ancillary or appropriate to the foregoing.
"High Yield Bonds" means debt Securities (including
convertible debt Securities) that are generally rated below "BBB-" by S&P, (a)
which are issued pursuant to a public registration, Rule 144A or as a private
placement and (b) which are not Cash Equivalents, Bank Loans, Mezzanine
Investments or CDO Debt Securities.
"Illiquid Investments" means (a) Unquoted Investments that do
not qualify as Semi-Liquid Investments; (b) CDO Debt Securities that are not
rated "BBB-" or better by S&P; (c) Bank Loan Participations (other than (x)
Bank Loan Participations that qualify as Semi-Liquid Investments and (y) Bank
Loan Participations which may be converted into a Bank Loan assignment at the
option of the Issuer); and (d) Private Equity Securities.
"Industry" means any industry category listed in Schedule 7
or any other such industry category designated by the Borrower in writing and
approved by the Administrative Agent and the Insurer (so long as the Insurer is
the Controlling Class) in their reasonable discretion and with respect to which
the Rating Agency Condition with respect to S&P has been satisfied.
"Ineligible Country" shall mean any country other than the
United States or an Eligible Country.
"Interest Rate Hedging Transaction" means (i) any Swap
Transaction entered into by the Borrower with an Eligible Counterparty intended
to protect the Borrower against changes in the floating rate of interest
payable on all or a portion of any Debt or other obligation of the Borrower or
its subsidiaries or on any Fund Investment or to protect against fluctuations
in interest rates, or (ii) any Swap Transaction or repurchase agreement entered
into by the Borrower, in each case with an Eligible Counterparty, intended to
protect against changes in the market value of any Fund Investment resulting
from fluctuations in interest rates.
"Investment Holding Subsidiaries" means any entities which
are wholly owned Subsidiaries of the Borrower organized for the purpose of (i)
facilitating the acquisition, holding and disposition of investments that would
otherwise qualify as Fund Investments and in cases where the Investment Manager
has reasonably determined that it would be substantially disadvantageous for
the Borrower to directly acquire or hold such a Fund Investment and (ii)
engaging in any other activity incidental, necessary, ancillary or appropriate
to the foregoing.
"Investment Holding Subsidiary Securities" means equity
securities issued by any Investment Holding Subsidiary to the Borrower.
"Market Value" has the meaning assigned to such terms in this
Schedule under "Determination of Market Value of Fund Investments."
"Market Value Price" has the meaning assigned to such term in
this Schedule under "Determination of Market Value of Fund Investments."
"Mezzanine Investments" means (i) debt Securities or other
obligations of an issuer (including convertible debt Securities and
obligations) that (A) are subordinated to other debt of such issuer and (B) may
be issued with equity participation features such as convertibility, senior
equity securities, common stock or warrants or (ii) Preferred Stock issued in
connection with management buyouts, acquisitions, refinancings,
recapitalizations and later stage growth capital financings.
"▇▇▇▇▇'▇" means ▇▇▇▇▇'▇ Investors Service, Inc., or any
successor thereto.
"NASDAQ" means the electronic inter-dealer quotation system
operated by NASDAQ, Inc., a subsidiary of the National Association of
Securities Dealers, Inc., or any successor thereto.
"Net Accrual Amount" shall mean, as of any date, an amount,
which may be positive or negative, equal to (i) the aggregate amount of accrued
interest payable to the Borrower on all interest-bearing Eligible Investments
as of such date minus (ii) the aggregate amount of accrued interest and
dividends payable by the Borrower as of such date in respect of the Loans (as
defined in the Credit Agreement) and the Preferred Shares, respectively, minus
(iii) the aggregate amount of dividends that would accumulate on the Preferred
Shares outstanding for the period longer of (x) the following 48 days
subsequent to such date or (y) the then-applicable Special Rate Period, at the
maximum rate applicable to such Preferred Shares set forth in the Operating
Agreement, minus (iv) the amount of other anticipated expenses of the Borrower
for the period longer of (x) the 90 days subsequent to such date or (y) the
then-applicable Special Rate Period, minus (v) any other current liabilities of
the Borrower payable as of such date; provided that until the earlier of two
years after the Closing Date or the date on which the Borrower shall have drawn
$711 million of the Equity Capital Commitments, the Net Accrual Amount shall
not be less than zero.
"Non-Cash Pay Instrument" means a High Yield Bond which falls
in Asset Category C, D, E, F or G that (a) does not provide for the payment of
cash interest or preferred dividends, or provides for the total deferral of
interest until the final maturity thereof, (b) is a debt security that has an
initial current yield on the date of purchase or acquisition thereof of less
than 2.5% per annum and provides for an increase in the rate of interest
payable in respect thereof at any time after the date it was purchased or
acquired (other than any increase resulting from (i) a change in a generally
recognized floating rate interest rate index, (ii) a change in the weighted
average interest rate on underlying collateral in the case of Securities the
interest rate on which is based on such weighted average interest rate or (iii)
a change in an interest rate spread or margin resulting from an announced
change in the rating of the issuer's debt obligations) or (c) is a debt
security that provides for the partial deferral of interest until the final
maturity thereof and which has cash interest payable without deferral at a rate
per annum less than (x) with respect to Fund Investments bearing interest at a
fixed rate, 2.5% per annum and (y) with respect to Fund Investments bearing
interest at a floating rate, a eurodollar rate plus 2% per annum. For purposes
of clause (b) of this definition, if the current yield is increased to 2.5% or
more per annum, then at the time of the increase of such interest rate, the
Security will cease to be a "Non-Cash Pay Instrument."
"Non-Credit Risk Security" means a security with respect to
which an institutional money manager would evaluate its value primarily by
reference to factors other than (a) the coupon (or the coupon as adjusted for
any purchase discount or premium) in relation to prevailing market yields, (b)
the credit worthiness of the issuing entity or (c) the adequacy of the
underlying financial assets supporting such security to ensure the repayment of
the security according to its terms (which adequacy may be measured by a credit
analysis of the likelihood of the obligors of such underlying assets to pay
according to the terms of such underlying assets and/or an analysis of the
sufficiency of the income streams thereon to meet the payment terms of the
security).
"Non-Performing Instrument" means (i) any Fund Investment
that is debt and the issuer of which is in default of any principal or interest
payment obligations in respect thereof (without giving effect to any applicable
grace period or waiver), (ii) any Fund Investment that is Preferred Stock and
the issuer of which has failed to meet any scheduled redemption obligations or
to pay its latest declared cash dividend or (iii) any Fund Investment that is a
CDO Debt Security and the issuer of which has failed to pay any current
interest or principal in cash when due.
"Outstanding Principal Amount" means the outstanding total
borrowings under the Credit Agreement at any given time.
"Performing" means, (i) with respect to any Fund Investment
that is a Bank Loan or other debt, the issuer of such Fund Investment is not in
default of any payment obligations in respect thereof, (ii) with respect to any
Fund Investment that is Preferred Stock, the issuer of such Fund Investment has
not failed to meet any scheduled redemption obligations or to pay its latest
declared cash dividend or (iii) with respect to any Fund Investment that is a
CDO Debt Security, the issuer of such Fund Investment has not failed to pay any
current principal or interest in cash when due.
"Person" means an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Pledge and Intercreditor Agreement" means the Pledge and
Intercreditor Agreement dated as of the Closing Date, among the Administrative
Agent, the Insurer, the Custodian, the Borrower and the Secured Parties
Representative identified therein, as amended, extended, restated, supplemented
or modified from time to time in accordance with the terms thereof.
"Portfolio Limitations" has the meaning assigned to such term
in this Schedule under "Application of Portfolio Limitations."
"Preferred Stock" means, as applied to the Capital Stock of
any Person, Capital Stock of such Person of any class or classes (however
designated) that ranks prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to any shares (or other interests) of
Capital Stock of such Person.
"Private Equity Securities" means, at any time of
determination, any Equity Security which the Borrower believes in good faith
(based on the facts and circumstances available to it) is (i) commonly regarded
by investment professionals as a "private equity security" and (ii) not traded
or listed on any national or regional securities exchange, any designated
offshore Securities market (as defined in Regulation S under the Securities
Act) or on the NASDAQ National Market and is not actively quoted or traded on
any automated quotation system or in the over-the-counter market; provided,
however, that "Private Equity Securities" shall not include (a) any Equity
Securities convertible or exchangeable for any Equity Securities traded or
quoted in the markets described in clause (ii) above, (b) any equity Securities
which may be resold under an effective registration statement under the
Securities Act at the time of determination or (c) any Investment Holding
Subsidiary Securities.
"Protected Market Value" means, with respect to any Fund
Investment that is the subject of a Defensive Hedge Transaction, the Protected
Price of such Fund Investment times the number of units of such Fund Investment
that are held by the Borrower and are the subject of such Defensive Hedge
Transaction.
"Protected Price" means, with respect to any Defensive Hedge
Transaction, (i) the agreed strike price at which the Eligible Counterparty to
such Defensive Hedge Transaction has agreed to purchase the Fund Investment
that is the subject of such Defensive Hedge Transaction or (ii) the agreed
strike price under a Defensive Hedge Transaction pursuant to which the Eligible
Counterparty has agreed to pay the Borrower an amount equal to the excess of
the agreed strike price over the current price of the Fund Investment that is
the subject of such Defensive Hedge Transaction.
"Quarterly Date" means the last Business Day of each March,
June, September and December, commencing in December of 2004.
"Related Person" means, with respect to any issuer, (a) any
Person of which such issuer is a Subsidiary, (b) any Person that is a
Subsidiary of such issuer, (c) with respect to a debt obligation, any Person
that relies on, or is relied upon for, the cash flows of such issuer to service
debt obligations or does not have a credit rating independent of such Person or
(d) with respect to a debt obligation, any Person that guarantees the issuer's
payment of such debt obligation; provided, however, that, in any such case, a
Person shall not be a Related Person of a second Person solely as a consequence
of the common control of such Persons by a single financial sponsor.
"Reporting Date" means the last Business Day of each calendar
week, commencing July 30, 2004.
"S&P" means Standard & Poor's Ratings Services, a Division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereto.
"S&P OC Test Rating" means as follows:
(a) with respect to any Fund Investment with an issue credit
rating by S&P, such S&P rating;
(b) with respect to any Fund Investment without an issue credit
rating by S&P, but whose issuer, or the unconditional and
irrevocable guarantor of such issue, is rated by S&P, the
senior unsecured S&P rating of such issuer or such
unconditional and irrevocable guarantor, as the case may be;
(c) with respect to any Fund Investment without an issue credit
rating by S&P, and without an issuer or unconditional and
irrevocable guarantor of such issue rated by S&P, but with a
senior unsecured public ▇▇▇▇▇'▇ rating of such issuer or
unconditional and irrevocable guarantor of such issue, the
S&P rating of such issuer or such unconditional and
irrevocable guarantor, as the case may be, as set forth
opposite the applicable public ▇▇▇▇▇'▇ rating in the S&P OC
Test Rating Chart;
(d) with respect to any Fund Investment not covered in (i)
through (iii) above, the rating of the issue, issuer, or such
unconditional and irrevocable guarantor, as the case may be,
as privately assessed by S&P at the Borrower 's request; and
(e) with respect to any Fund Investment not covered in (i)
through (iv) above, "CCC-."
"S&P OC Test Rating Chart" means the chart set forth below:
▇▇▇▇▇'▇ Mapped S&P
Rating Rating
----------------- -------------
Aaa AA+
Aa1 AA
Aa2 AA-
Aa3 A+
A1 A
A2 A-
A3 BBB+
Baa1 BBB
▇▇▇▇ ▇▇▇-
▇▇▇▇ ▇▇▇
▇▇▇ ▇▇-
▇▇▇ B+
Ba3 B
B1 B-
B2 CCC+
B3 CCC
Caa CCC-
NR or below Caa NR
"S&P Warrant/Option Advance Amount" means, as of any date of
determination, an amount equal to the sum for all Warrant/Option Investments of
the product of (i) the Warrant/Option Intrinsic Value of such Warrant/Option
Investment multiplied by (ii) the S&P Advance Rate for the S&P Asset Category
applicable to the Related Equity Securities of such Warrant/Option Investment.
"Secured Hedging Advance Amount" means as of any date of
determination, (i) if the Secured Hedging Net Exposure is greater than zero and
the Secured Hedging Transactions entered into, in the judgment of the Borrower,
hedge or mitigate risks to which the Borrower is exposed in the conduct of its
business or the management of its liabilities, 90% of the Secured Hedging Net
Exposure, and (ii) if the Secured Hedging Net Exposure is less than zero, 100%
of the Secured Hedging Net Exposure; provided that any Secured Hedging
Transaction having a Secured Hedging Net Exposure greater than zero and a
counterparty with a rating of less than "A-" by S&P shall be deemed, for
purposes of calculating the Secured Hedging Advance Amount, to have a Secured
Hedging Net Exposure of zero. Notwithstanding the foregoing, the Secured
Hedging Advance Amount, if positive, may not exceed 11.11% of the amount
calculated pursuant to clause (i) of the definition of "S&P Advance Amount,"
and to the extent that such amount exceeds 11.11%, the portion in excess of
11.11% will have a Market Value of zero.
"Secured Hedging Net Exposure" as of any date, as to any
Secured Hedging Transaction for which a determination thereof is required to be
made, shall be determined as follows: (i) each Eligible Counterparty party to
each Secured Hedging Transaction shall determine, with respect to the Secured
Hedging Transactions entered into by it with the Borrower, an amount (the
"Secured Net Exposure Component") equal to the net current market value on the
bid side of the market if the position is long and on the ask/offer side of the
market if the position is short to the Borrower on such date of determination
of each such Secured Hedging Transaction and (ii) for each Secured Hedging
Transaction, the "Secured Hedging Net Exposure" will, as of any date, be equal
to the sum of all applicable Secured Net Exposure Components as of such date
and may, for purposes of this calculation, be less than zero.
"Secured Hedging Transaction" means any Interest Rate Hedging
Transaction or Currency Hedging Transaction entered into by the Borrower with
any Lender that is an Eligible Counterparty which is secured by Collateral
pursuant to the Pledge and Intercreditor Agreement and for avoidance of doubt
shall exclude Structured Product Transactions.
"Securities" means common and preferred stock, partnership
units and participations, member interests in limited liability companies,
notes, bonds, debentures, trust receipts and other obligations, instruments or
evidences of indebtedness, including debt instruments of public and private
issuers and tax-exempt securities (including, without limitation, warrants,
rights, put and call options and other options and rights relating thereto, or
any combination thereof), guarantees of indebtedness, choses in action, trade
claims, other property or interests commonly regarded as securities or any form
of interest or participation therein, but not including Bank Loans or Hedging
and Short Sale Transactions.
"Securities Lending Transactions" means all obligations of
the Borrower (i) to purchase investments which arise out of or in connection
with the sale of the same or substantially similar investments or other similar
transactions having the same economic effect (excluding Swap Transactions); and
(ii) incurred in connection with any security lending transactions described in
clause (i).
"Semi-Liquid Investments" means (i) Unquoted Investments that
are debt Securities rated "B-" or better by S&P; (ii) Unquoted Investments that
are not subject to any enforceable agreement containing a material condition
to, or material restriction on, the ability of the holder of such Unquoted
Investment or an assignee of such holder to sell, assign, transfer or otherwise
liquidate the investment in a commercially reasonable time and manner (other
than in any such agreement contained in the Collateral Documents and customary
securities law arrangements or restrictions); (iii) Structured Product
Transactions; (iv) Bank Loan Participations (other than Bank Loan
Participations which may be converted into a Bank Loan assignment at the option
of the Issuer) for which the Market Value has been obtained from an Approved
Source that "quoted" or "priced" the participation interest in the Bank Loan
and not merely the Bank Loan itself; (v) solely for purposes of the definition
of Portfolio Limitations, Unquoted Investments which are High Yield Bonds or
Mezzanine Investments and are part of an issue that is greater or equal to $40
million in original principal amount; (vi) solely for purposes of the
definition of Portfolio Limitations, Unquoted Investments which are High Yield
Bonds that are held by ten or more holders or the issuer thereof has a total
capitalization in excess of $150.0 million; or (vii) CDO Debt Securities which
are rated "BBB-" or better by S&P.
"Senior Advance Amount" means the S&P Advance Amount
calculated using the S&P Advance Rate.
"Special Rate Period" has the meaning assigned to such term
in the Operating Agreement; provided, however, that for the purposes of this
Schedule, the Special Rate Period shall not be longer than 180 days.
"Special Situations Investments" means, as determined in the
reasonable judgment of the Borrower, any Securities or Loans issued by (i) an
out-of-favor company with visible potential operating cash flows and/or
liquidation values, and with businesses that are understandable, but may have
complex legal, operational and financial issues, or (ii) a fundamentally sound
operating company with sustainable margins that may have a poorly conceived
capital structure that, in general, the Borrower has purchased substantial
positions in such Securities or Loans, often with the goal of influencing the
values of investments through active management.
"Specified Foreign Country" shall mean each Designated
Country other than (x) a country whose sovereign debt rating in a non-local
currency is rated "AAA" by S&P or (y) a country whose sovereign debt rating in
a non-local currency is rated "AA" or better by S&P and in the case of (y)
which is (a) a member of the European Union that has adopted the Euro as its
lawful currency, (b) Canada, (c) Great Britain or (d) Australia.
"Structured Product Transaction" means a Hedging and Short
Sale Transaction between the Borrower and a counterparty that is on the date
such Hedging and Short Sale Transaction is entered into an Eligible
Counterparty, and pursuant to which (i) (a) the counterparty is entitled to
receive an amount equal to the sum of (1) periodic payments based on the
notional amount of such transaction for the term thereof at a specified rate
(which may be fixed or floating) and (2) the decrease over the term of such
transaction in the market value of a designated pool of one or more Bank Loans,
High Yield Bonds or a combination of Bank Loans and High Yield Bonds; and (b)
the counterparty is obligated to make payment to the Borrower in an amount
equal to the sum of (1) the interest, fees and other cash flows paid with
respect to the term of such transaction on such designated pool of Bank Loans
and/or High Yield Bonds and (2) the increase over the term of such transaction
in the market value of such designated pool of Bank Loans and/or High Yield
Bonds or (c) the counterparty and the Borrower agree to pay a net amount
calculated by reference to (a) or (b) above; (ii) the initial and minimum
amount of collateral that the Borrower is required to pledge as collateral for
such Hedging and Short Sale Transaction is not less than 10% of the notional
amount of such Hedging and Short Sale Transaction; and (iii) the counterparty
does not have recourse to the Collateral for amounts owing to such counterparty
thereunder. At the time a Bank Loan is made the subject of a Structured Product
Transaction, such Bank Loan must fall in Asset Category B-1. At the time a High
Yield Bond is made the subject of a Structured Product Transaction, such High
Yield Bond must (i) fall in Asset Category C, D or E, (ii) not be a Non-Cash
Pay Instrument and (iii) not be a CDO Debt Security or a Mezzanine Investment.
"Swap Transaction" means: (i) any rate, basis, debt or
equity; (ii) any put, cap, collar or floor agreement; (iii) any rate, basis,
debt or equity futures or forward agreement; (iv) any rate, basis, debt or
equity option representing an obligation to buy or sell a security, debt or
equity; and (v) any other similar agreement.
"Total Capitalization" means the sum of (a) Contributed
Company Capital plus aggregate undistributed net income of the Borrower (as
determined quarterly in accordance with GAAP and set forth in the Borrower's
financial statements) minus net loss of the Borrower (determined quarterly in
accordance with GAAP and set forth in the Borrower's financial statements), in
each case excluding any reduction in Company Equity as a result of placement or
structuring fees and organizational expenditures, (b) the aggregate outstanding
liquidation preference of the Preferred Shares and (c) the aggregate
Outstanding Principal Amount of the Loans under and as defined in the Credit
Agreement plus the amount, if any, by which the Total Maximum Commitment
exceeds the Outstanding Principal Amount of the Loans; provided, however, that
during the first 450 days following the Closing Date, for purpose of clauses
(i) through (v) of the Portfolio Limitations, "Total Capitalization" will be
the greater of (i) the amount determined pursuant to clauses (a), (b) and (c)
above and (ii) $711 million; provided, further, that, for purposes of the
definition of Portfolio Limitations, Total Capitalization shall not exceed
$1.625 billion.
"Unhedged Foreign Investment" means any portion of any Fund
Investment denominated in a currency other than Dollars which is not protected
against currency fluctuations as a result of Currency Hedging Transactions;
provided, however, that if 95% or more of the Market Value of a Fund Investment
denominated in a currency other than Dollars is so protected against currency
fluctuations, all of such Fund Investment shall be deemed to be protected
against currency fluctuations for purposes of this definition and the
calculation of the Over-Collateralization Test.
"Unquoted Investments" means Fund Investments other than Cash
or Cash Equivalents for which the Market Value has not been obtained from an
Approved Source.
"U.S. Government Securities" means Securities that are direct
obligations of, or obligations the timely payment of principal and interest on
which is fully guaranteed by, the United States of America or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America and in the
form of conventional bills, bonds and notes. In no event shall U.S. Government
Securities include: (i) any security providing for the payment of interest
only; (ii) any Swap Transaction; or (iii) any obligation on which all or any
portion of the payments thereunder is based, directly or indirectly, on any
Swap Transaction.
"Warrant/Option Intrinsic Value" means, with respect to any
Warrant/Option Investment, the product of (x) an amount by which the current
price (based on the price from an Approved Source or an Approved Investment
Banking Firm) of such Warrant/Option Investment exceeds the agreed strike price
with respect to such Warrant/Option Investment, multiplied by (y) the number of
shares of the Related Equity Securities. For the avoidance of doubt, the
Warrant/Option Advance Value shall always be zero if the agreed strike price of
such Warrant/Option Investment is equal to or greater than the current price of
such Warrant/Option Investment.
"Warrant/Option Investments" means any Fund Investments held
by the Borrower that are warrants or call options or similar rights with
respect to Equity Securities (the "Related Equity Securities").
"Yield to Worst" means, in respect of any High Yield Bond or
other debt security, the lesser of (a) the yield-to-maturity and (b) the lowest
yield-to-call calculated on each scheduled call date.