THE JAPAN FUND, INC.
as Borrower
and
▇▇▇▇▇ BROTHERS ▇▇▇▇▇▇▇▇ & CO.
as Lender
US$5,000,000
CREDIT AGREEMENT
Dated as of January 29, 2004
CREDIT AGREEMENT dated as of January 29, 2004 (this
"Agreement") between the undersigned a Maryland Corporation authorized and
existing under the laws of United States of America (the "Borrower"), and ▇▇▇▇▇
Brothers ▇▇▇▇▇▇▇▇ & Co., a New York limited partnership with an office at ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Lender").
WITNESSETH:
WHEREAS, the Borrower has requested, and the Lender has agreed
to make Loans (as defined below) to the Borrower and to make available to it a
credit facility for the purposes and on the terms and conditions set forth
herein;
WHEREAS, the Borrower is a Maryland corporation registered
under the 1940 Act as an open-end management investment company;
WHEREAS, the Lender is willing, on these terms and subject
to the conditions hereinafter set forth, to extend such Commitment and make such
Loans to Borrower; and
WHEREAS, the proceeds of the Loans will be used by the
Borrower to fund shareholder redemptions and for other lawful purposes under the
1940 Act, other than for leverage.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties to this Agreement agree as follows:
SECTION 1. DEFINITIONS
(1) Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate": has the meaning ascribed to the term
"Affilated Person" in the 1940 Act and the rules and regulations thereunder.
"Agreement": this Credit Agreement, as amended, restated,
supplemented or otherwise modified from time to time.
"Asset Coverage Ratio": means, with respect to the
Borrower, the ratio which the Net Asset Value of the Borrower less the value of
the assets subject to Liens bears to the aggregate Debt of the Borrower.
"Assignee": as defined in Section 8.6(c).
"Available Commitment": an amount equal to (a) the amount of
the Lender's Commitment less (b) the aggregate principal amount of all Loans to
the Borrower made by the Lender then outstanding.
"Base Rate": as defined in Section 2.7(b).
"Borrower": as defined in the Preamble hereto.
"Business Day": a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to close.
"Closing Date": the date on which the conditions precedent
set forth in Section 4.1 shall be satisfied and the Loan Documents are signed by
the parties hereto and delivered to the offices of ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ &
Co., ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Code": the Internal Revenue Code of 1986, as amended from time
to time.
"Commitment": the obligation of the Lender to make Loans
to the Borrower hereunder in an aggregate principal amount at any one time
outstanding not to exceed US$5,000,000 (Five Million Dollars).
"Commitment Fee": as defined in Section 2.3.
"Commitment Period": the period from and including the
Closing Date, but not including, the Termination Date.
"Contractual Obligation": as to any Person, any
provision of any security issued by such Person or of any agreement, instrument
or other undertaking to which such Person is a party or by which it or any of
its property is bound.
"Custody Agreement": as to the Borrower, the Custody
Agreement in effect between the Borrower and ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co. as
custodian for the Borrower.
"Debt": of any Person means at any date, without duplication,
(a) all obligations of such Person for borrowed money or extensions of credit,
(b) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (c) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (d) all obligations of such Person
as lessee which are or should be capitalized in accordance with GAAP, (e) all
Debt of others secured by a Lien on any asset of such Person, whether or not
such Debt is assumed by such Person, (f) all obligations of such Person in
respect of banker's acceptances and under reverse repurchase agreements, and (g)
all obligations of such Person in respect of futures contracts, swaps and other
obligations that are senior securities for purposes of the Act.
"Default": any of the events specified in Section 7, which with
the giving of notice, the lapse of time, or both, would, unless cured or waived,
became an Event of Default by the Borrower.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Eligible Lender": an entity that is a "Bank" (as defined in
the ▇▇▇▇ ▇▇▇) and is not otherwise prohibited by Section 17 of the 1940 Act from
lending to the Borrower.
"Event of Default": any of the events specified in Section 7.1,
provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, if any, has been satisfied.
"Federal Funds Rate": means the fluctuating "offered rate", as
determined by the Lender, for overnight federal funds, which rate is determined
day to day.
"Financing Lease": any lease of property, real or personal,
the obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Fundamental Investment Policy": those policies either from
which the Borrower may not deviate without obtaining shareholder consent or
which involve the Borrower's investment objectives.
"GAAP": generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority": any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (A) for the purchase
or payment of any such primary obligation or (B) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by such guaranteeing
person in good faith.
"Indebtedness": of any Person at any date, (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices), (b) any
other indebtedness of such Person which is evidenced by a note, bond, debenture
or similar debt instrument, (c) all obligations of such Person under Financing
Leases or Interest Rate Agreements, calculated daily on a marked-to-market basis
in accordance with GAAP, (d) all obligations of such Person in respect of
acceptances (as defined in Section 3-410 of the UCC) issued or created for the
account of such Person, (e) all reimbursement obligations of such person arising
out of any letters of credit, and (f) all liabilities secured by any Lien on any
property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof.
"Interest Rate Agreement": any interest rate protection
agreement, interest rate future, interest rate option, interest rate swap,
interest rate cap or other interest rate hedge or arrangement under which a
Fund, on its own behalf or if applicable on behalf of an investment portfolio
thereof that is a Borrower, is a party or a beneficiary.
"Investment Policies": as to the Borrower, the policies and
objectives for, and limits and restrictions on, investing by such Borrower set
forth in the Prospectus relating to such Borrower.
"Lender": as defined in the Preamble hereto.
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
Financing Lease having substantially the same economic effect as any of the
foregoing).
"Loan Documents": this Agreement, the Note, a Pledge Agreement,
, and such other papers, agreements, instruments, certificates and documents as
the Lender shall reasonably require at any time during the term of the
Commitment.
"Loans": all loans made pursuant to this Agreement;
individually, a "Loan".
"Material Adverse Effect": a material adverse effect on (a)
the business, financial condition (other than changes in net assets of the
Borrower in the ordinary course of its activities) or (b) ability to timely
perform any of its material obligations under the Loan Documents of the Borrower
or (c) the legality, validity, binding nature or enforceability of the Loan
Documents or the rights or remedies of the Lender hereunder or thereunder.
"Maturity Date": as to each Loan, the date which is the
earliest of (a) 30 days after the Borrowing Date for such Loan, (b) the
Termination Date and (c) the payment in full of such Loan.
"Net Asset Value": means, at any date, with respect to the
Borrower, Total Assets less Total Liabilities (other than the Loans of the
Borrower, any accrued interest thereon) of the Borrower.
"1940 Act": the Investment Company Act of 1940, as amended,
together with all rules and regulations promulgated from time to time
thereunder.
"Non-Excluded Taxes": as defined in Section 2.12.
"Note": the Revolving Credit Note as amended, extended,
superseded or replaced.
"Participant": as defined in Section 8.6(b).
"Person": an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or other
entity of whatever nature.
"Pledge Agreement": as to the Borrower, the pledge agreement
substantially in the form attached hereto as Exhibit 2.13(a), as amended or
modified from time to time, to be entered into by the Borrower for the benefit
of the Lender.
"Prospectus": at a particular time, shall mean the currently
effective prospectus of the Borrower.
"Regulation T": Regulation T of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Regulation X": Regulation X of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Requirement of Law": as to any Person, the certificate of
incorporation, by-laws, partnership agreement, or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chairman, vice chairman, president,
treasurer, secretary, assistant treasurer or assistant secretary of the
Borrower, or, with respect to financial matters, the treasurer of the Borrower.
"Revolving Credit Note": as defined in Section 2.5(d).
"Senior Securities": any bond, debenture, note or similar
obligation or instrument constituting a security and evidencing indebtedness
(including without limitation all Loans under this Agreement), and any share of
beneficial interest or common stock, as the case may be, of the Borrower having
priority over any other class of shares of such Fund as to distribution of
assets or payment of dividends.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"Swap Obligation": as to any Person, any obligation of such
Person arising out of (i) any "swap agreement" (as defined in Section 101(53B)
of the Bankruptcy Code), (ii) any equity swap, floor, collar, cap or option
transaction, (iii) any option to enter into any of the foregoing or (iv) any
combination of the foregoing.
"Termination Date": the date which is 364 days following the
Closing Date or such earlier date on which the Commitment shall terminate as
provided herein, provided that the Termination Date may be extended in
accordance with Section 2.14 hereof.
"Total Assets" means with respect to a Borrower as of any date,
the aggregate amount of all items that would be set forth as assets on a balance
sheet of such Borrower on such date prepared in accordance with GAAP. The assets
of a Borrower shall be valued in accordance with the 1940 Act, the rules and
regulations under the Act, and the valuation procedures set forth in its most
recent Prospectus and SAI.
"Total Liabilities" means, with respect to a Borrower as of any
date, the aggregate amount of all items that would be set forth as liabilities
on a balance sheet of such Borrower on such date prepared in accordance with
GAAP.
"Transferee": as defined in Section 8.6(d).
"UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have such defined
meanings when used in any Note or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in any Note and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower not defined in Section 1.1 and accounting terms partly defined in
Section 1.1, to the extent not defined, shall have the respective meanings given
to them under GAAP (as consistently applied).
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitment. Subject to the terms and conditions hereof, the Lender
agrees to make revolving credit Loans to the Borrower, from time to time during
the Commitment Period, in an aggregate principal amount at any one time
outstanding not to exceed the amount of Five Million Dollars and no/100
(US$5,000,000). During the Commitment Period, the Borrower may use Commitment by
borrowing, repaying Loans in whole or in part, and reborrowing, all in
accordance with the terms and conditions hereof and with such procedures as may
be agreed to by the Borrower from time to time; provided that at no time may the
aggregate principal amount outstanding of Loans to the Borrower exceed the
Commitment.
2.2 Procedure for Borrowing. The Borrower may borrow under the
Commitment during the Commitment Period on any Business Day, provided that the
Borrower shall give the Lender irrevocable notice substantially in the form of
Exhibit 2.2 not later than 2:00 PM (New York City time) on or before the
Borrowing Date.
2.3 Fees. The Borrower agrees to pay to the Lender for the account of
the Lender a commitment fee ("Commitment Fee") equal to 0.10% of the Commitment.
Such Commitment Fee shall be due and payable quarterly in arrears following the
Closing Date, and also prior to any extension by the Lender of the Existing
Termination Date as provided in Section 2.14 hereof.
2.4 Termination and Reduction of Commitments. (a) The Borrower shall
have the right, upon not less than three (3) Business Days' notice to the
Lender, to terminate the Commitment. Any termination of a Commitment to the
Borrower shall be effective as of the last day of the calendar quarter in which
such notice is given, and shall be accompanied by prepayment in full of the
Loans to the Borrower then outstanding, and payment of any other accrued fees,
expenses or indemnified liabilities payable by the Borrower hereunder.
(b) Interest accrued on the amount of any prepayment relating to such
termination and any unpaid Commitment Fee accrued hereunder shall be paid on the
date of such termination.
2.5 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay to the Lender the then unpaid principal amount
of each Loan of the Lender to the Borrower on the Maturity Date for such Loan
(or such earlier date on which the Loans become due and payable pursuant to
Sections 2.6 or 7). The Borrower hereby further agrees to pay to the Lender
interest on the unpaid principal amount of the Loans to the Borrower from time
to time outstanding from the date hereof until payment in full thereof at the
rates per annum, and on the dates, set forth in Sections 2.7 and 2.9.
(b) The Lender shall maintain in accordance with its usual practice an
account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of the Lender from time to time, including the amounts
of principal and interest payable and paid to the Lender from time to time under
this Agreement.
(c) The entries made in the accounts of the Lender maintained pursuant
to Section 2.5(b) shall, to the extent permitted by applicable law, be prima
facie evidence of the existence and amounts of the obligations of the Borrower
therein recorded, provided, however, that the failure of the Lender to maintain
the Register or any such account, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay (with applicable interest) the
Loans made to such Borrower by the Lender in accordance with the terms of this
Agreement.
(d) The Borrower has executed and delivered to the Lender a promissory
note evidencing the Loans of the Borrower in the form of Exhibit 2.5(d) (the
"Revolving Credit Note").
2.6 Optional and Mandatory Prepayments. Any notice from Borrower of
prepayment under this Agreement will oblige the Borrower to prepay in accordance
with that notice. Loans may be prepaid in whole or in part without a penalty. .
Any repayment or prepayment (as the case may be) shall be made together with all
unpaid interest accrued on the amount of that repayment or prepayment as
provided herein. If, at any time and from time to time, the aggregate amount of
all borrowings of Borrower (including without limitation the Loans made pursuant
to this Agreement) then outstanding exceeds the borrowing limits provided in
such Borrower's Prospectus and/or applicable law and regulations of the United
States of America, then in each case within three (3) Business Days thereafter
the Borrower shall repay Loans made to the Borrower to the extent necessary to
ensure that the aggregate amount of all Loans made to the Borrower then
outstanding does not after such payments exceed such limits.
2.7 Interest Rates and Payment Dates. (a) Each Loan or any portion of
the principal outstanding hereunder, shall bear interest at a per annum rate
equal to the Federal Funds Rate plus 200 basis points. Interest on each Loan
shall be payable monthly in arrears on the 1st day of each month, commencing on
the first such date following the date hereof and on the Maturity Date. Interest
on the Federal Funds Rate is calculated on the basis of actual days elapsed and
a 360-day year.
(b) Upon (i) the occurrence and continuance of any Default or Event of
Default specified in Section 7(e) with respect the Borrower, or (ii) notice
given by the Lender to the Borrower of any other Default or Event of Default,
then all Loans outstanding shall bear interest at a rate per annum equal to the
Base Rate plus 3% per annum, adjusted daily. If all or a portion of (i) the
principal amount of any Loan to the Borrower, (ii) any interest payable thereon
or (iii) any Commitment Fee or other amount payable hereunder shall not be paid
when due (whether at the stated maturity, by acceleration or otherwise), all of
the Loans outstanding to the Borrower shall bear interest at a rate per annum
equal to the Base Rate plus 3% per annum, adjusted daily. As used herein, "Base
Rate" shall mean that rate of interest per annum announced by the Lender from
time to time at its office in New York, New York as its base rate and shall be
calculated on the basis of actual days elapsed and in a 360 day year.
2.8 Computation of Interest. (a) Interest shall be calculated on the
Federal Fund Rate on the basis of a 360-day year for the actual days elapsed and
on Base Rate on the basis of a 360 day year for the actual days elapsed.
(b) Each determination of an interest rate by the Lender pursuant any
provision of this Agreement shall be conclusive and binding on the Borrower in
the absence of manifest error. The Lender shall, at the request of the Borrower,
deliver to the Borrower a statement showing the quotations used by the Lender in
determining any interest rate pursuant to Sections 2.7 and 2.9.
2.9 Unavailability of the Federal Funds Rate. In the event that on any
date on which the Federal Funds Rate with respect to a Loan would otherwise be
set, the Lender shall have determined in good faith (which determination shall
be final and conclusive) that adequate and fair means do not exist for
ascertaining the Federal Funds Rate, or at any time the Lender shall have
determined in good faith (which determination shall be final and conclusive)
that:
(i) the making or continuation of any Loan at the Federal Funds Rate
plus 200 basis points has been made impracticable or unlawful by (1) the
occurrence of a contingency that materially and adversely affects the Federal
Reserve Bank, or (2) compliance by the Lender in good faith with any applicable
law or governmental regulation, guideline or order or interpretation or change
thereof by any governmental authority charged with the interpretation or
administration thereof or with any request or directive of any such governmental
authority (whether or not having the force of law); or
(ii) the Federal Funds Rate shall no longer represent the effective
cost to the Lender for US dollar deposits in which it regularly participates;
then, and in any such event, the Lender shall forthwith so notify the
Borrower thereof. Any principal amount outstanding under any Loan hereunder
shall thereafter accrue interest at the rate per annum equal to the Bank's Base
Rate plus 1.50%, as adjusted daily and shall be calculated on the basis of
actual days elapsed in a 360 day year.
2.10 Payments. All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made no later than 12:00 Noon New York City time, on the due
date thereof to the Lender, at the Lender's office specified in Section 8.2
hereof, in Dollars and in immediately available funds. If any payment hereunder
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension.
2.11 Requirements of Law. (a) If the Lender shall have determined that
the adoption of or any change in any Requirement of Law (in each case after the
date hereof) of any Governmental Authority regarding capital adequacy or in the
interpretation or application thereof or compliance by the Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on the Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which the Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration the Lender's or such corporation's
policies with respect to capital adequacy) by an amount determined by the
Lender, in its reasonable discretion, to be material, then from time to time,
each Borrower shall within 10 days after demand pay to the Lender such
additional amount or amounts as will compensate the Lender for such reduction.
(b) If the Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrower of the event by
reason of which it has become so entitled by providing a certificate setting
forth in reasonable detail the basis for the claim for additional amounts and
the amounts required to be paid by the Borrower to the Lender; provided that the
Lender shall not be required to disclose any confidential information. Such
certificate as to any additional amounts payable pursuant to this Section
submitted by the Lender to the Borrower shall be conclusive in the absence of
manifest error. The agreements in this Section shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder. No Borrower shall be responsible to compensate the Lender for
additional amounts attributable to another Borrower's Loans. Any amounts due
hereunder which are not attributable to particular Loans shall be subject to pro
rata allocation.
(c) Failure or delay on the part of the Lender to demand compensation
pursuant to this Section shall not constitute a waiver of the Lender's right to
demand such compensation; provided that the Borrower shall not be required to
compensate the Lender pursuant to this Section for any increased costs or
reductions of the rate of return incurred more than 180 days prior to the date
that the Lender notifies the Borrower of the change in the Requirement of Law
giving rise to such increased costs or reductions of the rate of return and of
the Lender's intention to claim compensation therefor; provided further that, if
the change in the Requirement of Law giving rise to such increased costs or
reductions of the rate of return is retroactive, then the 180-day period
referred to above shall be extended to include the period of retroactive effect
thereof.
2.12 Taxes. All payments made by the Borrower under this Agreement and
the Note shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding all present and future income taxes and franchise taxes
(imposed in lieu of net income taxes) imposed on the Lender as a result of a
present or former connection between the Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or the Note). If any such
non-excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Lender hereunder or under the Note, the amounts so payable to the
Lender shall be increased to the extent necessary to yield to the Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement. Whenever
any Non-Excluded Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Lender, a certified copy of an
original official receipt received by such Borrower showing payment thereof. If
the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate
taxing authority or fails to remit to the Lender required receipts or other
required documentary evidence, the Borrower shall indemnify the Lender for any
incremental taxes, interest or penalties that may become payable by the Lender
as a result of any such failure. The agreements in this Section shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder. The Lender will promptly notify the Borrower upon
learning that any payments hereunder may be subject to withholding.
2.13 Collateral. The Loans and obligations under this Agreement may be secured
from time to time pursuant to a grant a pledge by the Borrower of all of the
cash and securities of the Borrower to the Lender to secure the payment when due
of all Loans and obligations of the Borrower now in existence or hereinafter
arising under this Agreement. In accordance therewith, the Borrower will
executed a Pledge and Security Agreement and Assignment of Account in the form
of Exhibit 2.13(a) hereto in favor of the Lender.
2.14 Extension of Termination Date. (a) The Borrower may, by notice to
the Lender of not less than 60 days and not more than 90 days prior to the
Termination Date then in effect hereunder (the "Existing Termination Date"),
request that the Lender extend the Termination Date for an additional 364 days
from the Consent Date (as defined below). The Lender, acting in its sole
discretion, shall by notice the Borrower given on the date (and, subject to the
provision below, only on the date) 30 days prior to the Existing Termination
Date (provided, if such date is not a business day, then such notice shall be
given on the next succeeding business day) (the "Consent Date"), advise the
Borrower whether or not the Lender agrees to such extension. The Lender's
failure to so notify the Borrower shall not operate as an automatic extension of
the Existing Termination Date hereunder.
(b) Notwithstanding the foregoing, the extension of then Existing
Termination Date shall not be effective with respect to the Lender unless:
(i) no Default or Event of Default shall have occurred and be
continuing on the date of the notice requesting such extension, the Consent Date
or the Existing Termination Date;
(ii) each of the representations, warranties and covenants of
the Borrower in Section 3 hereof shall be true and correct on and as of each of
the date of the notice requesting such extension, the Consent Date and the
Existing Termination Date with the same force and effect as if made on and as of
each such date (or, if any such representation or warranty is expressly stated
to have been made as of a specific date, as of such specific date);
(iii) each of the conditions precedent in Section 4 hereof
shall be satisfied in the reasonable opinion of the Lender; and
(iv) the Lender shall have been paid in full by the Borrower
all amounts owing to the Lender hereunder, including the Commitment Fee which
shall be applicable to the extension of the Existing Termination Date hereunder,
and payable to the Lender on or before the Existing Termination Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the
Loans, the Borrower hereby represents and warrants to the Lender that:
3.1 Financial Condition. The statement of assets and liabilities as of
the Borrower's most recently ended fiscal year for which annual reports have
been prepared and the related statements of operations and of changes in net
assets for the fiscal year ended on such date, copies of which financial
statements, certified by the independent public accountants for the Borrower,
have heretofore been delivered to the Lender, fairly present, in all material
respects, the financial position of the Borrower as of such date and the results
of its operations for such period, in conformity with GAAP (as consistently
applied).
3.2 No Change. Since the date of the statement of assets and
liabilities for the most recently ended fiscal year for which annual reports
have been prepared for the Borrower, there has been no development or event
which has had or could reasonably be expected to have a Material Adverse Effect
with respect to the Borrower.
3.3 Existence, Compliance with Law. The Borrower (a) is duly organized
and validly existing under the laws of the jurisdiction of its organization, (b)
has the power and authority and the legal right to own its property and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a Maryland Corporation_authorized and existing under the laws of _United State
of America where its ownership of property or the conduct of its business
requires such qualification, and (d) is in compliance with all Requirements of
Law, except to the extent that the failure to comply therewith, and with clause
(c) of this Section 3.3, could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect. The shares of each Borrower have been validly
authorized.
3.4 Power, Authorization, Enforceable Obligations. The Borrower has the
power and authority and the legal right, to execute, deliver and perform the
Loan Documents to which it is a party and to borrow hereunder and thereunder on
its own behalf, and has taken all necessary action to authorize the borrowings
on the terms and conditions of this Agreement and the Note and to authorize the
execution, delivery and performance of the Loan Documents to which it is a party
including, but not limited to, receiving the approval of the majority of
non-interested members of the board of directors of the Borrower as to entering
into the transactions contemplated hereby. No consent or authorization of,
filing with, notice to or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the borrowings
hereunder or with the execution, delivery, performance, validity or
enforceability of the Loan Documents to which Borrower is a party. This
Agreement has been, and each other Loan Document to which the Borrower is a
party will be, duly executed and delivered by the Borrower. This Agreement, the
Note and each other Loan Document to which the Borrower is a party when executed
and delivered will constitute, a legal, valid and binding obligation of the
Borrower, and enforceable against the Borrower in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.5 No Legal Bar. The execution, delivery and performance of the Loan
Documents to which the Borrower, the borrowings hereunder and the use of the
proceeds thereof (a) will not violate any material Requirement of Law or
Contractual Obligation of the Borrower, and (b) will not result in, or require,
the creation or imposition of any material Lien on any of their respective
material properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.
3.6 No Material Litigation. No litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower threatened by or against the Borrower or against its
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) which could reasonably
be expected to have a Material Adverse Effect.
3.7 No Default. The Borrower is not in default under or with respect to
any of its Contractual Obligations in any respect, which could reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
3.8 Ownership of Property, Liens. The Borrower has good title to all
its property, and none of such property is subject to any Lien except as
permitted by Section 6.3.
3.9 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation of the Borrower could reasonably be expected to have a Material
Adverse Effect.
3.10 Taxes. Borrower qualifies as a regulated investment company within
the meaning of the Code. The Borrower has filed all material tax returns which,
to the knowledge of the Borrower are required to be filed and has paid all taxes
shown to be due and payable on said returns or on any assessments made against
it or any of its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority (other than any the
amount or validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Borrower); no tax Lien has been
filed, and, to the knowledge of the Borrower with respect to any such tax, fee
or other charge.
3.11 Federal Regulations. If requested by the Lender from time to time,
the Borrower will furnish to the Lender a statement and current list of the
assets of the Borrower in conformity with the requirements of FR Form U-I
referred to in said Regulation U. Other than the furnishing of such statement
and such list, no filing or other action is required under the provisions of
Regulations T, U or X in connection with the execution and delivery of the
Agreement and the making of the Loans hereunder. No part of the proceeds of any
Loans made hereunder will be used in a manner that violates Regulation U.
3.12 Certain Regulations. The Borrower is not subject to regulation
under any Federal or State statute or regulation (other than Regulations U and X
of the Board of Governors of the Federal Reserve System) or any law or
regulation in the United States of America which limits its ability to incur
Indebtedness, and with respect to such Regulations and any law or regulation in
the United States of America, the Borrower has not failed to be in compliance
with such statutes and regulations.
3.13 Subsidiaries. The Borrower has no Subsidiaries and no equity
investment or interest in any other Person (other than portfolio securities
which have been acquired in the ordinary course of business).
3.14 Offering in Compliance with Securities Laws. The Borrower has
complied with all applicable securities laws with respect to the issue of its
shares.
3.15 Investment Policies. The Borrower is in compliance in all
material respects with all of its fundamental Investment Policies.
3.16 Permission to Borrow. The Borrower is permitted to borrow
hereunder pursuant to the limits and restrictions set forth in its Prospectus.
3.17 Accuracy of Information, Electronic Information. (a) All factual
information heretofore or contemporaneously furnished by the Borrower in writing
to the Lender for purposes of or in connection with this Agreement or any
transaction contemplated hereby (in each case, as amended, superseded,
supplemented or otherwise modified with the knowledge of the Lender) is, and all
other such factual information hereafter furnished by or on behalf of the
Borrower to the Lender (in each case, as amended, superseded, supplemented or
otherwise modified with the knowledge of the Lender will be, true and accurate
in every material respect on the date as of which such information is dated or
certified, and to the extent such information was furnished to the Lender
heretofore or contemporaneously, as of the date of execution and delivery of
this Agreement by the Lender, and such information is not, or shall not be, as
the case may be, incomplete by omitting to state any material fact necessary to
make such information not misleading.
(b) The Lender shall not be liable to the Borrower for any damages
arising from the Lender's use of information or other materials obtained through
transmission by the Internet, which damages are waived and forgiven.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Loans. The agreement of the Lender to make
the initial Loan requested to be made by it is subject to the satisfaction,
prior to or concurrently with the making of such Loan, of the following
conditions precedent:
(a) Executed Agreement. The Lender shall have received this Agreement,
executed and delivered by a duly authorized officer of the Borrower.
(b) Note. The Lender shall have received the Note executed and
delivered by a duly authorized officer of the Borrower.
(c) Pledge Agreement. The Lender shall have received the Pledge
Agreement executed and delivered by a duly authorized officer of the Borrower.
(d) Related Agreements. The Lender shall have received, true and
correct copies, certified as to authenticity by a Responsible Officer of the
Borrower, of the most recent Prospectus for each Borrower, , the most recent
annual and semi-annual financial reports for the Borrower and such other
documents or instruments as may be reasonably requested by the Lender including,
without limitation, a copy of any debt instrument, security agreement or other
material contract to which the Borrower may be a party.
(e) Proceedings of the Borrower. The Lender shall have received (i) a
copy of the resolutions, in form and substance satisfactory to the Lender, of
the board of directors of the Borrower authorizing (1) the execution, delivery
and performance of this Agreement and the other Loan Documents to which the
Borrower is a party, and (2) the borrowings contemplated hereunder, certified by
a Responsible Officer of the Borrower as of the Closing Date, which certificate
shall be in form and substance satisfactory to the Lender and shall state that
the resolutions thereby certified have not been amended, modified, revoked or
rescinded and are in full force and effect, (ii) a certificate of the Borrower
dated the Closing Date, as to the incumbency and signature of the officers of
the Borrower executing any Loan Document executed by a Responsible Officer of
the Borrower, satisfactory in form and substance to the Lender, and (iii) true
and complete copies of the Articles of Incorporation of the Borrower, certified
as of the Closing Date as complete and correct copies thereof by a Responsible
Officer of the Borrower.
(f) Financial Information. The Lender shall have received the most
recent publicly available financial information for the Borrower.
(g) Termination of other Credit Facilities. All other credit facilities
to which the Borrower is a party shall have been terminated except the overdraft
facility provided from time to time in the sole and absolute discretion of BBH
under the Custodian Agreement with BBH.
4.2 Conditions to Each Loan. The agreement of the Lender to make any
Loan requested by the Borrower to be made by it on any date (including, without
limitation, its initial Loan) is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Borrower, in or pursuant to the Loan Documents shall be
true and correct in all material respects on and as of such date as if made on
and as of such date.
(b) No Default. No Default or Event of Default shall have occurred with
respect to the Borrower be continuing on such date or after giving effect to the
Loans requested to be made on such date.
(c) Regulation U, Form U-1. The Lender shall be satisfied that the
Loans and the use of proceeds thereof comply in all respects with Regulation U.
To the extent required by Regulation U, the Lender shall have received a copy of
either (i) FR Form U- 1, duly executed and delivered by Borrower and completed
for delivery to the Lender or (ii) a current list of the assets of the Borrower
(including all "margin stock" (as defined in Regulation U) from the Borrower),
in form acceptable to the Lender and in compliance with Section 221.3(c)(2) of
Regulation U.
(d) Asset Coverage Ratio. Borrower shall at all times maintain an Asset
Coverage Ratio of at least 3 to 1 or such other restrictive ratio as may be set
forth in the most recent Prospectus of the Borrower, or as may be otherwise
acceptable to the Lender.
(e) Additional Matters. All proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Agreement and the other Loan Documents shall be
satisfactory in form and substance to the Lender, and the Lender shall have
received such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it shall
reasonably request.
Each borrowing by the Borrower shall constitute a representation and warranty by
such Borrower as of the date thereof that the conditions contained in this
Section have been satisfied with respect to the Borrower.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as (i) the Commitment remains in effect
with respect to it, or (ii) any amount is owing by it to the Lender hereunder or
under any other Loan Document, it shall:
5.1 Financial Statements. Furnish to the Lender:
(a) as soon as available and in any event within seventy-five (75) days
after the end of each fiscal year of the Borrower, a statement of assets and
liabilities of the Borrower as at the end of such fiscal year, a statement of
operations for such fiscal year, a statement of changes in net assets for such
fiscal year and the preceding fiscal year, a portfolio of investments as at the
end of such fiscal year and the per share and other data for such fiscal year
prepared in accordance with GAAP (as consistently applied) and all regulatory
requirements, and all presented in a manner acceptable to an independent
certified public accountants of recognized standing;
(b) as soon as available and in any event within sixty (60) days after
the close of the first six-month period of each fiscal year of the Borrower, a
statement of assets and liabilities as at the end of such six-month period, a
statement of operations for such six-month period, a statement of changes in net
assets for such six-month period and a portfolio of investments as at the end of
such six-month period, all prepared in accordance with regulatory requirements
and all certified (subject to normal year end adjustments) as to fairness of
presentation, GAAP (as consistently applied) and consistency by a Responsible
Officer; and
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
5.2 Certificates; Other Information. Furnish to the Lender:
(a) concurrently with the delivery of the financial statements referred
to in Sections 5. 1 (a), (b), and (c) and the quarterly report in Section
5.2(c), a certificate of a Responsible Officer substantially in the form of
Exhibit 5.2 stating that (i) to the best of such Responsible Officer's
knowledge, the Borrower during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in this
Agreement and the other Loan Documents to be observed, performed or satisfied by
it, and (ii) no Default or Event of Default has occurred and is continuing
except as specified in such certificate;
(b) within five (5) Business Days after they are sent, copies of all
financial statements and reports which the Borrower sends to its investors, and
within five (5) Business Days after they are filed, copies of all financial
statements and reports which each Borrower may make to, or file with, any
applicable Governmental Authority; and
(c) promptly, such additional financial and other information as any
Lender may from time to time reasonably request, including, but not limited to,
copies of all changes to the Borrower's Prospectus.
5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all of the
obligations of whatever nature of the Borrower, except where (i) the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower, as the case may be, or (ii) the failure
to timely make payment thereof could not reasonably be expected to have a
Material Adverse Effect.
5.4 Conduct of Business and Maintenance of Existence. Except as
otherwise permitted herein, continue to engage in (i) the Borrower's investment
business in accordance with its Investment Policies and Prospectus and preserve,
renew and keep in full force and effect its existence, and (ii) take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except to the extent that
failure to take such actions could not, in the aggregate, be reasonably expected
to have a Material Adverse Effect; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, be reasonably expected to have a Material Adverse Effect;
maintain at all times its status as a ____________________ authorized and
existing under the laws of the United States of America; and maintain at all
times ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co. as its current primary custodian.
5.5 Maintenance of Property; Insurance. Keep all property useful and
necessary in each Borrower's business, if any, in good working order and
condition; maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and against at least such
risks as are usually insured against in the same general area by entities
engaged in the same or similar business or as may otherwise be required by any
applicable Governmental Authority, and (b) errors and omissions insurance); and
furnish to each Lender, upon written request, full information as to the
insurance carried.
5.6 Inspection of Property; Books and Records; Discussions. Keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all material Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and permit
representatives of the Lender to visit and inspect any of the Borrower's
properties and examine and make abstracts from any of its books and records
during normal business hours and to discuss the business, operations, properties
and financial and other condition of the Borrower with officers and employees of
the Borrower and with its independent certified public accountants; provided
that, unless a Default or an Event of Default shall have occurred and be
continuing, the Lender shall provide the Borrower with five (5) Business Days'
prior notice of such visit and shall conduct such visit not more than once a
year.
5.7 Notices. Promptly give notice to the Lender of:
(a) the occurrence of any Default or Event of Default with respect to
the Borrower;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or (ii) litigation, investigation or proceeding which
may exist at any time between the Borrower and any Governmental Authority, which
in either case, if not cured or if adversely determined, as the case may be,
could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower in which the
amount reasonably determined to be at risk is more than 5% of the Borrower's net
assets and not covered by insurance or in which injunctive or similar relief is
sought;
(d) any change in a Borrower's Prospectus involving Investment Policies
which could materially increase the risks to the shareholders of the Borrower or
which would increase the borrowing limits provided for in the Borrower's
Prospectus;
(e) its registration under ________________________ has been suspended
or revoked; and
(f) any development or event in the business activities of the Borrower
which could reasonably be expected to have a Material Adverse Effect on the
Borrower.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and if appropriate stating what action the Borrower proposes to take with
respect thereto.
5.8 Purpose of Loans. Use the proceeds of the Loans for temporary or
emergency purposes, including, without limitation, funding of shareholder
redemption's or the payment of dividends, or (ii) for the purpose of funding
other short term liquidity needs. Without limiting the foregoing, the Borrower
will not, directly or indirectly, use any part of such proceeds for any purpose
which would violate any provision of its Registration Statement or any
applicable statute, regulation, order or restriction, including but not limited
to Regulation U; provided, however, that the Lender shall have no responsibility
as to the use of any of such proceeds.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that so long as (i) the Commitment
remains in effect with respect to it, or (ii) any amount is owing by it to the
Lender hereunder or under any other Loan Document, it shall not, without the
prior written consent of the Lender, directly or indirectly:
6.1 Financial Condition Covenant. Allow the aggregate
borrowings and/or Indebtedness of the Borrower to exceed the limits set forth in
such Borrower's Prospectus and/or the applicable law and regulations of the
United States of America.
6.2 Limitation on Indebtedness, Derivatives. (a) Create, incur, assume
or suffer to exist any Indebtedness except Indebtedness of the Borrower incurred
(i) under this Agreement and the Note, (ii) under the Custodian Agreement with
the Lender as the Borrower's custodian, (iii) in the ordinary course of business
of the Borrower (including liens arising from securities lending, margin
accounts, reverse repos and similar investment activities), or (iv) in the form
of reverse repurchase transactions, dollar rolls or other transactions entered
into primarily for investment purposes which have the effect of borrowing and,
in each case, which is not otherwise prohibited by law, is in the ordinary
course of business, is not in contravention of the Borrower's Prospectus or the
applicable law and regulations of the United States of America.
(b) Invest in, or incur Indebtedness or other liability to any Person
with respect to, any Swap Obligation or derivative instrument (including without
limitation any swap, collar, cap, puts, calls, equity derivative or
mortgage-backed or debt-backed derivative) unless each of the following is true:
(i) such Swap Obligation or derivative instrument, if marked-to-market on a net
daily basis (or marked to value in a manner reasonably acceptable to the
Lender), is appropriately reflected in the calculation of Asset Coverage Ratio,
and (ii) the purpose of the investment in such Swap Obligation or derivative
instrument is to augment the capital appreciation or current income of or by the
Borrower, or to hedge or manage the risk of various current or future exposures
of the Borrower.
6.3 Limitation on Liens. Create, incur, assume or suffer to exist any
Lien upon any of the property, assets or revenues, whether now owned or
hereafter acquired by the Borrower, except for (i) Liens for taxes not yet due
or which are being contested in good faith by appropriate proceedings, (ii)
Liens in favor of the Lender, and (iii) Liens in favor of the Lender as the
Borrower's custodian under the terms of the Custodian Agreement with the Lender,
provided that adequate reserves with respect thereto are maintained on the books
of the Borrower in conformity with GAAP.
6.4 Limitation on Guarantee Obligation. Create, incur, assume or suffer
to exist any material Guarantee Obligation except as may occur in the ordinary
course of the Borrower's business and which is not otherwise prohibited by any
Requirement of Law and/or the applicable law and regulations in the United
States of America.
6.5 Limitation on Fundamental Changes. (i) Enter into, any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), (ii) convey, sell, lease, assign,
transfer or otherwise dispose of all of the property, business or assets in a
single transaction or in related transactions, (iii) make any material change in
its present method of conducting business.
6.6 Limitation on Distributions. At any time, make any distribution to
the shareholders of the Borrower, whether now or hereafter existing, either
directly or indirectly, whether in cash or property or in obligations of the
Borrower if such distribution results in a Default or Event of Default. During
the occurrence and continuation of an Event of Default specified in paragraphs
(a) or (e) of Section 7.1 or an Event of Default arising in connection with the
Borrower's having failed to comply with Section 6.1, the Borrower shall not make
any distribution to the shareholders of the Borrower, whether now or hereafter
existing, either directly or indirectly, whether in cash or property or in
obligations of the Borrower.
6.7 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of or make any other investment in, any Person, except those not
inconsistent with such Borrower's Investment Policies.
6.8 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) not otherwise prohibited under this Agreement and/or the
applicable laws and regulations of the United States of America, (b) in the
ordinary course of such Borrower's business, and (c) upon terms which are fair
and reasonable in light of comparable quality services it would obtain in a
comparable arm's length transaction with a Person which is not an Affiliate.
6.9 Limitation on Negative Pledge Clauses. Enter into with any Person
any agreement, other than this Agreement or the other Loan Documents, which
prohibits or limits the ability of the Borrower to create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired, except such agreements entered into in the
ordinary course of the Borrower's business and which are not otherwise
prohibited by any Requirement of Law and/or the applicable laws and regulations
of the United States of America.
6.10 Limitation on Changes to Investment Policies. Except as may be
required by law, make any changes in the Fundamental Investment Policies of the
Borrower without the consent of the Lender.
SECTION 7. EVENTS OF DEFAULT
7.1 Defaults and Events of Default. Subject to the final paragraph of
this Section 7.1, if any of the following events shall occur and be continuing
with respect the Borrower (each an "Event of Default"):
(a) the Borrower shall fail to pay any principal of any Loan when due
in accordance with the terms thereof or hereof, including without limitation any
failure to make a mandatory prepayment due pursuant to the provisions of Section
2.6; or the Borrower shall fail to pay any interest on any Loan, or any other
amount payable hereunder, within three (3) business days after any such interest
or other amount becomes due in accordance with the terms thereof or hereof; or
(b) any representation or warranty made or deemed made by the Borrower,
or made or deemed made at the Borrower's request, herein or in any other Loan
Document or which is contained in any certificate, document or financial or
other statement furnished by it at any time under or in connection with this
Agreement or any such other Loan Document shall prove to have been incorrect in
any material respect on or as of the date made or deemed made; or
(c) the Borrower shall default in the observance or performance of any
other agreement contained in this Agreement or any other Loan Document (other
than as provided in paragraphs (a) and (b) of this Section), and such default
shall continue unremedied for a period of thirty (30) days or, solely in the
case of such default arising under Sections 5.4, 5.7 or 6.5 hereof, five (5)
Business Days; or
(d) the Borrower shall (i) default in any payment of principal of or
interest on any Indebtedness (other than the Loans), Interest Rate Agreement,
Swap Obligation or in the payment of any Guarantee Obligation, beyond the grace
period (not to exceed thirty (30) days), if any, provided in the instrument or
agreement under which such Indebtedness, Interest Rate Agreement, Swap
Obligation or Guarantee Obligation was created, if the aggregate amount of the
Indebtedness, Interest Rate Agreement, Swap Obligations and/or Guarantee
Obligations in respect of which such default or defaults shall have occurred is
equal to the lesser of (A) $10,000,000 or (B) an amount equal to 5% of the
Borrower's net assets; or (ii) default in the observance or performance of any
other agreement or condition relating to any such Indebtedness, Interest Rate
Agreement, Swap Obligation or Guarantee Obligation or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation,
Interest Rate Agreement, or Swap Obligation (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness, Interest Rate Agreement or Swap
Obligation to become due prior to its stated maturity or such Guarantee
Obligation to become payable if the aggregate amount of the Indebtedness,
Interest Rate Agreement, Swap Obligations and/or Guarantee Obligations subject
to becoming so due or so payable is equal to the lesser of (A) $10,000,000 or
(B) 5% of the Borrower's net assets; or
(e) (i) the Borrower shall commence any case, proceeding or other
action with respect to itself (A) under any then applicable law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or the
Borrower shall make a general assignment for the benefit of its creditors; or
(ii) there shall be commenced against the Borrower, any case, proceeding or
other action of a nature referred to in clause (i) above which (A) results in
the entry of an order for relief or any such adjudication or appointment and (B)
remains undismissed, undischarged, unstayed, unvacated or unbonded pending
appeal within sixty (60) days from the entry thereof; or (iii) there shall be
commenced against the Borrower any case, proceeding or other action seeking
issuance of a writ of attachment, execution, or similar process against all or
any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within sixty (60) days from the entry thereof; or (iv) the
Borrower shall take any action in material furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii). or (iii) above; or (v) the Borrower shall not, or shall be unable to,
pay its debts as they become due for ten (10) days after written notice thereof
to the Borrower, or shall admit in writing its inability to pay its debts as
they become due; or
(f) one or more judgments or decrees shall be entered against the
Borrower involving in the aggregate a liability (not fully covered by insurance
or otherwise paid or discharged) equal to the lesser of (A) $2,500,000 or (B) 5%
or more of the Borrower's net assets, and all such judgments or decrees shall
not have been vacated, discharged, stayed or bonded pending appeal within thirty
(30) days from the entry thereof; or
(g) any of the Loan Documents ceases to remain in full force and
effect, or the Borrower challenges the enforceability thereof; or
(h) the Borrower shall fail to materially comply with its Investment
Policies in a manner which the Lender, in its sole reasonable discretion,
determines could reasonably be expected to have a Material Adverse Effect and
such default (or the Material Adverse Effect arising therefrom if any) shall
continue unremedied for a period of three (3) days after notice from the Lender;
then, and in any such event, the Commitment available to the Borrower shall
automatically and immediately terminate and the Loans hereunder made to the
Borrower (with accrued interest thereon) and all other amounts owing under this
Agreement shall immediately become due and payable.
Presentment, demand, protest and all other notices of any kind are hereby
expressly waived by the Borrower.
7.2 Remedies. Notwithstanding any other provision herein to the
contrary and at the election of the Lender, Defaults and Events of Default shall
have the following results:
(a) The Commitment established hereunder shall terminate as to the
Borrower;
(b) The unpaid principal amount of the Loans together with accrued
interest and all other amounts owed shall become immediately due and payable
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; and
(c) The Lender may exercise any and all rights it has under this
Agreement, the Note and any other Loan Document execution in connection
herewith, and proceed to protect and enforce the Lender's rights by any action
at law, in equity or other appropriate proceeding.
Notwithstanding the foregoing provisions, the Lender may, in its sole
discretion elect to (i) waive or not to waive such a Default or an Event of
Default, and/or (ii) continue to make Loans available to the Borrower pursuant
to the Commitment and this Agreement. No such waiver of a Default or an Event of
Default by the Lender shall constitute a waiver of any other covenant,
condition, Default or Event of Default nor shall such waiver constitute a waiver
of the same Default or Event of Default occurring at any time thereafter.
SECTION 8. MISCELLANEOUS
8.1 Amendments and Waivers. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof, may be amended, supplemented or
modified except in writing and signed by parties to this Agreement.
8.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (which writing may
be in the form of a facsimile transmission), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered,
or five (5) days after being deposited in the mail, postage prepaid, or, in the
case of facsimile notice, when received, addressed as follows in the case the
Borrower and the Lender, and as set forth in Schedule I in the case of the other
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto:
The Borrower: The Japan Fund
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
The Lender: ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co.
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telex: 62923BBHUW
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
S.W.I.F.T.: ▇▇▇▇▇▇▇▇
Attention: U.S. Banking
provided that any notice, request or demand to or upon the Lender pursuant to
Section 2.2, 2.4 or 2.8 shall not be effective until received.
8.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of any party hereto, any right, remedy, power or
privilege hereunder or under the Note or the other Loan Documents shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
8.4 Survival of Representations and Warranties. All representations and
warranties made hereunder or under the Note or in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
8.5 Payment of Expenses and Taxes; Indemnification. The Borrower agrees
(i) to reimburse the Lender for its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Lender, (ii) to reimburse the Lender for all its
costs and expenses incurred in connection with the enforcement or preservation
of any rights under this Agreement with respect to the Borrower, the other Loan
Documents and any such other documents, including, without limitation, the
reasonable fees and disbursements of counsel to the Lender, (iii) to indemnify
and hold the Lender harmless from. any and all recording and filing fees and any
and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents with
respect to the Borrower, and (iv) to indemnify and hold the Lender (and its
respective affiliates, directors, partners, officers, agents and employees
(collectively the "Indemnified Parties") harmless from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, reasonable costs, reasonable out-of-pocket expenses or disbursements of
any kind or nature whatsoever arising from or in connection with the execution,
delivery, enforcement, performance and administration of this Agreement, the
Note and the other Loan Documents, the actual or proposed use of proceeds, the
other Loan Documents and any such other documents (all the foregoing in this
clause (iv), collectively, the "indemnified liabilities"), provided, that the
Borrower shall have no obligation hereunder to any Indemnified Party with
respect to indemnified liabilities arising from (A) with respect to any
Indemnified Party, the gross negligence or willful misconduct of such
Indemnified Party, (B) with respect to any such Indemnified Party, the failure
of such Indemnified Party (and its Affiliates) to comply with any Requirement of
Law. The agreements in this Section shall survive repayment of the Loans and all
other amounts payable hereunder.
8.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of each of the Borrower
and the Lender and each of their respective successors and assigns. The Borrower
may not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Lender.
(b) The Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable laws, at any time sell to one or more
Eligible Lenders (each a "Participant" and collectively, the "Participants")
participating interests in any Loan owing to such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder and under the other Loan
Documents. The Lender shall remain responsible for the performance of its
obligations hereunder. The Borrower shall continue to deal solely and directly
with Lender. Any agreement pursuant to which Lender may grant such a participant
interest shall provide that Lender shall retain sole right and responsibility to
enforce the obligations of Borrower hereunder, including without limitation the
right to approve any amendment, modification or waiver of any provision of this
Agreement.
(c) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section concerning assignments of the Loans and the
Note relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including, without limitation,
any pledge or assignment by the Lender of any Loan or Note to any Federal
Reserve Bank in accordance with applicable law.
8.7 Adjustments; Set-off. In addition to any rights and remedies of the
Lender provided by law, the Lender shall have the right, with prompt notice
subsequent to the exercise of such rights but without prior notice to the
Borrower, any such notice being expressly waived by the Borrower, to the extent
permitted by applicable law, upon any amount becoming due and payable by a
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, securities, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or any branch or
agency thereof to or for the credit or the account of the Borrower. This right
shall be in addition to any rights to the Lender may have in its capacity as
custodian (whether by law, regulation, contract or otherwise).
8.8 Counterparts. This Agreement may be executed by one or more of the
parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with USGI and the Lender.
8.9 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.10 Waiver of Conflicts; Confidentiality. (a) The Borrower
acknowledges that the Lender and its respective affiliates (collectively, the
"Bank Parties") may be providing debt financing, equity capital or other
services (including financial advisory services) to other companies in respect
of which the Borrower may have conflicting interests regarding the transactions
described herein and otherwise. The Bank Parties will not use Confidential
Information obtained from the Borrower by virtue of the transactions
contemplated by this Agreement or their other relationships with the Borrower in
connection with the performance by each of the Bank Parties of services for
other companies, and each of the Bank Parties will not furnish any such
Confidential Information to other companies. The Borrower also acknowledges that
no Bank Party has any obligation to use in connection with the transactions
contemplated by this Agreement, or to furnish to the Borrower confidential
information obtained from other companies. The obligations of the Lender
hereunder shall survive the repayment of the Loans and termination of this
Agreement.
(b) For purposes of this Section. "Confidential Information" shall mean
all information received from the Borrower relating to its business, other than
any such information that is available to the Lender on a nonconfidential basis
other than as a result of a breach of this Agreement. The Lender agrees to
maintain the confidentiality of, and not to use the Confidential Information,
except that Confidential Information may be disclosed (i) to its and its
Affiliates' directors, officers, partners, employees and agents, including
without limitation accountants, legal counsel and other advisors for purposes
relating to the transactions contemplated by this Agreement or for conducting
legitimate audits (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Confidential
Information and will have agreed to keep such Confidential Information
confidential), (ii) to the extent requested by any legal or regulatory authority
having or claiming jurisdiction over such Person, (iii) to the extent required
by applicable laws or regulations or by any subpoena or similar legal process,
(iv) to any other party to this Agreement for purposes relating to the
transactions contemplated hereby, (v) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (vi) subject to an agreement containing
provisions substantially the same as those of this subsection, to any Assignee
or Participant or any prospective Assignee or Participant which executes such
agreement, or (vii) with the consent of the Borrower. Any Person required to
maintain the confidentiality of Confidential Information as provided in this
Section shall be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
8.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
FOR ITS CHOICE OF LAW RULES.
8.12 Submission To Jurisdiction; Waivers. The Borrower and the
Lender hereby irrevocably and unconditionally:
(a) submit for themselves and their respective property in any legal
action or proceeding relating to this Agreement and the other Loan Documents to
which they are a party, or for recognition and enforcement of any Judgment in
respect thereof, to the nonexclusive general jurisdiction of the Courts of the
State of New York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in Section 8.2 or at such other address of which the Lender
shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right of any party
hereto to effect service of process in any other manner permitted by law or
shall limit the right of any party hereto to ▇▇▇ in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, indirect, punitive or consequential
damages.
8.13 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) the Lender has no fiduciary relationship with or duty to the
Borrower arising out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between the Lender, on the one hand, and
the Borrower on the other hand, in connection herewith or therewith is solely
that of creditor and debtor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby between
the Borrower and the Lender.
8.14 WAIVERS OF JURY TRIAL. THE BORROWER AND THE LENDER EACH HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED
BY THE PARTIES HERETO, AND THE PROVISIONS HEREFOF SHALL BE SUBJECT TO NO
EXCEPTIONS. NO PARTY HERETO HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY
OTHER PARTY THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES.
8.15 Integration. This Agreement, the Note and the other Loan Documents
represent the agreement of the Borrower and the Lender with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by the Lender relative to the subject matter hereof not expressly
set forth or referred to herein or in the other Loan Documents.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first written above.
[THIS SPACE INTENTIONALLY LEFT BLANK]
▇▇▇▇▇ BROTHERS ▇▇▇▇▇▇▇▇ & CO.
as Lender
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Managing Director
THE JAPAN FUND, INC.
as Borrower
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President,
The Japan Fund, Inc.
