AMENDED AND RESTATED CREDIT AGREEMENT
by and between
PILGRIM AMERICA GROUP, INC.
and
FIRST BANK NATIONAL ASSOCIATION
dated as of July 31, 1996
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS ....................................................... 1
Section 1.1 Defined Terms ....................................................... 1
Section 1.2 Accounting Terms and Calculations ................................... 15
Section 1.3 Computation of Time Periods ......................................... 15
Section 1.4 Other Definitional Terms ............................................ 16
ARTICLE II
TERMS OF THE CREDIT FACILITIES
Part A -- Terms of Lending ............................................................. 16
Section 2.1 Lending Commitments ................................................ 16
Section 2.2 Procedure for Loans ................................................ 17
Section 2.3 Notes .............................................................. 18
Section 2.4 Conversions and Continuations ...................................... 18
Section 2.5 Interest Rates, Default Interest and Payments ...................... 19
Section 2.6 Repayment .......................................................... 20
Section 2.7 Optional Prepayments ............................................... 20
Section 2.8 Letters of Credit .................................................. 21
Section 2.9 Procedures for Letters of Credit ................................... 21
Section 2.10 Terms of Letters of Credit ......................................... 21
Section 2.11 Agreement to Repay Letter of Credit Drawings ....................... 21
Section 2.12 Obligations Absolute ............................................... 22
Section 2.13 Increased Cost for Letters of Credit ............................... 23
Section 2.14 Optional Reduction of Commitment Amount or Termination of Commitment 23
Section 2.15 Loans to Cover Unpaid Drawings ..................................... 24
Section 2.16 Fees ............................................................... 24
Section 2.17 Computation ........................................................ 24
Section 2.18 Payments ........................................................... 24
Section 2.19 Use of Loan Proceeds ............................................... 25
Section 2.20 Interest Rate Not Ascertainable, Etc ............................... 25
Section 2.21 Increased Cost ..................................................... 26
Section 2.22 Illegality ......................................................... 27
Section 2.23 Increased Capital Requirements ..................................... 27
Section 2.24 Funding Losses; CD Rate Advances and Eurodollar Rate Advances ...... 28
Section 2.25 Discretion of Bank as to Manner of Funding ......................... 28
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ARTICLE III
CONDITIONS PRECEDENT ................................................................... 29
Section 3.1 Conditions Precedent to Term Loan .................................. 29
Section 3.3 Conditions Precedent to all Loans .................................. 31
ARTICLE IV
REPRESENTATIONS AND WARRANTIES ......................................................... 32
Section 4.1 Organization, Standing, Etc ........................................ 32
Section 4.2 Authorization and Validity ......................................... 33
Section 4.3 No Conflict; No Default ............................................ 33
Section 4.4 Government Consent ................................................. 33
Section 4.5 Financial Statements and Condition ................................. 34
Section 4.6 Litigation ......................................................... 34
Section 4.7 ERISA .............................................................. 34
Section 4.8 Federal Reserve Regulations ........................................ 34
Section 4.9 Title to Property; Leases; Liens; Subordination .................... 35
Section 4.10 Taxes .............................................................. 35
Section 4.11 Trademarks, Patents ................................................ 35
Section 4.12 Burdensome Restrictions ............................................ 35
Section 4.13 Force Majeure ...................................................... 35
Section 4.14 Investment Company Act ............................................. 36
Section 4.15 Public Utility Holding Company Act ................................. 36
Section 4.16 Retirement Benefits ................................................ 36
Section 4.17 Subsidiaries ....................................................... 36
Section 4.18 Fund Agreements .................................................... 36
Section 4.19 Full Disclosure .................................................... 36
ARTICLE V
AFFIRMATIVE COVENANTS .................................................................. 37
Section 5.1 Financial Statements and Reports ................................... 37
Section 5.2 Corporate Existence ................................................ 39
Section 5.3 Insurance .......................................................... 39
Section 5.4 Payment of Taxes and Claims ........................................ 40
Section 5.5 Inspection ......................................................... 40
Section 5.6 Maintenance of Properties .......................................... 40
Section 5.7 Books and Records .................................................. 40
Section 5.8 Compliance ......................................................... 40
Section 5.9 Notice of Litigation ............................................... 41
Section 5.10 ERISA .............................................................. 41
Section 5.11 Fund Agreements .................................................... 41
Section 5.12 Advisory Subsidiaries .............................................. 41
Section 5.13 Pledge of Stock of Advisory Subsidiaries ........................... 43
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Section 5.14 Further Assurances ................................................ 43
ARTICLE VI
NEGATIVE COVENANTS .................................................................... 44
Section 6.1 Merger ............................................................ 44
Section 6.2 Disposition of Assets ............................................. 44
Section 6.3 Plans ............................................................. 45
Section 6.4 Change in Nature of Business ...................................... 45
Section 6.5 Subsidiaries ...................................................... 45
Section 6.6 Negative Pledges; Subsidiary Restrictions ......................... 45
Section 6.7 Restricted Payments ............................................... 45
Section 6.8 Transactions with Affiliates ...................................... 46
Section 6.9 Accounting Changes ................................................ 46
Section 6.10 Capital Expenditures .............................................. 46
Section 6.11 Investments ....................................................... 46
Section 6.12 Indebtedness ...................................................... 47
Section 6.13 Liens ............................................................. 47
Section 6.14 Contingent Obligations ............................................ 49
Section 6.15 Net Worth ......................................................... 49
Section 6.16 Leverage Ratio .................................................... 49
Section 6.17 Funded Debt Leverage Ratio ........................................ 49
Section 6.18 Fixed Charge Coverage Ratio ....................................... 49
Section 6.19 Minimum Fund Balances ............................................. 49
Section 6.20 EBITDA ............................................................ 49
Section 6.21 Loan Proceeds ..................................................... 50
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES ........................................................ 50
Section 7.1 Events of Default ................................................. 50
Section 7.2 Remedies .......................................................... 53
Section 7.3 Offset ............................................................ 53
ARTICLE VIII
MISCELLANEOUS ......................................................................... 54
Section 8.1 Modifications ..................................................... 54
Section 8.2 Expenses; Amendment or Waiver Fee ................................. 54
Section 8.3 Waivers, etc ...................................................... 54
Section 8.4 Notices ........................................................... 54
Section 8.5 Taxes ............................................................. 55
Section 8.6 Successors and Assigns; Disposition of Loans; Transferees.......... 55
Section 8.7 Confidentiality of Information .................................... 56
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Section 8.8 Governing Law and Construction .................................... 56
Section 8.9 Consent to Jurisdiction ........................................... 56
Section 8.10 Waiver of Jury Trial .............................................. 57
Section 8.11 Survival of Agreement ............................................. 57
Section 8.12 Indemnification ................................................... 57
Section 8.13 Captions .......................................................... 58
Section 8.14 Entire Agreement .................................................. 58
Section 8.15 Counterparts ...................................................... 58
Section 8.16 Borrower Acknowledgements ......................................... 58
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AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (the "Agreement"),
dated as of July 31, 1996 is by and between PILGRIM AMERICA GROUP, INC., a
Delaware corporation (the "Borrower"), and FIRST BANK NATIONAL ASSOCIATION, a
national banking association (the "Bank").
WHEREAS, the Borrower and the Bank are the parties to that
certain Credit Agreement dated as of April 28, 1995, as amended by that certain
First Amendment to Credit Agreement dated as of May 31, 1995, that certain
Second Amendment to Credit Agreement dated as of August 28, 1995, that certain
Third Amendment to Credit Agreement dated April 19, 1996 and that certain Fourth
Amendment to Credit Agreement dated as of June 21, 1996 (as so amended, the
"Existing Credit Agreement"); and
WHEREAS, the Borrower and the Bank desire to further amend and
restate the Existing Credit Agreement in its entirety.
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
---------
DEFINITIONS AND ACCOUNTING TERMS
--------------------------------
Section 1.1 Defined Terms. As used in this Agreement the
following terms shall have the following respective meanings (and such meanings
shall be equally applicable to both the singular and plural form of the terms
defined, as the context may require):
"Adjusted CD Rate": With respect to each Interest Period
applicable to a CD Rate Advance, the sum (rounded upward, if necessary, to the
next one hundredth of one percent) of (a) the rate per annum obtained by
dividing (i) the CD Rate as of the first day of the Interest Period, by (ii)
1.00 minus the Domestic Reserve Percentage, plus (b) the annual rate most
recently estimated by the Bank as the then current net annual assessment rate
payable by the Bank to the Federal Deposit Insurance Corporation (or any
successor) for insuring time deposits made in Dollars at the Bank's domestic
offices, plus (c) the cost (converted to an equivalent rate per annum) of
customary brokerage fees incurred by the Bank in obtaining funds by the sale of
its negotiable certificates of deposit.
"Adjusted Fixed Eurodollar Rate": With respect to each
Interest Period applicable to a Fixed Eurodollar Rate Advance, the rate (rounded
upward, if necessary, to the next one hundredth of one percent) determined by
dividing the Eurodollar Rate as of the first day of such Interest Period by 1.00
minus the Eurodollar Reserve Percentage.
"Adjusted Floating Eurodollar Rate": On any date of
determination, the rate (rounded upward, if necessary, to the next one-hundredth
of one percent) determined by dividing the Eurodollar Rate on such date by 1.00
minus the Eurodollar Reserve Percentage.
"Advance": Any portion of the outstanding Loans as to which
the Borrower has elected one of the available interest rate options and, if
applicable, an Interest Period. An Advance may be a Fixed Eurodollar Rate
Advance, a Floating Eurodollar Rate Advance, a CD Rate Advance or a Reference
Rate Advance.
"Advisory Contracts": Contracts of the type described in 15
U.S.C. ss. 80a-15(a).
"Advisory Fund": Any Fund for which an Advisory Subsidiary
acts as investment adviser and is entitled to receive fees out of the assets of
such Fund, pursuant to an Advisory Contract.
"Advisory Subsidiary": PAII and any other Subsidiary of the
Borrower that acts as investment adviser for any Advisory Fund and, as such, is
party to Advisory Contracts.
"Affiliate": When used with reference to any Person, (a) each
Person that, directly or indirectly, controls, is controlled by or is under
common control with, the Person referred to, (b) each Person which beneficially
owns or holds, directly or indirectly, twenty-five percent or more of any class
of voting stock of the Person referred to (or if the Person referred to is not a
corporation, twenty-five percent or more of the equity interest), (c) each
Person, twenty-five percent of more of the voting stock (or if such Person is
not a corporation, twenty-five percent or more of the equity interest) of which
is beneficially owned or held, directly or indirectly, by the Person referred
to, and (d) each of such Person's officers, directors, joint venturers and
partners. The term control (including the terms "controlled by" and "under
common control with") means the possession, directly, of the power to direct or
cause the direction of the management and policies of the Person in question.
"Applicable Margin": With respect to each Reference Rate
Advance, 0.50%. With respect to each CD Rate Advance or Eurodollar Rate Advance
(i) from the Closing Date until July 31, 1997, 1.50%; and (ii) from and after
August 1, 1997, the
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Applicable Margin set forth in the table below as in effect on any date of
determination for a Floating Eurodollar Advance and on the first day of each
Interest Period for such CD Rate Advance or Fixed Eurodollar Rate Advance for
such Interest Period, in each case determined based on the Fixed Charge Coverage
Ratio calculated as of the end of the Measurement Period ended on the last day
of the most recently completed fiscal quarter for which the Borrower has
furnished the financial statements and reports required under Section 5.1(c)
(adjustments to the Applicable Margin to become effective on the first day of
the first month after the date the Borrower is required to deliver its financial
statements for such quarterly period under Section 5.1(c)).
Fixed Charge Fixed and Floating
Coverage Ratio CD Rate Eurodollar
(in each case, to 1.00) Advances Rate Advances
--------------------- -------- -------------
3.00 or greater 1.25% 1.25%
2.50 to 2.99 1.50% 1.50%
Less than 2.50 1.75% 1.75%
Notwithstanding the foregoing, if the Borrower has not furnished the financial
statements and reports required under Section 5.1(c) for the last month of any
fiscal quarter by the first day of the first month after such financial
statements and reports were required to be delivered, the Applicable Margin
shall be calculated as if the Fixed Charge Coverage Ratio as of the end of the
Measurement Period ended on the last day of the most recently completed fiscal
quarter was less than 2.50 to 1.00 for the period from the first day of the
first month after such financial statements and reports were required to be
delivered until the first day of the month following the month in which such
financial statements and reports are delivered.
"B Share Fund": Any Fund for which PASI acts as principal
distributor and in which B Shares will be sold.
"B Shares": In respect of any B Share Fund, any shares of such
Fund not subject to any Conversion Feature which are sold pursuant to a
distribution plan adopted under the Investment Company Act, and with respect to
which a Contingent Deferred Sales Charge on terms no less favorable than those
set forth on Schedule 1.1(a) is payable to PASI.
"Board": The Board of Governors of the Federal Reserve System
or any successor thereto.
"Business Day": Any day (other than a Saturday, Sunday or
legal holiday in the State of Minnesota) on which national banks are permitted
to be open in Minneapolis, Minnesota.
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"Capital Expenditures": For any period, the sum of all amounts
that would, in accordance with GAAP, be included as additions to property, plant
and equipment on a consolidated statement of cash flow for the Borrower during
such period.
"Capitalized Lease": A lease of (or other agreement conveying
the right to use) real or personal property with respect to which at least a
portion of the rent or other amounts thereon constitute Capitalized Lease
Obligations.
"Capitalized Lease Obligations": As to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board), and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13).
"Cash Balances": As of any date of determination, on a
consolidated basis, cash balances as reflected on the books of the Borrower and
its Subsidiaries, giving effect to any checks drawn on any accounts.
"Cash Equivalents": Investments of the Borrower of the type
described in Sections 6.11(c), (d), (e) and (f).
"CD Rate": With respect to any CD Rate Advance for any
Interest Period applicable thereto, the rate of interest determined by the Bank
for the relevant Interest Period to be the average (rounded upward, if
necessary, to the next 1/100th of 1%) of the rates quoted to the Bank at
approximately 8:00 a.m., Minneapolis time (or as soon thereafter as
practicable), or at the option of the Bank at approximately the time of the
request for a CD Rate Advance if such request is made later than 8:00 a.m.,
Minneapolis time, in each case on the first day of the applicable Interest
Period by certificate of deposit dealers selected by the Bank, in its sole
discretion, for the purchase from the Bank, at face value, of certificates of
deposit issued by the Bank in an amount and maturity comparable to the amount
and maturity of the requested CD Rate Advance, or at the option of the Bank
determined for such amount and maturity based on published composite quotations
of certificate of deposit rates selected by the Bank.
"CD Rate Advance": An Advance with respect to which the
interest rate is determined by reference to the Adjusted CD Rate.
"Change of Control": The occurrence, after the Closing Date,
of any of the following circumstances: (a) EAHC not owning, directly or
indirectly, all equity
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securities of the Borrower; or (b) the Borrower not owning, directly or
indirectly, all equity securities of any Subsidiary that has executed and
delivered a Security Agreement; or (c) any Person or two or more Persons acting
in concert acquiring beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934), directly or indirectly, of securities of EAHC (or other securities
convertible into such securities) representing twenty-five percent or more of
the combined voting power of all securities of EAHC entitled to vote in the
election of directors; or (d) during any period of up to twelve consecutive
months, whether commencing before or after the Closing Date, individuals who at
the beginning of such twelve-month period were directors of the Borrower or EAHC
ceasing for any reason to constitute a majority of the Board of Directors of the
Borrower or EAHC, respectively (other than by reason of death, disability or
scheduled retirement).
"Closing Date": The Business Day on which all the conditions
precedent to the obligation of the Bank to make the initial Revolving Loan, as
set forth in Article III, have been satisfied.
"Closing Fee": As defined in Section 2.16(a).
"Code": The Internal Revenue Code of 1986, as amended.
"Commitment": The obligation of the Bank to make Revolving
Loans to the Borrower in an aggregate principal amount outstanding at any time
not to exceed the Commitment Amount, and on the Transformation Date to convert
the outstanding principal balance thereof to a Term Loan, upon the terms and
subject to the conditions and limitations of this Agreement.
"Commitment Amount": $15,000,000, as the same may be reduced
pursuant to Section 2.14.
"Commitment Fees": As defined in Section 2.16(b).
"Contingent Deferred Sales Charge": With respect to any Fund,
the contingent deferred sales charges payable, either directly or by withholding
from the proceeds of the redemption of the shares of such Fund, by the
shareholders of such Fund on any redemption of shares of such Fund in accordance
with the Prospectus relating to such Fund and the Rules of Fair Practice.
"Contingent Obligation": With respect to any Person at the
time of any determination, without duplication, any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person (the "primary obligor" ) in
any manner, whether directly or otherwise; provided, that the term "Contingent
Obligation" shall not
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include endorsements for collection or deposit, in each case in the ordinary
course of business.
"Conversion Feature": With respect to any share of any Fund, a
mandatory or elective provision (including, without limitation, a provision
which permits or requires such share to be converted into a share of a different
class) which may result in a reduction or termination of any Contingent Deferred
Sales Charge owing from such Fund or the shareholder to PASI, except to the
extent such reduction or termination arises from the exchange of such share for
shares of another Fund with respect to which such Contingent Deferred Sales
Charge will be owing.
"Default": Any event which, with the giving of notice (whether
such notice is required under Section 7.1, or under some other provision of this
Agreement, or otherwise) or lapse of time, or both, would constitute an Event of
Default.
"Domestic Reserve Percentage": As of any day, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board for determining the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves) for a member bank of
the Federal Reserve System, with deposits comparable in amount to those held by
the Bank, in respect of new non-personal time deposits in dollars having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more. The rate of interest applicable to any outstanding CD Rate Advance
shall be adjusted automatically on and as of the effective date of any change in
the Domestic Reserve Percentage.
"EAHC": Express America Holdings Corporation, a Delaware
corporation.
"EBITDA": For any period of determination, the consolidated
net income of the Borrower before deductions for income taxes, interest expense,
depreciation and amortization, all as determined in accordance with GAAP.
"EBITDA Margin": For any Measurement Period, the ratio
(expressed as a percentage) (a) EBITDA bears to (b) the total revenue of the
Borrower and its Subsidiaries on a consolidated basis.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended.
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"ERISA Affiliate": Any trade or business (whether or not
incorporated) that is a member of a group of which the Borrower is a member and
which is treated as a single employer under Section 414 of the Code.
"Eurodollar Business Day": A Business Day which is also a day
for trading by and between banks in United States dollar deposits in the
interbank Eurodollar market and a day on which banks are open for business in
New York City.
"Eurodollar Rate": With respect to each Eurodollar Rate
Advance on any date of determination, the average offered rate for deposits in
United States dollars (rounded upward, if necessary, to the nearest 1/16 of 1%)
for delivery of such deposits on such date, for 30 days, in the case of a
Floating Eurodollar Advance or the number of days in the Interest Period in the
case of a Fixed Eurodollar Rate Advance, which appears on the Reuters Screen
LIBO page as of 11:00 a.m., London time (or such other time as of which such
rate appears) two Eurodollar Business Days prior to such date, or the rate for
such deposits determined by the Bank at such time based on such other published
service of general application as shall be selected by the Bank for such
purpose; provided, that in lieu of determining the rate in the foregoing manner,
the Bank may determine the rate based on rates at which United States dollar
deposits are offered to the Bank in the interbank Eurodollar market at such time
for delivery in Immediately Available Funds on such date in an amount
approximately equal to the Advance by the Bank to which such Interest Period is
to apply (rounded upward, if necessary, to the nearest 1/16 of 1%). "Reuters
Screen LIBO page" means the display designated as page "LIBO" on the Reuters
Monitor Money Rate Screen (or such other page as may replace the LIBO page on
such service for the purpose of displaying London interbank offered rates of
major banks for United States dollar deposits).
"Eurodollar Rate Advance": A Fixed Eurodollar Rate Advance or
a Floating Eurodollar Rate Advance.
"Eurodollar Reserve Percentage": As of any day, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board for determining the maximum reserve requirement
(including any basic, supplemental or emergency reserves) for a member bank of
the Federal Reserve System, with deposits comparable in amount to those held by
the Bank, in respect of "Eurocurrency Liabilities" as such term is defined in
Regulation D of the Board. The rate of interest applicable to any outstanding
Eurodollar Rate Advances shall be adjusted automatically on and as of the
effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default": Any event described in Section 7.1.
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"Exchange Act": The Securities Exchange Act of 1934, as
amended.
"Fixed Charge Coverage Ratio": For any Measurement Period, the
ratio that (a) EBITDA for such Measurement Period bears to (b) the sum of
interest expense for such Measurement Period plus aggregate scheduled payments
on Indebtedness for the 12 fiscal months immediately following the last day of
such Measurement Period, determined on a consolidated basis for the Borrower and
its Subsidiaries.
"Fixed Eurodollar Rate Advance": An Advance with respect to
which the interest rate is determined by reference to the Adjusted Fixed
Eurodollar Rate.
"Fixed Rate Advance": A CD Rate Advance or a Fixed Eurodollar
Rate Advance.
"Floating Eurodollar Rate Advance": An Advance with respect to
which the interest rate is determined by reference to the Adjusted Floating
Eurodollar Rate.
"Fund": Each open-end or close-end investment company
registered under the Investment Company Act, or separate series of shares of any
such company representing interests in a separate pool of Investments.
"Fund Agreements": All investment advisory agreements,
distribution agreements and other agreements under which the Borrower or any
Subsidiary is entitled to compensation (including, without limitation,
Contingent Deferred Sales Charges) for services rendered to any Fund.
"Funded Debt": At the time of any determination, the sum of
(a) that portion of Total Indebtedness with a final maturity in excess of one
year after such time of determination (including any current portion thereof),
plus (b) any Indebtedness of the Borrower or any Subsidiary excluded in
calculating Total Indebtedness and having a final maturity in excess of one year
after such time of determination (including the current portion thereof).
"GAAP": Generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of any
date of determination.
"Guaranty": The guaranty of EAHC and PAII, both dated April
28, 1995 (as the same may be amended, modified, supplemented or restated) and
any
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acknowledgments or affirmations thereof, or a guaranty of any Advisory
Subsidiary in the form of Exhibit B.
"Holding Account": A deposit account belonging to the Bank
into which the Borrower may be required to make deposits pursuant to the
provisions of this Agreement, such account to be under the sole dominion and
control of the Bank and not subject to withdrawal by the Borrower, with any
amounts therein to be held for application toward payment of any outstanding
Letters of Credit when drawn upon.
"Immediately Available Funds": Funds with good value on the
day and in the city in which payment is received.
"Indebtedness": With respect to any Person at the time of any
determination, without duplication, all obligations, contingent or otherwise, of
such Person which in accordance with GAAP should be classified upon the balance
sheet of such Person as liabilities, but in any event including: (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all obligations of such Person upon which interest charges are customarily paid
or accrued, (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property purchased by such Person, (e)
all obligations of such Person issued or assumed as the deferred purchase price
of property or services, (f) all obligations of others secured by any Lien on
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (g) all Capitalized Lease Obligations of such
Person, (h) all obligations of such Person in respect of interest rate
protection agreements, (i) all obligations of such Person, actual or contingent,
as an account party in respect of letters of credit or bankers' acceptances, (j)
all obligations of any partnership or joint venture as to which such Person is
or may become personally liable, and (k) all Contingent Obligations of such
Person.
"Interest Period": With respect to each Fixed Eurodollar Rate
Advance, the period commencing on the date of such Advance or on the last day of
the immediately preceding Interest Period, if any, applicable to an outstanding
Advance and ending one, two, three or six months thereafter, and with respect to
such CD Rate Advance, the period commencing on the date of such Advance or on
the last day of the immediately preceding Interest Period, if any, applicable to
an outstanding Advance and ending twelve or twenty-four months thereafter, as
the Borrower may elect in the applicable notice of borrowing, continuation or
conversion; provided that:
(a) Any Interest Period applicable to a CD Rate
Advance that would otherwise end on a day which is not a Business Day
shall be extended to the next succeeding Business Day;
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(b) Any Interest Period applicable to a Fixed
Eurodollar Rate Advance that would otherwise end on a day which is not
a Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless such Eurodollar Business Day falls in
another calendar month, in which case such Interest Period shall end on
the next preceding Eurodollar Business Day;
(c) Any Interest Period applicable to a Fixed
Eurodollar Rate Advance that begins on the last Eurodollar Business Day
of a calendar month (or 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 Eurodollar Business Day of a calendar
month;
(d) No Interest Period with respect to the Revolving
Loans shall end after the Transformation Date; and
(e) Interest Periods shall be selected so that the
scheduled principal payments on the Term Loan can be made without
having to pay a Fixed Rate Advance prior to the last day of the
Interest Period applicable thereto.
"Investment": The acquisition, purchase, making or holding of
any stock or other security, any loan, advance, contribution to capital,
extension of credit (except for trade and customer accounts receivable for
inventory sold or services rendered in the ordinary course of business and
payable in accordance with customary trade terms), any acquisitions of real or
personal property (other than real and personal property acquired in the
ordinary course of business) and any purchase or commitment or option to
purchase stock or other debt or equity securities of or any interest in another
Person or any integral part of any business or the assets comprising such
business or part thereof. The amount of any Investment shall be the original
cost of such Investment plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment.
"Investment Advisers Act": The Investment Advisers Act of
1940, as amended.
"Investment Company Act": The Investment Company Act of 1940,
as amended.
"Letter of Credit": An irrevocable letter of credit issued by
the Bank pursuant to this Agreement for the account of the Borrower.
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"Letter of Credit Fee": As defined in Section 2.16(c).
"Letter of Credit Usage": As of any date, the sum of (a) the
amount of all Unpaid Drawings plus (b) the amount available to be drawn under
all outstanding Letters of Credit.
"Leverage Ratio": At the time of any determination, the ratio
of (a) Total Indebtedness to (b) Net Worth.
"Lien": With respect to any Person, any security interest,
mortgage, pledge, lien, charge, encumbrance, title retention agreement or
analogous instrument or device (including the interest of each lessor under any
Capitalized Lease), in, of or on any assets or properties of such Person, now
owned or hereafter acquired, whether arising by agreement or operation of law.
"Loan": A Revolving Loan or the Term Loan.
"Loan Documents": This Agreement, the Note, the Security
Documents and the Guaranties.
"Maturity Date": The earlier of (a) the sixteenth Quarterly
Payment Date occurring after the Transformation Date and (b) the date on which
the Obligations become due and payable pursuant to Section 7.2 hereof.
"Measurement Period": The twelve consecutive months or four
consecutive fiscal quarters, as applicable, ending on the last day of any month
or fiscal quarter.
"Multiemployer Plan": A multiemployer plan, as such term is
defined in Section 4001 (a) (3) of ERISA, which is maintained (on the Closing
Date, within the five years preceding the Closing Date, or at any time after the
Closing Date) for employees of the Borrower or any ERISA Affiliate.
"NASD": The National Association of Securities Dealers, Inc.,
and any successor thereto or to the functions thereof.
"NationsBanc": NationsBanc Mortgage Corporation, a Texas
corporation.
"Net Asset Value": With respect to any Fund, as of the date of
any determination, the net asset value of such Fund computed in the manner net
asset value was computed for purposes of its reports to the shareholders of such
Funds.
- 11 -
"Net Worth": As of any date of determination, with respect to
any Person, the sum of the amounts set forth on a consolidated balance sheet of
such Person as the sum of the common stock, preferred stock, additional paid-in
capital and retained earnings of such Person, but excluding any amounts
attributable to receivables, notes or other obligations owed by Affiliates of
such Person that are not otherwise eliminated in determining consolidated net
worth.
"Note": A promissory note of the Borrower in the form of
Exhibit A.
"Obligations": The Borrower's obligations in respect of the
due and punctual payment of principal and interest on the Note when and as due,
whether by acceleration or otherwise and all fees (including Commitment Fees),
expenses, indemnities, reimbursements and other obligations of the Borrower
under this Agreement or any other Loan Document, in all cases whether now
existing or hereafter arising or incurred.
"PAII": Pilgrim America Investments, Inc., a Delaware
corporation.
"PASI": Pilgrim America Securities, Inc., a Delaware
corporation.
"PBGC": The Pension Benefit Guaranty Corporation, established
pursuant to Subtitle A of Title IV of ERISA, and any successor thereto or to the
functions thereof.
"Person": Any natural person, corporation, partnership,
limited partnership, limited liability company, joint venture, firm,
association, trust, unincorporated organization, government or governmental
agency or political subdivision or any other entity, whether acting in an
individual, fiduciary or other capacity.
"Plan": Each employee benefit plan (whether in existence on
the Closing Date or thereafter instituted), as such term is defined in Section 3
of ERISA, maintained for the benefit of employees, officers or directors of the
Borrower or of any ERISA Affiliate.
"Pledge Agreements": The Pledge Agreement of EAHC and the
Pledge Agreement of the Borrower, both dated as of April 28, 1995, as the same
may be supplemented, amended or otherwise modified and in effect from time to
time.
"Prohibited Transaction": The respective meanings assigned to
such term in Section 4975 of the Code and Section 406 of ERISA.
"Prospectus": With respect to any Fund, the prospectus and
related statement of additional information filed with the SEC under the
Securities Act in
- 12 -
respect of the shares of such Fund, as the same may be amended or supplemented
from time to time.
"Quarterly Payment Date": The last Business Day of each of
March, June, September and December.
"Reference Rate": The rate of interest from time to time
publicly announced by the Bank as its "reference rate." The Bank may lend to its
customers at rates that are at, above or below the Reference Rate. For purposes
of determining any interest rate hereunder or under any other Loan Document
which is based on the Reference Rate, such interest rate shall change as and
when the Reference Rate shall change.
"Reference Rate Advance": An Advance with respect to which the
interest rate is determined by reference to the Reference Rate.
"Regulatory Change": Any change after the Closing Date in
federal, state or foreign laws or regulations or the adoption or making after
such date of any interpretations, directives or requests applying to a class of
banks including the Bank under any federal, state or foreign laws or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
"Reportable Event": A reportable event as defined in Section
4043 of ERISA and the regulations issued under such Section, with respect to a
Plan, excluding, however, such events as to which the PBGC by regulation has
waived the requirement of Section 4043(a) of ERISA that it be notified within 30
days of the occurrence of such event, provided that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any waiver in
accordance with Section 412(d) of the Code.
"Restricted Payments": With respect to the Borrower,
collectively, all dividends or other distributions of any nature (cash,
securities other than common stock of the Borrower, assets or otherwise), and
all payments on any class of equity securities (including warrants, options or
rights therefor) issued by the Borrower, whether such securities are authorized
or outstanding on the Closing Date or at any time thereafter and any redemption
or purchase of, or distribution in respect of, any of the foregoing, whether
directly or indirectly.
"Revolving Loan": As defined in Section 2.1(a).
"Revolving Loan Date": The date of the making of any Revolving
Loans hereunder.
"Revolving Loan Period" The period from the Closing Date to
and including the day preceding the Transformation Date, and if there is no
Transformation Date, from the Closing Date to and including the date on which
the Note is paid in full and the Commitment has expired or been terminated.
- 13 -
"Rules of Fair Practice": The Rules of Fair Practice of the
NASD, as amended, and the rules, regulations and interpretations of the NASD in
respect thereto.
"SEC": The Securities and Exchange Commission, and any
successor thereto or to the functions thereof.
"Securities Act": The Securities Act of 1933, as amended.
"Security Agreements": The Security Agreements of the
Borrower, PAII and PASI, all dated as of April 28, 1995; any Security Agreement
of an Advisory Subsidiary in the form of Exhibit C; and any Security Agreement
of any other Subsidiary in the form of Exhibit D entered into thereafter, in
each case as the same may be supplemented, amended or otherwise modified and in
effect from time to time.
"Security Documents": The Security Agreements, the Pledge
Agreements, the Trademark Assignment and all other agreements, documents and
instruments delivered hereto or thereto or in connection herewith or therewith
creating, perfecting or otherwise providing for any Lien to secure the
Obligations, in each case as amended, supplemented, restated or otherwise
modified and in effect from time to time.
"Selling Agent": Each Person which acts as any Subsidiary's
direct or indirect distributor, underwriter, broker, dealer or agent for the
shares of any Fund.
"SIPA": The Securities Investor Protection Act of 1970, as
amended.
"SIPC": The Securities Investor Corporation established
pursuant to SIPA, or any successor thereto or to the functions thereof.
"Solvency Certificate": A certificate of the chief financial
officer of the Borrower substantially in the form of Exhibit L.
"Subsidiary": With respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power for the election of a majority of the board of directors or other
Persons
- 14 -
performing similar functions are owned by such Person either directly or through
one or more Subsidiaries.
"Term Loan": As defined in Section 2.1.
"Termination Date": The earliest of (a) the Transformation
Date, (b) the date on which the Commitment is terminated pursuant to Section 7.2
or (c) the date on which the Commitment is terminated pursuant to Section 2.14.
"Term Loan Period": The period from the Transformation Date to
and including the Maturity Date.
"Total Indebtedness": At the time of any determination, the
amount, on a consolidated basis, of all obligations, liabilities and
indebtedness of the Borrower and its Subsidiaries as determined in accordance
with GAAP.
"Total Outstandings": As of any date of determination, the sum
of (a) the aggregate unpaid principal balance of Loans outstanding on such date,
(b) the Letter of Credit Usage on such date.
"Trademark Assignment": The Collateral Assignment of
Trademarks of the Borrower dated as of April 28, 1995, as the same may be
supplemented, amended, or otherwise modified and in effect from time to time.
"Transformation Date": July 31, 1997.
"Unpaid Drawing": As defined in Section 2.11.
"Unused Commitment": As of any date of determination, the
amount by which the Commitment Amount exceeds the Total Outstandings on such
date.
Section 1.2 Accounting Terms and Calculations. Except as may
be expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder shall be made
in accordance with GAAP. To the extent any change in GAAP affects any
computation or determination required to be made pursuant to this Agreement,
such computation or determination shall be made as if such change in GAAP had
not occurred unless the Borrower and the Bank agree in writing on an adjustment
to such computation or determination to account for such change in GAAP.
Section 1.3 Computation of Time Periods. In this Agreement, in
the computation of a period of time from a specified date to a later specified
date, unless otherwise stated the word "from" means "from and including" and the
word "to" or "until" each means "to but excluding".
- 15 -
Section 1.4 Other Definitional Terms. The words "hereof",
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. References to Sections, Exhibits, Schedules and like references
are to this Agreement unless otherwise expressly provided. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". Unless the context in which used herein otherwise clearly requires,
"or" has the inclusive meaning represented by the phrase "and/or".
ARTICLE II
----------
TERMS OF THE CREDIT FACILITIES
Part A -- Terms of Lending
--------------------------
Section 2.1 Lending Commitments.
2.1(a) Revolving Credit. On the Closing Date, each
"Loan" outstanding under the Existing Credit Agreement shall become a
Revolving Loan hereunder, each "Reference Rate Advance," "Floating
Eurodollar Rate Advance," Fixed Eurodollar Rate Advance" and "CD Rate
Advance" outstanding under the Existing Credit Agreement shall become a
Reference Rate Advance, a Floating Eurodollar Rate Advance, a Fixed
Eurodollar Rate Advance or a CD Rate Advance, respectively, hereunder
(and, with respect to Fixed Eurodollar Rate Advances and CD Rate
Advances, the "Interest Periods" in effect under the Existing Credit
Agreement shall remain in effect). On the terms and subject to the
conditions hereof, the Bank agrees to make a revolving credit facility
available as loans (each, a "Revolving Loan" and, collectively, the
"Revolving Loans") to the Borrower on a revolving basis at any time and
from time to time from the Closing Date to the Termination Date, during
which period the Borrower may borrow, repay and reborrow in accordance
with the provisions hereof, provided, that no Revolving Loan will be
made in any amount which, after giving effect thereto, would cause the
Total Outstandings to exceed the Commitment Amount. Revolving Loans may
be obtained and maintained, at the election of the Borrower but subject
to the limitations hereof, as Reference Rate Advances, Floating
Eurodollar Rate Advances, Fixed Eurodollar Rate Advances or CD Rate
Advances.
2.1(b) Conversion to Term Loan. On the Transformation
Date, provided that no Default or Event of Default has occurred and is
continuing, the aggregate outstanding principal balance on such date of
the Revolving Loans shall be converted into a term loan (the "Term
Loan") on the terms
- 16 -
and subject to the conditions set forth herein. The Term Loan or
portions thereof may be maintained, at the election of the Borrower but
subject to the limitations hereof, as Reference Rate Advances, Floating
Eurodollar Rate Advances, Fixed Eurodollar Rate Advances or CD Rate
Advances.
Section 2.2 Procedure for Loans.
2.2(a) Procedure for Revolving Loans. Any request by
the Borrower for Revolving Loans hereunder shall be in writing or by
telephone and must be given so as to be received by the Bank not later
than 12:00 noon (Minneapolis time) two Eurodollar Business Days prior
to the requested Revolving Loan Date if the Revolving Loans are
requested as Eurodollar Rate Advances and not later than 12:00 noon
(Minneapolis time) on the requested Revolving Loan Date if the
Revolving Loans are requested as CD Rate Advances or Reference Rate
Advances. Each request for Revolving Loans hereunder shall be
irrevocable and shall be deemed a representation by the Borrower that
on the requested Revolving Loan Date and after giving effect to the
requested Revolving Loans, the applicable conditions specified in
Article III have been and will be satisfied. Each request for Revolving
Loans hereunder shall specify (i) the requested Revolving Loan Date,
(ii) the aggregate amount of Revolving Loans to be made on such date,
which shall be in a minimum amount of $100,000 or, if more, an integral
multiple thereof, (iii) whether such Revolving Loans are to be funded
as Reference Rate Advances, Floating Eurodollar Rate Advances, Fixed
Eurodollar Rate Advances or CD Rate Advances and (iv) in the case of CD
Rate Advances or Fixed Eurodollar Rate Advances, the duration of the
initial Interest Period applicable thereto. The Bank may rely on any
telephone request for Revolving Loans hereunder which it believes in
good faith to be genuine; and the Borrower hereby waives the right to
dispute the Bank's record of the terms of such telephone request.
Unless the Bank determines that any applicable condition specified in
Article III has not been satisfied, the Bank will make available to the
Borrower at the Bank's principal office in Minneapolis, Minnesota in
Immediately Available Funds not later than 3:00 p.m. (Minneapolis time)
on the requested Revolving Loan Date the amount of the requested
Revolving Loans.
2.2(b) Procedure for Conversion to Term Loan. Not
later than 12:00 noon (Minneapolis time) two Eurodollar Business Days
prior to the Transformation Date if the Borrower elects to maintain all
or any portion of the Term Loan as Eurodollar Rate Advances, and not
later than 12:00 noon (Minneapolis time) one Business Day prior to the
Transformation Date if the Borrower elects to maintain all of the Term
Loan as CD Rate Advances or Reference Rate Advances, the Borrower shall
deliver to the Bank a written notice electing the type of Advances into
which the Term Loan will be
- 17 -
converted on the Transformation Date. Such notice shall specify (i)
whether the Term Loan is to be funded as Floating Eurodollar Rate
Advances, Fixed Eurodollar Rate Advances, CD Rate Advances or Reference
Rate Advances, and (ii) in the case of CD Rate Advances or Fixed
Eurodollar Rate Advances, the duration of the initial Interest Period
applicable thereto.
Section 2.3 Notes. The Loans shall be evidenced by a single
Note payable to the order of the Bank in a principal amount equal to the
Commitment Amount originally in effect. The Bank shall enter in its ledgers and
records the amount of each Loan, the various Advances made, converted or
continued and the payments made thereon, and the Bank is authorized by the
Borrower to enter on a schedule attached to its Note a record of such Loans,
Advances and payments; provided, however that the failure by the Bank to make
any such entry or any error in making such entry shall not limit or otherwise
affect the obligation of the Borrower hereunder and on the Note, and, in all
events, the principal amounts owing by the Borrower in respect of the Note shall
be the aggregate amount of all Loans made by the Bank less all payments of
principal thereof made by the Borrower.
Section 2.4 Conversions and Continuations. On the terms and
subject to the limitations hereof, the Borrower shall have the option at any
time and from time to time to convert all or any portion of the Advances into
Reference Rate Advances, CD Rate Advances, Fixed Eurodollar Rate Advances or
Floating Eurodollar Rate Advances, or to continue a Eurodollar Rate Advance or a
CD Rate Advance as such; provided, however that (a) a Fixed Eurodollar Rate
Advance or a CD Rate Advance may be converted or continued only on the last day
of the Interest Period applicable thereto, and (b) no Advance may be converted
to or continued as a Eurodollar Rate Advance or a CD Rate Advance if a Default
or Event of Default has occurred and is continuing on the proposed date of
continuation or conversion. Advances may be converted to, or continued as,
Eurodollar Rate Advances and CD Rate Advances only in integral multiples of
$100,000. The Borrower shall give the Bank written notice of any continuation or
conversion of any Advances and such notice must be given so as to be received by
the Bank not later than 12:00 noon (Minneapolis time) two Eurodollar Business
Days prior to requested date of conversion or continuation in the case of the
continuation of, or conversion to, Fixed Eurodollar Rate Advances and on the
date of the requested conversion to Reference Rate Advances, Floating Eurodollar
Rate Advances or CD Rate Advances. Each such notice shall specify (a) the amount
to be continued or converted, (b) the date for the continuation or conversion
(which must be (i) the last day of the preceding Interest Period for any
continuation or conversion of Fixed Eurodollar Rate Advances or CD Rate
Advances, and (ii) a Eurodollar Business Day in the case of continuations as or
conversion to Fixed Eurodollar Rate Advances and a Business Day in the case of
conversions to Reference Rate Advances, Floating Eurodollar Rate Advances or CD
Rate Advances), and (c) in the case of conversions to or
- 18 -
continuations as Fixed Eurodollar Rate Advances or CD Rate Advance, the Interest
Period applicable thereto. Any notice given by the Borrower under this Section
shall be irrevocable. If the Borrower shall fail to notify the Bank of the
continuation of any Fixed Eurodollar Rate Advances or CD Rate Advances within
the time required by this Section, such Advances shall, on the last day of the
Interest Period applicable thereto, automatically be converted into Reference
Rate Advances of the same principal amount.
Section 2.5 Interest Rates, Default Interest and Payments.
Interest shall accrue and be payable on the Advances as follows:
(a) Each Fixed Eurodollar Rate Advance shall bear
interest on the unpaid principal amount thereof during the Interest
Period applicable thereto at a rate per annum equal to the sum of (i)
the Adjusted Fixed Eurodollar Rate for such Interest Period, plus (ii)
the Applicable Margin.
(b) Each Floating Eurodollar Rate Advance shall bear
interest on the unpaid principal amount thereof at a floating rate per
annum equal to the sum of (A) the Adjusted Floating Eurodollar Rate,
plus (B) the Applicable Margin.
(c) Each Reference Rate Advance shall bear interest
on the unpaid principal amount thereof at a floating rate per annum
equal to the sum of (A) the Reference Rate, plus (B) the Applicable
Margin.
(d) Each CD Rate Advance shall bear interest on the
unpaid principal amount thereof during the Interest Period applicable
thereto at a rate per annum equal to the sum of (i) the Adjusted CD
Rate for such Interest Period, plus (ii) the Applicable Margin.
(e) Any Advance not paid when due, whether at the
date scheduled therefor or earlier upon acceleration, shall bear
interest until paid in full (A) during the balance of any Interest
Period applicable to any Fixed Eurodollar Rate Advance, at a rate per
annum equal to the sum of the rate applicable to such Advance during
such Interest Period plus 2.0%, and (B) otherwise, at a rate per annum
equal to the sum of (1) the Reference Rate, plus (2) the Applicable
Margin for Reference Rate Advances, plus (3) 2.0%.
(f) Interest shall be payable (A) with respect to
each Fixed Rate Advance, on the last day of the Interest Period
applicable thereto and on each day that would have been the last day of
the Interest Period for such Advance had successive Interest Periods of
three months duration been applicable to such Advance; (B) with respect
to each Reference Rate Advance and Floating Eurodollar Rate Advance, in
arrears on the Quarterly Payment
- 19 -
Date; and (C) with respect to any Loan, on the date such Loan becomes
due and payable in full; provided that interest under Section 2.5 (e)
shall be payable on demand.
(g) Interest accrued under the Existing Credit
Agreement through the Closing Date shall be payable on the date
provided for herein for the type of Advance into which each Advance
outstanding thereunder is converted pursuant to Section 2.1(a).
Section 2.6 Repayment. The unpaid principal balance of the
Note, together with all accrued and unpaid interest thereon, shall be due and
payable on the Maturity Date. If a Letter of Credit is outstanding on the
Maturity Date, the Borrower shall deposit into the Holding Account an amount
sufficient to cause the amount deposited in the Holding Account to equal the
undrawn face amount of such outstanding Letter of Credit. At any time after such
deposit is made and all outstanding Obligations, other than Obligations with
respect to such outstanding Letters of Credit, have been paid in full, if such
outstanding Letter of Credit expires or is reduced without the full amount
thereof having been drawn, the Bank shall withdraw from the Holding Account and
deliver to the Borrower an amount equal to the amount by which the amount on
deposit in the Holding Account exceeds the aggregate undrawn face amount of
outstanding Letters of Credit (after giving effect to such expiration or
reduction). In addition, the outstanding principal balance of the Term Loan on
the Transformation Date shall be payable in sixteen quarterly installments, each
in an amount equal to one-sixteenth of the Total Outstandings as of the
Transformation Date, on each subsequent Quarterly Payment Date beginning with
the first Quarterly Payment Date after the Transformation Date.
Section 2.7 Optional Prepayments. The Borrower may prepay
Reference Rate Advances, in whole or in part, at any time, without premium or
penalty. Any such prepayment must be accompanied by accrued and unpaid interest
on the amount prepaid. Each partial prepayment shall be in an aggregate amount
for all the Banks of $100,000 or an integral multiple thereof. Except upon an
acceleration following an Event of Default or upon termination of the
Commitment, the Borrower may pay Fixed Rate Advances only on the last day of the
Interest Period applicable thereto. Amounts paid (unless following an
acceleration or upon termination of the Commitment) or prepaid under this
Section 2.7 during the Revolving Period may be reborrowed upon the terms and
subject to the conditions and limitations of this Agreement. Amounts paid or
prepaid on the Term Loan under this Section 2.7 shall be applied to the
installments due on the Term Loan in the inverse order of their maturities.
- 20 -
Part B -- Terms of the Letter of Credit Facility
------------------------------------------------
Section 2.8 Letters of Credit. Upon the terms and subject to
the conditions of this Agreement, the Bank agrees to (a) issue Letters of Credit
for the account of the Borrower from time to time during the Revolving Loan
Period in such amounts as the Borrower shall request, and (b) renew existing
Letters of Credit during the Term Loan Period, in each case in an amount not
exceeding the lesser of (i) the amount of the Letter of Credit being renewed,
and (ii) the amount of the Total Outstandings on the date of such renewal minus
the amount of scheduled payments under Section 2.6 during the term of the
renewal Letter of Credit; provided that no Letter of Credit will be issued in
any amount which, after giving effect to such issuance, would cause (A) Total
Outstandings to exceed the Commitment Amount, or (B) the Letter of Credit Usage
to exceed $4,500,000.
Section 2.9 Procedures for Letters of Credit. Each request for
a Letter of Credit shall be made by the Borrower in writing, by telex, facsimile
transmission or electronic conveyance received by the Bank by 2:00 p.m.,
Minneapolis time, on a Business Day which is not less than one Business Day
preceding the requested date of issuance (which shall also be a Business Day).
Each request for a Letter of Credit shall be deemed a representation by the
Borrower that on the date of issuance of such Letter of Credit and after giving
effect thereto the applicable conditions specified in Article III have been and
will be satisfied. The Bank may require that such request be made on such letter
of credit application and reimbursement agreement form as the Bank may from time
to time specify, along with satisfactory evidence of the authority and
incumbency of the officials of the Borrower making such request.
Section 2.10 Terms of Letters of Credit. Letters of Credit may
be issued in support of obligations of EAHC to NationsBanc existing on the
Closing Date pursuant to the Asset Purchase Agreement dated as of August 7,
1994; provided that the Bank may require as a condition precedent to the
issuance of the first Letter of Credit that documents in form and substance
satisfactory to the Bank have been executed by NationsBanc releasing collateral
of EAHC pledged to NationsBanc to secure such obligation in an amount not less
than the face amount of such Letter of Credit. All Letters of Credit must expire
not later than the Maturity Date. No Letter of Credit may have a term longer
than 12 months.
Section 2.11 Agreement to Repay Letter of Credit Drawings. If
the Bank has received documents purporting to draw under a Letter of Credit that
the Bank believes conform to the requirements of the Letter of Credit, or if the
Bank has decided that it will comply with the Borrower's written or oral request
or authorization to pay a drawing on any Letter of Credit that the Bank does not
believe conforms to the requirements of the Letter of Credit, it will notify the
Borrower of that fact. The Borrower shall reimburse the Bank by 9:30 a.m.
- 21 -
(Minneapolis time) on the day on which such drawing is to be paid in Immediately
Available Funds in an amount equal to the amount of such drawing. Any amount by
which the Borrower has failed to reimburse the Bank for the full amount of such
drawing by 10:00 a.m. on the date on which the Bank in its notice indicated that
it would pay such drawing, until reimbursed from the proceeds of Loans pursuant
to Section 2.15 or out of funds available in the Holding Account, is an "Unpaid
Drawing."
Section 2.12 Obligations Absolute. The obligation of the
Borrower under Section 2.11 to repay the Bank for any amount drawn on any Letter
of Credit and to repay the Bank for any Advances made under Section 2.15 to
cover Unpaid Drawings shall be absolute, unconditional and irrevocable, shall
continue for so long as any Letter of Credit is outstanding notwithstanding any
termination of this Agreement, and shall be paid strictly in accordance with the
terms of this Agreement, under all circumstances whatsoever, including without
limitation the following circumstances:
(a) Any lack of validity or enforceability of any Letter of
Credit;
(b) The existence of any claim, setoff, defense or other right
which the Borrower may have or claim at any time against any
beneficiary, transferee or holder of any Letter of Credit (or any
Person for whom any such beneficiary, transferee or holder may be
acting), the Bank or any other Person, whether in connection with a
Letter of Credit, this Agreement, the transactions contemplated hereby,
or any unrelated transaction; or
(c) Any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever.
Neither the Bank nor its officers, directors or employees shall be liable or
responsible for, and the obligations of the Borrower to the Bank shall not be
impaired by:
(i) The use which may be made of any Letter of Credit or
for any acts or omissions of any beneficiary,
transferee or holder thereof in connection therewith;
(ii) The validity, sufficiency or genuineness of
documents, or of any endorsements thereon, even if
such documents or endorsements should, in fact, prove
to be in any or all respects invalid, insufficient,
fraudulent or forged;
- 22 -
(iii) The acceptance by the Bank of documents that appear
on their face to be in order, without responsibility
for further investigation, regardless of any notice
or information to the contrary; or
(iv) Any other action of the Bank in making or failing to
make payment under any Letter of Credit if in good
faith and in conformity with U.S. or foreign laws,
regulations or customs applicable thereto.
Notwithstanding the foregoing, the Borrower shall have a claim against the Bank,
and the Bank shall be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential, damages suffered by the
Borrower which the Borrower proves were caused by the Bank's willful misconduct
or gross negligence in determining whether documents presented under any Letter
of Credit comply with the terms thereof.
Section 2.13 Increased Cost for Letters of Credit. If any
Regulatory Change shall either (a) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against Letters of
Credit issued by the Bank, or (b) shall impose on the Bank any other conditions
affecting this Agreement or any Letter of Credit; and the result of any of the
foregoing is to increase the cost to the Bank of issuing or maintaining any
Letter of Credit, or reduce the amount of any sum received or receivable by the
Bank hereunder, then, upon demand (which demand shall be given by the Bank
promptly after it determines such increased cost or reduction), the Borrower
shall pay to the Bank the additional amount or amounts as will compensate the
Bank for such increased cost or reduction. A certificate submitted to the
Borrower by the Bank setting forth the basis for the determination of such
additional amount or amounts necessary to compensate the Bank as aforesaid shall
be conclusive and binding on the Borrower absent error.
Part C -- General
-----------------
Section 2.14 Optional Reduction of Commitment Amount or
Termination of Commitment. The Borrower may, at any time, upon not less than
thirty days prior written notice to the Bank, reduce the Commitment Amount, with
any such reduction in a minimum amount of $1,000,000, or, if more, in an
integral multiple of $250,000; provided, however, that the Borrower may not at
any time reduce the Commitment Amount below the Total Outstandings. The Borrower
may, at any time when there are no Letters of Credit outstanding, upon not less
than thirty days prior written notice to the Bank, terminate the Commitment in
its entirety.
- 23 -
Section 2.15 Loans to Cover Unpaid Drawings. Whenever any
Unpaid Drawing exists for which there are not then funds in the Holding Account
to cover the same, the Bank is authorized (and the Borrower does here so
authorize the Bank) to, and shall, make a Revolving Loan or, after the
Transformation Date, increase the Term Loan to the Borrower in an amount equal
to the amount of the Unpaid Drawing. The Bank shall apply the proceeds of such
Revolving Loan or increase directly to reimburse itself for such Unpaid Drawing.
If at the time the Bank makes a Loan pursuant to the provisions of this Section,
the applicable conditions precedent specified in Article III shall not have been
satisfied, the Borrower shall pay to the Bank interest on the funds so advanced
at a floating rate per annum equal to the sum of the Reference Rate plus the
Applicable Margin plus two percent (2.00%).
Section 2.16 Fees.
2.16(a) Closing Fees. The Borrower shall pay to the
Bank on the date of this Agreement a closing fee (the "Closing Fee") in
an amount equal to $1,500.
2.16(b) Commitment Fee. The Borrower shall pay to the
Bank fees (the "Commitment Fees") in an amount determined by applying a
rate of three-eighths of one percent (0.375%) per annum to the average
daily Unused Commitment for the period from the Closing Date to the
Termination Date. Such Commitment Fees are payable in arrears on each
Quarterly Payment Date and on the Termination Date.
2.16(c) Letter of Credit Fees. For each Letter of
Credit issued, the Borrower shall pay to the Bank, in advance payable
on the date of issuance, a fee (a "Letter of Credit Fee") in an amount
determined by applying a per annum rate equal to the Applicable Margin
for CD Rate Advances then in effect to the original face amount of the
Letter of Credit for the period from the date of issuance to the
scheduled expiration date of such Letter of Credit. In addition to the
Letter of Credit Fee, the Borrower shall pay to the Bank, on demand,
all issuance, amendment, drawing and other fees regularly charged by
the Bank to its letter of credit customers and all out-of-pocket
expenses incurred by the Bank in connection with the issuance,
amendment, administration or payment of any Letter of Credit.
Section 2.17 Computation. Commitment Fees, Letter of Credit
Fees and interest on the Loans shall be computed on the basis of actual days
elapsed and a year of 360 days.
Section 2.18 Payments. Payments and prepayments of principal
of, and interest on, the Note and all fees, expenses and other obligations under
this
- 24 -
Agreement payable to the Bank shall be made without setoff or counterclaim in
Immediately Available Funds not later than 3:00 p.m. (Minneapolis time) on the
dates called for under this Agreement to the Bank at its main office in
Minneapolis, Minnesota. Funds received after such time shall be deemed to have
been received on the next Business Day. Whenever any payment to be made
hereunder or on the Note shall be stated to be due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day and
such extension of time, in the case of a payment of principal, shall be included
in the computation of any interest on such principal payment.
Section 2.19 Use of Loan Proceeds. The proceeds of the
Revolving Loans shall be used by the Borrower and the Subsidiaries (i) for their
general business purposes in a manner not in conflict with any of the Borrower's
covenants in this Agreement (including, subject to the terms and conditions
hereof, the making of Restricted Payments) and (ii) otherwise for (A) the
acquisition of Funds to be managed by the Borrower and the Subsidiaries, for
costs associated with starting new Funds to be managed by the Borrower and its
Subsidiaries, and for other costs associated with increasing assets under
management by the Borrower and its Subsidiaries, and (B) to finance the payment
of sales commissions on sales of B Shares in connection with which Contingent
Deferred Sales Charges are payable to PASI. For the proceeds of a Revolving Loan
to be applied pursuant to Section 2.19(ii), the Borrower shall provide to the
Bank documentation evidencing the costs to be paid, in form and substance
satisfactory to the Bank.
Section 2.20 Interest Rate Not Ascertainable, Etc. If, on or
prior to the date for determining the Adjusted CD Rate or the Adjusted
Eurodollar Rate for any CD Rate Advance or the Eurodollar Rate Advance, the Bank
determines (which determination shall be conclusive and binding, absent error)
that:
(a) deposits in dollars (in the applicable amount)
are not being made available to the Bank in the relevant market for
such Interest Period, or
(b) the Adjusted CD Rate or the Adjusted Eurodollar
Rate, as applicable, will not adequately and fairly reflect the cost to
the Bank of funding or maintaining CD Rate Advances and Eurodollar Rate
Advances for such Interest Period,
the Bank shall forthwith give notice to the Borrower of such determination,
whereupon the obligation of the Bank to make or continue, or to convert any
Advances to, CD Rate Advances or Eurodollar Rate Advances, as applicable, shall
be suspended until the Bank notifies the Borrower that the circumstances giving
rise to
- 25 -
such suspension no longer exist. While any such suspension continues, all
further Advances by the Bank as CD Rate Advances or Eurodollar Rate Advances, as
applicable, shall be made as Reference Rate Advances. No such suspension shall
affect the interest rate then in effect during the applicable Interest Period
for any CD Rate Advance or Eurodollar Rate Advance outstanding at the time such
suspension is imposed.
Section 2.21 Increased Cost. If any Regulatory Change:
(a) shall subject the Bank to any tax, duty or other
charge with respect to its CD Rate Advances or Eurodollar Rate
Advances, the Note, or its obligation to make CD Rate Advances or
Eurodollar Rate Advances or shall change the basis of taxation of
payment to the Bank of the principal of or interest on CD Rate Advances
or Eurodollar Rate Advances or any other amounts due under this
Agreement in respect of CD Rate Advances or Eurodollar Rate Advances or
its obligation to make CD Rate Advances or Eurodollar Rate Advances
(except for changes in the rate of tax on the overall net income of the
Bank imposed by the jurisdiction in which the Bank's principal office
is located); or
(b) shall impose, modify or deem applicable any
reserve, special deposit, capital requirement or similar requirement
(including, without limitation, any such requirement imposed by the
Board, but excluding with respect to any CD Rate Advance or Eurodollar
Rate Advance any such requirement to the extent included in calculating
the applicable Adjusted CD Rate or Adjusted Eurodollar Rate) against
assets of, deposits with or for the account of, or credit extended by,
the Bank's applicable lending office or shall impose on the Bank (or
its applicable lending office) or on the United States market for
certificates of deposit or the interbank Eurodollar market any other
condition affecting its CD Rate Advances or Eurodollar Rate Advances,
the Note or its obligation to make CD Rate Advances or Eurodollar Rate
Advances;
and the result of any of the foregoing is to increase the cost to the Bank of
making or maintaining any CD Rate Advances or Eurodollar Rate Advance, or to
reduce the amount of any sum received or receivable by the Bank under this
Agreement or under the Note, then, within 30 days after demand by the Bank, the
Borrower shall pay to the Bank such additional amount or amounts as will
compensate the Bank for such increased cost or reduction; provided, that the
Borrower shall not be obligated to pay any such additional amount (i) unless the
Bank shall first have notified the Borrower in writing that it intends to seek
such compensation pursuant to this Section, or (ii) to the extent such
additional amount is
- 26 -
attributable to the period ending 91 days prior to the date of the first such
notice with respect to such Regulatory Change (the "Excluded Period"), except to
the extent any amount is attributable to the Excluded Period as a result of the
retroactive application of the applicable Regulatory Change. A certificate of
the Bank claiming compensation under this Section, setting forth the additional
amount or amounts to be paid to it hereunder and stating in reasonable detail
the basis for the charge and the method of computation, shall be conclusive in
the absence of error. In determining such amount, the Bank may use any
reasonable averaging and attribution methods. Failure on the part of the Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable with respect to any Interest Period shall not constitute a waiver of
the Bank's rights to demand compensation for any increased costs or reduction in
amounts received or receivable in any subsequent Interest Period.
Section 2.22 Illegality. If any Regulatory Change shall make
it unlawful or impossible for the Bank to make, maintain or fund any Eurodollar
Rate Advances or CD Rate Advances, the Bank shall notify the Borrower, whereupon
the obligation of the Bank to make or continue, or to convert any Advances to,
Eurodollar Rate Advances or CD Rate Advances shall be suspended until the Bank
notifies the Borrower that the circumstances giving rise to such suspension no
longer exist. If the Bank determines that it may not lawfully continue to
maintain any CD Rate Advances or Eurodollar Rate Advances to the end of the
applicable Interest Period, the affected Advances shall be automatically
converted to Reference Rate Advances as of the date of the Bank's notice, and
upon the conversion of any CD Rate Advances or Eurodollar Rate Advances the
Borrower shall indemnify the Bank in accordance with Section 2.24.
Section 2.23 Increased Capital Requirements. In the event
that, as a result of any Regulatory Change, compliance by the Bank with any
applicable law or governmental rule, requirement, regulation, guideline or order
(whether or not having the force of law) regarding capital adequacy has the
effect of reducing the rate of return on the Bank's capital as a consequence of
the Commitment or amounts outstanding under the Note to a level below that which
the Bank would have achieved but for such compliance (taking into consideration
the Bank's policies with respect to capital adequacy), then from time to time
the Borrower shall pay to the Bank, within thirty days after written demand by
the Bank, such additional amount or amounts as will compensate the Bank for such
reduction; provided that the Borrower shall not be obligated to pay any such
additional amount (i) unless the Bank shall first have notified the Borrower in
writing that it intends to seek such compensation pursuant to this Section, or
(ii) to the extent such additional amount is attributable to the period ending
91 days prior to the date of the first such notice with respect to such
Regulatory Change (the "Excluded Period"), except to the extent any amount is
attributable to the Excluded Period as a result of the retroactive application
of the applicable Regulatory Change. A certificate, which shall be conclusive
except for manifest error, as to the amount of any such reduction (including
calculations in reasonable detail showing how the Bank computed such
- 27 -
reduction and a statement that the Bank has not allocated to the Commitment or
amounts outstanding under the Note a proportionately greater amount of such
reduction than is attributable to each of its other commitments to lend or to
each of its other outstanding credit extensions that are affected similarly by
such compliance by the Bank, whether or not the Bank allocates any portion of
such reduction to such other commitments or credit extensions, shall be
furnished promptly by the Bank to the Borrower.
Section 2.24 Funding Losses; CD Rate Advances and Eurodollar
Rate Advances. The Borrower shall compensate the Bank, upon its written request,
for all losses, expenses and liabilities (including any interest paid by the
Bank to lenders of funds borrowed by it to make or carry CD Rate Advances or
Eurodollar Rate Advances to the extent not recovered by the Bank in connection
with the re-employment of such funds and including loss of anticipated profits)
which the Bank may sustain: (i) if for any reason, other than a default by the
Bank, a funding of a CD Rate Advance or a Eurodollar Rate Advance does not occur
on the date specified therefor in the Borrower's request or notice as to such
Advance under Section 2.2 or 2.4, or (ii) if, for whatever reason (including,
but not limited to, acceleration of the maturity of Loans following an Event of
Default), any repayment of a CD Rate Advance or a Eurodollar Rate Advance, or a
conversion pursuant to Section 2.22, occurs on any day other than the last day
of the Interest Period applicable thereto. The Bank's request for compensation
shall set forth the basis for the amount requested and shall be final,
conclusive and binding, absent error.
Section 2.25 Discretion of Bank as to Manner of Funding. The
Bank shall be entitled to fund and maintain its funding of CD Rate Advances and
Eurodollar Rate Advances in any manner it may elect, it being understood,
however, that for the purposes of this Agreement all determinations hereunder
(including, but not limited to, determinations under Section 2.24) shall be made
as if the Bank had actually funded and maintained each CD Rate Advance during
the Interest Period for such Advances through the issuance of its certificates
of deposit having a maturity corresponding to the last day of the Interest
Period and bearing an interest rate equal to the CD Rate, and as if the Bank had
actually funded and maintained each Fixed Eurodollar Rate Advance during the
Interest Period for such Advance through the purchase of deposits having a
maturity corresponding to the last day of the Interest Period and bearing an
interest rate equal to the Eurodollar Rate for such Interest Period.
- 28 -
ARTICLE III
-----------
CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to Term Loan. The making of
the initial Revolving Loan and the issuance of the initial Letter of Credit
shall be subject to the prior or simultaneous fulfillment of the following
conditions:
3.1(a) Documents. The Bank shall have received the
following:
(i) The Note, executed by the Borrower and dated the
date of this Agreement.
(ii) Reaffirmations of Security Agreement, in the
form of Exhibits E, F, G and executed by the Borrower, PAII and PASI,
respectively.
(iii) A Reaffirmation of the Pledge Agreement, in the
form of Exhibit H, executed by the Borrower.
(iv) Reaffirmation of Guaranty and Pledge Agreement,
in the form of Exhibit I, executed by EAHC.
(v) A Reaffirmation of Guaranty, in the form of
Exhibit J, executed by PAII.
(vi) Copies of the corporate resolutions of the
Borrower, PAII, PASI and EAHC authorizing the execution, delivery and
performance of the Loan Documents or reaffirmations thereof to which
each of them is a party, certified as of the Closing Date by the
respective Secretary or an Assistant Secretary of the Borrower, PAII,
PASI and EAHC.
(vii) Incumbency certificates showing the names and
titles and bearing the signatures of the officers of the Borrower,
PAII, PASI and EAHC authorized to execute the Loan Documents or
reaffirmations thereof to which each of them is a party and, in the
case of the Borrower, to request Loans and conversions and
continuations of Advances hereunder, certified as of the Closing Date
by the respective Secretary or an Assistant Secretary of the Borrower,
PAII, PASI and EAHC.
(viii) A certificate of the Secretary or Assistant
Secretary of each of the Borrower, EAHC, PAII and PASI certifying that
the Articles of Incorporation and Bylaws of the Borrower, EAHC, PAII
and PASI, respectively, have not been repealed, rescinded, amended or
otherwise
- 29 -
modified since copies of the same were delivered to the Bank on April
28, 1995.
(ix) Long-form certificates of good standing for the
Borrower, PAII, PASI and EAHC in the respective jurisdictions of their
incorporation, and for the Borrower, PAII and PASI in all of the
jurisdictions in which the character of the properties owned or leased
by it or the business conducted by it makes such qualification
necessary, certified by the appropriate governmental officials as of a
date not more than ten (10) days prior to the Closing Date.
(x) A certificate dated the Closing Date of the chief
executive officer or chief financial officer of the Borrower certifying
that:
(A) All representations and warranties set
forth in Article IV are true and correct as of the Closing
Date, and
(B) On the Closing Date, after giving effect
to the making of the initial Revolving Loan, no Event of
Default or Default shall have occurred or will exist.
(xi) Evidence of compliance with the insurance
requirements of Section 5.3.
(xii) A written opinion of Xxxxx & Xxxx, P.A.,
counsel to the Borrower, PAII, PASI and EAHC, addressed to the Bank and
dated the Closing Date, covering the matters set forth in Exhibit K
hereto.
3.1(b) Additional Conditions. The following
conditions shall exist:
(i) The Borrower shall have performed and complied
with all agreements, terms and conditions contained in this Agreement
required to be performed or complied with by the Borrower prior to or
simultaneously with the Closing Date.
(ii) The Bank shall have received (A) the Closing Fee
and (B) all fees and other amounts due and payable by the Borrower on
or prior to the Closing Date, including the reasonable fees and
expenses of counsel to the Bank payable pursuant to Section 8.2.
3.1(c) Security Documents. All Security Documents (or
financing statements with respect thereto) shall have been appropriately filed
or recorded to the satisfaction of the Bank; any pledged collateral shall have
been duly
- 30 -
delivered to the Bank; and the priority and perfection of the Liens created by
the Security Documents shall have been established to the satisfaction of the
Bank and its counsel.
Section 3.2 Conditions Precedent to the Obligation of the Bank
to issue Letters of Credit and to make certain Loans to Finance any Restricted
Payment. The obligation of the Bank to (i) issue any Letter of Credit hereunder
(other than a Letter of Credit that replaces, and does not increase the amount
available to be drawn under, an existing Letter of Credit), (ii) to make any
Loan the proceeds (or any part thereof) in an amount not less than $500,000 of
which are going to be used to finance any Restricted Payments, or (iii) to make
any other Loan the proceeds (or any part thereof) of which are going to be used
to finance any Restricted Payment if the Bank requests satisfaction of such
conditions (provided that a request under this clause (iii) shall not be made
more than once in any calendar quarter), shall be subject to the prior or
simultaneous fulfillment of each of the following conditions:
3.2(a) the Bank shall have received the following
documents and certificates, each in form and substance satisfactory to the Bank
and its counsel:
(i) a Solvency Certificate duly executed by the chief
financial officer of the Borrower; and
(ii) if requested by the Bank, a favorable written
opinion of counsel to the Borrower and EAHC acceptable to the Bank, as to such
matters and to such effect as may be requested by the Bank.
3.2(b) The Borrower shall have performed and complied
with all agreements, terms and conditions contained in this Agreement required
to be performed or complied with by the Borrower prior to or simultaneously with
the date of the making of such Loan or the issuance of such Letter of Credit.
Section 3.3 Conditions Precedent to all Loans. The obligation
of the Bank to make any Loans or issue any Letters of Credit hereunder shall be
subject to the fulfillment of the following conditions:
3.3(a) Representations and Warranties. The
representations and warranties contained in Article IV shall be true and correct
on and as of each Revolving Loan Date, with the same force and effect as if made
on such date.
3.3(b) No Default. No Default or Event of Default
shall have occurred and be continuing on any Revolving Loan Date, or will exist
after giving effect to the Loans made on such date.
- 31 -
3.3(c) Notices and Requests. The Bank shall have
received the Borrower's request for such Loan as required under Section 2.2.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement and to make
Loans hereunder, the Borrower represents and warrants to the Bank:
Section 4.1 Organization, Standing, Etc. The Borrower is a
corporation duly incorporated and validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as now conducted, to
enter into the Loan Documents or reaffirmations thereof to which it is a party
and to perform its obligations under the Loan Documents to which it is a party.
EAHC is a corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as now conducted, to
enter into the Loan Documents or reaffirmations thereof to which it is a party,
and to perform its obligations under the Loan Documents to which it is a party.
Each Subsidiary is a corporation duly incorporated and validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to carry on its business as now
conducted. Each of EAHC, the Borrower and the Subsidiaries (a) holds all
certificates of authority, licenses and permits necessary to carry on the
business as now conducted in each jurisdiction in which it is carrying on such
business, except where the failure to hold such certificates, licenses or
permits would not have a material adverse effect on the business, operations,
property, assets or condition, financial or otherwise, of the Borrower and the
Subsidiaries taken as a whole, and (b) is duly qualified and in good standing as
a foreign corporation in each jurisdiction in which the character of the
properties owned, leased or operated by the Borrower or the business conducted
by the Borrower makes such qualification necessary and the failure so to qualify
would permanently preclude EAHC, the Borrower or such Subsidiary from enforcing
its rights with respect to any assets or expose EAHC, the Borrower or such
Subsidiary to any liability, which in either case would be material to the
Borrower and the Subsidiaries taken as a whole. PASI is duly registered with the
SEC as a broker-dealer, is a member in good standing of the NASD, and is not in
arrears with respect to any assessment made on it by the SIPC. Each Advisory
Subsidiary is duly registered with the SEC as an investment adviser. PASI
maintains procedures and internal controls reasonably adapted to insure that it
does not extend or maintain credit to or for its customers other than in
accordance with the provisions of Regulation T of the Board, and officers of
PASI regularly supervise its activities and the activities of employees of PASI
to reasonably ensure that PASI does not extend
- 32 -
or maintain credit to or for customers other than in accordance with the
provisions of Regulation T of the Board.
Section 4.2 Authorization and Validity. The execution,
delivery and performance by each of the Borrower, each Subsidiary and EAHC of
the Loan Documents to which it is a party or reaffirmations thereof have been
duly authorized by all necessary corporate action, and Loan Documents when
executed will constitute the legal, valid and binding obligations of the
Borrower, each Subsidiary and EAHC, enforceable against each of them in
accordance with their respective terms, subject to limitations as to
enforceability which might result from bankruptcy, insolvency, moratorium and
other similar laws affecting creditors' rights generally and general principles
of equity.
Section 4.3 No Conflict; No Default. The execution, delivery
and performance by the Borrower, each Subsidiary and EAHC of the Loan Documents
to which each of them is a party or reaffirmations thereof will not (a) violate
any provision of any law, statute, rule or regulation or any order, writ,
judgment, injunction, decree, determination or award of any court, governmental
agency or arbitrator presently in effect having applicability to the Borrower,
such Subsidiary or EAHC, (b) violate or contravene any provision of the Articles
of Incorporation or bylaws of the Borrower, such Subsidiary or EAHC, or (c)
result in a breach of or constitute a default under any agreement, lease or
instrument to which the Borrower, such Subsidiary or EAHC is a party or by which
they or any of their properties may be bound or result in the creation of any
Lien thereunder. None of EAHC, the Borrower or any Subsidiary is in default
under or in violation of any such law, statute, rule or regulation, order, writ,
judgment, injunction, decree, determination or award or any such indenture, loan
or credit agreement or other agreement, lease or instrument in any case in which
the consequences of such default or violation could have a material adverse
effect on the business, operations, properties, assets or condition (financial
or otherwise) of the Borrower and its Subsidiaries taken as a whole. Without
limiting the foregoing, the Borrower and each Subsidiary are in compliance with
all applicable capital requirements of all governmental authorities applicable
to them, including, without limitation, Rule 15c3-1 under the Exchange Act, as
the same is modified with respect to PASI in accordance with the undertaking
outlined in paragraph 2 of the letter dated March 2, 1995 from PASI to the NASD
District Committee for District No. 2, and as the same may be further modified
from time to time by the NASD.
Section 4.4 Government Consent. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with, or exemption by, any governmental or public body or authority is required
on the part of EAHC, the Borrower or any Subsidiary to authorize, or is required
in connection with the execution, delivery and performance of, or the legality,
validity, binding
- 33 -
effect or enforceability of, the Loan Documents, except for any necessary filing
or recordation of or with respect to any of the Security Documents.
Section 4.5 Financial Statements and Condition. The Borrower's
audited consolidated financial statements as at September 30, 1995 and its
unaudited financial statements as at March 31, 1996, as heretofore furnished to
the Bank, have been prepared in accordance with GAAP on a consistent basis
(except for the absence of footnotes and subject to year-end audit adjustments
as to the interim statements) and fairly present the financial condition of the
Borrower and its Subsidiaries as at such dates and the results of their
operations and changes in financial position for the respective periods then
ended. As of the dates of such financial statements, neither the Borrower nor
any Subsidiary had any material obligation, contingent liability, liability for
taxes or long-term lease obligation which is not reflected in such financial
statements or in the notes thereto.
Since September 30, 1995, there has been no material adverse change in the
business, operations, property, assets or condition, financial or otherwise, of
the Borrower and its Subsidiaries taken as a whole.
Section 4.6 Litigation. Except as described on Schedule 4.6,
there are no actions, suits or proceedings pending or, to the knowledge of the
Borrower, threatened against or affecting EAHC, the Borrower or any Subsidiary,
or any of their properties before any court or arbitrator, or any governmental
department, board, agency or other instrumentality which, if determined
adversely to EAHC, the Borrower or any Subsidiary, would have a material adverse
effect on the business, operations, property or condition (financial or
otherwise) of the Borrower and the Subsidiaries taken as a whole or on the
ability of EAHC, the Borrower or any Subsidiary to perform its obligations under
the Loan Documents.
Section 4.7 ERISA. Each Plan is in substantial compliance with
all applicable requirements of ERISA and the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and the
Code setting forth those requirements. No Reportable Event has occurred and is
continuing with respect to any Plan. All of the minimum funding standards
applicable to such Plans have been satisfied and there exists no event or
condition which would reasonably be expected to result in the institution of
proceedings to terminate any Plan under Section 4042 of ERISA. With respect to
each Plan subject to Title IV of ERISA, as of the most recent valuation date for
such Plan, the present value (determined on the basis of reasonable assumptions
employed by the independent actuary for such Plan and previously furnished in
writing to the Bank) of such Plan' s projected benefit obligations did not
exceed the fair market value of such Plan's assets.
Section 4.8 Federal Reserve Regulations. Neither the Borrower
nor any Subsidiary is engaged principally or as one of its important activities
in the business of extending credit for the purpose of purchasing or carrying
margin stock
- 34 -
(as defined in Regulation U of the Board). The value of all margin stock owned
by the Borrower does not constitute more than 25% of the value of the assets of
the Borrower.
Section 4.9 Title to Property; Leases; Liens; Subordination.
Each of the Borrower and the Subsidiaries has (a) good and marketable title to
its real properties and (b) good and sufficient title to, or valid, subsisting
and enforceable leasehold interest in, its other material properties, including
all real properties (other than property disposed of since the date of such
financial statements in the ordinary course of business). None of such
properties is subject to a Lien, except as allowed under Section 6.13. The
Borrower has not subordinated any of its rights under any obligation owing to it
to the rights of any other person.
Section 4.10 Taxes. Each of the Borrower and the Subsidiaries
has filed all federal, state and local tax returns required to be filed and has
paid or made provision for the payment of all taxes due and payable pursuant to
such returns and pursuant to any assessments made against it or any of its
property and all other taxes, fees and other charges imposed on it or any of its
property by any governmental authority (other than taxes, fees or charges the
amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in accordance with
GAAP have been provided on the books of the Borrower). The charges, accruals and
reserves on the books of the Borrower in respect of taxes and other governmental
charges are adequate and the Borrower knows of no proposed material tax
assessment against the Borrower, any Subsidiary or any of their assets or of any
basis therefor.
Section 4.11 Trademarks, Patents. Each of the Borrower and the
Subsidiaries possesses or has the right to use all of the patents, trademarks,
trade names, service marks and copyrights, and applications therefor, and all
technology, know-how, processes, methods and designs used in or necessary for
the conduct of its business, without known conflict with the rights of others.
Section 4.12 Burdensome Restrictions. None of EAHC, the
Borrower or any Subsidiary is a party to or otherwise bound by any indenture,
loan or credit agreement or any lease or other agreement or instrument or
subject to any charter, corporate or partnership restriction which would
foreseeably have a material adverse effect on the business, properties, assets,
operations or condition (financial or otherwise) of the Borrower and the
Subsidiaries taken as a whole or on the ability of EAHC or the Borrower to carry
out its obligations under any Loan Document.
Section 4.13 Force Majeure. Since the date of the most recent
financial statement referred to in Section 4.5, the business, properties and
other assets of the Borrower and the Subsidiaries have not been materially and
adversely affected in any way as the result of any fire or other casualty,
strike, lockout, or other labor
- 35 -
trouble, embargo, sabotage, confiscation, condemnation, riot, civil disturbance,
activity of armed forces or act of God.
Section 4.14 Investment Company Act. Neither the Borrower nor
any Subsidiary is an "investment company" or a company "controlled" by an
investment company within the meaning of the Investment Company Act of 1940, as
amended.
Section 4.15 Public Utility Holding Company Act. Neither the
Borrower nor any Subsidiary is a "holding company" or a "subsidiary company" of
a holding company or an "affiliate" of a holding company or of a subsidiary
company of a holding company within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
Section 4.16 Retirement Benefits. Except as required under
Section 4980B of the Code, Section 601 of ERISA or applicable state law, neither
the Borrower nor any Subsidiary is obligated to provide post-retirement medical
or insurance benefits with respect to employees or former employees.
Section 4.17 Subsidiaries. Schedule 4.17 sets forth as of the
date of this Agreement a list of all Subsidiaries and the number and percentage
of the shares of each class of capital stock owned beneficially or of record by
the Borrower or any Subsidiary therein, and the jurisdiction of incorporation of
each Subsidiary.
Section 4.18 Fund Agreements. Schedule 4.18 sets forth as of
the date of this agreement, a list of all Funds for which PAII acts as
investment adviser or PASI acts as principal distributor, and a list of all
related Fund Agreements. All Fund Agreements are in full force and effect.
Section 4.19 Full Disclosure. Subject to the following
sentence, neither the financial statements referred to in Section 4.5 nor any
other certificate, written statement, exhibit or report furnished by or on
behalf of the Borrower in connection with or pursuant to this Agreement contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements contained therein not misleading.
Certificates or statements furnished by or on behalf of the Borrower to the Bank
consisting of projections or forecasts of future results or events have been
prepared in good faith and based on good faith estimates and assumptions of the
management of the Borrower, and the Borrower has no reason to believe that such
projections or forecasts are not reasonable.
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ARTICLE V
---------
AFFIRMATIVE COVENANTS
Until any obligation of the Bank hereunder to make the
Revolving Loans and Term Loan shall have expired or been terminated and the Note
and all of the other Obligations have been paid in full, unless the Bank shall
otherwise consent in writing:
Section 5.1 Financial Statements and Reports. The Borrower
will furnish to the Bank:
5.1(a) As soon as available and in any event within
ninety days after the end of each fiscal year of the Borrower, the consolidated
financial statements of the Borrower and the Subsidiaries consisting of at least
statements of income, cash flow and changes in stockholders' equity, and a
consolidated balance sheet as at the end of such year, setting forth in each
case in comparative form corresponding figures from the previous annual audit,
certified without qualification by KPMG Peat Marwick or other independent
certified public accountants of recognized national standing selected by the
Borrower and acceptable to the Bank, together with (a) any management letters,
management reports or other supplementary written comments or reports to the
Borrower or its board of directors furnished by such accountants and (b) a
letter from such accountants addressed to the Bank acknowledging that the Bank
is extending credit in reliance on such financial statements and authorizing
such reliance.
5.1(b) Together with the audited financial statements
required under Section 5.1(a), a statement by the accounting firm performing
such audit to the effect that it has reviewed this Agreement and that in the
course of performing its examination nothing came to its attention that caused
it to believe that any Default or Event of Default exists, or, if such Default
or Event of Default exists, describing its nature.
5.1(c) As soon as available and in any event within
forty-five days after the end of each March, June, September and December, and
thirty days after the end of each other month, unaudited consolidated statements
of income, cash flow and changes in stockholders' equity for the Borrower and
its Subsidiaries for such month and for the period from the beginning of such
fiscal year to the end of such month, and a consolidated balance sheet of the
Borrower as at the end of such month, setting forth in comparative form figures
for the corresponding period for the preceding fiscal year, accompanied by a
certificate signed by the chief financial officer of the Borrower stating that
such financial statements present fairly the financial condition of the Borrower
and the Subsidiaries and that the same have been prepared in accordance with
GAAP.
- 37 -
5.1(d) Together with the unaudited financial
statements required under Section 5.1(c), (i) a compliance certificate signed by
the chief financial officer of the Borrower demonstrating in reasonable detail
compliance (or noncompliance, as the case may be) with Sections 6.10, 6.11(h),
6.14 through 6.20, and 7.1(s) as at the end of such month and stating that as at
the end of such month there did not exist any Default or Event of Default or, if
such Default or Event of Default existed, specifying the nature and period of
existence thereof and what action the Borrower proposes to take with respect
thereto, and (ii) a report on the Net Asset Value of all Advisory Funds in form
acceptable to the Bank, signed by the chief financial officer of the Borrower.
5.1(e) As soon as practicable and in any event prior
to the beginning of each fiscal year of the Borrower, statements of forecasted
income and cash flow for the Borrower and the Subsidiaries for each month in
such fiscal year and a forecasted consolidated balance sheet of the Borrower and
the Subsidiaries, together with supporting assumptions, as at the end of each
month, all in reasonable detail and reasonably satisfactory in scope to the
Bank.
5.1(f) As soon as available and in any event within
ninety days after the end of each fiscal year of EAHC the consolidated and
consolidating financial statements of EAHC and its Subsidiaries consisting of at
least statements of income, cash flow and changes in stockholders' equity, and
consolidated and consolidating balance sheets as at the end of such year,
setting forth in each case in comparative form corresponding figures from the
previous annual audit, certified without qualification by KPMG Peat Marwick or
other independent certified public accountants of recognized national standing
selected by EAHC and acceptable to the Bank, together with (a) any management
letters, management reports or other supplementary written comments or reports
to EAHC or its board of directors furnished by such accountants and (b) a letter
from such accountants addressed to the Bank acknowledging that the Bank is
extending credit in reliance on such financial statements and authorizing such
reliance.
5.1(g) As soon as available and in any event within
forty-five days after the end of each March, June, September and December, and
thirty days after the end of each other month, unaudited consolidated and
consolidating statements of income, cash flow and changes in stockholders'
equity for the EAHC its Subsidiaries for such month and for the period from the
beginning of such fiscal year to the end of such month, and consolidated and
consolidating balance sheets of EAHC at the end of such month, setting forth in
comparative form figures for the corresponding period for the preceding fiscal
year, accompanied by a certificate signed by the chief financial officer of the
EAHC stating that such financial statements present fairly the financial
condition of the EAHC and the Subsidiaries
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and that the same have been prepared in accordance with GAAP (subject to
year-end adjustments and the absence of footnotes).
5.1(h) Immediately upon any officer of the Borrower
becoming aware of any Default or Event of Default, a notice describing the
nature thereof and what action the Borrower proposes to take with respect
thereto.
5.1(i) Immediately upon any officer of the Borrower
becoming aware of the occurrence, with respect to any Plan, of any Reportable
Event or any Prohibited Transaction, a notice specifying the nature thereof and
what action the Borrower proposes to take with respect thereto, and, when
received, copies of any notice from PBGC of intention to terminate or have a
trustee appointed for any Plan.
5.1(j) Promptly upon the mailing or filing thereof,
copies of all financial statements, reports and proxy statements mailed to the
shareholders of EAHC or any Fund, and copies of all registration statements,
periodic reports and other documents filed with the Securities and Exchange
Commission (or any successor thereto) or any national securities exchange.
5.1(k) Immediately upon any officer of the Borrower
becoming aware of any action by the Borrower, any Subsidiary or any Fund to make
any modification to, waive any provision of, or fail to renew any Fund
Agreement, to the extent such modification, waiver or non-renewal would have an
adverse effect on the amount of compensation payable to the Borrower or any
Subsidiary by any Fund in an amount exceeding $100,000, a notice describing the
same and what action the Borrower proposes to take with respect thereto.
5.1(l) From time to time, such other information
regarding the business, operation and financial condition of EAHC, the Borrower,
the Subsidiaries and the Funds as the Bank may reasonably request.
Section 5.2 Corporate Existence. The Borrower will maintain,
and cause each Subsidiary to maintain, its corporate existence in good standing
under the laws of its jurisdiction of incorporation and its qualification to
transact business in each jurisdiction where failure so to qualify would
permanently preclude the Borrower or such Subsidiary from enforcing its rights
with respect to any material asset or would expose the Borrower or such
Subsidiary to any material liability; provided, however, that nothing herein
shall prohibit the merger or liquidation of any Subsidiary allowed under Section
6.1.
Section 5.3 Insurance. The Borrower shall maintain, and shall
cause each Subsidiary to maintain, with financially sound and reputable
insurance companies such insurance as may be required by law and such other
insurance in
- 39 -
such amounts and against such hazards as is customary in the case of reputable
firms engaged in the same or similar business and similarly situated.
Section 5.4 Payment of Taxes and Claims. The Borrower shall
file, and cause each Subsidiary to file, all tax returns and reports which are
required by law to be filed by it and will pay, and cause each Subsidiary to
pay, before they become delinquent all taxes, assessments and governmental
charges and levies imposed upon it or its property and all claims or demands of
any kind (including but not limited to those of suppliers, mechanics, carriers,
warehouses, landlords and other like Persons) which, if unpaid, might result in
the creation of a Lien upon its property; provided that the foregoing items need
not be paid if they are being contested in good faith by appropriate
proceedings, and as long as the Borrower's or such Subsidiary's title to its
property is not materially adversely affected, its use of such property in the
ordinary course of its business is not materially interfered with and adequate
reserves with respect thereto have been set aside on the Borrower's or such
Subsidiary's books in accordance with GAAP.
Section 5.5 Inspection. The Borrower shall permit any Person
designated by the Bank to visit and inspect any of the properties, corporate
books and financial records of the Borrower and the Subsidiaries, to examine and
to make copies of the books of accounts and other financial records of the
Borrower and the Subsidiaries, and to discuss the affairs, finances and accounts
of the Borrower and the Subsidiaries with, and to be advised as to the same by,
its officers at such reasonable times and intervals as the Bank may designate.
So long as no Event of Default exists, the expenses of the Bank for such visits,
inspections and examinations shall be at the expense of the Bank, but any such
visits, inspections and examinations made while any Event of Default is
continuing shall be at the expense of the Borrower.
Section 5.6 Maintenance of Properties. The Borrower will
maintain, and cause each Subsidiary to maintain, its properties used or useful
in the conduct of its business in good condition, repair and working order, and
supplied with all necessary equipment, and make all necessary repairs, renewals,
replacements, betterments and improvements thereto, all as may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times.
Section 5.7 Books and Records. The Borrower will keep, and
will cause each Subsidiary to keep, adequate and proper records and books of
account in which full and correct entries will be made of its dealings, business
and affairs.
Section 5.8 Compliance. The Borrower will comply, and will
cause each Subsidiary to comply, in all material respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject;
- 40 -
provided, however, that failure so to comply shall not be a breach of this
covenant if such failure does not have, or is not reasonably expected to have, a
materially adverse effect on the properties, business, prospects or condition
(financial or otherwise) of the Borrower or such Subsidiary and the Borrower or
such Subsidiary is acting in good faith and with reasonable dispatch to cure
such noncompliance.
Section 5.9 Notice of Litigation. The Borrower will give
prompt written notice to the Bank of the commencement of any action, suit or
proceeding before any court or arbitrator or any governmental department, board,
agency or other instrumentality affecting EAHC, the Borrower or any Subsidiary
or any property of EAHC, the Borrower or a Subsidiary or to which EAHC, the
Borrower or a Subsidiary is a party in which an adverse determination or result
could have a material adverse effect on the business, operations, property or
condition (financial or otherwise) of the Borrower and the Subsidiaries taken as
a whole or on the ability of EAHC or the Borrower to perform its obligations
under the Loan Documents, stating the nature and status of such action, suit or
proceeding.
Section 5.10 ERISA. The Borrower will maintain, and cause each
Subsidiary to maintain, each Plan in compliance with all material applicable
requirements of ERISA and of the Code and with all applicable rulings and
regulations issued under the provisions of ERISA and of the Code and will not
and not permit any of the ERISA Affiliates to (a) engage in any transaction in
connection with which the Borrower or any of the ERISA Affiliates would be
subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA
or a tax imposed by Section 4975 of the Code, in either case in an amount
exceeding $50,000, (b) fail to make full payment when due of all amounts which,
under the provisions of any Plan, the Borrower or any ERISA Affiliate is
required to pay as contributions thereto, or permit to exist any accumulated
funding deficiency (as such term is defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, with respect to any Plan in an
aggregate amount exceeding $50,000 or (c) fail to make any payments in an
aggregate amount exceeding $50,000 to any Multiemployer Plan that the Borrower
or any of the ERISA Affiliates may be required to make under any agreement
relating to such Multiemployer Plan or any law pertaining thereto.
Section 5.11 Fund Agreements. Subject to its fiduciary
obligations and except as may otherwise be required by law, the Borrower will
use its best efforts to cause each Fund for which a Subsidiary acts as
investment advisor or principal distributor to continue such Subsidiary in such
capacity and not to reduce the compensation payable to such Subsidiary for its
services to such Fund in any material respect.
Section 5.12 Advisory Subsidiaries. The Borrower will cause
PAII, on and at all times after the Closing Date, and any Advisory Subsidiary
acquired hereafter as a result of an Investment permitted under Section 6.11(h),
on and at all
- 41 -
times after the Business Day following such acquisition, to comply with the
following requirements:
(a) not have any (i) business other than the business
of serving as investment adviser for Advisory Funds pursuant to
Advisory Contracts and receiving payments thereunder, (ii) assets other
than Advisory Contracts and assets necessary to the performance by such
Advisory Subsidiary of its obligations under such Advisory Contracts,
or (iii) liabilities other than liabilities under Advisory Contracts or
other agreements permitted pursuant to Section 5.12(b);
(b) not enter into any agreements or other
arrangements with any Affiliate or any unaffiliated Person, other than
(y) Advisory Contracts and (z) other agreements necessary to the
performance by such Advisory Subsidiary of its obligations under
Advisory Contracts; provided that such Advisory Contracts and other
agreements are entered into upon fair and reasonable terms no less
favorable to such Advisory Subsidiary than would obtain in a comparable
arm's-length available to a Person unaffiliated with the Borrower;
(c) distribute (by dividend or otherwise) all of its
revenue, less actual expenses incurred in performing its obligations
under Advisory Contracts, and subject to any restrictions applicable
under the Delaware General Corporation Act or other applicable
corporate statute, or the Investment Advisers Act or any state law
applicable to investment advisers, to the Borrower by means of a
deposit into an account of the Borrower with the Bank;
(d) be incorporated under the Delaware General
Corporation Act and provide in its Certificate or Articles of
Incorporation that, until the Obligations have been paid in full and
the Commitment has been terminated, no action of the types described in
Sections 7.1(e), (f) or (g) may be taken without the prior written
consent of the Bank;
(e) conduct its business solely in its own name
through its duly authorized officers or agents so as not to mislead
others as to the identity of the Person with which those others are
concerned, and use its best efforts to avoid the appearance of
conducting business on behalf of the Borrower or any other Subsidiary
or Affiliate of the Borrower, or that the assets of such Advisory
Subsidiary are available to pay the creditors of the Borrower or any
Subsidiary or Affiliate of the Borrower (without limiting the
generality of the foregoing, all oral and written communications,
including, without limitation, letters, invoices, purchase orders,
contracts and statements will be made solely in the name of such
Advisory Subsidiary);
- 42 -
(f) maintain corporate records and books of account
separate from those of the Borrower and any Subsidiary or Affiliate of
the Borrower;
(g) obtain proper authorization from its board of
directors of all corporate action requiring such authorization, and
hold meetings of its board of directors and hold not less frequently
than four times per annum;
(h) obtain proper authorization from its shareholder
of all corporate action requiring shareholder approval;
(i) pay its operating expenses and liabilities from
its own funds;
(j) disclose in its annual and interim financial
statements the effects of such Advisory Subsidiary's transactions in
accordance with generally accepted accounting principles; and
(k) keep its assets and its liabilities wholly
separate from those of all other Persons, including, but not limited
to, the Borrower and any other Subsidiaries or Affiliates of the
Borrower.
Section 5.13 Pledge of Stock of Advisory Subsidiaries. The
Borrower will, within five (5) Business Days after it receives a "no action"
letter from the SEC confirming that the pledge of the stock of the Advisory
Subsidiaries to the Bank pursuant to the Pledge Agreement to which the Borrower
is a party will not constitute an assignment of the Advisory Contracts under the
Investment Company Act, deliver the certificates evidencing all of the stock of
the Advisory Subsidiaries, together with undated stock powers for such
certificates, duly executed in blank.
Section 5.14 Further Assurances. The Borrower will, and will
cause its Subsidiaries to, promptly correct any defect or error that may be
discovered in any Loan Document or in the execution, acknowledgment or
recordation thereof. Promptly upon request by the Bank, the Borrower also will,
and will cause it Subsidiaries to, do, execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register, any and all assignments,
estoppel certificates, financing statements and continuations thereof, notices
of assignment, transfers, certificates, assurances and other instruments as the
Bank may reasonable require from time to time in order: (a) to carry out more
effectively the purposes of the Loan Documents; (b) to perfect and maintain the
validity, effectiveness and priority of any Liens intended to be created by the
Loan Documents; and (c) to better assure, convey, grant, assign, transfer,
preserve, protect and confirm unto the Bank the rights granted now or hereafter
intended to be granted to the Bank under any Loan Document or under any other
instrument executed in connection with any Loan Document or that the
- 43 -
Borrower or any Subsidiary may be or become bound to convey, mortgage or assign
to the Bank in order to carry out the intention or facilitate the performance of
the provisions of any Loan Document. The Borrower will furnish to the Bank
evidence satisfactory to the Bank of every such recording, filing or
registration.
ARTICLE VI
----------
NEGATIVE COVENANTS
Until any obligation of the Bank hereunder to make the
Revolving Loans and the Term Loan shall have expired or been terminated and the
Note and all of the other Obligations have been paid in full, unless the Bank
shall otherwise consent in writing:
Section 6.1 Merger. The Borrower will not merge or consolidate
or enter into any analogous reorganization or transaction with any Person or
liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution)
or permit any Subsidiary to do any of the foregoing; provided, however, any
Subsidiary, other than an Advisory Subsidiary, may be merged with or liquidated
into any wholly-owned Subsidiary (if such wholly-owned Subsidiary is the
surviving corporation).
Section 6.2 Disposition of Assets. The Borrower will not, and
will not permit any Subsidiary to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise dispose of (whether in one transaction or a series
of transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:
6.2(a) sales of Fund shares (i) underwritten by any
Subsidiary of the Borrower or (ii) in which the Borrower or any Subsidiary makes
an Investment permitted under Section 6.11(i), in the ordinary course of
business;
6.2(b) sales of rights to receive investment
distribution fees as provided in rule 12b-1 of the SEC under the Investment
Company Act, other than fees related to B Shares with respect to which the Bank
has made Revolving Loans pursuant to this Agreement, provided that, both before
and after giving effect thereto, no Default or Event of Default would have
occurred and be continuing; and
6.2(c) the sale of equipment to the extent that (i)
such equipment is no longer useful in the Borrower's or such Subsidiary's
business, (ii) is exchanged for credit against the purchase price of similar
replacement equipment, or (iii) the proceeds of such sale are applied with
reasonable promptness to the purchase price of similar replacement equipment.
- 44 -
Section 6.3 Plans. The Borrower will not permit, and will not
allow any Subsidiary to permit, any event to occur or condition to exist which
would permit any Plan to terminate under any circumstances which would cause the
Lien provided for in Section 4068 of ERISA to attach to any assets of the
Borrower or any Subsidiary; and the Borrower will not permit, as of the most
recent valuation date for any Plan subject to Title IV of ERISA, the present
value (determined on the basis of reasonable assumptions employed by the
independent actuary for such Plan and previously furnished in writing to the
Bank) of such Plan's projected benefit obligations to exceed the fair market
value of such Plan's assets.
Section 6.4 Change in Nature of Business. The Borrower will
not (a) own any assets other than the stock of its Subsidiaries, Cash Balances
and Cash Equivalents held through the Bank or its Affiliates, the trademarks
subject to the Trademark Assignment, and fixed assets used in the business of
the Borrower and its Subsidiaries, (b) will not permit any Advisory Subsidiaries
to take any action that would cause, or authorize, any violation of Section
5.12, and (c) will not permit any Subsidiary to make any material change in the
nature of the business of such Subsidiary as carried on at the date hereof or,
if later, the date such Subsidiary is acquired.
Section 6.5 Subsidiaries. After the date of this Agreement,
the Borrower will not, and will not permit any Subsidiary to, form or acquire
any corporation which would thereby become a Subsidiary, except for Subsidiaries
acquired as a result of Investments permitted pursuant to Section 6.11(h).
Section 6.6 Negative Pledges; Subsidiary Restrictions. The
Borrower will not, and will not permit any Subsidiary to, enter into any
agreement, bond, note or other instrument with or for the benefit of any Person
other than the Bank which would (i) prohibit the Borrower or such Subsidiary
from granting, or otherwise limit the ability of the Borrower or such Subsidiary
to grant, to the Bank any Lien on any assets or properties of the Borrower or
such Subsidiary, or (ii) require the Borrower or such Subsidiary to xxxxx x Xxxx
to any other Person if the Borrower or such Subsidiary grants any Lien to the
Bank. The Borrower will not permit any Subsidiary to place or allow any
restriction, directly or indirectly, on the ability of such Subsidiary to (a)
pay dividends or any distributions on or with respect to such Subsidiary's
capital stock or (b) make loans or other cash payments to the Borrower.
Section 6.7 Restricted Payments. The Borrower will not make
any Restricted Payments, except:
(a) provided that no Event of Default or Default
shall have occurred and be continuing, or shall result therefrom,
Restricted Payments consisting of cash dividends made with the proceeds
of Loans, provided that
- 45 -
the Borrower delivers to the Bank, on or before the date it makes such
Restricted Payment, the items (if any) required pursuant to Section
3.2(a); and
(b) provided that no Event of Default or Default
shall have occurred and be continuing, or shall result therefrom, the
issuance of the Letters of Credit for the benefit of NationsBanc and
the incurrence by the Borrower of reimbursement obligations in respect
thereof.
Section 6.8 Transactions with Affiliates. The Borrower will
not, and will not permit any Subsidiary to, enter into any transaction with any
Affiliate of the Borrower, except upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate.
Section 6.9 Accounting Changes. The Borrower will not, and
will not permit any Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change its
fiscal year or the fiscal year of any Subsidiary.
Section 6.10 Capital Expenditures. The Borrower will not, and
will not permit any Subsidiary to, make Capital Expenditures in an amount
exceeding $500,000 on a consolidated basis in any fiscal year.
Section 6.11 Investments. The Borrower will not, and will not
permit any Subsidiary to, acquire for value, make, have or hold any Investments,
except:
6.11(a) Investments existing on the date of this
Agreement.
6.11(b) Travel and relocation advances to management
personnel and employees in the ordinary course of business.
6.11(c) Investments by the Borrower in readily
marketable obligations issued or guaranteed by the United States or any agency
thereof and supported by the full faith and credit of the United States.
6.11(d) Investments by the Borrower in certificates
of deposit or bankers' acceptances issued by the Bank or any other commercial
bank organized under the laws of the United States or any State thereof which
has (i) combined capital and surplus of at least $100,000,000, and (ii) a credit
rating with respect to its unsecured indebtedness from a nationally recognized
rating service that is satisfactory to the Bank.
6.11(e) Investments by the Borrower in commercial
paper given the highest rating by a nationally recognized rating service.
- 46 -
6.11(f) Investments by the Borrower in repurchase
agreements relating to securities issued or guaranteed as to principal and
interest by the United States of America.
6.11(g) Investments by the Borrower in other readily
marketable Investments in debt securities which are reasonably acceptable to the
Bank.
6.11(h) Other Investments consisting of the
acquisition of all or substantially all of the capital stock of, or assets of,
Persons engaged in the business of serving as investment advisors to or
principal distributors for Funds, provided (i) the aggregate Net Asset Value of
all Funds with respect to which any Subsidiary becomes the investment advisor,
or the investment advisor becomes a Subsidiary, as a result of all such
Investments does not exceed $500,000,000, (ii) the aggregate consideration paid
for any such Investment does not exceed three percent (3%) of the Net Asset
Value of all Funds with respect to which any Subsidiary becomes the investment
advisor, or the investment advisor becomes a Subsidiary, as a result of such
Investments, and (iii) in the case of any Investment resulting in the
acquisition of new Subsidiary, such Subsidiary is or becomes a wholly-owned
Subsidiary and executes and delivers to the Bank a Security Agreement and, if
such Subsidiary is an Advisory Subsidiary, a Guaranty simultaneously with such
Investment.
6.11(i) Investments in Advisory Funds in an amount
not to exceed at any time (i) with respect to any Advisory Fund, $1,000,000 and
(ii) in the aggregate, $3,000,000.
Any Investments under clauses (c), (d), (e) or (f) above must mature within one
year of the acquisition thereof by the Borrower.
Section 6.12 Indebtedness. The Borrower will not, and will not
permit any Subsidiary to, incur, create, issue, assume or suffer to exist any
Indebtedness, except:
6.12(a) The Obligations.
6.12(b) Current liabilities, other than for borrowed
money, incurred in the ordinary course of business.
6.12(c) Indebtedness secured by Liens permitted under
Section 6.13(h) hereof in an amount not to exceed $1,000,000.
Section 6.13 Liens. The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume or suffer to exist any Lien, or enter
into, or make
- 47 -
any commitment to enter into, any arrangement for the acquisition of any
property through conditional sale, lease-purchase or other title retention
agreements, with respect to any property now owned or hereafter acquired by the
Borrower or a Subsidiary, except:
6.13(a) Liens granted to the Bank under the Security
Documents to secure the Obligations.
6.13(b) Deposits or pledges to secure payment of
workers' compensation, unemployment insurance, old age pensions or other social
security obligations, in the ordinary course of business of the Borrower or a
Subsidiary.
6.13(c) Liens for taxes, fees, assessments and
governmental charges not delinquent or to the extent that payment therefor shall
not at the time be required to be made in accordance with the provisions of
Section 5.4.
6.13(d) Liens of carriers, warehousemen, mechanics
and materialmen, and other like Liens arising in the ordinary course of
business, for sums not due or to the extent that payment therefor shall not at
the time be required to be made in accordance with the provisions of Section
5.4.
6.13(e) Liens incurred or deposits or pledges made or
given in connection with, or to secure payment of, indemnity, performance or
other similar bonds.
6.13(f) Liens arising solely by virtue of any
statutory or common law provision relating to banker's liens, rights of set-off
or similar rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; provided that (i) such -------- ----
deposit account is not a dedicated cash collateral account and is not subject to
restriction against access by the Borrower or a Subsidiary in excess of those
set forth by regulations promulgated by the Board, and (ii) such deposit account
is not intended by the Borrower or any Subsidiary to provide collateral to the
depository institution.
6.13(g) Encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of real
property and landlord's Liens under leases on the premises rented, which do not
materially detract from the value of such property or impair the use thereof in
the business of the Borrower or a Subsidiary.
6.13(h) The interest of any lessor under any
Capitalized Lease entered into after the Closing Date or purchase money Liens on
equipment acquired after the Closing Date; provided, that, (i) the Indebtedness
secured thereby is otherwise permitted by this Agreement and (ii) such Liens are
limited to the
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equipment acquired and do not secure Indebtedness other than the related
Capitalized Lease Obligations or the purchase price of such equipment.
6.13(i) A Lien in favor of the Borrower's landlord
covering tenant improvements located in the Borrower's office in Phoenix,
Arizona and financed by such landlord, to secure all of Borrower's obligations
under the lease for such office premises as in effect on May 31, 1995.
Section 6.14 Contingent Obligations. The Borrower will not,
and will not permit any Subsidiary to, be or become liable on any Contingent
Obligations.
Section 6.15 Net Worth. The Borrower will not permit its Net
Worth at any time to be less than the greater of (i) $25,000,000 plus ninety
percent (90%) of the aggregate amount of equity contributions made to the
Borrower after the Closing Date, or (ii) eighty-five percent (85%) of the
Borrower's Net Worth as at the end of its most recently completed fiscal year
or, with respect to the end of any fiscal year, as at the end of its preceding
fiscal year.
Section 6.16 Leverage Ratio. The Borrower will not permit the
Leverage Ratio to be more than 1.0 to 1.0 at any time.
Section 6.17 Funded Debt Leverage Ratio. The Borrower will not
permit the ratio of (i) Funded Debt as of the last day of any fiscal quarter of
the Borrower, beginning on September 30, 1997, to (ii) EBITDA, for the
Measurement Period ending on that date, to be more than 4.0 to 1.0.
Section 6.18 Fixed Charge Coverage Ratio. The Borrower will
not permit the Fixed Charge Coverage Ratio, as of the last day of any month
beginning with September 30, 1997, for the Measurement Period ending on that
date, to be less than 1.50 to 1.00.
Section 6.19 Minimum Fund Balances. The Borrower will not
permit the sum of the Net Asset Values of all Advisory Funds at any time to be
less than the greater of (a) $1,350,000,000 or (b) ninety percent of the sum of
such Net Asset Values at the end of the most recently completed fiscal quarter
(or, in the case of a measurement at the end of any fiscal quarter, the
preceding fiscal quarter).
Section 6.20 EBITDA
6.20(a) FY 1996 EBITDA. The Borrower and its
Subsidiaries, on a consolidated basis, shall not as at the end of any
month during the Borrower's fiscal year ending September 30, 1996, have
cumulative negative EBITDA of more than $1,500,000 for the period from
the beginning of such fiscal year through the end of such month.
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6.20(b) FY 1997 EBITDA. The Borrower and its
Subsidiaries, on a consolidated basis, shall at each date set forth
below have cumulative positive EBITDA for the period from October 1,
1996 through such date of not less than the amount set forth below
opposite such date:
Date Cumulative FYTD EBITDA
---- ----------------------
December 31, 1996 $ 250,000
March 31, 1997 $1,500,000
June 30, 1997 $3,000,000
September 30, 1997 $5,000,000
6.20(c) EBITDA Margin. The Borrower will not permit
the EBITDA Margin, as the last day of any month beginning with
September 30, 1997, for the Measurement Period ending on that date, to
be less than 25.0%.
Section 6.21 Loan Proceeds. The Borrower will not use any part
of the proceeds of the Loans directly or indirectly, and whether immediately,
incidentally or ultimately, (a) to purchase or carry margin stock (as defined in
Regulation U of the Board), other than to the extent used to make Restricted
Payments to EAHC to fund the repurchase of its outstanding capital stock, or to
extend credit to others for the purpose of purchasing or carrying margin stock
or to refund Indebtedness originally incurred for such purpose or (b) for any
purpose which entails a violation of, or which is inconsistent with, the
provisions of Regulations G, U or X of the Board.
ARTICLE VII
-----------
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default. The occurrence of any one or
more of the following events shall constitute an Event of Default:
7.1(a) The Borrower shall fail to make when due,
whether by acceleration or otherwise, any payment of principal of or interest on
either Note or any other Obligation required to be made to the Bank pursuant to
this Agreement.
7.1(b) Any representation or warranty made by or on
behalf of EAHC, the Borrower or any Subsidiary in this Agreement or any other
Loan Document or by or on behalf of EAHC, the Borrower or any Subsidiary in any
certificate, statement, report or document herewith or hereafter furnished to
the Bank pursuant to this Agreement or any other Loan Document shall prove to
have been false or misleading in any material respect on the date as of which
the facts set forth are stated or certified.
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7.1(c) The Borrower shall fail to comply with
Sections 5.2, 5.3, 5.12 or 5.13, any Section of Article VI, or the Borrower or
any Subsidiary shall fail to comply with Section 4, 6, 8 or 13, the first
sentence of Section 7 or the second sentence of Section 14 of the Security
Agreements to which it is a party.
7.1(d) The Borrower, EAHC or any Subsidiary shall
fail to comply with any other agreement, covenant, condition, provision or term
contained in this Agreement or any other Loan Document (other than those
hereinabove set forth in this Section 7.1) and such failure to comply shall
continue for thirty calendar days after whichever of the following dates is the
earliest: (i) the date the Borrower gives notice of such failure to the Bank,
(ii) the date the Borrower should have given notice of such failure to the Banks
pursuant to Section 5.1, or (iii) the date the Bank gives notice of such failure
to the Borrower.
7.1(e) EAHC, the Borrower or any Subsidiary shall
become insolvent or shall generally not pay its debts as they mature or shall
apply for, shall consent to, or shall acquiesce in the appointment of a
custodian, trustee or receiver of EAHC, the Borrower or such Subsidiary or for a
substantial part of the property thereof or, in the absence of such application,
consent or acquiescence, a custodian, trustee or receiver shall be appointed for
EAHC, the Borrower or a Subsidiary or for a substantial part of the property
thereof and shall not be discharged within 45 days, or EAHC, the Borrower or any
Subsidiary shall make an assignment for the benefit of creditors.
7.1(f) Any bankruptcy, reorganization, debt
arrangement or other proceedings under any bankruptcy or insolvency law shall be
instituted by or against EAHC, the Borrower or any Subsidiary, and, if
instituted against EAHC, the Borrower or any Subsidiary, shall have been
consented to or acquiesced in by EAHC, the Borrower or such Subsidiary, or shall
remain undismissed for 60 days, or an order for relief shall have been entered
against EAHC, the Borrower or such Subsidiary.
7.1(g) Any dissolution or liquidation proceeding not
permitted by Section 6.1 shall be instituted by or against EAHC, the Borrower or
a Subsidiary and, if instituted against EAHC, the Borrower or any Subsidiary,
shall be consented to or acquiesced in by EAHC, the Borrower or such Subsidiary
or shall remain for 45 days undismissed.
7.1(h) A judgment or judgments for the payment of
money in excess of the sum of $100,000 in the aggregate shall be rendered
against the Borrower or a Subsidiary and either (i) the judgment creditor
executes on such judgment or (ii) such judgment remains unpaid or undischarged
for more than 60 days from the date of entry thereof or such longer period
during which execution of such judgment shall be stayed during an appeal from
such judgment.
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7.1(i) The maturity of any material Indebtedness of
the Borrower (other than Indebtedness under this Agreement) or a Subsidiary
shall be accelerated, or the Borrower or a Subsidiary shall fail to pay any such
material Indebtedness when due (after the lapse of any applicable grace period)
or, in the case of such Indebtedness payable on demand, when demanded (after the
lapse of any applicable grace period), or any event shall occur or condition
shall exist and shall continue for more than the period of grace, if any,
applicable thereto and shall have the effect of causing, or permitting the
holder of any such Indebtedness or any trustee or other Person acting on behalf
of such holder to cause, such material Indebtedness to become due prior to its
stated maturity or to realize upon any collateral given as security therefor.
For purposes of this Section, Indebtedness of the Borrower or a Subsidiary shall
be deemed "material" if it exceeds $100,000 as to any item of Indebtedness or in
the aggregate for all items of Indebtedness with respect to which any of the
events described in this Section 7.1(i) has occurred.
7.1(j) Any execution or attachment shall be issued
whereby any substantial part of the property of the Borrower or any Subsidiary
or any of the stock of the Borrower shall be taken or attempted to be taken and
the same shall not have been vacated or stayed within 30 days after the issuance
thereof.
7.1(k) EAHC or any Advisory Subsidiary shall
repudiate or purport to revoke its Guaranty or any Guaranty for any reason shall
cease to be in full force and effect as to EAHC or any Advisory Subsidiary, or
shall be judicially declared null and void.
7.1(l) Any Security Document shall, at any time,
cease to be in full force and effect or shall be judicially declared null and
void, or the validity or enforceability thereof shall be contested by the
Borrower, any Subsidiary or EAHC, or the Bank shall cease to have a valid and
perfected security interest having the priority contemplated thereunder in all
of the collateral described therein, other than by action or inaction of the
Bank if (i) the aggregate value of the collateral affected by any of the
foregoing exceeds $25,000 and (ii) any of the foregoing shall remain unremedied
for ten days or more after receipt of notice thereof by the Borrower, any
Subsidiary or EAHC from the Bank.
7.1(m) The SEC shall have revoked, or taken any
action to revoke, the broker/dealer or investment adviser registration of any
Subsidiary.
7.1(n) The Borrower or any Subsidiary shall have
failed to meet the minimum capital requirements prescribed from time to time by
Rule 15c3-1 under the Exchange Act and applicable to it.
7.1(o) The SEC, the NASD or any other authority shall
have modified or terminated, or proposed to modify or terminate Rule 12b-1 under
the Investment Company Act or the Rules of Fair Practice in a manner which
could, in
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the sole judgment of the Bank, result in a material adverse effect on the
business, operations, properties, assets or condition (financial or otherwise)
of the Borrower and the Subsidiaries taken as a whole.
7.1(p) PASI or any other Subsidiary that is a
broker/dealer shall cease to be a member in good standing of the NASD.
7.1(q) The SIPC shall have applied or shall have
announced its intention to apply for a decree adjudicating that customers of the
Borrower or any Subsidiary are in need of protection under SIPA.
7.1(r) Any Change of Control shall occur.
7.1(s) EAHC shall at any time have a Net Worth of
less than $28,000,000.
Section 7.2 Remedies. If (a) any Event of Default described in
Sections 7.1(e), (f), (g) or (q) shall occur with respect to the Borrower, the
Commitment shall automatically terminate and the Note and all other Obligations
shall automatically become immediately due and payable; or (b) any other Event
of Default shall occur and be continuing, then the Bank may (i) declare the
Commitment terminated, whereupon the Commitment shall terminate and (ii) declare
the outstanding unpaid principal balance of the Note, the accrued and unpaid
interest thereon and all other Obligations to be forthwith due and payable,
whereupon the Note, all accrued and unpaid interest thereon and all such
Obligations shall immediately become due and payable, in each case without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, anything in this Agreement or in the Note to the
contrary notwithstanding. Upon the occurrence of any of the events described in
clauses (a) or (b) of the preceding sentence the Bank may exercise all rights
and remedies under any of the Loan Documents, and enforce all rights and
remedies under any applicable law.
Section 7.3 Offset. In addition to the remedies set forth in
Section 7.2, upon the occurrence of any Event of Default and thereafter while
the same be continuing, the Borrower hereby irrevocably authorizes the Bank to
set off any Obligations against all deposits and credits of the Borrower with,
and any and all claims of the Borrower or any Subsidiary against, the Bank. Such
right shall exist whether or not the Bank shall have made any demand hereunder
or under any other Loan Document, whether or not the Obligations, or any part
thereof, or deposits and credits held for the account of the Borrower or any
Subsidiary is or are matured or unmatured, and regardless of the existence or
adequacy of any collateral, guaranty or any other security, right or remedy
available to the Bank. The Bank agrees that, as promptly as is reasonably
possible after the exercise of any such setoff right, it shall notify the
Borrower of its exercise of such setoff right; provided, however, that the
failure of the Bank to provide such notice shall not affect the
- 53 -
validity of the exercise of such setoff rights. Nothing in this Agreement shall
be deemed a waiver or prohibition of or restriction on the Bank to all rights of
banker's Lien, setoff and counterclaim available pursuant to law.
ARTICLE VIII
------------
MISCELLANEOUS
Section 8.1 Modifications. Notwithstanding any provisions to
the contrary herein, any term of this Agreement may be amended with the written
consent of the Borrower; provided that no amendment, modification or waiver of
any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Bank, and then such amendment, modification, waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.
Section 8.2 Expenses; Amendment or Waiver Fee. Whether or not
the transactions contemplated hereby are consummated, the Borrower agrees to
reimburse the Bank upon demand for all reasonable out-of-pocket expenses paid or
incurred by the Bank (including filing and recording costs and fees and expenses
of Xxxxxx & Xxxxxxx LLP, counsel to the Bank) in connection with the
negotiation, preparation, approval, review, execution, delivery, administration,
amendment, modification and interpretation of this Agreement and the other Loan
Documents and any commitment letters relating thereto. The Borrower shall also
reimburse the Bank upon demand for all reasonable out-of-pocket expenses
(including expenses of legal counsel) paid or incurred by the Bank in connection
with the collection and enforcement of this Agreement and any other Loan
Document. The obligations of the Borrower under this Section shall survive any
termination of this Agreement. In addition, the Company shall pay a fee of
$1,500.00 to the Bank on the effective date of any amendment to, modification of
or waiver of any provision of this Agreement if the Bank determines, in its sole
discretion, that its policies or practices required the Bank to obtain the
approval of any credit committee or similar approval authority for the execution
of such amendment, modification or waiver.
Section 8.3 Waivers, etc. No failure on the part of the Bank
or the holder of a Note to exercise and no delay in exercising any power or
right hereunder or under any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any power or right preclude
any other or further exercise thereof or the exercise of any other power or
right. The remedies herein and in the other Loan Documents provided are
cumulative and not exclusive of any remedies provided by law.
Section 8.4 Notices. Except when telephonic notice is
expressly authorized by this Agreement, any notice or other communication to any
party in connection with this Agreement shall be in writing and shall be sent by
manual
- 54 -
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed; provided, however, that
any notice to the Bank under Article II hereof shall be deemed to have been
given only when received by the Bank.
Section 8.5 Taxes. The Borrower agrees to pay, and save the
Bank harmless from all liability for, any stamp or other taxes which may be
payable with respect to the execution or delivery of this Agreement or the
issuance of the Note, which obligation of the Borrower shall survive the
termination of this Agreement.
Section 8.6 Successors and Assigns; Disposition of Loans;
Transferees. 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 its rights or delegate its obligations hereunder or
under any other Borrower Loan Document without the prior written consent of the
Bank. The Bank may at any time sell, assign, transfer, grant participations in,
or otherwise dispose of any portion of the Commitment, the Loans and/or Advances
(each such interest so disposed of being herein called a "Transferred Interest")
to banks or other financial institutions ("Transferees"). The Borrower agrees
that each Transferee shall be entitled to the benefits of Sections 2.21, 2.22,
2.23, 2.24, 8.2 and 8.12 with respect to its Transferred Interest and that each
Transferee may exercise any and all rights of banker's Lien, setoff and
counterclaim as if such Transferee were a direct lender to the Borrower. If the
Bank makes any assignment to a Transferee, then upon notice to the Borrower such
Transferee, to the extent of such assignment (unless otherwise provided
therein), shall become a "Bank" hereunder and shall have all the rights and
obligations of the Bank hereunder and the Bank shall be released from its duties
and obligations under this Agreement to the extent of such assignment.
Notwithstanding the sale by the Bank of any participation hereunder, (a) no
participant shall be deemed to be or have the rights and obligations of the Bank
hereunder except that any participant shall have a right of setoff under Section
7.3 as if it were the Bank and the amount of its participation were owing
directly to such participant by the Borrower and (b) the Bank shall not in
connection with selling any such participation condition the Bank's rights in
connection with consenting to amendments or granting waivers concerning any
matter under any Loan Document upon obtaining the consent of such participant
other than on matters relating to (i) any reduction in the amount of any
principal of, or the amount of or rate of interest on, the Note or Advance in
which such participation is sold, (ii) any postponement of the date fixed for
any payment of principal of or interest on the Note or Advance in which such
participation is sold, (iii) the release or subordination of any material
- 55 -
portion of any collateral other than pursuant to the terms of any Security
Document or (iv) the release of any Guaranty.
Section 8.7 Confidentiality of Information. The Bank shall use
reasonable efforts to assure that information about the Borrower and its
operations, affairs and financial condition, not generally disclosed to the
public or to trade and other creditors, which is furnished to the Bank pursuant
to the provisions hereof is used only for the purposes of this Agreement and any
other relationship between the Bank and the Borrower and shall not be divulged
to any Person other than the Bank, its Affiliates and their respective officers,
directors, employees and agents, except: (a) to their attorneys and accountants,
(b) in connection with the enforcement of the rights of the Bank hereunder and
under the Note, the Guaranties and the Security Documents or otherwise in
connection with applicable litigation, (c) in connection with assignments and
participations and the solicitation of prospective assignees and participants
referred to in the immediately preceding Section, and (d) as may otherwise be
required or requested by any regulatory authority having jurisdiction over the
Bank or by any applicable law, rule, regulation or judicial process, the opinion
of the Bank's counsel concerning the making of such disclosure to be binding on
the parties hereto. The Bank shall not incur any liability to the Borrower by
reason of any disclosure permitted by this Section 8.7.
Section 8.8 Governing Law and Construction. THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT
TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE
UNITED STATES APPLICABLE TO NATIONAL BANKS. Whenever possible, each provision of
this Agreement and the other Loan Documents and any other statement, instrument
or transaction contemplated hereby or thereby or relating hereto or thereto
shall be interpreted in such manner as to be effective and valid under such
applicable law, but, if any provision of this Agreement, the other Loan
Documents or any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto shall be held to be prohibited or
invalid under such applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement, the other Loan
Documents or any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto.
Section 8.9 Consent to Jurisdiction. AT THE OPTION OF THE
BANK, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE ENFORCED IN ANY FEDERAL
COURT OR MINNESOTA STATE COURT SITTING IN HENNEPIN COUNTY, MINNESOTA; AND THE
BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY
- 56 -
ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER
COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT
THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS
AGREEMENT, THE BANK AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED
TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER
CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
Section 8.10 Waiver of Jury Trial. EACH OF THE BORROWER AND
THE BANK IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 8.11 Survival of Agreement. All representations,
warranties, covenants and agreement made by the Borrower herein or in the other
Loan Documents and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be deemed to have been relied upon by the Bank and shall survive
the making of the Loans by the Bank and the execution and delivery to the Bank
by the Borrower of the Note, regardless of any investigation made by or on
behalf of the Bank, and shall continue in full force and effect as long as any
Obligation is outstanding and unpaid and so long as the Commitment have not been
terminated; provided, however, that the obligations of the Borrower under
Sections 8.2, 8.5 and 8.12 shall survive payment in full of the Obligations and
the termination of the Commitment.
Section 8.12 Indemnification. The Borrower hereby agrees to
defend, protect, indemnify and hold harmless the Bank and its Affiliates and the
directors, officers, employees, attorneys and agents of the Bank and its
Affiliates (each of the foregoing being an "Indemnitee" and all of the foregoing
being collectively the "Indemnitees") from and against any and all claims,
actions, damages, liabilities, judgments, costs and expenses (including all
reasonable fees and disbursements of counsel which may be incurred in the
investigation or defense of any matter) imposed upon, incurred by or asserted
against any Indemnitee, whether direct, indirect or consequential and whether
based on any federal, state, local or foreign laws or regulations (including
securities laws, environmental laws, commercial laws and regulations), under
common law or on equitable cause, or on contract or otherwise:
(a) by reason of, relating to or in connection with
the execution, delivery, performance or enforcement of any
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Loan Document, any commitments relating thereto, or any transaction
contemplated by any Loan Document; or
(b) by reason of, relating to or in connection with
any credit extended or used under the Loan Documents or any act done or
omitted by any Person, or the exercise of any rights or remedies
thereunder, including the acquisition of any collateral by the Bank by
way of foreclosure of the Lien thereon, deed or xxxx of sale in lieu of
such foreclosure or otherwise;
provided, however, that the Borrower shall not be liable to any Indemnitee for
any portion of such claims, damages, liabilities and expenses resulting from
such Indemnitee's gross negligence or willful misconduct. In the event this
indemnity is unenforceable as a matter of law as to a particular matter or
consequence referred to herein, it shall be enforceable to the full extent
permitted by law.
This indemnification applies, without limitation, to any act,
omission, event or circumstance existing or occurring on or prior to the later
of the Termination Date or the date of payment in full of the Obligations,
including specifically Obligations arising under clause (b) of this Section. The
indemnification provisions set forth above shall be in addition to any liability
the Borrower may otherwise have. Without prejudice to the survival of any other
obligation of the Borrower hereunder the indemnities and obligations of the
Borrower contained in this Section shall survive the payment in full of the
other Obligations.
Section 8.13 Captions. The captions or headings herein and any
table of contents hereto are for convenience only and in no way define, limit or
describe the scope or intent of any provision of this Agreement.
Section 8.14 Entire Agreement. This Agreement and the other
Loan Documents embody the entire agreement and understanding between the
Borrower and the Bank with respect to the subject matter hereof and thereof.
This Agreement supersedes all prior agreements and understandings relating to
the subject matter hereof. Nothing contained in this Agreement or in any other
Loan Document, expressed or implied, is intended to confer upon any Persons
other than the parties hereto any rights, remedies, obligations or liabilities
hereunder or thereunder.
Section 8.15 Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 8.16 Borrower Acknowledgements. The Borrower hereby
acknowledges that (a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents, (b) the
Bank has no fiduciary relationship to the Borrower, the relationship being
solely that of debtor
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and creditor, (c) no joint venture exists between the Borrower and the Bank, and
(d) the Bank undertakes no responsibility to the Borrower to review or inform
the Borrower of any matter in connection with any phase of the business or
operations of the Borrower and the Borrower shall rely entirely upon its own
judgment with respect to its business, and any review, inspection or supervision
of, or information supplied to, the Borrower by the Bank is for the protection
of the Bank and neither the Borrower nor any third party is entitled to rely
thereon.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
PILGRIM AMERICA GROUP, INC.
By Signature Illegible
Title Vice Chairman
Address for Borrower:
Two Renaissance Square, Ste. 1200
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxx
Telecopier: (000) 000-0000
FIRST BANK NATIONAL ASSOCIATION
By Signature Illegible
Title Vice President
Address:
First Bank Place - MPFP0702
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx
Telecopier: (000) 000-0000
[SIGNATURE PAGE TO AMENDED AND RESTATED CREDIT AGREEMENT]
S-1
