AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of
April 30, 1998
and
amended and restated as of
July 10, 1998
among
Prospect Street High Income Portfolio Inc.
and
BankBoston, N.A.
Commerzbank AG New York Branch
and
BankBoston, N.A.,
as Agent
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS.....................................................1
SECTION 1.1. Definitions............................................1
SECTION 1.2. Accounting Terms and Determinations.....................6
ARTICLE II THE CREDIT......................................................7
SECTION 2.1. Commitments to Lend....................................7
SECTION 2.2. Notice of Borrowings...................................7
SECTION 2.3. Notice to Banks; Funding of Loans......................7
SECTION 2.4. Notes..................................................8
SECTION 2.5. Optional Termination or Reduction of Commitments.......9
SECTION 2.6. Extension of Commitment Termination Date;
Mandatory Termination of Commitments...................9
SECTION 2.7. Optional Prepayments...................................9
SECTION 2.8. Mandatory Payments.....................................9
SECTION 2.9. Interest Rates........................................10
SECTION 2.10. Fees.................................................11
SECTION 2.11. General Provisions as to Payments....................11
SECTION 2.12. Computation of Interest and Fees.....................12
SECTION 2.13. Funding Losses.......................................12
SECTION 2.14. Withholding Tax Exemption............................12
ARTICLE III CONDITIONS....................................................13
SECTION 3.1. Effectiveness.........................................13
SECTION 3.2. All Borrowings........................................14
SECTION 4.1. Existence and Power; Investment Company...............14
SECTION 4.2. Authorization; No Contravention.......................15
SECTION 4.3. Binding Effect........................................15
SECTION 4.4. Compliance with Margin Rules..........................15
SECTION 4.5. Non-Affiliation with Banks............................15
SECTION 4.6. Subsidiaries..........................................15
SECTION 4.7. Financial Information.................................15
SECTION 4.8 Litigation.............................................15
SECTION 4.9. ERISA.................................................16
SECTION 4.10. Taxes................................................16
SECTION 4.11. Compliance...........................................16
SECTION 4.12. Full Disclosure......................................16
SECTION 4.13. Margin Stock.........................................16
SECTION 4.14. Senior Debt..........................................16
-2-
ARTICLE V COVENANTS......................................................16
SECTION 5.1. Information............................................17
SECTION 5.2. Payment of Obligations.................................17
SECTION 5.3. Maintenance of Insurance...............................18
SECTION 5.4. Conduct of Business and Maintenance of Existence.......18
SECTION 5.5. Compliance with Laws...................................18
SECTION 5.6. Inspection of Property, Books and Records..............18
SECTION 5.7. Debt...................................................18
SECTION 5.8. Negative Pledge........................................18
SECTION 5.9. Consolidations, Mergers and Sales of Assets............19
SECTION 5.10. Use of Proceeds.......................................19
SECTION 5.11. Ratio of Liabilities to Assets........................19
SECTION 5.12. Compliance with Prospectus............................19
SECTION 5.13. Non-Affiliation with Banks...........................19
SECTION 5.14. Deposit Account.......................................19
SECTION 5.15. Regulated Investment Company..........................19
SECTION 5.16. No Subsidiary.........................................19
SECTION 5.17. ERISA.................................................19
SECTION 5.18. Distributions.........................................19
SECTION 5.19. Margin Stock..........................................20
SECTION 5.20. Capitalization........................................20
SECTION 5.21. Fixed Rate Notes......................................20
ARTICLE VI DEFAULTS.........................................................20
SECTION 6.1. Events of Default......................................20
SECTION 6.2. Notice of Default......................................21
ARTICLE VII THE AGENT........................................................21
SECTION 7.1. Appointment and Authorization..........................21
SECTION 7.2. Action by Agent........................................21
SECTION 7.3. Consultation with Experts..............................22
SECTION 7.4. Liability of Agent.....................................22
SECTION 7.5. Indemnification........................................22
SECTION 7.6. Credit Decision........................................22
SECTION 7.7. Successor Agent........................................22
SECTION 7.8. Agent as Bank..........................................23
SECTION 7.9. Distribution by Agent..................................23
SECTION 7.10. Delinquent Banks......................................23
ARTICLE VIII CHANGE IN CIRCUMSTANCES.........................................23
SECTION 8.1. Basis for Determining Interest Rate
Inadequate or Unfair................................23
SECTION 8.2. Illegality.............................................24
SECTION 8.3. Increased Cost and Reduced Return.......................24
SECTION 8.4. Base Rate Loans Substituted for Affected LIBOR Loans...25
-3-
ARTICLE IX MISCELLANEOUS..................................................25
SECTION 9.1. Notices................................................25
SECTION 9.2. No Waivers.............................................26
SECTION 9.3. Expenses; Documentary Taxes; Indemnification...........26
SECTION 9.4. Set Off................................................26
SECTION 9.5. Amendments and Waivers.................................27
SECTION 9.6. Successors and Assigns.................................27
SECTION 9.7. Governing Law; Submission to Jurisdiction..............29
SECTION 9.8. Counterparts; Integration..............................29
SECTION 9.9. WAIVER OF JURY TRIAL...................................29
SECTION 9.10. Confidentiality.......................................29
SECTION 9.11. No Bankruptcy Proceedings.............................30
SECTION 9.12. Dollar References.....................................30
Exhibit A - Form of Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Conversion
Exhibit D-1 - Form of Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome & ▇▇▇▇▇▇▇▇▇▇ LLP
Exhibit D-2 - Form of Opinion of Piper & Marbury L.L.P.
Exhibit E - Form of Compliance Certificate
Exhibit F - Form of Assignment and Acceptance
Exhibit G - Form of Designation Agreement
Schedule 1 - Addresses for Notices, Commitment Amounts and Lending Offices
-4-
AMENDED AND RESTATED
CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 10,
1998, by and among Prospect Street High Income Portfolio Inc., a Maryland
corporation (the "Borrower"), the lending institutions listed on the signature
pages hereof and BankBoston, N.A., as agent for itself and such other lending
institutions.
WHEREAS, pursuant to that certain Credit Agreement, dated as
of April 30, 1998 (the "Original Credit Agreement"), BankBoston, N.A. has made
loans to the Borrower for the purposes described therein; and
WHEREAS, the Borrower, the lenders listed on the signature
pages hereof and BankBoston, N.A., as agent, wish to amend and restate the
Original Credit Agreement in order to increase the commitment to make loans
thereunder and to make certain other changes to the Original Credit Agreement;
NOW, THEREFORE, the Borrower, the lenders listed on the
signature pages hereof and BankBoston, N.A., as agent, hereby agree that from
and after the date hereof, the Original Credit Agreement shall be amended and
restated as set forth herein and shall be in full force and effect as set forth
herein and the Loans (as defined in the Original Credit Agreement) shall
constitute loans hereunder.
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein,
have the following meanings:
"Affiliate" has the meaning ascribed to the term "Affiliated
Person" in the Investment Company Act and the rules and regulations thereunder.
"Affiliated Person" has the meaning ascribed to that term in
the Investment Company Act and the rules and regulations thereunder.
"Agent" means BankBoston acting as Agent for the Banks.
"Applicable Lending Office" means, with respect to any Bank,
(a) in the case of its Base Rate Loans, its Domestic Lending Office, and (b) in
the case of its LIBOR Loans, its LIBOR Lending Office.
"Assignee" has the meaning set forth in Section 9.06(c).
"Bank" means BankBoston, each lender named on the signature
pages hereof, each Assignee which becomes a Bank pursuant to Section 9.06(c),
their respective successors and the Designated Lenders, if any; provided,
however, that the term "Bank" shall exclude each Designated Lender when used in
reference to a Loan (except to the extent a Designated Lender is the obligee of
a Loan actually funded by it pursuant to Section 2.03(d)), the Commitments or
terms relating to the Loans (except as noted above) or the Commitments.
"BankBoston" means BankBoston, N.A., a national banking
association.
-1-
"Base Rate" means the higher of (a) the annual rate of
interest announced from time to time by BankBoston at its head office in Boston,
Massachusetts as its "base rate" and (b) one-half of one percent (1/2%) above
the Federal Funds Rate as in effect from time to time.
"Base Rate Loans" means Loans bearing interest calculated by
reference to the Base Rate.
"Benefit Arrangement" means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrower" has the meaning set forth in the preamble.
"Borrowing" means the aggregation of Loans of the Banks to be
made to the Borrower pursuant to Article II hereof on a single date.
"Borrowing Date" means the Domestic or LIBOR Business Day on
which Loans are advanced hereunder as specified in a Notice of Borrowing
delivered pursuant to Section 2.02(a) hereof.
"Commitment" means the agreement of each Bank, subject to the
terms and conditions of this Agreement, to make Loans to the Borrower hereunder.
"Commitment Amount" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on Schedule 1 attached hereto,
as such amount may be reduced from time to time pursuant to Sections 2.05 or
9.06(c) or increased from time to time pursuant to Section 9.06(c); and
"Commitment Amounts" means, as of any date, the aggregate of all such amounts on
such date. On the Effective Date the aggregate Commitment Amounts equal
$50,000,000.
"Commitment Percentage" means, with respect to each Bank, the
percentage set forth opposite the name of such Bank on Schedule 1 attached
hereto as such Bank's percentage of the aggregate Commitment Amounts of all of
the Banks.
"Commitment Termination Date" means April 30, 2001, provided
that the Commitment Termination Date (and each Bank's Commitment to make Loans
hereunder) may be extended in accordance with Section 2.06(a) hereof.
"Custodian" means the entity which, on the Effective Date,
acts as the Borrower's custodian for purposes of Section 17(f) of the Investment
Company Act.
"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 generally
accepted accounting principles, (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 under Guarantees, all obligations to reimburse
the issuer in respect of letters of credit or under performance or surety bonds,
or other similar obligations, (g) all obligations of such Person in respect of
judgments, (h) all obligations of such Person in respect of banker's acceptances
and under reverse repurchase agreements, and (i) all obligations of such Person
in respect of futures contracts, options, swaps and other obligations that are,
or would be but for the segregation of assets therefor, senior securities for
purposes of the Investment Company Act.
-2-
"Default" means any condition or event which with the giving
of notice or lapse of time or both would, unless cured or waived, become an
Event of Default.
"Delinquent Bank" has the meaning set forth in Section 7.10(a).
"Designated Lender" means a special purpose corporation that
is identified as such on the signature pages hereto next to the caption
"Designated Lender" as well as each special purpose corporation that (a) shall
have become a party to this Agreement pursuant to Section 9.06(e) and (b) is not
otherwise a Bank.
"Designating Lender" shall mean each Bank that is identified
as such on the signature pages hereto next to the caption "Designating Lender"
and immediately below the signature of its Designated Lender as well as each
Bank that shall designate a Designated Lender pursuant to Section 9.06(e).
"Designation Agreement" means a designation agreement in
substantially the form of Exhibit G attached hereto, entered into by a Bank and
a Designated Lender and accepted by the Borrower and the Agent.
"Distribution" means the declaration or payment of any
dividend on or in respect of any shares of any class of capital stock of the
Borrower, other than dividends payable solely in shares of common stock of the
Borrower; the purchase, redemption, or other retirement of any shares of any
class of capital stock of the Borrower, directly or indirectly; the return of
capital by the Borrower to its shareholders as such; or any other distribution
on or in respect of any shares of any class of capital stock of the Borrower.
"Domestic Business Day" means any day which is not (a) a
Saturday or Sunday, (b) a legal holiday on which the New York Stock Exchange is
scheduled to be closed, or (c) a day on which commercial banks are authorized or
required to be closed in Boston, Massachusetts.
"Domestic Lending Office" means, initially, the office of each
Bank designated as such on Schedule 1 attached hereto; and thereafter such other
office of such Bank, if any, located in the United States that shall be making
or maintaining Base Rate Loans.
"Effective Date" means the date this Agreement becomes
effective in accordance with Section 3.01.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414 of the Internal Revenue Code.
"Event of Default" has the meaning set forth in Section 6.01.
"Extension Date" means that date which occurs two years prior
to the Commitment Termination Date then in effect.
"Failure" has the meaning set forth in Section 7.10(b).
"Federal Funds Rate" means for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Domestic Business Day, for the immediately preceding Domestic Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Domestic Business Day, the average of the
-3-
quotations for such day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by the Agent in its sole
discretion.
"Fixed Rate Notes" means the promissory notes of the Borrower
issued pursuant to the Note Purchase Agreement.
"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 (a) 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 (b) 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.
"Interest Period" means, with respect to each LIBOR Borrowing,
initially the period commencing on the date of such Borrowing and ending 30, 60,
90, 120 or 180 days thereafter, as the Borrower may elect in the applicable
Notice of Borrowing, and thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Borrowing and ending on
the last day of one of the periods set forth above, as the Borrower may elect in
the applicable Notice of Conversion, provided that:
(a) any Interest Period which would otherwise end on a day
which is not a LIBOR Business Day shall be extended to the next
succeeding LIBOR Business Day unless such LIBOR Business Day falls in
another calendar month, in which case such Interest Period shall end on
the next preceding LIBOR Business Day;
(b) any Interest Period which begins on the last LIBOR
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last LIBOR Business Day of a calendar
month;
(c) any Interest Period which would otherwise end after the
Commitment Termination Date shall end on the Commitment Termination
Date;
(d) if the Borrower fails to give notice as provided in
Section 2.02(b) it shall be deemed to have requested a conversion of
the affected LIBOR Loan to a Base Rate Loan; and
(e) all LIBOR Loans outstanding at any time shall end on no
more than six different dates.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"Investment Adviser" means Prospect Street Investment
Management Company, Inc.
"Investment Company Act" means the Investment Company Act of
1940, as amended.
"LIBOR Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London or such other eurodollar interbank market as may be
selected by the Agent in its sole discretion acting in good faith.
-4-
"LIBOR Lending Office" means, initially, the office of each
Bank designated as such in Schedule 1 hereto; and thereafter such other office
of such Bank, if any, that shall be making or maintaining LIBOR Loans.
"LIBOR Loans" means Loans bearing interest calculated by
reference to the LIBOR Offered Rate.
"LIBOR Margin" has the meaning set forth in Section 2.09(b).
"LIBOR Offered Rate" has the meaning set forth in Section
2.09(b).
"LIBOR Reserve Percentage" has the meaning set forth in
Section 2.09(b).
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, including any agreement preventing a Person from encumbering such asset.
"Loan Documents" means, collectively, this Agreement, the
Notes and any and all other documents and instruments required to be delivered
pursuant to this Agreement, in each case as amended and in effect from time to
time.
"Loans" means the revolving credit loans made or to be made to
the Borrower by the Banks pursuant to Section 2.01.
"Maximum Amount" has the meaning set forth in Section 2.01(a).
"Multiemployer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"Note Purchase Agreement" means that certain Amended and
Restated Note Purchase Agreement, dated as of December 16, 1993, between the
Borrower and Pacific Mutual Life Insurance Company, a California corporation.
"Notes" means promissory notes of the Borrower, substantially
in the form of Exhibit A attached hereto, and "Note" means any one of such
promissory notes issued hereunder.
"Notice of Borrowing" has the meaning set forth in Section
2.02(a).
"Notice of Conversion" has the meaning set forth in Section
2.02(b).
"Obligations" means all indebtedness, obligations and
liabilities of the Borrower to any of the Banks and the Agent, existing on the
date of this Agreement or arising thereafter, direct or indirect, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Agreement or any of the other Loan Documents or in respect
of any of the Loans to the Borrower or any of the Notes or other instruments at
any time evidencing any thereof.
"Participant" has the meaning set forth in Section 9.06(b).
-5-
"Person" means an individual, a corporation (or series
thereof), a partnership, an association, a trust (or series thereof) or any
other entity or organization, including a government or political subdivision or
an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards of Section 302 or Section 412 of the
Internal Revenue Code and either (i) is maintained, or contributed to, by any
member of the ERISA Group for employees of any member of the ERISA Group or (ii)
has at any time within the preceding five years been maintained, or contributed
to, by any Person which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member of the ERISA Group.
"Prospectus" means the Borrower's most recent effective
prospectus under the Securities Act of 1933, as amended, and the Investment
Company Act.
"Proxy Statement" means the Borrower's proxy statement dated
January 7, 1998 relating to the annual meeting of the Borrower's Stockholders
held on March 11, 1998.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks holding at least 51%
of the outstanding principal amount of the Notes at such time and, if no such
principal amount is outstanding, Banks whose aggregate Commitments Amounts
constitute at least 51% of the aggregate Commitment Amounts of all Banks at such
time.
"Revolving Credit Period" means the period from and including
the Effective Date to but excluding the then applicable Commitment Termination
Date.
"Subsidiary" of the Borrower means any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by the Borrower.
"Total Assets" means, at any date, all assets of the Borrower
which in accordance with generally accepted accounting principles would be
classified as assets upon a balance sheet of the Borrower prepared as of such
date.
"Total Liabilities" means, at any date, all liabilities of the
Borrower which in accordance with generally accepted accounting principles would
be classified as liabilities upon a balance sheet of the Borrower prepared as of
such date.
SECTION 1.2. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time in the United States of America, applied on a basis consistent (except
for changes concurred in by the Borrower's independent public accountants) with
the most recent audited financial statements of the Borrower delivered to the
Banks hereunder.
-6-
ARTICLE II
THE CREDIT
SECTION 2.1. Commitments to Lend. Subject to the terms and
conditions set forth in this Agreement, each of the Banks severally agrees to
lend to the Borrower, and the Borrower may borrow, repay and reborrow from time
to time during the Revolving Credit Period, upon notice by the Borrower to the
Agent and the Banks given in accordance with Section 2.02 hereof, such sums as
are requested by the Borrower up to a maximum aggregate amount outstanding
(after giving effect to all amounts requested) at any one time equal to such
Bank's Commitment Amount, provided that the aggregate principal amount of all
Loans outstanding (after giving effect to all amounts requested) shall not
exceed at any time the lesser of (x) the aggregate Commitment Amounts of all of
the Banks or (y) the maximum amount (the "Maximum Amount") the Borrower is
permitted to borrow at such time under applicable laws and regulations
(including the Investment Company Act), the provisions of Sections 5.07 and 5.11
hereof, the limitations on borrowing adopted by the Borrower in its Prospectus
or elsewhere, and any agreements with federal, state, local or foreign
governmental authorities or regulators, in each case as in effect from time to
time. Each Borrowing under this Section shall be in an aggregate principal
amount of not less than $1,000,000 or a larger whole multiple of $1,000,000 and
shall be made from the several Banks pro rata in accordance with each Bank's
Commitment Percentage.
SECTION 2.2. Notice of Borrowings. (a) The Borrower shall give
the Agent a notice substantially in the form of Exhibit B attached hereto (a
"Notice of Borrowing") of each Loan requested hereunder not later than 10:00
a.m. (Boston time) (or telephonic notice not later than 10:00 a.m. (Boston time)
confirmed in a writing substantially in the form of Exhibit B attached hereto
not later than 1:00 p.m. (Boston time)) on (i) the Domestic Business Day of each
proposed Borrowing of a Base Rate Loan, and (ii) the third LIBOR Business Day
before each proposed Borrowing of a LIBOR Loan, appropriately completed
concerning the Borrowing. Each Notice of Borrowing or oral request shall
constitute a representation and warranty by the Borrower that the conditions set
forth in Section 3.02 (and, in the case of the initial Loan to be made
hereunder, Section 3.01) have been satisfied on the date of such notice and will
be satisfied on the Borrowing Date.
(b) The Borrower may elect from time to time to convert any
outstanding Base Rate Loan or LIBOR Loan to a Loan of the other type, or to roll
over any outstanding LIBOR Loan upon the expiration of an Interest Period with
respect thereto, by giving a notice to the Agent substantially in the form of
Exhibit C attached hereto (a "Notice of Conversion") (or telephonic notice
confirmed in a writing substantially in the form of Exhibit C attached hereto),
provided that (i) with respect to any conversion into or rollover of a LIBOR
Loan, the Notice of Conversion shall be given within the time period for the
giving of a Notice of Borrowing for a LIBOR Loan as set forth in Section
2.02(a), (ii) no Loan may be converted into or rolled over as a LIBOR Loan (x)
if the Interest Period therefor would extend beyond the Commitment Termination
Date or (y) if a Default or Event of Default has occurred and is continuing (in
which case such Loan shall automatically become a Base Rate Loan on the last day
of the first Interest Period relating thereto ending during the continuance of
any Default or Event of Default of which the Agent has actual knowledge), (iii)
a LIBOR Loan may be converted into another type of Loan only on the last day of
the Interest Period applicable thereto, and (iv) if the Borrower fails to give a
Notice of Conversion for a LIBOR Loan the Borrower shall be deemed to have
elected to convert such Loan to a Base Rate Loan on the last day of the Interest
Period applicable thereto. Conversions to and from LIBOR Loans shall be in such
amounts and pursuant to such elections so that, after giving effect thereto, the
aggregate principal amount of all LIBOR Loans having the same Interest Period
shall not be less than $500,000 or a larger integral multiple of $100,000.
SECTION 2.3. Notice to Banks; Funding of Loans. (a) Upon
receipt of a Notice of Borrowing or an oral request for a Borrowing in
accordance with Section 2.02(a), the Agent shall promptly notify each Bank of
the contents thereof and of such Bank's ratable share, if any, of such
Borrowing. Such
-7-
Notice of Borrowing or oral request shall not thereafter be revocable by the
Borrower and shall obligate the Borrower to accept the Loans requested from the
Banks on the Borrowing Date.
(b) Not later than 2:00 p.m. (Boston time) on the Borrowing
Date of each Borrowing, each Bank shall make available its share, if any, of
such Borrowing, in Federal or other funds immediately available in Boston, to
the Agent at its address referred to in Section 9.01. Unless the Agent
determines that any applicable condition specified in Article III has not been
satisfied, the Agent will make BankBoston's share of such Borrowing and the
funds so received from the other Banks available to the Borrower by wiring such
funds to the Borrower's Custodian, in accordance with the instructions in the
Notice of Borrowing, on the Borrowing Date. The failure or refusal of any Bank
to make available to the Agent as provided herein its share of any Borrowing
shall not relieve any other Bank from its several obligations hereunder.
(c) Unless the Agent shall have received notice from a Bank
prior to any Borrowing Date that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on such Borrowing Date in accordance with
subsection (b) of this Section and the Agent may (but it shall not be required
to), in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Bank shall not have
so made such share available to the Agent, such Bank and the Borrower severally
agree to repay to the Agent, within three days after demand by the Agent, such
amount together with interest thereon, for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, at (i) in the case of the Borrower, a rate per annum equal to the
interest rate applicable thereto pursuant to Section 2.10 and (ii) in the case
of such Bank, the Federal Funds Rate. If such Bank shall repay to the Agent such
amount, such amount so repaid shall constitute such Bank's Loan included in such
Borrowing for purposes of this Agreement. If the Borrower shall repay to the
Agent such amount, such payment shall not relieve such Bank of any obligation to
the Borrower hereunder.
(d) For any Bank which is a Designating Lender, any Loan to be
made by such Bank may from time to time be made by its Designated Lender in such
Designated Lender's sole discretion, and nothing herein shall constitute a
commitment to make Loans by such Designated Lender; provided that if any
Designated Lender elects not to, or fails to, make such Loan, its Designating
Lender hereby agrees that it shall make such Loan pursuant to the terms hereof.
Any Loan actually funded by a Designated Lender shall constitute a utilization
of the Commitment of the Designating Lender for all purposes hereunder.
(e) The failure of any Bank to make a Loan to be made by it as
a part of a Borrowing shall not relieve any other Bank of its obligation, if
any, to make its Loan on the date of such Borrowing, but no Bank shall be
responsible for the failure of any other Bank to make the Loan to be made by
such Bank on the date of such Borrowing.
SECTION 2.4. Notes. (a) The Loans of each Bank shall be
evidenced by a single Note payable to the order of such Bank in an amount equal
to such Bank's Commitment Amount or, if less, the aggregate unpaid principal
amount of such Bank's Loans, plus interest thereon as provided below.
(b) Each Bank may, by notice to the Borrower and the Agent,
request that its Loans of a particular type be evidenced by a separate Note in
an amount equal to the aggregate unpaid principal amount of such Loans. Each
such Note shall be in substantially the form of Exhibit A attached hereto with
appropriate modifications to reflect the fact that it evidences solely Loans of
the relevant type. Each reference in this Agreement to the "Note" of such Bank
shall be deemed to refer to and include any or all of such Notes, as the context
may require.
(c) Upon receipt of each Bank's Note pursuant to Section
3.01(b), the Agent shall deliver such Note to such Bank. Each Bank shall record
on its Note the date, type and amount of each Loan made by it and the date and
amount of each payment of principal made with respect thereto, and prior to any
transfer of its Note
-8-
in accordance with this Agreement shall endorse on the schedule forming a part
thereof appropriate notations to evidence the foregoing information with respect
to each such Loan then outstanding; provided that the failure of any Bank to
make, or any error by any Bank in making, any such recordation or endorsement
shall not affect the obligations of the Borrower hereunder or under the Note.
Each Bank is hereby irrevocably authorized by the Borrower so to endorse its
Note and to attach to and make a part of its Note a continuation of any such
schedule as and when required.
SECTION 2.5. Optional Termination or Reduction of Commitments.
The Borrower shall have the right at any time prior to the Commitment
Termination Date and from time to time prior to the Commitment Termination Date
upon seven (7) Domestic Business Days' prior written notice to the Agent to
reduce by $1,000,000 or a larger integral multiple of $1,000,000 the unborrowed
portion of the aggregate Commitment Amounts of the Banks or terminate entirely
each Bank's Commitment, whereupon the Commitment Amounts of each of the Banks
shall be reduced pro rata in accordance with their Commitment Percentages of the
amount specified in such notice or, as the case may be, each Bank's Commitment
shall be terminated. Promptly after receiving any notice of the Borrower
delivered pursuant to this Section, the Agent will notify the Banks of the
substance thereof. Upon the effective date of any such reduction or termination,
the Borrower shall pay to the Agent for the respective accounts of the Banks the
full amount of any commitment fee then accrued on the amount of the reduction.
No reduction in the Commitment Amounts or termination of the Commitments may be
reinstated.
SECTION 2.6. Extension of Commitment Termination Date;
Mandatory Termination of Commitments. (a) So long as no Default or Event of
Default has occurred and is continuing, the Borrower may request by notice
delivered to each Bank no later than 90 days prior to the Extension Date
applicable to the Commitment Termination Date then in effect that such
Commitment Termination Date be extended for 364 days. The Banks shall inform the
Borrower by written notice delivered no later than 45 days prior to the then
applicable Extension Date whether the Banks will grant such request. In no event
shall the Commitment Termination Date be extended without the written consent of
each Bank in its sole discretion.
(b) On the Commitment Termination Date, each Bank's Commitment
Amount permanently shall reduce to $0 and each Bank's Commitment shall
terminate.
SECTION 2.7. Optional Prepayments. (a) The Borrower may, upon
at least one Domestic Business Day's notice to the Agent in the case of Base
Rate Loans and upon at least three LIBOR Business Days' notice to the Agent in
the case of LIBOR Loans (which notice shall not thereafter be revocable by the
Borrower), prepay any Loans in whole at any time, or from time to time in part
in an aggregate principal amount not less than $1,000,000 and in larger integral
multiples of $500,000 or the entire outstanding amount of such Loans, by paying
the principal amount to be prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall be applied to prepay
ratably the Loans of the several Banks included in such Borrowing.
(b) If the Borrower prepays all or any portion of the
principal amount of any LIBOR Loan on any day other than the last day of the
Interest Period relating thereto, such prepayment shall include the amounts, if
any, payable pursuant to Section 2.13.
(c) Upon receipt of a notice of prepayment pursuant to
subsection (a), the Agent shall promptly notify each Bank of the contents
thereof and of such Bank's ratable share of such prepayment.
(d) Subject to the satisfaction of the conditions set forth in
Section 3.02, Loans prepaid prior to the Commitment Termination Date may be
reborrowed prior to the Commitment Termination Date.
SECTION 2.8. Mandatory Payments. (a) If at any time the Loans
outstanding to the Borrower (i) exceed the Maximum Amount or (ii) would cause
the Borrower to be in violation of Section 5.07
-9-
or Section 5.11, the Borrower immediately shall prepay such principal amount of
one or more Loans (together with accrued interest thereon and the amount, if
any, payable pursuant to Section 2.13), as may be necessary so that after such
prepayment (x) the Loans outstanding shall not exceed the Maximum Amount and (y)
the Borrower shall not be in violation of any of the provisions of Section 5.07
or Section 5.11.
(b) On any date on which the Loans outstanding exceed the
aggregate Commitment Amounts or the Commitment of any Bank, the Borrower shall
immediately prepay such principal amount of one or more Loans (together in each
case with accrued interest thereon and the amount, if any, payable pursuant to
Section 2.13), as may be necessary to eliminate such excess.
(c) The Borrower promises to pay on the then applicable
Commitment Termination Date, and there shall become absolutely due and payable
on such Commitment Termination Date, all of the Loans outstanding on such date,
together with all accrued and unpaid interest thereon and all other amounts
payable hereunder, including, without limitation, the amounts, if any, payable
pursuant to Section 2.13.
SECTION 2.9. Interest Rates. (a) Subject to Section 2.09(c),
each Base Rate Loan shall bear interest on the outstanding principal amount
thereof, for the period commencing with the date such Base Rate Loan is made up
to but not including the date such Base Rate Loan is repaid in full, at a rate
per annum equal to the Base Rate as in effect from time to time. Interest on
each Base Rate Loan shall be payable on the last Domestic Business Day of each
calendar month and on the Commitment Termination Date.
(b) Subject to Section 2.09(c), each LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the period commencing
with the date such LIBOR Loan is made or continued through and including the
last day of the Interest Period applicable thereto, at a rate per annum equal to
the sum of the LIBOR Margin plus the applicable Adjusted LIBOR Offered Rate.
Interest on each LIBOR Loan shall be payable on the last day of the Interest
Period in effect with respect thereto and on the Commitment Termination Date,
provided that if the Interest Period in effect for such LIBOR Loan is 60, 90,
120 or 180 days, interest on such LIBOR Loan shall be payable every 30 days
(commencing on the 30th day after the first date of such Interest Period) and on
the last day of such Interest Period.
"LIBOR Margin" means 0.55%.
The "Adjusted LIBOR Offered Rate" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable LIBOR
Offered Rate by (ii) 1.00 minus the LIBOR Reserve Percentage.
The "LIBOR Offered Rate" applicable to any Interest Period
means the rate per annum of interest determined by the Agent at which deposits
in dollars are offered to the Agent's LIBOR Lending Office in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations of such LIBOR Lending Office are customarily conducted at
approximately 12:00 noon (Boston time) two LIBOR Business Days before the first
day of such Interest Period, for delivery on the first day of such Interest
Period in an amount approximately equal to the principal amount of the LIBOR
Loan to which such Interest Period is to apply and for a period of time
comparable to such Interest Period.
"LIBOR Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, at which any lender
subject thereto would be required to maintain reserves under Regulation D of the
Board of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Adjusted LIBOR Offered Rate shall be adjusted automatically on
and as of the effective date of any change in the LIBOR Reserve Percentage.
-10-
(c) Any overdue principal of (whether at stated maturity, by
acceleration or otherwise) and (to the extent permitted by applicable law)
interest on the Loans and all other overdue amounts payable hereunder shall bear
interest, payable on demand, for each day from and including the date payment
thereof was due (whether at stated maturity, by acceleration or otherwise)
through and including the date of actual payment, at a rate per annum equal to
the sum of two percent (2%) above the Base Rate until such amount shall be paid
in full (after as well as before judgment). During the continuance a Default or
an Event of Default the principal of the Loans not overdue shall, until such
Default or Event of Default has been cured or remedied or such Default or Event
of Default has been waived by the Required Banks pursuant to Section 9.05, bear
interest at a rate per annum equal to the greater of (i) two percent (2%) above
the rate of interest otherwise applicable to such Loans pursuant to this Section
2.10(a) and (b) and (ii) the rate of interest applicable to overdue principal.
SECTION 2.10. Fees. (a) During the Revolving Credit Period,
the Borrower shall pay to the Agent for the account of each Bank a commitment
fee at the rate of 0.09% per annum on the daily amount by which the aggregate
amount of such Bank's Commitment Amount exceeded the aggregate outstanding
principal amount of the Loans made by such Bank.
(b) The commitment fee shall accrue from and including the
Effective Date to but excluding the Commitment Termination Date. Accrued
commitment fees payable hereunder shall be payable quarterly in arrears on the
last day of each March, June, September and December, commencing on the first
such day after the Effective Date, and on the Commitment Termination Date.
(c) The Borrower shall pay to the Agent for its own account,
annually in advance on the Effective Date and on each anniversary thereof during
the term of this Agreement, a non-refundable agent's fee as agreed upon
separately by the Borrower and the Agent.
SECTION 2.11. General Provisions as to Payments. (a) Payment
of principal of and interest on the Loans and of fees and all other amounts due
hereunder shall be made not later than 2:00 p.m. (Boston time) on the date when
due, in United States dollars and in Federal or other funds immediately
available in Boston, to the Agent at its address referred to in Section 9.01.
The Agent will promptly distribute to each Bank its ratable share of each such
payment received by the Agent for the account of the Banks. Whenever any payment
of principal of, or interest on, the Base Rate Loans or of fees shall be due on
a day which is not a Domestic Business Day, the date for payment thereof shall
be extended to the next succeeding Domestic Business Day, and interest shall
accrue during such extension. Except as otherwise provided in the definition of
Interest Period, whenever any payment of principal of, or interest on, LIBOR
Loans shall be due on a day which is not a LIBOR Business Day, the date for
payment thereof shall be extended to the next succeeding LIBOR Business Day
(with interest accruing during such extension) unless such LIBOR Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding LIBOR Business Day. If the date for any payment of
principal is extended by operation of law or otherwise, interest thereon shall
be payable for such extended time.
(b) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Banks hereunder
that the Borrower will not make such payment in full, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date and the
Agent may (but it shall not be required to), in reliance upon such assumption,
cause to be distributed to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent that the Borrower shall not have
so made such payment, each Bank shall repay to the Agent forthwith on demand
such amount distributed to such Bank together with interest thereon, for each
day from the date such amount is distributed to such Bank until the date such
Bank repays such amount to the Agent, at the Federal Funds Rate.
(c) The Borrower agrees that payments by the Borrower
hereunder and under any of the other Loan Documents shall be made without setoff
or counterclaim and free and clear of and without deduction for any taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, compulsory
loans, restrictions or
-11-
conditions of any nature now or hereafter imposed or levied by any jurisdiction
or any political subdivision thereof or taxing or other authority therein unless
the Borrower is compelled by law to make such deduction or withholding. If any
such obligation (other than one arising with respect to taxes based on or
measured by the income or profits of any of the Banks or the Agent) is imposed
upon the Borrower with respect to any amount payable by it hereunder or under
any of the other Loan Documents, the Borrower will pay to the Agent, for the
account of the Banks or (as the case may be) the Agent, on the date on which
such amount is due and payable hereunder or under such other Loan Document, such
additional amount in U.S. dollars as shall be necessary to enable the Banks or
the Agent to receive the same net amount which the Banks or the Agent would have
received on such due date had no such obligation been imposed upon the Borrower.
The Borrower will deliver promptly to the Agent certificates or other valid
vouchers for all taxes or other charges deducted from or paid with respect to
payments made by the Borrower hereunder or under such other Loan Document.
(d) The Agent's records as to the outstanding principal amount
of the Loans, and payments of principal and interest received, shall be
considered correct and binding on the Borrower, absent manifest error.
SECTION 2.12. Computation of Interest and Fees. All interest
and fees hereunder shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed. The Agent's determination of interest
rates shall be conclusive and binding for all purposes, absent manifest error.
SECTION 2.13. Funding Losses. If the Borrower makes any
payment of principal with respect to any LIBOR Loan (pursuant to Sections 2.08,
2.09 or Article VI or VIII or otherwise) on any day other than the last day of
the Interest Period applicable thereto or defaults in payment of any such
principal or any interest thereon, or if the Borrower fails to borrow or
continue any LIBOR Loans after notice has been given to any Bank in accordance
with Section 2.02, the Borrower shall reimburse each Bank upon demand (with a
copy to the Agent) for any resulting loss or expense incurred by it as a result
of such payment, default in payment or failure (or by an existing or prospective
Participant in the related Loan), including (without limitation) any loss or
expense incurred in obtaining, liquidating or employing deposits from third
parties. Any such demand shall be accompanied by a certificate of the applicable
Bank setting forth in reasonable detail the amounts of such losses and expenses
payable to it by the Borrower under this Section, which statement shall be
conclusive in the absence of manifest error.
SECTION 2.14. Withholding Tax Exemption. At least five
Domestic Business Days prior to the first date on which interest or fees are
payable hereunder for the account of any Bank, each Bank and each Designated
Lender that is not incorporated under the laws of the United States of America
or a state thereof agrees that it will deliver to the Borrower and the Agent two
duly completed copies of United States Internal Revenue Service Form 1001 or
4224 (or successor or replacement forms), certifying in either case that such
Bank is entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes. Each Bank
and each Designated Lender which so delivers a Form 1001 or 4224 (or successor
or replacement forms) further undertakes to deliver to the Borrower and the
Agent two additional copies of such form (or a successor form) on or before the
date that such form expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, in each case certifying that such Bank
or Designated Lender is entitled to receive payments under this Agreement and
the Notes without deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank or Designated Lender from duly completing and delivering any
such form with respect to it and such Bank or Designated Lender advises the
Borrower and the Agent that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax. If such an event
occurs, the applicable Bank or Designated Lender shall take such steps as may be
necessary (including the redesignation of its LIBOR Lending Office, if any) to
avoid any requirements of applicable laws or regulations that the Borrower make
any deduction or withholding for taxes from amounts payable to such Bank or
Designated Lender. In the
-12-
event that the Borrower or the Agent becomes aware that a participation has been
granted pursuant to Section 9.06 to a Participant that is incorporated or
otherwise organized under the laws of a jurisdiction other than the United
States of America or any state thereof, then, upon request made by the Borrower
or the Agent to the applicable Bank or Designated Lender that granted such
participation, such Bank or Designated Lender shall cause such Participant to
deliver the same documents and information to the Borrower and the Agent as
would be required under this Section if such Participant were a Bank.
ARTICLE III
CONDITIONS
SECTION 3.1. Effectiveness. This Agreement shall become
effective on the date that each of the following conditions shall have been
satisfied (or waived in accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed by each
of the parties hereto;
(b) receipt by the Agent for the account of each Bank of a
duly executed Note dated on or before the Effective Date complying with the
provisions of Section 2.04;
(c) receipt by each of the Banks of (i) an opinion of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Frome & ▇▇▇▇▇▇▇▇▇▇ LLP, counsel to the Borrower, substantially in the
form of Exhibit D-1 attached hereto and satisfactory to the Agent in all
respects and (ii) an opinion of Piper & Marbury L.L.P., Maryland counsel to the
Borrower, substantially in the form of Exhibit D-2 attached hereto and
satisfactory to the Agent in all respects;
(d) receipt by each of the Banks of a certificate manually
signed by the treasurer or vice president of the Borrower to the effect set
forth in clauses (b) (if a Borrowing will occur on the Effective Date), (c) and
(d) of Section 3.02, such certificate to be dated the Effective Date and to be
in form and substance satisfactory to the Agent;
(e) receipt by each of the Banks of a manually signed
certificate from the Secretary of the Borrower, in form and substance
satisfactory to the Agent and dated the Effective Date, as to the incumbency of,
and bearing manual specimen signatures of, the officers of the Borrower who are
authorized to execute and take actions under the Loan Documents, as to the
Custodian and Investment Adviser of the Borrower, and certifying and attaching
copies of (i) the Borrower's by-laws as then in effect, (ii) duly authorized
resolutions of the Borrower's board of directors authorizing the transactions
contemplated hereby, (iii) the current Prospectus for the Borrower, and (iv) the
Annual Reports and Semi-Annual Reports to the Borrower's shareholders for the
two most recently ended fiscal years;
(f) receipt by each of the Banks of a certificate manually
signed by the treasurer or vice president of the Borrower evidencing compliance
by the Borrower with Section 18 of the Investment Company Act after giving
effect to the borrowing of Loans in an aggregate principal amount equal to the
aggregate Commitment Amounts as senior securities representing indebtedness
under Section 18(a) and not loans for temporary purposes under Section 18(g);
(g) satisfactory completion by the Banks of due diligence with
respect to the Borrower;
(h) the Banks being satisfied in their sole discretion that
there has been no material adverse change in the business, assets, financial
condition or prospects of the Borrower since the date of the most recent
financial statements of the Borrower referred to in Section 4.07;
-13-
(i) receipt by the Agent of all documents, opinions and
instruments it may reasonably request prior to the execution of this Agreement
relating to compliance with applicable rules and regulations promulgated by the
Federal Reserve Board and other governmental and regulatory authorities, the
existence of the Borrower, the authority for and the validity and enforceability
of this Agreement and the Notes, and any other matters relevant hereto, all in
form and substance satisfactory to the Agent;
(j) receipt by the Agent of evidence which is satisfactory to
the Agent in all respects that the Borrower will redeem and repay in full all
amounts outstanding under each of the Fixed Rate Notes on or before the
thirtieth (30th) day after the Effective Date, with the proceeds of a Loan to be
made hereunder; and
(k) receipt by the Agent of payment of all fees and expenses
(including fees and disbursements of special counsel for the Agent ) then
payable hereunder and under the other Loan Documents;
provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
June 30, 1998. Receipt by the Agent of a Bank's signature hereto shall mean that
the conditions in clauses (g) and (h) of this Section 3.01 have been satisfied
as to that Bank. The Agent shall promptly notify the Borrower and the Banks of
the Effective Date and such notice shall be conclusive and binding on all
parties hereto.
SECTION 3.2. All Borrowings. The obligation of any Bank to
make a Loan on the occasion of any Borrowing is subject to the satisfaction of
the following conditions:
(a) receipt by the Agent and the Banks of a Notice of
Borrowing as required by Section 2.02 which is completed in a manner which is
reasonably satisfactory to the Agent in all respects;
(b) immediately after such Borrowing, the aggregate
outstanding principal amount of the Loans to the Borrower will not exceed the
lesser of (i) the Maximum Amount, or (ii) the aggregate Commitment Amounts;
(c) immediately before and after such Borrowing, no Default or
Event of Default shall have occurred and be continuing;
(d) the representations and warranties contained in this
Agreement shall be true on and as of the date of such Borrowing; and
(e) the Fixed Rate Notes shall have been, or will be with the
proceeds of such Loan, redeemed and repaid in full.
Each Borrowing hereunder shall be deemed to be a representation and warranty on
the date of such Borrowing as to the facts specified in clauses (b), (c), (d)
and (e) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants that:
SECTION 4.1. Existence and Power; Investment Company. (a) It
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland, is duly qualified and in good standing in every
other jurisdiction where it is doing business, and has all corporate powers and
all authorizations and approvals required to carry on its business as now
conducted.
-14-
(b) It is a closed-end, diversified management investment
company registered under the Investment Company Act, and its outstanding
interests (i) have been duly issued and are fully paid and non-assessable, (ii)
have been duly registered under the Securities Act of 1933, as amended, and
(iii) have been registered or are exempt from registration under all applicable
state securities or so-called "Blue Sky" laws.
(c) Its shares of Common Stock are traded on the New York
Stock Exchange.
SECTION 4.2. Authorization; No Contravention. The execution,
delivery and performance by the Borrower of this Agreement, the Notes and each
of the other Loan Documents to which it is a party are within its corporate
powers, have been duly authorized by all necessary corporate action, require no
authorization or action by or in respect of, or filing with, any governmental
body, agency or official or any shareholder in or creditor of the Borrower, and
do not contravene, or constitute a default under, any provision of applicable
law or regulation, the Articles of Incorporation or by-laws of the Borrower, any
agreement, judgment, injunction, order, decree or other instrument binding upon
it or its most recent Prospectus, or result in the creation or imposition of any
Lien on any of its assets.
SECTION 4.3. Binding Effect. Each of the Loan Documents has
been duly executed and delivered by the Borrower. This Agreement constitutes a
valid and binding agreement of the Borrower and the Notes constitute valid and
binding obligations of the Borrower, in each case enforceable in accordance with
their terms, except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights.
SECTION 4.4. Compliance with Margin Rules. The execution,
delivery and performance by the Borrower of this Agreement, the Notes and the
other Loan Documents and the transactions contemplated hereunder and thereunder
will not violate Regulation U or Regulation X of the Board of Governors of the
Federal Reserve System.
SECTION 4.5. Non-Affiliation with Banks. So far as appears
from the records of the Borrower, neither any Bank nor any Affiliate of any Bank
known to the Borrower is an Affiliated Person of the Borrower and none of the
Borrower or any Affiliate of the Borrower is an Affiliated Person of any Bank or
of any Affiliate of any Bank known to the Borrower.
SECTION 4.6. Subsidiaries. The Borrower has no Subsidiaries.
SECTION 4.7. Financial Information.
(a) The statement of assets and liabilities of the Borrower as
of the last day of the Borrower's fiscal year most recently ended prior to the
Effective Date, and the related Statements of Operations and Changes in Net
Assets for the fiscal year ended on such date, reported on by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP and set forth in the Annual Report to the Borrower's shareholders for the
fiscal year ended on such date, together with the notes and schedules thereto,
present fairly, in all material respects, in conformity with generally accepted
accounting principles, the financial position of the Borrower as of such date.
(b) Since the last day of the Borrower's fiscal year most
recently ended prior to the Effective Date, there has been no material adverse
change in the business, financial position, results of operations or prospects
of the Borrower.
SECTION 4.8 Litigation. There is no action, suit or proceeding
pending against, or, to the knowledge of the Borrower, threatened against or
affecting, the Borrower or, to the knowledge of the Borrower, any Person with
whom it has entered into a material contract or agreement before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could materially adversely
affect the business, financial position or results of operations of the Borrower
or
-15-
which in any manner draws into question the validity or enforceability of this
Agreement, the Notes or any of the other Loan Documents or any such material
contract or agreement.
SECTION 4.9. ERISA. (a) The Borrower is not a member of an
ERISA Group and has no liability in respect of any Benefit Arrangement, Plan or
Multiemployer Plan.
(b) No Loan will constitute a "prohibited transaction" within
the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code
for which an exemption is not available.
SECTION 4.10. Taxes. The Borrower qualifies as a "regulated
investment company" within the meaning of the Internal Revenue Code. The
Borrower has timely filed in correct form all United States Federal income tax
returns and all other material tax returns which are required to be filed by it
and has paid all taxes due pursuant to such returns or pursuant to any
assessment received by it. The charges, accruals and reserves on the books of
the Borrower in respect of taxes or other governmental charges are, in the
opinion of the Borrower, adequate.
SECTION 4.11. Compliance. (a) The Loans are a "senior security
representing indebtedness" for purposes of and as defined in Section 18 of the
Investment Company Act. The Borrower is in compliance with Section 18 of the
Investment Company Act. The Borrower is also in compliance with all other
applicable laws and regulations (including, without limitation, all other
provisions of the Investment Company Act and all rules and regulations
thereunder), all applicable ordinances, decrees, requirements, orders and
judgments of, and all of the terms of any applicable licenses and permits issued
by, any governmental body, agency or official, or the exchange on which its
shares are traded, and all agreements and instruments to which it may be subject
or any of its properties may be bound, in each case where the violation thereof
may have a material adverse effect on its business, operations, properties,
assets or condition (financial or otherwise). The Borrower is in compliance with
all investment policies and restrictions set forth (or incorporated by
reference) in its most recent Prospectus.
(b) No Default or Event of Default has occurred and is
continuing.
SECTION 4.12. Full Disclosure. All information heretofore
furnished by the Borrower to the Banks for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Borrower to the Banks will be, true and
accurate in all material respects on the date as of which such information is
stated or certified. The Borrower has disclosed to the Banks in writing all
facts which, to its knowledge after reasonable inquiry, materially and adversely
affect or may affect (to the extent it can now reasonably foresee), the
business, operations or financial condition of the Borrower or the ability of
the Borrower to perform its obligations under the Loan Documents.
SECTION 4.13. Margin Stock. Not more than 25% of the value (as
determined by any reasonable method) of the Borrower's assets are represented by
"margin stock" (as defined under Regulation U).
SECTION 4.14. Senior Debt. None of the Obligations are
subordinated or junior to the payment and performance of any other Debt of the
Borrower.
-16-
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Note remains unpaid:
SECTION 5.1. Information. The Borrower will deliver to each of
the Banks:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, (i) a statement of the Borrowers
assets and liabilities, including the portfolio of investments, as of the end of
such fiscal year and the related statements of operations and changes in net
assets for such fiscal year, or (ii) if different from the foregoing, the
statements which the Borrower is required to prepare under applicable laws and
regulations as of the end of such period, all reported in a manner acceptable to
the Securities and Exchange Commission, together with an audit report thereon
issued by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other independent public accountants of
nationally recognized standing;
(b) as soon as available and in any event within 90 days after
the end of the first semi-annual period of each fiscal year of the Borrower, (i)
a statement of the Borrowers assets and liabilities, including the portfolio of
investments, as of the end of such period, (ii) if different from the foregoing,
the statements which the Borrower is required to prepare under applicable laws
and regulations as of the end of such period, all certified (subject to normal
year-end adjustments) as to fairness of presentation, generally accepted
accounting principles and consistency by the treasurer or vice president of the
Borrower or accompanied by an audit report thereon issued by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
or other independent public accountants of nationally recognized standing;
(c) as soon as available and in any event on each Wednesday, a
listing of the Borrower's investments as of the immediately preceding Friday,
certified by the treasurer or vice president of the Borrower;
(d) simultaneously with the delivery of each set of financial
statements referred to in clauses (a), (b) and (c) above, a compliance
certificate substantially in the form of Exhibit E attached hereto and not later
than 12:00 noon (Boston time) on each Domestic Business Day or LIBOR Business
Day on which a Loan is made pursuant to Section 2.01 or converted pursuant to
Section 2.02(b), a Notice of Borrowing or Notice of Conversion, as appropriate;
(e) promptly after the Borrower obtains knowledge of any
Default or Event of Default, a certificate of the chief financial officer or the
chief accounting officer of the Borrower setting forth the details thereof and
the action which the Borrower is taking or proposes to take with respect
thereto;
(f) promptly upon the filing thereof with the Securities and
Exchange Commission or the mailing thereof to its shareholders, copies of all
reports to shareholders, amendments and supplements to its Prospectus, proxy
statements and other materials of a financial or otherwise material nature;
(g) promptly upon the effectiveness thereof, copies of all
amendments to the Borrower's investment objectives, policies and restrictions;
(h) promptly upon any officer of the Borrower becoming aware
of any action, suit or proceeding of the type described in Section 4.08, notice
and a description thereof and copies of any filed complaint relating thereto;
and
(i) from time to time such additional information regarding
the financial position or business of the Borrower as the Agent, at the request
of any Bank, may reasonably request.
SECTION 5.2. Payment of Obligations. The Borrower will duly
and punctually pay or cause to be paid the principal and interest on the Loans
and all other amounts payable by it provided for in this Agreement and the other
Loan Documents. The Borrower will pay and discharge, at or before maturity, all
of
-17-
its material obligations and liabilities, including, without limitation, tax
liabilities, except where the same may be contested in good faith by appropriate
proceedings, and will maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.
SECTION 5.3. Maintenance of Insurance. The Borrower will
maintain with financially sound and reputable insurance companies, policies with
respect to its property and business against at least such risks (and with no
greater risk retentions) and in at least such amounts as are required by law
and, in addition, as are customary in the case of registered closed-end
investment companies engaged in similar securities activities of comparable size
and financial strength; and will furnish upon request to the Banks, information
presented in reasonable detail as to the insurance so carried.
SECTION 5.4. Conduct of Business and Maintenance of Existence.
The Borrower will continue to engage in business of the same general type as now
conducted by it, will preserve, renew and keep in full force and effect its
existence as a Maryland corporation and its rights, privileges and franchises
necessary in the normal conduct of its business, including its status as a
registered investment company.
SECTION 5.5. Compliance with Laws. The Borrower will comply in
all material respects with all applicable laws, ordinances, rules, regulations
and requirements of governmental authorities (including, without limitation,
ERISA and the Investment Company Act and the rules and regulations thereunder)
and the exchange on which its shares are traded, except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings or
exemptive relief has been obtained therefrom and remains in effect. The Borrower
will file all federal and other tax returns, reports and declarations required
by all relevant jurisdictions on or before the due dates for such returns,
reports and declarations and will pay all taxes and other governmental
assessments and charges as and when they become due (except those that are being
contested in good faith by the Borrower and as to which the Borrower has
established appropriate reserves on its books and records).
SECTION 5.6. Inspection of Property, Books and Records. The
Borrower will keep proper books of record and account in which full, true and
correct entries shall be made of all dealings and transactions in relation to
its business and activities; and will permit representatives of any Bank, at
such Bank's expense, to visit and inspect any of its offices, to examine and
make abstracts from any of its books and records and to discuss its affairs,
finances and accounts with its officers, employees and independent public
accountants, all at such reasonable times and as often as may reasonably be
desired.
SECTION 5.7. Debt. The Borrower will not create, assume or
suffer to exist any Debt other than (a) Debt arising under this Agreement and
the Notes, (b) Debt in favor of the Borrower's Custodian consisting of overnight
loans to cover failed securities trades, provided that the aggregate amount of
such Debt does not at any time exceed 5% of the Total Assets of the Borrower,
(c) subject to Section 5.21, Debt evidenced by the Fixed Rate Notes or otherwise
incurred pursuant to the Note Purchase Agreement, and (d) Debt arising in
connection with portfolio investments and investment techniques permissible
under the Investment Company Act and consistent with the Borrower's investment
objectives and fundamental and operating investment restrictions, provided that
in no event shall the Borrower (i) enter into or utilize swaps, caps, options,
futures contracts, options on futures contracts or other similar portfolio
investments or investment techniques other than for hedging purposes, (ii) enter
into reverse repurchase agreements, (iii) borrow money or create leverage under
any arrangement other than (x) from the Banks hereunder, (y) on an overnight
basis from the Borrower's Custodian to the extent provided in clause (b) hereof,
or (z) subject to Section 5.21, pursuant to the Fixed Rate Notes, or (iv) issue
or be or remain liable for or have outstanding any "senior security" (as defined
in the Investment Company Act), except that the Borrower may borrow from the
Banks hereunder and, subject to Section 5.21, the Fixed Rate Notes may remain
outstanding.
SECTION 5.8. Negative Pledge. The Borrower will not create,
assume or suffer to exist any Lien on any of its assets, whether now owned or
hereafter acquired, or on the income or profits therefrom,
-18-
except (a) Liens for taxes, assessments or governmental charges or levies the
payment of which is not at the time required, (b) the agreements of the Borrower
limiting its ability to encumber its assets as set forth in the Note Purchase
Agreement, as in effect on the date hereof, and (c) encumbrances created in
connection with the Borrower's portfolio investments (and not for the primary
purpose of borrowing money) to the extent permitted by the provisions of the
Borrower's Prospectus and Section 5.07 hereof, provided that the aggregate
amount of such encumbered assets of the Borrower pursuant to this clause (c)
does not at any time exceed 5% of the Total Assets of the Borrower.
SECTION 5.9. Consolidations, Mergers and Sales of Assets. The
Borrower will not consolidate or merge with or into any other Person or
reorganize its assets into series of a series corporation or entity, nor will
the Borrower sell, lease or otherwise transfer, directly or indirectly, all or
any substantial part of its assets to any other Person except that the Borrower
may sell its assets in the ordinary course of business as described in its
Prospectus. The Borrower will not invest all of its investable assets in any
other management investment company or otherwise employ a master-feeder or fund
of funds investment structure.
SECTION 5.10. Use of Proceeds. The proceeds of the Loans made
under this Agreement to the Borrower will be used by the Borrower solely to (a)
redeem and cancel all of the Fixed Rate Notes and (b) finance the purchase of
securities for its investment portfolio.
SECTION 5.11. Ratio of Liabilities to Assets. The Borrower
will not permit, at any time, the sum of its Total Liabilities plus, without
duplication, the aggregate amount of its Debt, to exceed 25% of its Total
Assets.
SECTION 5.12. Compliance with Prospectus. The Borrower will at
all times comply in all material respects with the investment objectives,
limitations and policies set forth (or incorporated by reference) in its
Prospectus, as such objectives, limitations and policies were modified as
described in the Proxy Statement. The Borrower will not permit its investment
objective or any fundamental policy or its diversified status to be changed from
those in effect on the Effective Date and reflected in the Prospectus delivered
to the Banks on the Effective Date. The Borrower will maintain its status as a
closed-end management investment company.
SECTION 5.13. Non-Affiliation with Banks. The Borrower will
not at any time become an Affiliated Person of any Bank or any Affiliate of any
Bank known to the Borrower and the Borrower will use its best efforts to ensure
that none of its Affiliates is or becomes an Affiliated Person of any Bank or
any Affiliate of any Bank known to the Borrower.
SECTION 5.14. Deposit Account. The Borrower shall specify a
deposit account with its Custodian in which Loans shall be deposited.
SECTION 5.15. Regulated Investment Company. The Borrower will
maintain its status as a "regulated investment company" under the Internal
Revenue Code at all times and will make sufficient distributions to qualify as a
"regulated investment company" pursuant to subchapter M of the Internal Revenue
Code.
SECTION 5.16. No Subsidiary. The Borrower will not have at any
time any Subsidiary.
SECTION 5.17. ERISA. The Borrower will not become a member of
any ERISA Group and will not incur any liability in respect of any Benefit
Arrangement, Plan or Multiemployer Plan, including without limitation for
benefits thereunder.
SECTION 5.18. Distributions. The Borrower will not at any time
make any Distribution to any of its shareholders provided that (a) the Borrower
may declare and pay dividends so long as no Default or Event of Default has
occurred and is continuing or will result therefrom, and (b) the Borrower shall
at all times
-19-
be permitted to declare and pay dividends that are required to enable it to
maintain its status as a "regulated investment company" under subchapter M of
the Internal Revenue Code.
SECTION 5.19. Margin Stock. The Borrower will not permit more
than 25% of the value (as determined by any reasonable method) of its assets to
be represented by "margin stock" (as defined under Regulation U) at any time.
SECTION 5.20. Capitalization. The Borrower will not designate,
establish or create any new or additional series of capital stock, effect or
permit any change in or amendment to its charter documents or any other document
or instrument pertaining to the terms of the capital stock of the Borrower or
issue or have outstanding any preferred stock.
SECTION 5.21. Fixed Rate Notes. The Borrower will not effect
or permit any change in or amendment to the Note Purchase Agreement, the Fixed
Rate Notes, or any document or instrument pertaining thereto without the prior
written consent of the Required Banks.
(b) The Borrower shall, on or before the thirtieth (30th) day
after the Effective Date, redeem, and repay in full all amounts outstanding
under, each of the Fixed Rate Notes.
ARTICLE VI
DEFAULTS
SECTION 6.1. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall (i) fail to pay when due any principal
of any Loan, or (ii) fail to pay any interest on any Loan, or any fees or any
other amount payable by the Borrower hereunder within five days after the same
shall become due and payable;
(b) the Borrower shall fail to observe or perform any covenant
contained in Article V;
(c) the Borrower shall fail to observe or perform any covenant
or agreement contained in this Agreement or in any other Loan Document (other
than those covered by clause (a) or (b) above) for ten (10) Domestic Business
Days after written notice thereof has been given to the Borrower by the Agent at
the request of any Bank;
(d) any representation, warranty, certification or statement
made (or deemed made) by the Borrower in this Agreement or in any certificate,
financial statement or other document delivered pursuant to this Agreement shall
prove to have been incorrect in any material respect when made (or deemed made);
(e) the Borrower shall fail to pay, when due or within any
applicable grace period, any Debt of the Borrower in an aggregate principal
amount in excess of $500,000;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Debt of the Borrower in an aggregate
principal amount in excess of $500,000 or enables (or, with the giving of notice
or lapse of time or both, would enable) the holder of such Debt or any Person
acting on such holder's behalf to accelerate the maturity thereof;
-20-
(g) the Borrower shall seek the appointment of a trustee,
receiver, liquidator, custodian or other similar official for it or any
substantial part of its property, or shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator or other similar official for it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it or the Borrower shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Borrower seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it and such involuntary case
or other proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Borrower or under the
federal bankruptcy laws as now or hereafter in effect;
(i) a judgment or order for the payment of money in excess of
$500,000 shall be rendered against the Borrower and such judgment or order shall
continue unsatisfied and unstayed for a period of 10 days;
(j) the investment advisory agreement which is in effect on
the Effective Date for the Borrower shall terminate, or the Investment Adviser
shall cease to be the investment adviser to the Borrower; or
(k) the Custodian of the Borrower shall cease to be its
Custodian;
then, and in every such event, the Agent shall (i) if requested by Banks
constituting Required Banks, by notice to the Borrower terminate the
Commitments, and they shall thereupon terminate, and (ii) if requested by Banks
constituting Required Banks, by notice to the Borrower declare the Loans
(together with accrued interest thereon) to be, and the Loans (together with
accrued interest thereon) shall thereupon become, immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; provided that in the case of any of the
Events of Default specified in clause (g) or (h) above, automatically without
any notice to the Borrower or any other act by the Agent or the Banks, the
Commitments shall thereupon terminate and the Loans (together with accrued
interest thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower.
SECTION 6.2. Notice of Default. The Agent shall give notice to
the Borrower under Section 6.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.1. Appointment and Authorization. Subject to Section
7.07 hereof, each Bank irrevocably appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under this
Agreement, the Notes and the other Loan Documents as are delegated to the Agent
by the terms hereof or thereof, together with all such powers as are reasonably
incidental thereto.
SECTION 7.2. Action by Agent. The duties and responsibilities
of the Agent hereunder are only those expressly set forth herein. The
relationship between the Agent and the Banks is and shall be that of agent and
principal only, and nothing contained in this Agreement or any of the other
Loans Documents shall be
-21-
construed to constitute the Agent as a trustee for any Bank. Without limiting
the generality of the foregoing, the Agent shall not be required to take any
action with respect to any Default or Event of Default, except as expressly
provided in Article VI.
SECTION 7.3. Consultation with Experts. The Agent may consult
with legal counsel, independent public accountants and other experts 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.
SECTION 7.4. Liability of Agent. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or not taken by it in connection herewith (a) with the consent or at the
request of the Required Banks or (b) in the absence of its own gross negligence
or willful misconduct. Neither the Agent nor any of its directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or representation made by any
other Person in connection with this Agreement or any borrowing hereunder; (ii)
the performance or observance of any of the covenants or agreements of the
Borrower; (iii) the satisfaction of any condition specified in Article III,
except receipt of items required to be delivered to it; or (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement (except as to its
own execution of this Agreement), the Notes, the other Loan Documents or any
other instrument or writing furnished in connection herewith or therewith. The
Agent shall not incur any liability by acting in reliance upon any notice,
consent, certificate, statement or other writing (which may be a bank wire,
telex or similar writing) reasonably believed by it to be genuine or to be
signed by the proper party or parties.
SECTION 7.5. Indemnification. The Banks hereby ratably agree
to indemnify the Agent (to the extent not reimbursed by the Borrower) against
any cost, expense (including counsel fees and disbursements), claim, demand,
action, loss or liability (except such as directly result from the Agent's gross
negligence or willful misconduct) that the Agent may suffer or incur in
connection with this Agreement or any of the other Loan Documents or any action
taken or omitted by the Agent hereunder or thereunder, provided that no
Designated Lender shall be liable for any payment due under this Section 7.05 so
long as, and to the extent that, its Designating Lender makes such payments.
SECTION 7.6. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon either the Agent or any other Bank,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Bank
also acknowledges that it will, independently and without reliance upon either
the Agent or any other Bank, 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 any action under this Agreement.
SECTION 7.7. Successor Agent. The Agent may resign at any time
by giving written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent with the prior written consent of the Borrower, which consent shall not be
unreasonably withheld or delayed. If no successor Agent shall have been so
appointed by the Required Banks within 30 days after the retiring Agent gives
notice of resignation, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent, which shall be a commercial bank organized or
licensed under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of its appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
-22-
SECTION 7.8. Agent as Bank. In its individual capacity,
BankBoston and any other Bank that serves as a successor Agent hereunder shall
have the same obligations and the same rights, powers and privileges in respect
of its Commitment and the Loans made by it as it would have were it not also the
Agent.
SECTION 7.9. Distribution by Agent. If in the opinion of the
Agent the distribution of any amount received by it in such capacity hereunder,
under the Notes or under any of the other Loan Documents might involve it in
liability, it may refrain from making such distribution until its right to make
distribution shall have been adjudicated by a court of competent jurisdiction.
If a court of competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay over the
same in such manner and to such Persons as shall be determined by such court.
SECTION 7.10. Delinquent Banks. (a) Notwithstanding anything
to the contrary contained in this Agreement or any of the other Loan Documents,
any Bank that (i) willfully does not or (ii) does not as a result of a Failure
(as defined below) (A) make available to the Agent its pro rata share of any
Loan, or (B) comply with the provisions of Section 9.04 with respect to making
dispositions and arrangements with the other Banks, where such Bank's share of
any payment received, whether by setoff or otherwise, is in excess of its pro
rata share of such payments due and to payable to all of the Banks, in each case
as, when and to the full extent required by the provisions of this Agreement,
shall be deemed delinquent (a "Delinquent Bank") and shall be deemed a
Delinquent Bank until such time as such delinquency is satisfied. A Delinquent
Bank shall be deemed to have assigned any and all payments due to it from the
Borrower, whether on account of outstanding Loans, interest, fees or otherwise,
to the remaining nondelinquent Banks for application to, and reduction of, their
respective pro rata shares of all outstanding Loans. The Delinquent Bank hereby
authorizes the Agent to distribute such payments to the nondelinquent Banks in
proportion to their respective pro rata shares of all outstanding Loans. A
Delinquent Bank shall be deemed to have satisfied in full a delinquency when and
if, as a result of application of the assigned payments to all outstanding Loans
of the nondelinquent Banks, the Banks' respective pro rata shares of all
outstanding Loans have been returned to those in effect immediately prior to
such delinquency and without giving effect to the nonpayment causing such
delinquency.
(b) For purposes of this Section 7.10, a Failure of a Bank shall mean
(i) it shall seek the appointment of a trustee, receiver, liquidator, custodian
or other similar official for it or any substantial part of its property, or
shall commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator or other similar
official for it or any substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or (ii) it
makes a general assignment for the benefit of creditors, or shall fail generally
to pay its debts as they become due, or shall take any corporate action to
authorize any of the foregoing, or (iii) an involuntary case or other proceeding
shall be commenced against it seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it, or (iv) an
order for relief shall be entered against it under the federal bankruptcy laws
as now or hereafter in effect.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.1. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any Borrowing
of LIBOR Loans:
-23-
(a) the Agent determines that deposits in dollars (in the
applicable amounts) are not being offered to the Agent in the relevant
market for such Interest Period, or
(b) the Required Banks advise the Agent that the Adjusted
LIBOR Offered Rate as determined by the Agent will not adequately and
fairly reflect the cost to such Banks of funding their LIBOR Loans for
such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to make
LIBOR Loans shall be suspended. Unless the Borrower notifies the Agent at least
two Domestic Business Days before the date of any Borrowing of LIBOR Loans or
any rollover date for which a Notice of Borrowing or Notice of Conversion has
previously been given that it elect not to borrow or roll over on such date,
such Borrowing of LIBOR Loans or outstanding LIBOR Loan shall instead be made as
a Borrowing of a Base Rate Loan.
SECTION 8.2. Illegality. If any present or future applicable
law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its LIBOR Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for any Bank (or its LIBOR Lending Office) to make, maintain or fund
its LIBOR Loans and such Bank shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Banks and the Borrower, whereupon
until such Bank notifies the Borrower and the Agent that the circumstances
giving rise to such suspension no longer exist, the obligation of such Bank to
make LIBOR Loans shall be suspended. Before giving any notice to the Agent
pursuant to this Section, such Bank shall designate a different LIBOR Lending
Office if such designation will avoid the need for giving such notice and will
not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. If
such Bank shall determine that it may not lawfully continue to maintain and fund
any of its outstanding LIBOR Loans to maturity and shall so specify in such
notice, the Borrower shall immediately prepay in full the then outstanding
principal amount of each such LIBOR Loan, together with accrued interest thereon
and any amount payable by the Borrower pursuant to Section 2.14. Concurrently
with prepaying each such LIBOR Loan, the Borrower shall borrow a Base Rate Loan
in an equal principal amount from such Bank (on which interest and principal
shall be payable contemporaneously with the related LIBOR Loans of the other
Banks), and such Bank shall make such a Base Rate Loan.
SECTION 8.3. Increased Cost and Reduced Return. (a) If (i) the
introduction of any new law, rule or regulation, or (ii) any change in the
interpretation or administration of any applicable law, rule or regulation by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency in
connection therewith:
(i) shall subject any Bank (or its Applicable Lending Office) to any
new tax, duty or other charge with respect to its Loans, its Note or its
Commitment, or shall change the basis of taxation of payments to any Bank (or
its Applicable Lending Office) of the principal of or interest on its Loans or
any other amounts due under this Agreement or its Commitment, in each case
except for any tax on, or changes in the rate of tax on the overall net income
of such Bank or its Applicable Lending Office imposed by the jurisdiction in
which such Bank's principal executive office or Applicable Lending Office is
located; or
(ii) shall impose, modify or deem applicable any reserve (including,
without limitation, any such requirement imposed by the Board of Governors of
the Federal Reserve System), special deposit, insurance assessment or similar
requirement against assets of, deposits with or for the account of, or credit
extended by,
-24-
any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its
Applicable Lending Office) any other condition affecting its Loans, its Notes or
its Commitment;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making or maintaining any Loan, or to reduce
the amount of any sum received or receivable by such Bank (or its Applicable
Lending Office) under this Agreement or under its Notes with respect thereto, by
an amount deemed by such Bank to be material, then, upon demand by such Bank and
delivery to the Borrower of the certificate required by clause (c) hereof (with
a copy to the Agent), the Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank for such increased cost or reduction.
(b) If any Bank shall determine that any change in any
existing applicable law, rule or regulation or any new law, rule or regulation,
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any new request or directive of general applicability 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 capital of such Bank (or its parent corporation) as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank (or its parent corporation) could have achieved but for such law,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, upon demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank (or its parent corporation) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent
of any event of which it has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder and the calculations
used in determining such additional amount or amounts shall be conclusive in the
absence of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
SECTION 8.4. Base Rate Loans Substituted for Affected LIBOR
Loans. If (a) the obligation of any Bank to make LIBOR Loans has been suspended
pursuant to Section 8.02 or (b) any Bank has demanded compensation under Section
8.03(a) with respect to LIBOR Loans and the Borrower shall, by at least two
LIBOR Business Days' prior notice to such Bank through the Agent, have elected
that the provisions of this Section shall apply to such Bank, then, unless and
until such Bank notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as
LIBOR Loans shall be made instead as Base Loans, and
(b) after each of its LIBOR Loans has been repaid, all
payments of principal which would otherwise be applied to repay such
LIBOR Loans shall be applied to repay its Base Rate Loans instead.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Notices. All notices, requests, consents and
other communications to any party hereunder shall be in writing (including bank
wire, facsimile transmission or similar writing) and shall be
-25-
given to such party at its address or facsimile number set forth on Schedule 1
attached hereto. Each such notice, request, consent or other communication shall
be effective (a) if given by facsimile, when such facsimile is transmitted to
the facsimile number specified in this Section and the appropriate confirmation
is received, (b) if given by mail, 72 hours after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid
or (c) if given by any other means, when delivered at the address specified in
this Section; provided that notices to the Agent under Article II or Article
VIII shall not be effective until received.
SECTION 9.2. No Waivers. No failure or delay by the Agent or
any Bank in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.3. Expenses; Documentary Taxes; Indemnification. (a)
The Borrower agrees to pay (i) all reasonable out-of-pocket expenses of the
Agent, including the fees and disbursements of special counsel for the Agent, in
connection with the preparation, negotiation and closing of this Agreement and
the other Loan Documents, any waiver or consent hereunder or any amendment
hereof, any waiver of any Default or Event of Default or alleged Default or
Event of Default hereunder, and any termination hereof, and (ii) if a Default or
an Event of Default occurs, all reasonable out-of-pocket expenses incurred by
the Agent, its Affiliates and each Bank, including fees and disbursements of
counsel (including reasonable allocated costs of in-house counsel), in
connection with such Default or Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom. The Borrower
agrees to indemnify each Bank against any transfer taxes, documentary taxes,
assessments or similar charges made by any governmental authority by reason of
the execution and delivery of this Agreement or the Notes.
(b) The Borrower agrees to indemnify the Agent, its Affiliates
and each Bank and hold the Agent, its Affiliates and each Bank harmless from and
against any and all liabilities, losses, damages, costs and expenses of any
kind, including, without limitation, the reasonable fees and disbursements of
counsel, which may be incurred by the Agent, any of its Affiliates or any Bank
in connection with any investigative, administrative or judicial proceeding
(whether or not the Agent, its Affiliate or any Bank shall be designated a party
thereto) relating to or arising out of this Agreement or the other Loan
Documents or any actual or proposed use of proceeds of Loans, provided that the
Agent, its Affiliates and the Banks shall not have the right to be indemnified
hereunder for their own gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
SECTION 9.4. Set Off. Regardless of the adequacy of any
collateral, during the continuance of any Event of Default, any deposits or
other sums credited by or due from any of the Banks to the Borrower, and any
securities or other property of the Borrower in the possession of such Bank may
be applied to or set off by such Bank against the payment of the Obligations and
any and all other liabilities, direct, or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, of the Borrower to such
Bank. Each of the Banks agrees with each other Bank that (a) if an amount to be
set off is to be applied to Debt of the Borrower to such Bank, other than Debt
evidenced by the Note held by such Bank, such amount shall be applied ratably to
such other Debt and to the Debt evidenced by the Note held by such Bank, and (b)
if such Bank shall receive from the Borrower whether by voluntary payment,
exercise of the right of set off, counterclaim, cross action, or enforcement of
the claim evidenced by the Note held by such Bank by proceedings against the
Borrower at law or in equity or by proof thereof in bankruptcy, reorganization,
liquidation, receivership or similar proceedings, or otherwise, and shall retain
and apply to the payment of the Note held by such Bank any amount in excess of
its ratable portion of the payments received by all of the Banks with respect to
the Notes held by all of the Banks, such Bank will make such disposition and
arrangements with the other Banks with respect to such excess, either by way of
distribution, pro tanto assignment of claims, subrogation or otherwise as shall
result in each Bank receiving in respect of the Note held by it its
proportionate payment as contemplated by this Agreement; provided that if all or
any part of such excess payment is thereafter recovered from such Bank,
-26-
such disposition and arrangements shall be rescinded and the amount restored to
the extent of such recovery, but without interest.
SECTION 9.5. Amendments and Waivers. Any provision of this
Agreement or the Notes or any of the other Loan Documents may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
the Borrower and the Required Banks (and, if the rights or duties of the Agent
are affected thereby, by the Agent); provided that no such amendment or waiver
shall, unless signed by all the Banks (a) increase or decrease the Commitment
Amount of any Bank (except as provided in Section 9.06(c)) or subject any Bank
to any additional obligation, (b) reduce or forgive the principal of or rate of
interest on any Loan or any fees to the Banks hereunder, (c) postpone the date
fixed for any payment of principal of or interest on any Loan or any fees to the
Banks hereunder or for the termination of the Commitments, (d) change the
percentage of the Commitment Amounts or of the aggregate unpaid principal amount
of the Notes, or the number of Banks, which shall be required for the Banks or
any of them to take any action under this Section or any other provision of this
Agreement, or (e) permit the Borrower to change its investment objective or any
fundamental policy. Each Designating Lender shall act on behalf of its
Designated Lender with respect to any rights of its Designated Lender to grant
or withhold any consent hereunder.
SECTION 9.6. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Borrower may
not assign or otherwise transfer any of its rights under this Agreement without
the prior written consent of all of the Banks.
(b) Any Bank may at any time grant to one or more banks or
other institutions (each a "Participant") participating interests in its
Commitment or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Agent, such Bank shall remain responsible for the performance
of its obligations hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of the
Borrower hereunder, including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such participation agreement may provide that such Bank will not agree to
any modification, amendment or waiver of this Agreement described in clause (a),
(b), (c), (d) or (e) of Section 9.05 without the consent of the Participant. The
Borrower agrees that each Participant shall, to the extent provided in its
participation agreement, be entitled to the benefits of Article VIII with
respect to its participating interest. An assignment or other transfer which is
not permitted by clause (c) or (d) below shall be given effect for purposes of
this Agreement only to the extent of a participating interest granted in
accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or
other financial institutions (each an "Assignee") all or a minimum of $5,000,000
or an integral multiple of $1,000,000 in excess of $5,000,000 of its rights and
obligations under this Agreement and the Notes, and such Assignee shall assume
such rights and obligations, pursuant to an Assignment and Acceptance in
substantially the form of Exhibit F attached hereto executed by such Assignee
and such transferor Bank, with, if no Default or Event of Default has occurred
and is continuing, the written consent of the Borrower, which consent shall not
be unreasonably withheld or delayed, and of the Agent, which consent shall not
be unreasonably withheld or delayed. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with Commitment Amounts as set forth in
such instrument of assumption, and the transferor Bank shall be released from
its obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this clause (c), the transferor Bank, the Agent and the Borrower
shall make appropriate arrangements so that, if required, new Notes are issued
to the Assignee, and the Agent shall be authorized to revise Schedule 1
-27-
to reflect such assignment and to circulate such revised schedule to the Banks
and the Borrower. In connection with any such assignment, the transferor Bank
shall pay to the Agent an administrative fee for processing such assignment in
the amount of $3,500. If the Assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall, prior to the first date
on which interest or fees are payable hereunder for its account, deliver to the
Borrower and the Agent certification as to exemption from deduction or
withholding of any United States federal income taxes in accordance with Section
2.14.
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) Any Bank may at any time designate not more than one
Designated Lender to fund Loans on behalf of such Designating Lender subject to
the terms of this clause (e), and the provisions of clause (c) of this Section
9.06 shall not apply to such designation. No Bank may have more than one
Designated Lender at any time. Such designation may occur either by the
execution of the signature pages hereof by such Bank and Designated Lender next
to the appropriate "Designating Lender" and "Designated Lender" captions, or by
execution by such parties of a Designation Agreement subsequent to the date
hereof; provided, that any Bank and its Designated Lender executing the
signatures pages hereof as "Designating Lender" and "Designated Lender",
respectively, on the date hereof shall be deemed to have executed a Designation
Agreement, and shall be bound by the respective representations, warranties and
covenants contained therein, and such designation shall be conclusively deemed
to be accepted by the Borrower and the Agent. The parties to each such
designation occurring subsequent to the Effective Date shall execute and deliver
to the Agent and the Borrower for their acceptance a Designation Agreement. Upon
such receipt of an appropriately completed Designation Agreement executed by a
Designating Lender and a designee representing that it is a Designated Lender
and consented to by the Borrower, the Agent will accept such Designation
Agreement and will give prompt notice thereof to the Borrower and the other
Banks, whereupon (i) the Borrower shall execute and deliver to the Designating
Lender a Note payable to the order of the Designated Lender, (ii) from and after
the effective date specified in the Designation Agreement, the Designated Lender
shall become a party to this Agreement with a right to make Loans on behalf of
its Designating Lender pursuant to Section 2.03(d), and (iii) the Designated
Lender shall not be required to make payments with respect to any obligations in
this Agreement except to the extent of excess cash flow of such Designated
Lender which is not otherwise required to repay obligations of such Designated
Lender which are then due and payable; provided, however, that regardless of
such designation and assumption by a Designated Lender, the Designating Lender
shall be and remain obligated to the Borrower, the Agent and the Banks for the
timely satisfaction of each and every obligation of its Designating Lender and
its related Designated Lender with respect to this Agreement, including, without
limitation, any indemnification obligations under Section 7.05 and any sums
otherwise payable to the Borrower by the Designated Lender. Each Designating
Lender, or a specified branch or affiliate thereof, shall serve as the
administrative agent of its Designated Lender and shall on behalf of its
Designated Lender: (A) receive any and all payments made for the benefit of such
Designated Lender and (B) give and receive all communications and notices and
take all actions hereunder, including, without limitation, votes, approvals,
waivers, consents and amendments under or relating to this Agreement and the
other Loan Documents. Any such notice, communication, vote, approval, waiver,
consent or amendment shall be signed by a Designating Lender, or specified
branch or affiliate thereof, as administrative agent for and on behalf of its
Designated Lender and need not be signed by such Designated Lender on its own
behalf. The Borrower, the Agent and the Banks may rely thereon without any
requirement that the Designated Lender sign or acknowledge the same. No
Designated Lender may assign or transfer all or any portion of its interest
hereunder or under any other Loan Document, other than pursuant to an assignment
to its Designating Lender or otherwise in accordance with the provisions of
clause (c) of this Section 9.06.
(f) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Section 8.01 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent.
-28-
SECTION 9.7. Governing Law; Submission to Jurisdiction. THIS
AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS
OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE EXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 9.01. THE BORROWER HEREBY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
SECTION 9.8. Counterparts; Integration. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement and each of the other Loan Documents constitute the
entire agreement and understanding among the parties hereto and supersede any
and all prior agreements and understandings, oral or written, relating to the
subject matter hereof. The provisions of this Agreement are severable and if any
one clause or provision hereof shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction, and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
SECTION 9.9. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.10. Confidentiality. (a) Each of the Banks and the
Agent agrees, on behalf of itself and each of its affiliates, directors,
officers, employees and representatives, to use reasonable precautions to keep
confidential, in accordance with their customary procedures for handling
confidential information of the same nature and in accordance with safe and
sound banking practices, any non-public information supplied to it by the
Borrower pursuant to this Agreement that is identified by the Borrower as being
confidential at the time the same is delivered to the Banks or the Agent,
provided that nothing herein shall limit the disclosure of any such information
(i) after such information shall have become public other than through a
violation of this Section 9.10, (ii) to the extent required by statute, rule,
regulation or judicial process, (iii) to counsel for any of the Banks or the
Agent, (iv) to bank examiners or any other regulatory authority having
jurisdiction over any Bank or the Agent, or to auditors or accountants, (v) to
the Agent or any Bank, (vi) in connection with any litigation to which any one
or more of the Banks or the Agent is a party, or in connection with the
enforcement of rights or remedies hereunder or under any other Loan Document,
(vii) to a subsidiary or Affiliate of any Bank or (viii) to any assignee or
participant (or prospective assignee or participant) so long as such assignee or
participant agrees to be bound by the provisions of this Section 9.10.
(b) Unless specifically prohibited by applicable law or court
order, each of the Banks and the Agent shall, prior to disclosure thereof,
notify the Borrower of any request for disclosure of any such non-public
information by any governmental agency or representative thereof (other than any
such request in connection with an examination of the financial condition of
such Bank by such governmental agency) or pursuant to legal process.
(c) The Borrower hereby consents to the disclosure of any
non-public information with respect to it which is related to this transaction
by any Designated Lender to any rating agency, commercial paper dealer,
-29-
or provider of a surety, guaranty or credit or liquidity enhancement to such
Designated Lender, provided that such entity agrees to be bound by the
provisions of this Section 9.10 and such Designated Lender notifies the Borrower
prior to any disclosure of any such non-public information.
SECTION 9.11. No Bankruptcy Proceedings. Each of the Borrower,
the Banks and the Agent agrees that it will not institute against any Designated
Lender or join any other Person in instituting against any Designated Lender any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding
under any federal or state bankruptcy or similar law, for one year and one day
after the payment in full of the latest maturing commercial paper note issued by
such Designated Lender.
SECTION 9.12. Dollar References. All references herein to
"dollars" or "$" shall be references to United States Dollars.
[Signature page follows]
-30-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as an agreement under seal by their respective authorized officers
as of the day and year first above written.
PROSPECT STREET HIGH INCOME PORTFOLIO
INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Title: Vice President
BANKBOSTON, N.A., Individually and as Agent
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Title: Managing Director
Designated Lender:
FOUR WINDS FUNDING CORP.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
Title: Vice President
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Title: Vice President
Designating Lender:
COMMERZBANK AG NEW YORK BRANCH
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Title:
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Title: Assistant Vice President
-31-
Exhibit A
FORM OF NOTE
$___________ _____________, 1998
FOR VALUE RECEIVED, PROSPECT STREET HIGH INCOME PORTFOLIO INC. (the
"Borrower") hereby promises to pay to the order of [INSERT NAME OF BANK] (the
"Bank") at the head office of BankBoston, N.A. at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇:
(a) prior to or on the Commitment Termination Date the
principal amount of [INSERT BANK'S COMMITMENT AMOUNT] Dollars ($ ) or,
if less, the aggregate unpaid principal amount of Loans advanced by the
Bank to the Borrower pursuant to the Amended and Restated Credit
Agreement dated as of , 1998 (as amended and in effect from time to
time, the "Credit Agreement"), among the Borrower, the Bank and other
parties thereto;
(b) the principal outstanding hereunder from time to time at
the times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Effective Date (as defined in the Credit
Agreement) through and including the Commitment Termination Date at the
times and at the rates provided in the Credit Agreement.
This Note evidences borrowings under and has been issued by the
Borrower in accordance with the terms of the Credit Agreement. The Bank and any
holder hereof is entitled to the benefits of the Credit Agreement and the other
Loan Documents, and may enforce the agreements of the Borrower contained
therein, and any holder hereof may exercise the respective remedies provided for
thereby or otherwise available in respect thereof, all in accordance with the
respective terms thereof. All capitalized terms used in this Note and not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be
made, at or about the date of any Loan or at the time of receipt of any payment
of principal of this Note, an appropriate notation on the grid attached to this
Note, or the continuation of such grid, or any other similar record, including
computer records, reflecting the making of such Loan or (as the case may be) the
receipt of such payment. The outstanding amount of the Loans set forth on the
grid attached to this Note, or the continuation of such grid, or any other
similar record, including computer records, maintained by the Bank with respect
to any Loans shall be prima facie evidence of the principal amount thereof owing
and unpaid to the Bank, but the failure to record, or any error in so recording,
any such amount on any such grid, continuation or other record shall not limit
or otherwise affect the obligation of the Borrower hereunder or under the Credit
Agreement to make payments of principal of and interest on this Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay,
-1-
omission or waiver on any one occasion be deemed a bar or waiver of the same or
any other right on any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH
COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER
BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 9.01 OF THE CREDIT AGREEMENT. THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
[This Note amends and restates in its entirety the Note dated April 30,
1998 in the principal amount of $30,000,000 issued by the Borrower to the Bank.]
IN WITNESS WHEREOF, each of the undersigned has caused this Note to be
signed in its name by its duly authorized officer as of the day and year first
above written.
PROSPECT STREET HIGH INCOME
PORTFOLIO INC.
By:____________________________
Title:
-2-
------------------------------------------------------------------------------------------------------------------------------------
Amount of Balance of
Amount Type Principal Paid Principal Notation
Date of Loan of Loan or Prepaid Unpaid Made By:
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
-3-
Exhibit B
FORM OF
NOTICE OF BORROWING
DATE: _____________________
TO: BankBoston, N.A., as Agent
ATTN: _____________________
FROM: Prospect Street High Income Portfolio Inc. (the "Borrower")
In connection with the Amended and Restated Credit Agreement, dated as
of _____________, 1998, currently in effect with BankBoston, N.A., as Agent (as
amended and in effect from time to time, the "Credit Agreement"), please
increase the outstanding balance of Loans as indicated below. The Loans should
be recorded on the books of the Borrower as a liability of the Borrower to the
Banks and interest payable to the Banks should be recorded at the agreed upon
rate. Capitalized terms which are used herein without definition and which are
defined in the Credit Agreement shall have the same meanings herein as in the
Credit Agreement.
(a) Date of proposed Borrowing: _________________________________
(b) Amount of Loan requested: $______________________________
(c) Type of Loan requested
(and Interest Period if LIBOR Loan): __________________________________
(d) Aggregate principal amount of Loans
outstanding (including Loan
requested): $_________________________________
(e) Lesser of the Maximum Amount and
the aggregate Commitment Amounts: $_________________________________
No Default or Event of Default exists on the date of this certificate.
On the date hereof, the Total Liabilities of the Borrower plus, without
duplication, the aggregate amount of its Debt equals $________________ and the
Borrower's Total Assets equals $________________. On the date hereof, the Total
Liabilities of the Borrower, plus without duplication, the aggregate amount of
its Debt, is ____% of the Borrower's Total Assets.
________________________________________
Authorized Signature
Wire to: ___________________
___________________
-1-
Exhibit C
FORM OF
NOTICE OF CONVERSION
DATE: ____________________________
TO: BankBoston, N.A., as Agent
ATTN: ____________________________
FROM: Prospect Street High Income Portfolio Inc. (the "Borrower")
In connection with the Amended and Restated Credit Agreement, dated as
of _________________, 1998, currently in effect with BankBoston, N.A., as Agent
(as amended and in effect from time to time, the "Credit Agreement"), please
[convert] [roll over] the following Loans:
(a) Date of conversion or roll over: ___________________________________
(b) Base Rate to LIBOR Loan $_________________________________
(c) Roll over LIBOR Loan: $__________________________________
(d) Interest Period (LIBOR Loan only): __________________________________
Capitalized terms which are used herein without definition and which
are defined in the Credit Agreement shall have the same meanings herein as in
the Credit Agreement.
No Default or Event of Default exists on the date of this certificate.
On the date hereof, the Total Liabilities of the Borrower plus, without
duplication, the aggregate amount of its Debt equals $________________ and the
Borrower's Total Assets equals $________________. On the date hereof, the Total
Liabilities of the Borrower, plus without duplication, the aggregate amount of
its Debt, is ____% of the Borrower's Total Assets.
___________________________________
Authorized Signature
-1-
Exhibits D-1 and D-2
Text of Borrower's Counsel Opinion
1. The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Maryland and has the
corporate power and authority to own and operate its properties, to conduct its
business as now conducted by it and to enter into and to perform its obligations
under the Note. The Borrower is duly registered as a closed-end management
investment company under the Investment Company Act and its outstanding shares
(a) have been duly issued and are fully paid and non-assessable, (b) have been
duly registered under the Securities Act of 1933, as amended and (c) have been
registered or are exempt from registration under state securities or so-called
"Blue Sky" laws.
2. The Borrower is duly qualified to do business and is in good
standing in each jurisdiction in which it owns or leases real property or where,
if the failure to be so qualified could result in the Borrower's unremediable
inability to enforce its contracts and other rights therein, the nature of its
business requires such qualification.
3. The execution and delivery by the Borrower of the Credit Agreement
and the other Loan Documents, the borrowing of the Loans pursuant thereto and
the performance by the Borrower of its agreements and obligations under the
Credit Agreement and the other Loan Documents has been duly authorized by all
requisite corporate action including the vote or consent of shareholders, where
necessary, on the part of the Borrower and do not and will not (a) conflict with
the charter, by-laws or Prospectus of the Borrower, (b) contravene or constitute
a default under, any provision of any applicable law, regulation, ruling or
order applicable to the Borrower, (c) constitute a violation of or a default
under, or result in the creation of any mortgage, lien, pledge, charge, security
interest or other encumbrance upon the property of the Borrower under any
indenture, mortgage, deed of trust, agreement or instrument to which the
Borrower is a party, or by which the Borrower or any of its property is bound,
(d) require any authorization, approval, consent, order, license, or other
action by, and no notice to or filing with, any governmental authority or agency
under any applicable law or regulation of the State of Maryland or the United
States of America or any judgment, decree or order of any court or governmental
or regulatory authority applicable to the Borrower.
4. The Borrower has duly executed and delivered the Credit Agreement
and each of the other Loan Documents, and the Credit Agreement and each of the
other Loan Documents constitutes the valid and binding agreement of the
Borrower, enforceable against the Borrower in accordance with its terms.
5. There is no pending or threatened action, suit or proceeding before
any court, governmental or regulatory authority, agency, commission, or board of
arbitration, against the Borrower which, if adversely determined, could have a
materially adverse effect on the financial condition or operations of the
Borrower or on its ability to perform its obligations under the Credit Agreement
and the other Loan Documents.
6. Assuming the accuracy of the representations and warranties made in
the Credit Agreement, the transactions and arrangements contemplated by the
Credit Agreement do not violate Regulation U of the Board of Governors of the
Federal Reserve Board.
-1-
Exhibit E
FORM OF
COMPLIANCE CERTIFICATE
DATE: ____________________________
TO: Each of the Banks Referred to Below
FROM: Prospect Street High Income Portfolio Inc. (the "Borrower")
Reference is hereby made to that certain Amended and Restated Credit
Agreement, dated as of _______________, 1998 (as amended and in effect from time
to time, the "Credit Agreement"), among Prospect Street High Income Portfolio,
Inc. (the "Borrower"), the lenders which are or may become parties thereto
(collectively, the "Banks"), and BankBoston, N.A., as agent for the Banks (the
"Agent"). Capitalized terms which are used herein without definition and which
are defined in the Credit Agreement shall have the same meanings herein as in
the Credit Agreement.
Pursuant to Section 5.01(d) of the Credit Agreement, the Borrower
hereby certifies as follows:
1. No Default or Event of Default exists on the date of this
certificate.
2. On the date hereof, the Total Liabilities of the Borrower plus,
without duplication, the aggregate amount of its Debt equals $________________
and the Borrower's Total Assets equals $________________. On the date hereof,
the Total Liabilities of the Borrower, plus without duplication, the aggregate
amount of its Debt, is ____% of the Borrower's Total Assets.
______________________________
Authorized Signature
-1-
Exhibit F
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated as of ___________, 199_
Reference is made to the Amended and Restated Credit Agreement, dated
as of , 1998 (as from time to time amended and in effect, the "Credit
Agreement"), by and among Prospect Street High Income Portfolio Inc. (the
"Borrower"), the banking institutions referred to therein as Banks
(collectively, the "Banks"), and BankBoston, N.A., as agent (in such capacity,
the "Agent") for the Banks. Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Credit Agreement.
______________________ (the "Assignor") and ____________________________ (the
"Assignee") hereby agree as follows:
Section1. Assignment. Subject to the terms and conditions of this
Assignment and Acceptance, the Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes without recourse to the
Assignor, a ___% interest in and to all of the Assignor's rights and obligations
with respect to its Commitment Percentage and its Commitment Amount, the Loans
owing to it and the Note held by it under the Credit Agreement.
Section2. Assignor's Representations. The Assignor (a) represents and
warrants that (i) it is legally authorized to enter into this Assignment and
Acceptance, and (ii) as of the date hereof, its aggregate Commitment Amount is
[$_____________], its Commitment Percentage is [____%], the aggregate
outstanding principal balance of its Loans equals [$____________] (in each case
after giving effect to the assignment contemplated hereby but without giving
effect to any contemplated assignments which have not yet become effective), (b)
makes no representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any of the other Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement, any of the other Loan Documents or
any other instrument or document furnished pursuant thereto or the attachment,
perfection or priority of any security interest or mortgage, other than that it
is the legal and beneficial owner of the interest being assigned by it hereunder
free and clear of any claim or encumbrance; (c) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or any other Person primarily or secondarily liable in respect
of any of the Obligations, or the performance or observance by the Borrower or
any other Person primarily or secondarily liable in respect of any of the
Obligations or any of its obligations under the Credit Agreement or any of the
other Loan Documents or any other instrument or document delivered or executed
pursuant thereto; and (d) attaches hereto the Note delivered to it under the
Credit Agreement.
-2-
The Assignor requests that the Borrower exchange the Assignor's Note
for new Notes payable to the Assignor and the Assignee as follows:
Notes Payable to Amounts of
the Order of: Notes
Assignor $____________
Assignee $____________
Section3. Assignee's Representations. The Assignee (a) represents and
warrants that (i) it is duly and legally authorized to enter into this
Assignment and Acceptance, (ii) the execution, delivery and performance of this
Assignment and Acceptance do not conflict with any provision of law or of the
charter or by-laws of the Assignee, or of any agreement binding on the Assignee,
(iii) all acts, conditions and things required to be done and performed and to
have occurred prior to the execution, delivery and performance of this
Assignment and Acceptance, and to render the same the legal, valid and binding
obligation of the Assignee, enforceable against it in accordance with its terms,
have been done and performed and have occurred in due and strict compliance with
all applicable laws; (b) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 5.01 thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (c) agrees that it will,
independently and without reliance upon the Assignor, the Agent or any other
Bank 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; (d) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Credit
Agreement and the other Loan Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
and (e) agrees that it will perform in accordance with their terms all the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Bank.
Section4. Effective Date. The effective date for this Assignment and
Acceptance shall be [__________] (the "Effective Date"). Following the execution
of this Assignment and Acceptance each party hereto shall deliver its duly
executed counterpart hereof to the Agent for consent by the Agent and recording
in the Register by the Agent. Schedule 1 to the Credit Agreement shall thereupon
be replaced as of the Effective Date by the Schedule 1 annexed hereto.
Section5. Rights Under Credit Agreement. Upon such acceptance and
recording, from and after the Effective Date, (a) the Assignee shall be a party
to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Bank thereunder, and (b) the
Assignor shall, with respect to that portion of its interest under the Credit
Agreement assigned hereunder, relinquish its rights and be released from its
obligations under the Credit Agreement; provided, however, that the Assignor
shall retain its rights to be indemnified pursuant to Section 9.03 of the Credit
Agreement with respect to any claims or actions arising prior to the Effective
Date.
Section6. Payments. Upon such acceptance of this Assignment and
Acceptance by the Agent and such recording, from and after the Effective Date,
the Agent shall make all payments in respect of the rights and interests
assigned hereby (including payments of principal, interest, fees and other
amounts) to the Assignee. The Assignor and the Assignee shall make any
appropriate adjustments in payments for periods prior to the Effective Date by
the Agent or with respect to the making of this assignment directly between
themselves.
Section7. Governing Law. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO
TAKE EFFECT AS A SEALED INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED IN
-3-
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT
REFERENCE TO CONFLICT OF LAWS).
Section 8. Counterparts. This Assignment and Acceptance may be executed
in any number of counterparts which shall together constitute but one and the
same agreement.
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.
[ASSIGNOR]
By:________________________________
Title:
[ASSIGNEE]
By:________________________________
Title:
CONSENTED TO:
PROSPECT STREET HIGH
INCOME PORTFOLIO INC.
By:________________________________
Title:
BANKBOSTON, N.A., as Agent
By:________________________________
Title:
-4-
Exhibit G
FORM OF DESIGNATION AGREEMENT
Dated ___________________
Reference is made to that certain Amended and Restated Credit
Agreement, dated as of ____________, 1998 (as amended, supplemented or otherwise
modified from time, the "Credit Agreement"), by and among Prospect Street High
Income Portfolio Inc., the Banks parties thereto, and BankBoston, N.A., as Agent
(the "Agent"). Terms defined in the Credit Agreement are used herein with the
same meaning.
[NAME OF DESIGNATING LENDER] (the "Designating Lender"), [NAME OF
DESIGNEE] (the "Designee"), the Agent and Borrower agree as follows:
1. Pursuant to Section 9.06(e) of the Credit Agreement, the Designating
Lender hereby designates the Designee, and the Designee hereby accepts such
designation, to have a right to make Loans pursuant to Article II of the Credit
Agreement. Any assignment by the Designating Lender to the Designee of its
rights to make a Loan pursuant to such Article II shall be effective at the time
of the funding of such Loan and not before such time.
2. Except as set forth in Section 7 below, the Designating Lender makes
no representation or warranty and assumes no responsibility pursuant to this
Designation Agreement with respect to (a) any statements, warranties or
representations made in or in connection with any Loan Document or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of any Loan Document or any other instrument and document furnished pursuant
thereto and (b) the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under any Loan Document or
any other instrument or document furnished pursuant thereto.
3. The Designee (a) confirms that is has received a copy of each Loan
Document, together with copies of the financial statements referred to in
Section 5.01 of the Credit Agreement and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Designation Agreement; (b) agrees that it will independently and
without reliance upon the Agent, the Designating Lender or any other Bank 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 any Loan Document; (c) confirms that it is a Designated Lender (d)
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers and discretion under any Loan Document as are delegated
to the Agent by the terms thereof, together with such powers and discretion as
are reasonably incidental thereto; and (e) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of any
Loan Document are required to be performed by it as a Bank.
4. The Designee hereby appoints the [Designating Lender or a specified
branch or affiliate of Designating Lender] as the Designee's agent and attorney
in fact and grants to the [Designating Lender or a specified branch or affiliate
of Designating Lender] an irrevocable power of attorney to receive payments made
for the benefit of the Designee under the Credit Agreement, to deliver and
receive all communications and notices under the Credit Agreement and other Loan
Documents and to exercise on the Designees' behalf all rights to vote and to
grant and make approvals, waivers, consents of amendments to or under the Credit
Agreement or other Loan Documents. Any document executed by such agent on the
Designee's behalf in connection with the Credit Agreement or other Loan
Documents shall be binding on the Designee. The Borrower, the Agent and each of
the Banks may rely on and are beneficiaries of the preceding provisions.
-1-
5. Following the execution of this Designation Agreement by the
Designating Lender, its Designee and the Borrower, it will be delivered to the
Agent for acceptance and recording by the Agent. The effective date for this
Designation Agreement (the "Effective Date") shall be the date of acceptance
hereof by the Agent, unless otherwise specified on the signation page thereto.
6. Each of the Borrower, the Designating Lender and the Agent hereby
(a) acknowledges that the Designee is relying on the non-petition provisions of
Section 9.11 of the Credit Agreement as agreed to by all signatories thereto and
(b) reaffirms that it will not institute against the Designee or join any other
Person in instituting against the Designee any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any federal or state
bankruptcy or similar law for one year and one day after the payment in full of
the latest maturing commercial paper note issued by the Designee.
7. The Designating Lender unconditionally agrees to pay or reimburse
the Designee and save the Designee harmless against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
or asserted by any of the parties to the Loan Documents against the Designee, in
its capacity as such, in any way relating to or arising out of this Agreement or
any other Loan Documents or any action taken or omitted by the Designee
hereunder or thereunder, provided that the Designating Lender shall not be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements if the
same results from the Designee's gross negligence or willful misconduct.
8. Upon such acceptance and recording by the Agent, as of the Effective
Date, the Designee shall be a party to the Credit Agreement with a right to make
Loans as a Designated Lender pursuant to Section 2.03(d) of the Credit Agreement
and the rights and obligations of a Designated Lender related thereto; provided,
however, that the Designee shall not be required to make payments with respect
to such obligations except to the extent of excess cash flow of the Designee
which is not otherwise required to repay obligations of the Designee which are
then due and payable. Notwithstanding the foregoing, the [Designating Lender or
a specified branch or affiliate of Designating Lender], as administrative agent
for the Designee, shall be and remain obligated to the Borrower, the Agent and
the Banks for the timely satisfaction of each and every of the obligations of
the Designee and the Designating Lender with respect to the Credit Agreement,
including, without limitation, any indemnification obligations under Section
7.05 of the Credit Agreement any sums otherwise payable to the Borrower by the
Designee.
9. This Designation Agreement shall be governed by and construed as an
agreement under seal in accordance with the laws of the Commonwealth of
Massachusetts.
10. This Designation Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Designation Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
of this Designation Agreement.
IN WITNESS WHEREOF, the Designating Lender and the Designee intending
to be legally bound, have caused this Designation Agreement to be executed by
their officers thereunto duly authorized as of the date first above written.
[NAME OF DESIGNATING LENDER], as Designating
Lender
By:________________________________________
Title:
-2-
[NAME OF DESIGNEE], as Designee
By:________________________________________
Title:
Lending Office (and address for notices):
PROSPECT STREET HIGH INCOME PORTFOLIO INC.,
as Borrower
By:________________________________________
Title:
Effective Date:
Accepted this ___ day
of _______________, 19__
BANKBOSTON, N.A., as Agent
By:______________________
Title:
-3-
Schedule 1
COMMITMENT COMMITMENT
BANKS AMOUNT PERCENTAGE
BANKBOSTON, N.A.
Domestic Lending Office:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - 01-15-02 $25,000,000 50%
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
LIBOR Lending Office:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇-▇▇-▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
COMMERZBANK AG NEW YORK
BRANCH
Domestic Lending Office:
Two World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ $25,000,000 50%
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
LIBOR Lending Office:
Two World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
BORROWER:
PROSPECT STREET HIGH INCOME
PORTFOLIO INC.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
-1-
