EXECUTION COPY
CREDIT AGREEMENT
dated as of May 13, 2008
between
FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME
FUND
and
THE BANK OF NOVA SCOTIA
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TABLE OF CONTENTS
Article 1. DEFINITIONS 1
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Section 1.1 Defined Terms 1
Section 1.2 Terms Generally 12
Section 1.3 Accounting Terms 12
Article 2. THE CREDITS 13
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Section 2.1 Commitment 13
Section 2.2 Loans 13
Section 2.3 Termination and Reduction of Commitment 13
Section 2.4 Repayment of Loans; Evidence of Debt 14
Section 2.5 Prepayments of Loans 14
Section 2.6 Payments Generally 14
Section 2.7 Letter of Credit 15
Article 3. INTEREST, FEES, YIELD PROTECTION, ETC 16
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Section 3.1 Interest 16
Section 3.2 Fees 17
Section 3.3 Increased Costs 17
Section 3.4 Taxes 18
Section 3.5 Alternate Rate of Interest 19
Section 3.6 Illegality 19
Section 3.7 Break Funding Payments 20
Article 4. REPRESENTATIONS AND WARRANTIES 20
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Section 4.1 Organization and Power 20
Section 4.2 Authority and Execution 20
Section 4.3 Binding Agreement 21
Section 4.4 Litigation 21
Section 4.5 Approvals and Consents 21
Section 4.6 No Conflict 21
Section 4.7 Taxes 22
Section 4.8 Compliance 22
Section 4.9 Property 22
Section 4.10 Federal Reserve Regulations; Use of Proceeds 22
Section 4.11 No Material Adverse Change 22
Section 4.12 Material Agreements 22
Section 4.13 Financial Condition 23
Section 4.14 No Misrepresentation 23
Section 4.15 Legal Status 23
Section 4.16 Investment Company Status 23
Section 4.17 MMP Defeasance and Redemption 24
Article 5. CONDITIONS 24
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Section 5.1 Effective Date 24
Section 5.2 Each Credit Event 25
Article 6. AFFIRMATIVE COVENANTS 26
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Section 6.1 Financial Statements and Other Information 26
Section 6.2 Notice of Material Events 27
Section 6.3 Legal Existence 27
Section 6.4 Insurance 27
Section 6.5 Payment of Indebtedness and Performance of Obligations 27
Section 6.6 Observance of Legal Requirements 28
Section 6.7 Books and Records; Visitation 28
Section 6.8 Purpose of Credit Extensions 28
Article 7. NEGATIVE COVENANTS 28
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Section 7.2 Liens 29
Section 7.3 Fundamental Changes 30
Section 7.4 Restricted Payments 30
Section 7.5 Fundamental Policies 30
Section 7.6 Amendments and Changes 30
Section 7.7 Financial Covenants 30
Section 7.8 Investment 30
Article 8. EVENTS OF DEFAULT 31
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Section 8.1 Events of Default 31
Section 8.2 Remedies 32
Article 9. MISCELLANEOUS 33
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Section 9.1 Notices 33
Section 9.2 Waivers; Amendments 33
Section 9.3 Expenses; Indemnity; Damage Waiver 34
Section 9.4 Successors and Assigns 34
Section 9.5 Survival 35
Section 9.6 Counterparts; Integration; Effectiveness 35
Section 9.7 Severability 35
Section 9.8 Right of Setoff 36
Section 9.9 Governing Law; Jurisdiction; Consent to Service of Process 36
Section 9.10 WAIVER OF JURY TRIAL 36
Section 9.11 Headings 37
Section 9.12 Interest Rate Limitation 37
Section 9.13 Non-Recourse 37
Section 9.14 Treatment of Certain Information 37
Section 9.15 USA Patriot Act Notice 38
Section 9.16 Limitation on Liability 38
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EXHIBITS:
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Exhibit A Form of Note
Exhibit B Outline of Opinion of Counsel to the Borrower
Exhibit C Form of Written Credit Extension Request
Exhibit D Form of Closing Certificate
Exhibit E Form of Federal Reserve Form FR U-1
Exhibit F Form of Compliance Certificate
Exhibit G Form of Security Agreement
Exhibit H Form of Control Agreement
Exhibit I Form of Letter of Credit
Exhibit J Form of Letter of Credit Application and Agreement
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CREDIT AGREEMENT, dated as of May 13, 2008, between First Trust/Four
Corners Senior Floating Rate Income Fund, a Massachusetts business trust, and
The Bank of Nova Scotia.
The parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
Section 1.1 Defined Terms
As used in this Credit Agreement, the following terms have the
meanings specified below:
"ABR Loan" means a Loan (or any portion thereof) bearing
interest based on the Alternate Base Rate.
"Adjusted Asset Coverage" means, with respect to the Borrower as
of any date, the ratio on such date of (a)(i) Adjusted Total Net Assets of the
Borrower minus (ii) the Value of all Distressed Investments in excess of 10% of
Total Net Assets to (b) Adjusted Senior Debt of the Borrower.
"Adjusted LIBO Rate" means, with respect to any LIBOR Loan for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
"Adjusted Senior Debt" means, with respect to the Borrower as of
any date, the sum of each of the following (without duplication) on such date:
(a) Senior Debt of the Borrower plus (b) the net liabilities (excluding Ordinary
Liabilities), if any, of the Borrower under all Hedging Agreements determined on
a mark-to-market basis, plus (c) all Secured Liabilities of the Borrower, plus
(d) all Segregated Liabilities of the Borrower.
"Adjusted Total Net Assets" means, with respect to the Borrower
as of any date, the difference of each of the following (without duplication) on
such date: (a) Total Net Assets of the Borrower minus (b) the value of all
Excluded Assets of the Borrower, minus (c) the excess, if any, of (i) the value
of all assets of the Borrower that are subject to a Lien (other than Liens
referred to in Section 7.2(b), (c), (d), (f) and (g)), assets that have been
segregated, or assets on deposit to satisfy margin requirements, minus (ii) the
sum of all Secured Liabilities and all Segregated Liabilities of the Borrower.
"Affiliate" means an affiliated person, as defined in Section
2(a)(3) of the ICA.
"Alternate Base Rate" means, for any day, a rate per annum equal
to the greater of (i) the Prime Rate in effect on such day and (ii) 1/2 of 1%
plus the Federal Funds Effective Rate in effect on such day. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate.
"Anti-Terrorism Order" means Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001.
"Applicable Accounting Principles" means, with respect to the
Borrower, those accounting principles required by the ICA and prescribed by the
SEC for the Borrower and, to the extent not so required or prescribed, GAAP.
"Applicable Money Market" means any money market applicable to
LIBOR Loans.
"Applicable Rate" means, with respect to each (a) LIBOR Loan,
the Adjusted LIBO Rate plus 1.00%, and (b) ABR Loan, the Alternate Base Rate.
"Bank" means The Bank of Nova Scotia.
"Board" means the Borrower's board of trustees.
"Board of Governors" means the Board of Governors of the Federal
Reserve System of the United States of America.
"Borrower" means First Trust/Four Corners Senior Floating Rate
Income Fund, a Massachusetts business trust.
"Borrowing Asset Value" means, at any time, the sum of (a) Net
Asset Value plus (b) the aggregate outstanding principal balance of the Loans.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed, provided that, when used in connection with a LIBOR
Loan, the term "Business Day" shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the Effective Date, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the Effective Date or (c) compliance by the Bank (or, for
purposes of Section 3.3(b), by any lending office of the Bank or by the Bank's
holding company) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the
Effective Date.
"Code" means the Internal Revenue Code of 1986.
"Commitment" means the commitment of the Bank to make Credit
Extensions having Credit Exposure in an aggregate amount not exceeding
$35,000,000 at any one time outstanding, as such commitment may be reduced from
time to time pursuant to Section 2.3.
"Commitment Termination Date" means the earlier to occur of (a)
the Scheduled Commitment Termination Date, or (b) such earlier date on which the
Bank's obligations to make Credit Extensions shall have otherwise terminated or
been terminated.
"Control Agreement" shall have the meaning set forth in Section
5.1(g).
"Credit Exposure" means, on any date of determination, an amount
equal to the sum of (a) the LC Exposure, plus (b) the aggregate outstanding
principal balance of the Loans.
"Credit Extension" means the making of a Loan or the issuance of
the Letter of Credit.
"Credit Extension Request" means a request for a Credit
Extension in accordance with Section 2.2 or 2.7 and, if required in writing, in
the form of Exhibit C.
"Custodian" means PFPC Trust Company, in its capacity as
custodian under the Custody Agreement.
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"Custody Agreement" means the Custodian Services Agreement,
dated as of September 18, 2003, by and between the Borrower and PFPC Trust
Company, in its capacity as custodian thereunder.
"Default" means any event or condition that constitutes an Event
of Default or that upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Derivative" means (i) any rate, basis, commodity, currency,
debt or equity swap, (ii) any put, cap, collar or floor agreement, (iii) any
rate, basis, commodity, currency, debt or equity futures or forward agreement,
(iv) any rate, basis, commodity, currency, debt or equity option representing an
obligation to buy or sell a security, commodity, currency, debt or equity, (v)
any financial instrument whose value is derived from the value of something
else, or (vi) any contract under which the parties agree to payments between or
among them based upon the value of an underlying asset or other data at a
particular point in time.
"Derivative Agreement" means an agreement between the Borrower
and one or more counterparties with respect to a Derivative.
"Derivative Asset Value" means, at any time, the net amount, if
any, which the Borrower would be entitled, in accordance with each Derivative
Agreement, to receive from the relevant counterparty thereto if each such
Derivative Agreement and all transactions thereunder terminated at such time in
accordance therewith on a complete no-fault basis.
"Derivative Liability Value" means, at any time, the greater of
(a) the net amount, if any, which the Borrower would be obligated, in accordance
with each Derivative Agreement, to pay to the relevant counterparty thereto if
each such Derivative Agreement and all transactions thereunder terminated at
such time in accordance therewith on a complete no-fault basis, and (b) the fair
market value of all margin or other collateral posted by the Borrower as
security for the performance of its obligations under such Derivative Agreement.
"Derivative Termination Value" means, at any time, the sum
(whether such sum be positive or negative) of the Derivative Asset Value and the
Derivative Liability Value.
"Distressed Rating" means, with respect to any debt investment
or credit worthiness of an issuer, such investment or issuer (as the case may
be) is (a) rated below CCC+ by S&P (or the equivalent rating of another
independent rating agency (other than Moody's) if not so rated by S&P) and below
Caa1 by Moody's (or the equivalent rating of another independent rating agency
(other than S&P) if not so rated by Moody's), or (b) if clause (a) does not
apply, is reasonably equivalent or of similar quality, as reasonably determined
pursuant to any policy of the Investment Adviser, to any debt investment or
issuer that is so rated.
"Distressed Investment" means (a) any security or other
Investment that has a Distressed Rating, and (b) any Investment the issuer or
counterparty in respect of which has a Distressed Rating.
"dollars" or "$" refers to lawful money of the United States of
America.
"Effective Date" has the meaning set forth in Section 5.1.
"Event of Default" has the meaning assigned to such term in
Section 8.1.
"Excluded Assets" means, with respect to the Borrower, (a) all
equipment, if any, (b) all securities held that are in default
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except to the extent that the Borrower is required or permitted to attribute
a value thereto pursuant to the ICA, the rules thereunder and Applicable
Accounting Principles) or determined to be worthless pursuant to any
applicable policy of the Borrower, (c) all deferred organizational and offering
expenses, and (d) the aggregate notional amount of all credit default swaps
entered into or otherwise acquired or held by the Borrower in accordance with
the proviso contained in Section 7.8(b).
"Excluded Taxes" means, with respect to the Bank or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower under any Loan Document, (a) income or franchise taxes imposed on (or
measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of the Bank, in which its applicable
lending office is located, and (b) any branch profits taxes imposed by the
United States of America or any similar tax imposed by any other jurisdiction in
which the Borrower is located.
"Federal Funds Effective Rate" means, for any day, a rate per
annum (expressed as a decimal, rounded upwards, if necessary, to the next higher
1/100 of 1%) equal to the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers on such day, as published by the Federal Reserve Bank of
New York on the Business Day next succeeding such day, provided that (a) if the
day for which such rate is to be determined is not a Business Day, the Federal
Funds Effective Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the Business Day succeeding such
next preceding Business Day, and (b) if such rate is not so published for any
day, the Federal Funds Effective Rate for such day shall be the average of the
quotations for such day on such transactions received by the Bank.
"Federal Reserve Form" means a Form FR U-1 duly completed by the
Bank and executed by the Borrower, the statements made in which shall, in the
reasonable opinion of the Bank, permit the transactions contemplated hereby in
compliance with Regulation U, together with all instruments, certificates and
other documents executed or delivered in connection therewith or attached
thereto.
"Foreign Lender" has the meaning assigned to such term in
Section 3.4(e).
"Fundamental Policies" means, collectively, (i) the policies and
objectives for, and limits and restrictions on, investing by the Borrower set
forth in its Prospectus as in effect on the Effective Date and which may be
changed only by a vote of a majority of the Borrower's outstanding voting
securities (as defined in Section 2(a)(42) of the ICA), and (ii) all policies
limiting the incurrence of Indebtedness by the Borrower set forth in its
Prospectus as in effect on the Effective Date.
"GAAP" means generally accepted accounting principles in the
United States of America.
"Governmental Authority" means the government of the United
States of America or any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, arbitrator, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in
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any manner, whether directly or indirectly, and including any obligation of
the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation
or to purchase (or to advance or supply funds for the purchase of) any
security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such
Indebtedness or other obligation of the payment thereof, (c) to maintain working
capital, equity capital or any other financial statement condition or liquidity
of the primary obligor as to enable the primary obligor to pay such Indebtedness
or other obligation or (d) as an account party in respect of any letter of
credit or letter of guaranty issued to support such Indebtedness or obligation,
provided that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guaranteed" has a
meaning correlative thereto.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement, credit default swap, credit linked note or other interest or currency
exchange rate or commodity price arrangement.
"ICA" means the Investment Company Act of l940.
"Illiquid Investment" means, as of any date, any Investment that
has any material condition to or restriction on the ability of the Borrower, the
Bank or any assignee of either thereof to sell, assign, transfer, pledge,
hypothecate or otherwise encumber or liquidate the same in a commercially
reasonable time and manner (other than customary securities law arrangements or
restrictions), whether or not such condition or restriction is intrinsic to such
Investment, provided that any condition or restriction that could reasonably be
expected to (a) prohibit or delay any such sale, assignment, transfer, pledge,
hypothecation, encumbrancing or liquidation for more than seven (7) Business
Days, or (b) require any payment (other than a nominal amount) in connection
therewith, shall be deemed to be such a material condition or restriction within
the meaning of this defined term.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by or otherwise in respect of bonds, debentures, notes or
similar instruments, (c) all obligations of such Person upon which interest
charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty, (h) all
obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances, (i) all net payment obligations, contingent or otherwise, of such
Person under Hedging Agreements, and (j) all Guarantees by such Person of any of
the foregoing. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has the meaning assigned to such term in Section
9.3(b).
"Interest Period" means, with respect to any Loan, the period
commencing on the date of such Loan and ending: (a) in the case of an ABR Loan,
on the 30th day thereafter, and (b) in the case of a
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LIBOR Loan, on the numerically corresponding day in the calendar
month that is one, two, or three months thereafter, as the Borrower may elect,
provided that, with respect to this clause (b) only (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day, unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, and (ii) any Interest
Period that commences on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the last calendar month
of such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period.
"Investment" means, with respect to any Person, any direct or
indirect portfolio investment by such Person in, or portfolio exposure
(including through Derivatives) of such Person to (a) currencies, commodities,
loans or securities, or any indexes on currencies, commodities, loans,
securities, interest rates, or indexes, (b) any Derivative, or (c) any other
medium for investment.
"Investment Adviser" means, with respect to the Borrower, the
investment adviser or investment manager therefor.
"Investment Limitation Default" means, as of any date:
(i) the Value of all Illiquid Investments exceeds 15% of
Total Net Assets;
(ii) the Value of all Unrated Investments exceeds 20% of
Total Net Assets;
(iii) the Value of all Distressed Investments exceeds 20% of
Total Net Assets; or
(iv) the Borrower shall hold in excess of 10% of the
aggregate outstanding principal balance of all loans and
advances to a borrower or group of borrowers under any
single syndicated credit facility.
"LC Disbursement" means a payment made by the Bank pursuant to
the Letter of Credit.
"LC Exposure" means, at any time, the sum, without duplication,
of (a) the aggregate undrawn amount of the Letter of Credit at such time plus
(b) the aggregate amount of all LC Disbursements that have not yet been
reimbursed by or on behalf of the Borrower at such time.
"Letter of Credit" means a standby letter of credit issued by
the Bank pursuant to this Credit Agreement in the form of Exhibit I.
"Letter of Credit Application and Agreement" means the
Application and Agreement For Irrevocable Standby Letter of Credit, relating to
the Letter of Credit, made by the Borrower to the Bank in the form of Exhibit J.
"LIBOR Loan" means a Loan (or any portion thereof) bearing
interest based on the Adjusted LIBO Rate.
"LIBO Rate" means, with respect to any LIBOR Loan for any
Interest Period, the rate of interest per annum that appears on Reuters LIBOR01
Page as of 11:00 a.m., London time, two Business Days prior to the commencement
of such Interest Period in an amount equal to $1,000,000 for dollar deposits
with a maturity comparable to such Interest Period. If Reuters LIBOR01 Page does
not include such a rate or is then unavailable, then LIBO Rate shall mean with
respect to any LIBOR Loan for any Interest Period, the rate of
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interest per annum quoted by the Bank to leading banks in the London interbank
market as the rate at which the Bank is offering dollar deposits in an amount
equal to $1,000,000 for dollar deposits with a maturity comparable to such
Interest Period at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period.
"Lien" means, with respect to (a) any asset, (i) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, and (ii) the interest of a vendor or a lessor
under any conditional sale agreement, capital lease or title retention agreement
relating to such asset, and (b) any securities, any purchase option, call or
similar right of a third party.
"Loan" means a loan made pursuant to Section 2.2.
"Loan Documents" means this Credit Agreement, the Security
Documents, the Letter of Credit Application and Agreement and the Note.
"Margin Stock" has the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" means a material adverse effect on (a)
the property, assets, income or financial condition of the Borrower, (b) the
ability of the Borrower to perform any of its monetary or other material
obligations under any Loan Document or (c) the rights of, or benefits available
to, the Bank under any Loan Document.
"Material Indebtedness" means Indebtedness (other than
Indebtedness under the Loan Documents) in an aggregate principal amount
exceeding the Threshold Amount.
"Maturity Date" means, for any Loan, the earlier to occur of (a)
the last day of the Interest Period for such Loan, and (b) the Commitment
Termination Date.
"Maximum Loan Value" means, at any time with respect to the
Borrower's assets constituting (a) Margin Stock, the "current market value"
(within the meaning of Regulation U) thereof at such time, and (b) Non-Margin
Assets, the "good faith loan value" (within the meaning of Regulation U) thereof
at such time.
"Maximum Permitted Borrowing" means, at any time of
determination, an amount equal to the least of (a) the maximum amount of Senior
Debt that the Borrower would be permitted to incur under the Fundamental
Policies, (b) the maximum amount of Senior Debt that the Borrower would be
permitted to incur on such date under the ICA, (c) the sum on such date of (i)
50% of the Maximum Loan Value of the Borrower's Margin Stock (excluding any such
Margin Stock that is subject to any Lien (other than a Lien referred to in
Section 7.2(b), (c), (d), (f) or (g)), that have been segregated or that is on
deposit to satisfy margin requirements) as of such date plus (ii) the Maximum
Loan Value of the Borrower's Non-Margin Assets (excluding any such Non-Margin
Assets that are subject to any Lien (other than a Lien referred to in Section
7.2(b), (c), (d), (f) or (g)), that are segregated or that are on deposit to
satisfy margin requirements) as of such date, and (d) 33.33% of (i) in
connection with any Credit Extension, the Pro-forma Borrowing Asset Value, or
(ii) in all other cases, the Borrowing Asset Value as of the immediately
preceding Business Day.
"Measurement Date" means the date of the most recent audited
financial statements of the Borrower which were delivered to the Bank prior to
the date of this Credit Agreement.
"MMP Auction Agent" means Deutsche Bank Trust Company Americas
in its capacity as "Auction Agent" within the meaning of the MMP Statement.
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"MMP Defeasance" has the meaning set forth in Section 4.17.
"MMP Redemption" means the redemption in full of not less than
1,400 of the outstanding MMP Shares.
"MMP Redemption Notice" has the meaning set forth in Section
5.1(i)
"MMP Shares" means the Borrower's Money Market Cumulative
Preferred Shares, with a liquidation preference of $25,000 per share, created by
the MMP Statement.
"MMP Statement" means the Borrower's Statement Establishing and
Fixing the Rights and Preferences of Money Market Cumulative Preferred Shares,
dated as of November 20, 2003, as amended by (a) Certificate of Amendment to
Statement Establishing and Fixing the Rights and Preferences of Money Market
Cumulative Preferred Shares, dated as of May 13, 2008, and (b) Certificate of
Amendment to Statement Establishing and Fixing the Rights and Preferences of
Money Market Cumulative Preferred Shares, dated as of May 13, 2008.
"Moody's" means Moody's Investors Service, Inc.
"Net Asset Value" means, at any time of determination, an amount
equal to Adjusted Total Net Assets minus Adjusted Senior Debt.
"Note" means the promissory note, substantially in the form of
Exhibit A, payable to the order of the Bank and dated the Effective Date,
including all replacements thereof and substitutions therefor.
"Non-Margin Assets" means assets of the Borrower which do not
constitute Margin Stock, provided, that, for purposes of this definition,
"Non-Margin Assets" shall not include "puts, calls or combinations thereof"
within the meaning of Regulation U.
"Non-Recourse Person" has the meaning assigned to such term in
Section 9.13.
"Notice Date" means, (i) with respect to the MMP Redemption
Notice, the date on which such MMP Redemption Notice is delivered to the Auction
Agent pursuant to the terms of the MMP Statement and (ii) with respect to the
SEC Notice, the date on which such SEC Notice is delivered to the SEC pursuant
to the terms of the MMP Statement.
"OFAC" means the U.S. Department of the Treasury's Office of
Foreign Assets Control.
"Ordinary Liabilities" means, as of any date, "all liabilities
and indebtedness" (within the meaning of the first sentence of Section 18(h) of
the ICA) of the Borrower not represented by Senior Securities.
"Organization Documents" means, (a) with respect to any
corporation, its certificate of incorporation or charter, and by-laws, (b) with
respect to any partnership, its partnership agreement, (c) with respect to any
limited liability company, its certificate of formation and limited liability
company agreement, (d) with respect to any business trust or statutory trust,
its certificate of trust, if any, and declaration of trust and, (e) with respect
to any other Person, the counterpart documents thereof.
"Other Taxes" means all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or under any other
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Loan Document or from the execution, delivery or enforcement of,
or otherwise with respect to, this Credit Agreement or any other
Loan Document.
"Patriot Act" means the USA PATRIOT Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)).
"Permitted Investments" means all Investments of the Borrower,
in each case (a) to the extent that the Borrower has the power and authority
under its Organization Documents to invest therein, and (b) to the extent the
investment therein, ownership thereof, or exposure thereto, by the Borrower is
in conformity with the Prospectus.
"Permitted Liens" means Liens permitted by Section 7.2.
"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Bank as its prime commercial lending rate;
each change in the Prime Rate being effective from and including the date such
change is publicly announced as being effective. The Prime Rate is not intended
to be the lowest rate of interest charged by the Bank in connection with
extensions of credit to borrowers.
"Pro-forma Borrowing Asset Value" means, in connection with any
Credit Extension, the Borrowing Asset Value as of the immediately preceding
Business Day adjusted to give effect to such Credit Extension and the
contemporaneous use of the proceeds, if any, thereof.
"Prospectus" means the prospectus of the Borrower dated
September 25, 2003, as declared effective by the SEC, and as amended from time
to time through and including the Effective Date.
"Regulated Investment Company" has the meaning set forth in
Section 851 of the Code.
"Regulation D" means Regulation D of the Board of Governors as
from time to time in effect and all official rulings and interpretations
thereunder or thereof.
"Regulation T" means Regulation T of the Board of Governors as
from time to time in effect and all official rulings and interpretations
thereunder or thereof.
"Regulation U" means Regulation U of the Board of Governors as
from time to time in effect and all official rulings and interpretations
thereunder or thereof.
"Regulation X" means Regulation X of the Board of Governors as
from time to time in effect and all official rulings and interpretations
thereunder or thereof.
"Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"S&P" means Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc.
9
"Sanctioned Country" shall mean a country subject to a sanctions
program identified on the list maintained by OFAC and available at the following
website (or as otherwise published from time to time):
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html.
"Sanctioned Person" shall mean (a)(i) an agency of the
government of a Sanctioned Country, (ii) an organization controlled by a
Sanctioned Country, or (iii) a person resident in a Sanctioned Country, to the
extent subject to a sanctions program administered by OFAC, or (b) a Person
named on the list of "Specially Designated Nationals and Blocked Persons"
maintained by OFAC available at
http://www.treas.gov/offices/eotffc/ofac/sdn/index.html (or as otherwise
published from time to time).
"Scheduled Commitment Termination Date" means May 12, 2009.
"SEC" means the U.S. Securities and Exchange Commission and/or
any other Governmental Authority succeeding to the functions thereof with
respect to the ICA and the Securities Act.
"SEC Notice" has the meaning set forth in Section 5.1(i)
"Secured Liabilities" means all liabilities (excluding Ordinary
Liabilities) of the Borrower secured by Liens.
"Securities Act" means the Securities Act of 1933.
"Security Agreement" shall have the meaning set forth in Section
5.1(f).
"Security Documents" means the Security Agreement, the Control
Agreement and each other agreement, instrument or other document executed or
delivered pursuant thereto.
"Segregated Liabilities" means all liabilities and other
obligations (excluding Ordinary Liabilities) of the Borrower relating to assets
that have been segregated or are otherwise subject to margin arrangements.
"Senior Debt" means, as of any date, the aggregate amount of
Senior Securities Representing Indebtedness of the Borrower, provided that if at
the time of calculation thereof the aggregate amount of all Senior Securities
Representing Indebtedness of the Borrower is zero, for purposes of such
calculation such aggregate amount shall be one (1).
"Senior Security" shall have the meaning set forth in the first
sentence of Section 18(g) of the ICA.
"Senior Security Representing Indebtedness" shall have the
meaning set forth in the first sentence of Section 18(g) of the ICA.
"Status" has the meaning set forth in Section 4.16.
"Statutory Reserve Rate" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board of Governors to which the Bank is subject
for eurocurrency funding (currently referred to as "Eurocurrency liabilities" in
Regulation D). Such reserve percentages shall include those imposed pursuant to
such Regulation D. LIBOR Loans shall be deemed to constitute eurocurrency
funding and to be
10
subject to such reserve requirements without benefit of or credit
for proration, exemptions or offsets that may be available from
time to time to the Bank under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any
reserve percentage.
"Taxes" means any and all current or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Threshold Amount" means the lesser of (i) 1.0% of the aggregate
Net Asset Value of the Borrower, and (ii) $500,000.
"Total Net Assets" means, as of any date, (a) the "value of the
total assets" (within the meaning of the first sentence of Section 18(h) of the
ICA) of the Borrower less (b) the Ordinary Liabilities of the Borrower.
"Transactions" means the (a) execution, delivery and performance
by the Borrower of each Loan Document to which it is a party, (b) borrowing of
the Loans, (c) issuance of the Letter of Credit, (d) use of the proceeds of the
Loans, (e) MMP Defeasance, and (f) MMP Redemption.
"Unrated Investment" means a debt security or non-equity
investment that is not publicly rated by S&P, Moody's or another
nationally-recognized statistical rating organization.
"Value" means, as of any date:
(a) with respect to any Derivative, the Derivative Termination
Value thereof, and
(b) with respect to any other Investment,
(i) with respect to cash, the current balance thereof,
(ii) with respect to any cash equivalent, the current
net value thereof,
(iii) with respect to any Investment that is traded on
a national securities exchange or appears on NASDAQ,
the closing price therefor on the immediately
preceding trading day,
(iv) with respect to any U.S. government security or
any Investment not included within the meaning of
clauses (i) - (iii) above which has a value that may
be ascertained from one or more nationally recognized
third-party quotation or pricing services, such value
(or the mean thereof if more than one such value is
obtained); provided that if due to the time
differences between the close of the financial
markets in the United States and the close of the
financial markets where any Investment is primarily
traded a closing value for any such Investment can
not be determined, the value for such Investment
shall be the value determined as the close of
business on the immediately preceding trading day,
(v) with respect to any Investment not included within
the meaning of clauses (i) - (iv) above which has a
value that may be ascertained from one or more
nationally recognized broker-dealers, such value (or
the mean thereof if more than one such value is
obtained), and
(vi) with respect to all other Investments, the lowest
of (i) original cost thereof, (ii) the value thereof
on the Borrower's books on such date, and (iii) the
most recent appraised value thereof;
11
provided that, for purposes of determining "Value", (i) Investments which the
Borrower has contracted to purchase shall not be deemed to be owned by the
Borrower until one Business Day following the trade date or, in the case of the
purchase of newly issued loans, one Business Day following the allocation date,
and Investments which the Borrower has contracted to sell shall be deemed to be
owned by the Borrower until one Business Day following the trade date of such
sale, (ii) the Value of all non-dollar Investments shall be converted into
dollars at the then current spot rate, and (iii) as of any date of calculation
and with respect to any Investment that is subject to any purchase option, call
or similar right of a third party with respect to such Investment, the Value of
such Investment shall be the lower of (A) the Value thereof calculated without
giving effect to this clause (iii), and (B) the Value of the consideration that
would be payable to the Borrower on the related settlement date therefor in the
event such option, call or similar right were exercised on such date of
calculation without giving effect to any provision relating to net settlement.
Section 1.2 Terms Generally
The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise, (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any definition
of or reference to any law, rule or regulation shall be construed as referring
to such law, rule or regulation as from time to time amended and any successor
thereto and in the case of such law, the rules and regulations promulgated from
time to time thereunder, (c) any reference herein to any Person shall be
construed to include such Person's successors and permitted assigns, (d) the
words "herein", "hereof" and "hereunder", and words of similar import, shall be
construed to refer to this Credit Agreement in its entirety and not to any
particular provision hereof, and (e) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Credit Agreement.
Section 1.3 Accounting Terms
As used in the Loan Documents and in any certificate, opinion or
other document made or delivered pursuant thereto, accounting terms not defined
in Section 1.1, and accounting terms partly defined in Section 1.1, to the
extent not defined, shall have the respective meanings given to them under
Applicable Accounting Principles. If at any time any change in Applicable
Accounting Principles would affect the computation of any financial ratio or
requirement set forth in this Credit Agreement and (i) the Borrower notifies the
Bank that the Borrower objects to determining compliance with such financial
ratio or requirement on the basis of Applicable Accounting Principles in effect
immediately after such change becomes effective or (ii) the Bank so objects,
then the Borrower's compliance with such ratio or requirement shall be
determined on the basis of Applicable Accounting Principles in effect
immediately before such change becomes effective, until either such notice is
withdrawn by the Borrower or the Bank, as the case may be, or the Borrower and
the Bank otherwise agree. Except as otherwise expressly provided herein, the
computation of financial ratios and requirements set forth in this Credit
Agreement shall be consistent with the Borrower's financial statements required
to be delivered hereunder.
12
ARTICLE 2. THE CREDITS
Section 2.1 Commitment
Subject to the terms and conditions set forth herein, the Bank
agrees to make loans to the Borrower from time to time during the period from
the date of the surrender of the Letter of Credit, undrawn, to the Bank through
the Business Day immediately preceding the Commitment Termination Date, provided
that immediately after giving effect thereto, (a) the Credit Exposure will not
exceed the Commitment, and (b) Senior Debt shall not exceed the Maximum
Permitted Borrowing. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow Loans.
Section 2.2 Loans
To request a Loan, the Borrower shall make a telephonic Credit
Extension Request to the Bank, not later than (a) in the case of an ABR Loan,
1:00 p.m., New York City time one Business Day before the date of the proposed
Loan, (b) in the case of a LIBOR Loan, 11:00 a.m., New York City time, three (3)
Business Days before the date of the proposed Loan. Such telephonic Credit
Extension Request shall be irrevocable and shall be confirmed promptly by hand
delivery or facsimile to the Bank of a duly executed Credit Extension Request
duly signed by or on behalf of the Borrower. Each such telephonic and written
Credit Extension Request shall specify: (I) the requested date for such Loan
(which shall be a Business Day), (II) whether such Loan is to be an ABR Loan or
a LIBOR Loan, (III) the amount of such Loan, which shall (x) in the case of an
ABR Loan, be either $1,000,000 or in an integral multiple of $1,000,000 or, if
less, the unused Commitment, or (y) in the case of a LIBOR Loan, be either
$1,000,000 or in an integral multiple of $1,000,000, and (IV) with respect to
each LIBOR Loan, the Interest Period therefor. Each such written Credit
Extension Request shall specify the additional information required by Exhibit
C. Notwithstanding anything herein to the contrary, in no event shall the
Borrower be permitted to borrow a LIBOR Loan if, immediately after giving effect
thereto, there would be more than three (3) LIBOR Loans outstanding. Subject to
the terms and conditions set forth herein, the Bank shall make each Loan by
transferring the proceeds thereof to a custodial account at the Custodian in the
name of the Borrower, provided that prior to the MMP Redemption, the Bank shall
make each Loan by transferring the proceeds thereof to the MMP Auction Agent for
the purpose of paying the redemption price of the MMP Shares to be redeemed
pursuant to the MMP Redemption Notice.
Section 2.3 Termination and Reduction of Commitment
(a) Unless previously terminated, the Commitment shall terminate
on the Scheduled Commitment Termination Date.
(b) The Borrower may at any time terminate, or from time to time
reduce, without premium or penalty, the Commitment, provided that (i) the
Borrower may not terminate or reduce the Commitment if, after giving effect to
any concurrent repayment of the Loans in accordance with Section 2.4 or 2.5 or
concurrent surrender of the Letter of Credit, the Credit Exposure would exceed
the Commitment, and (ii) each such reduction shall be in an amount that, when
added to the amount of each such prepayment, is in a minimum amount of
$1,000,000 or in an integral multiple of $1,000,000.
(c) The Borrower shall notify the Bank of any election to
terminate or reduce the Commitment under paragraph (b) of this Section at least
three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Each notice
delivered by the Borrower pursuant to this Section shall be irrevocable and any
termination or reduction of the Commitment hereunder shall be permanent. Each
13
termination or reduction of the Commitment shall be accompanied by the payment
of accrued and unpaid commitment fees to the extent required by Section 3.2.
Section 2.4 Repayment of Loans; Evidence of Debt
(a) The Borrower hereby unconditionally promises to pay to the
Bank the then unpaid principal amount of each Loan on the Maturity Date
therefor.
(b) In the event that on any date, the Borrower shall either
fail to be in compliance with Section 7.7(a) or Senior Debt exceeds the Maximum
Permitted Borrowing, the Borrower shall, on such date, repay the Loans,
surrender the Letter of Credit and take such other actions as may be necessary
such that, immediately after giving effect to such repayment, surrender and
other actions, Senior Debt no longer exceeds the Maximum Permitted Borrowing and
the Borrower is in compliance with Section 7.7(a).
(c) The Bank shall maintain in accordance with its usual
practice an account or accounts evidencing the outstanding principal of and
accrued interest on each Loan. The entries made in such account or accounts
shall, to the extent not prohibited by applicable law and not inconsistent with
any entries made in the Note, be prima facie evidence of the existence and
amounts of the obligations recorded therein, provided that the failure of the
Bank to maintain such accounts or any error therein shall not in any manner
affect the obligation of the Borrower to repay the Loans (and interest thereon)
in accordance with the terms of this Credit Agreement.
Section 2.5 Prepayments of Loans
The Borrower shall have the right at any time and from time to
time, without premium or penalty, to prepay any Loan in whole or in part. The
Borrower shall notify the Bank by telephone (confirmed by telecopy) of any
prepayment hereunder not later than 2:00 p.m., New York City time, three
Business Days prior to date of prepayment. Each such notice shall be irrevocable
and shall specify the prepayment date and the principal amount of each Loan or
portion thereof to be prepaid. Each partial prepayment of any Loan shall be in a
minimum amount of $1,000,000 or in an integral multiple of $1,000,000.
Prepayments shall be accompanied by accrued and unpaid interest to the extent
required by Section 3.1.
Section 2.6 Payments Generally
The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal of Loans, LC
Disbursements, interest, fees, or otherwise) prior to 2:00 p.m., New York City
time, on the date when due, in immediately available funds, without setoff or
counterclaim. Any amounts received after such time on any date shall be deemed
to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the Bank at its
office at One Liberty Plaza, New York, New York, or such other office in the
United States as to which the Bank may notify the Borrower. Except as may be
otherwise provided in the defined term "Interest Period", if any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars. If at any time
insufficient funds are received by and available to the Bank from the Borrower
to pay fully all amounts of principal of Loans, LC Disbursements, interest, fees
and other amounts then due under the Loan Documents, such funds shall be applied
14
to the obligations owing to the Bank: (i) first, to payment of such amounts
(excluding principal, interest and fees), in such order as the Bank may choose,
(ii) second, to such interest and fees then due, and (iii) third, to such
principal of the Loans and LC Disbursements then due. All amounts paid under the
Loan Documents shall not be refundable under any circumstances.
Section 2.7 Letter of Credit
(a) General. Subject to the terms and conditions set forth
herein, the Bank agrees to issue the Letter of Credit, for the account of the
Borrower, on any Business Day during the period commencing on the Effective Date
and ending on the 60th day thereafter, provided that immediately after giving
effect thereto (i) the Credit Exposure will not exceed the Commitment, and (ii)
the Borrower will not have exceeded the Maximum Permitted Borrowing.
(b) Procedures for Issuance of the Letter of Credit. To request
the issuance of the Letter of Credit, (i) the Borrower shall have executed and
delivered to the Bank a Letter of Credit Application and Agreement, and (ii) the
Borrower shall deliver by hand or facsimile to the Bank on the Effective Date a
written Credit Extension Request requesting the issuance of the Letter of Credit
and such other information as shall be necessary to prepare the Letter of
Credit. The Letter of Credit shall be issued only if (and, upon such issuance,
the Borrower shall be deemed to represent and warrant that), after giving effect
to such issuance, (x) the Credit Exposure shall not exceed the Commitment, and
(y) the Borrower will not have exceeded the Maximum Permitted Borrowing. In the
event of any inconsistency between the terms and conditions of this Credit
Agreement and the terms and conditions of the Letter of Credit Application and
Agreement, the terms and conditions of this Credit Agreement shall control.
(c) Reimbursement. If the Bank shall make any LC Disbursement in
respect of the Letter of Credit, such LC Disbursement shall be immediately due
and payable and (i) the Bank shall notify the Borrower to reimburse the Bank
therefor, and (ii) the Borrower shall immediately pay such due and unpaid sums
to the Bank.
(d) Obligations Absolute. The Borrower's obligations to
reimburse LC Disbursements as provided in paragraph (c) of this Section shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Credit Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of validity or
enforceability of the Letter of Credit or this Credit Agreement, or any term or
provision therein or herein, (ii) any draft or other document presented under
the Letter of Credit proving to be forged, fraudulent or invalid in any respect
or any statement therein being untrue or inaccurate in any respect, (iii)
payment by the Bank under the Letter of Credit against presentation of a draft
or other document that does not comply with the terms of the Letter of Credit or
(iv) any other event or circumstance whatsoever, whether or not similar to any
of the foregoing, that might, but for the provisions of this Section, constitute
a legal or equitable discharge of, or provide a right of setoff against, the
Borrower's obligations hereunder other than gross negligence or willful
misconduct on the part of the Bank. Neither the Bank nor any of its Related
Parties shall have any liability or responsibility by reason of or in connection
with the issuance or transfer of the Letter of Credit or any payment or failure
to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to the Letter of Credit (including any document
required to make a drawing thereunder), any error in interpretation of technical
terms or any consequence arising from causes beyond the control of the Bank;
provided that the foregoing shall not be construed to excuse the Bank from
liability to the Borrower to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable law) suffered by the Borrower
that are caused by the Bank's failure to exercise due care when determining
whether drafts and other documents presented under the Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that, in the absence
of gross negligence or willful misconduct on the part of the Bank (as finally
determined by a court of competent jurisdiction), the Bank shall be deemed to
15
have exercised due care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of the Letter of Credit, the Bank may, in
its sole discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of the
Letter of Credit.
(e) Disbursement Procedures. The Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under the Letter of Credit. The Bank shall promptly notify the Borrower
by telephone (confirmed by facsimile) of such demand for payment and whether the
Bank has made or will make an LC Disbursement thereunder; provided that any
failure to give or delay in giving such notice shall not relieve the Borrower of
its obligation to reimburse the Bank with respect to any such LC Disbursement.
(f) Administration. The Borrower will promptly examine the copy
of the Letter of Credit (and any amendments thereof) sent to the Borrower by the
Bank, as well as all other instruments and documents delivered to the Borrower
from time to time, and, in the event the Borrower has any claim of noncompliance
with the instructions or of any discrepancy or other irregularity, the Borrower
will immediately notify the Bank thereof in writing, and the Borrower will
conclusively be deemed to have waived any such claim against the Bank and its
correspondents unless such immediate notice is given as aforesaid. The Bank may
(but need not) pay any drafts otherwise in order which are signed or issued by,
or accompanied by required statements or other documents otherwise in order
which are signed or issued by, the custodian, executor, administrator, trustee
in bankruptcy, debtor in possession, assignees for the benefit of creditors,
liquidator, receiver or other agent or legal representative of the beneficiary
of the Letter of Credit or other party who is authorized under the Letter of
Credit to draw or issue any drafts, required statements or other documents.
Neither the Bank nor any of its correspondents shall be responsible for, and
neither the Bank's powers and rights hereunder nor Borrower's Obligations (as
defined in the Security Agreement) shall be affected by: (i) any act or omission
pursuant to the Borrower's instructions; (ii) any other act or omission of Bank
or its correspondents or their respective agents or employees other than any
such arising from its or their gross negligence or willful misconduct; (iii) the
validity, accuracy or genuineness of drafts, documents or required statements,
even if such drafts, documents or statements should in fact prove to be in any
or all respects invalid, inaccurate, fraudulent or forged (and notwithstanding
that the Borrower shall have notified the Bank thereof); (iv) failure of any
draft to bear any reference or adequate reference to the Letter of Credit; (v)
errors, omissions, interruptions or delays in transmission or delivery of any
messages however sent and whether or not in code or cipher; (vi) any act,
default, omission, insolvency or failure in business of any other Person
(including any correspondent) or any consequences arising from causes beyond the
Bank's control; or (vii) any acts or omissions of any beneficiary of the Letter
of Credit or transferee of the Letter of Credit, if transferable.
ARTICLE 3. INTEREST, FEES, YIELD PROTECTION, ETC.
Section 3.1 Interest
(a) Each Loan shall bear interest at a rate per annum equal to
the Applicable Rate, provided that if an Event of Default has occurred and is
continuing, then, so long as such Event of Default is continuing, (i) the
principal balance of such Loan shall bear interest at a rate per annum equal to
the higher of (1) the Applicable Rate plus 2.00%, or (2) the Alternate Base Rate
plus 2.00%, and (ii) all other amounts owing under the Loan Documents
(including, without limitation, LC Disbursements) that are not paid when due,
16
shall bear interest, after as well as before judgment, at a rate per annum equal
to the Alternate Base Rate plus 2.00%.
(b) Accrued and unpaid interest on each Loan shall be payable in
arrears on the Maturity Date therefor, provided that (1) interest accrued and
unpaid pursuant to each of clauses (i) and (ii) of paragraph (a) of this Section
shall be payable on demand, and (2) in the event of any repayment or prepayment
of any Loan, accrued and unpaid interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment. All
interest hereunder shall be computed on the basis of a year of 360 days for the
actual number of days elapsed (including the day a Loan is made but excluding
the date of repayment). The Alternate Base Rate, the Federal Funds Effective
Rate, the LIBO Rate and the Prime Rate shall be determined by the Bank in
accordance with the provisions of this Credit Agreement, and such determination
shall be conclusive absent manifest error.
Section 3.2 Fees
(a) The Borrower shall pay to the Bank a commitment fee, at a
rate per annum equal to 0.10% during the period from and including the date on
which this Credit Agreement shall have become effective in accordance with
Section 9.6 to but excluding the date on which the Commitment terminates, on the
daily amount of the excess of the Commitment over the Credit Exposure. Accrued
and unpaid commitment fees shall be payable in arrears on the last Business Day
of March, June, September and December of each year, each date on which the
Commitment is reduced and on the date on which the Commitment terminates,
commencing on the first such date to occur after the date hereof. All commitment
fees shall be computed on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day).
(b) The Borrower shall pay to the Bank (i) a letter of credit
fee, which shall accrue at the rate of 1.0% per annum on the daily amount of the
LC Exposure, and (ii) the Bank's standard fees with respect to the issuance or
extension of the Letter of Credit or processing of drawings thereunder.
Section 3.3 Increased Costs
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets
of, deposits with or for the account of, or credit
extended by, the Bank; or
(ii) impose on the Bank or any Applicable Money Market
any other condition affecting this Credit Agreement
or any Credit Extension,
and the result of any of the foregoing shall be (1) to increase the cost to the
Bank of making or maintaining any Credit Extension, or to reduce the amount of
any sum received or receivable by the Bank hereunder (whether of principal,
interest or otherwise), then the Borrower will pay to the Bank such amount as
will compensate the Bank for such increased costs or reduced amount, or (2) to
increase the cost to the Bank of maintaining the Commitment, then the Borrower
will pay to the Bank such amount as will compensate the Bank for such increased
costs.
(b) If the Bank determines in good faith that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on the Bank's capital or on the capital of the Bank's holding company,
as a
17
consequence of this Credit Agreement or any Credit Extension made by the Bank
hereunder to a level below that which the Bank or the Bank's holding company
could have achieved but for such Change in Law (taking into consideration the
Bank's policies and the policies of the Bank's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to the Bank such
additional amount or amounts as will compensate the Bank or the Bank's holding
company for (i) any such reduction suffered as a consequence of such Credit
Extension, and (ii) any other such reduction.
(c) A certificate of the Bank setting forth the Bank's
reasonable good faith determination of the additional amount or amounts
necessary to compensate the Bank or its holding company, as applicable, as
specified in paragraph (a) or (b) of this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The amount shown as
payable on any such certificate shall be due within ten days after receipt
thereof. In determining such additional amounts of compensation, the Bank will
act reasonably and in good faith.
(d) Failure or delay on the part of the Bank to demand
compensation pursuant to this Section shall not constitute a waiver of the
Bank's right to demand such compensation; provided that the Borrower shall not
be required to compensate the Bank pursuant to this Section for any increased
costs or reductions incurred more than 90 days prior to the date that the Bank
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of the Bank's intention to claim compensation therefor; and
provided further that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 90-day period referred to above shall be
extended to include the period of retroactive effect thereof.
Section 3.4 Taxes
(a) Each payment by the Borrower under any Loan Document shall
be made free and clear of and without deduction for Indemnified Taxes and Other
Taxes, provided that, if the Borrower shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that, after making all required deductions
(including deductions applicable to additional sums payable under this Section),
the Bank receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay all Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Bank, within ten days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Bank on or with respect to any payment under the Loan
Documents (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by the Bank shall be
conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Bank the original or a certified copy of a receipt issued
by such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Bank.
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(e) In the event that the Bank (or any successor or assign)
shall be a Foreign Lender, such Person shall, to the extent it may lawfully do
so, deliver to the Borrower on or prior to the date on which it extends credit
under this Credit Agreement (and from time to time thereafter upon the
reasonable request of the Borrower, but only if such Person is legally entitled
to do so), any form prescribed by applicable Requirements of Law as a basis for
claiming exemption from or a reduction in United States federal withholding tax
duly completed together with such supplementary documentation as may be
prescribed by applicable Requirements of Law to permit the Borrower to determine
the withholding or deduction required to be made. For purposes of this Section,
(i) "Foreign Lender" shall mean any Person that is not, for United States
federal income tax purposes, (A) an individual who is a citizen or resident of
the United States, (B) a corporation, partnership or other entity treated as a
corporation or partnership created or organized in or under the laws of the
United States, or any political subdivision thereof, (C) an estate whose income
is subject to U.S. federal income taxation regardless of its source or (D) a
trust if a court within the United States is able to exercise primary
supervision over the administration of such trust and one or more United States
persons have the authority to control all substantial decisions of such trust,
and (ii) "Requirements of Law" shall mean, collectively, any and all
requirements of any Governmental Authority including any and all laws,
judgments, orders, decrees, ordinances, rules, regulations, statutes or case
law. The Borrower shall not be obligated to indemnify or pay any additional
amount with respect to Indemnified Taxes under this Section 3.4 to the extent
such Indemnified Taxes are imposed solely because the Bank fails to timely
provide the forms or certificates required under this Section 3.4.
Section 3.5 Alternate Rate of Interest
If the Bank determines (which determination shall be conclusive
absent manifest error) that, with respect to any existing or requested Loan the
pricing of which is determined by reference to an Applicable Money Market (each
an "Affected Credit Extension"), by reason of one or more circumstances arising
after the date hereof affecting such Applicable Money Market, adequate and
reasonable means do not exist for ascertaining the rate of interest applicable
to such Affected Credit Extension, or that such rate of interest will not
adequately and fairly reflect the cost to the Bank of making or maintaining such
Affected Credit Extension because of (x) any change since the date hereof in any
applicable law or governmental rule, regulation, order or directive (whether or
not having the force of law) or in the interpretation or administration thereof
or (y) other circumstances arising after the date hereof affecting the Bank or
such Applicable Money Market, then the Bank may give notice thereof to the
Borrower by telephone or telecopy and (A) upon the giving of such notice, each
existing Affected Credit Extension shall automatically be deemed converted into
and redenominated as an ABR Loan and shall thereafter bear interest at a rate
per annum equal to the Applicable Rate therefor, and (B) until such notice is
rescinded by the Bank, the Bank shall have no obligation to make any new Loan
that would be an Affected Credit Extension. The Bank agrees that promptly after
it shall have determined, with respect to any notice given by it under this
Section, that the circumstance or circumstances that gave rise to such notice
with respect to an Affected Credit Extension no longer exist, the Bank shall by
notice to the Borrower rescind such notice with respect to such Affected Credit
Extension.
Section 3.6 Illegality
Notwithstanding any other provision hereof, if any Change in Law
shall make it unlawful for the Bank to make, convert or maintain any LIBOR Loan
or to give effect to its obligations as contemplated hereby with respect to any
LIBOR Loan, then, by written notice to the Borrower:
(a) the Bank may, if such Change in Law makes it unlawful to
make LIBOR Loans, declare that LIBOR Loans will not thereafter (for the duration
of such unlawfulness) be made, whereupon any request for a LIBOR Loan be deemed
a request for an ABR Loan, unless such declaration shall be subsequently
withdrawn; and
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(b) the Bank may, if such Change in Law makes it unlawful to
maintain LIBOR Loans, require that all outstanding LIBOR Loans be converted to
ABR Loans, in which event all such LIBOR Loans shall be automatically converted
to ABR Loans, as of the effective date of such notice.
Section 3.7 Break Funding Payments
In the event of (a) the payment or prepayment (voluntary or
otherwise) of any principal of any LIBOR Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), or (b) the failure to borrow any LIBOR Loan on the date specified in
any notice delivered pursuant hereto, then, in any such event, the Borrower
shall compensate the Bank for the loss, cost and expense attributable to such
event. Such loss, cost or expense shall be deemed to include an amount
determined by the Bank to be the excess, if any, of (x) the amount of interest
that would have accrued on the principal amount of such LIBOR Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such LIBOR Loan, for the period from the date of such event to the last day of
the then current Interest Period therefor (or, in the case of a failure to
borrow for the period that would have been the Interest Period for such Loan),
over (y) the amount of interest that would accrue on such principal amount for
such period at the interest rate that the Bank would bid were it to bid, at the
commencement of such period, for deposits in dollars of a comparable amount and
period from other banks in the eurocurrency market. A certificate of the Bank
setting forth any amount or amounts that the Bank is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay the Bank the amount
shown as due on any such certificate within 10 days after receipt thereof.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Credit Agreement
and make the Credit Extensions, the Borrower makes the following representations
and warranties to the Bank:
Section 4.1 Organization and Power
The Borrower (i) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and (ii) is duly
qualified to do business and in good standing in each jurisdiction in which the
failure to be so qualified could reasonably be expected to have a Material
Adverse Effect. The Borrower has all requisite power and authority to own its
property and to carry on its business as now conducted.
Section 4.2 Authority and Execution
(a) The Borrower has full legal power and authority to enter
into, execute, deliver and perform the terms of the Loan Documents and to cause
the MMP Redemption, all of which have been duly authorized by all proper and
necessary Massachusetts business trust action, and the Borrower is in full
compliance with its Organization Documents. The Borrower has duly executed and
delivered the Loan Documents to which it is a party.
(b) The Borrower has full legal power and authority to give the
SEC Notice and the MMP Redemption Notice and such action has been duly
authorized by all proper and necessary Massachusetts business trust action.
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Section 4.3 Binding Agreement
The Loan Documents constitute the valid and legally binding
obligations of the Borrower to the extent it is a party thereto, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally.
Section 4.4 Litigation
There are no actions, suits or proceedings at law or in equity
or by or before any Governmental Authority (whether purportedly on behalf of the
Borrower) pending or, to the knowledge of the Borrower, threatened against it or
maintained by it that may affect the property or rights of the Borrower, which
(a) could reasonably be expected to have a Material Adverse Effect, (b) are not
purely frivolous and call into question the validity or enforceability of, or
otherwise seek to invalidate, any Loan Document, the MMP Defeasance or the MMP
Redemption or (c) might, individually or in the aggregate, materially adversely
affect the MMP Defeasance, the MMP Redemption or any of the transactions
contemplated by any Loan Document.
Section 4.5 Approvals and Consents
No consent, authorization or approval of, filing (other than (x)
the filing of each financing statement in the form attached to the Security
Agreement in the office indicated on such financing statement, (y) the delivery
of the MMP Redemption Notice and (z) the delivery of the SEC Notice) with,
notice to, or exemption by, the holders of any securities issued by the
Borrower, any Governmental Authority or any other Person is required to
authorize, or is required in connection with, the execution and delivery by the
Borrower of, and the performance by the Borrower of its obligations under, the
Loan Documents or the consummation of the MMP Redemption or is required as a
condition to the validity or enforceability of the Loan Documents with respect
to or against the Borrower or its property or assets. No provision of any
applicable treaty, statute, law (including any applicable usury or similar law),
rule or regulation of any Governmental Authority will prevent the execution and
delivery by the Borrower or performance by the Borrower of its obligations
under, or affect the validity with respect to or against the Borrower of, the
Loan Documents, the MMP Redemption Notice, the SEC Notice or the consummation of
the MMP Redemption.
Section 4.6 No Conflict
The Borrower is not in default under any mortgage, indenture,
contract, agreement, judgment, decree or order to which it is a party or by
which it or any of its property is bound, which defaults, taken as a whole,
could reasonably be expected to (i) have a Material Adverse Effect or (ii)
prohibit or prevent the MMP Redemption. The execution, delivery or carrying out
by the Borrower of the terms of the Loan Documents, the Credit Extensions
hereunder and the use by the Borrower of the proceeds thereof in accordance with
the terms thereof, the delivery of the MMP Redemption Notice, the delivery of
the SEC Notice and the consummation of the MMP Redemption (a) will not (i)
violate any statutes or regulations, including the ICA, of any Governmental
Authority applicable to the Borrower or (ii) constitute a default under,
conflict with, require any consent under (other than consents which have been
obtained), or result in the creation or imposition of, or obligation to create,
any Lien (other than pursuant to the Security Agreement) upon the property of
the Borrower pursuant to the terms of any such mortgage, indenture, contract,
agreement, judgment, decree or order, which defaults, conflicts and consents, if
not obtained, could reasonably be expected to have a Material Adverse Effect,
and (b) are not inconsistent with the Fundamental Policies or the MMP Statement.
21
Section 4.7 Taxes
The Borrower has filed or caused to be filed all tax returns
required to be filed and has paid, or has made adequate provision for the
payment of, all Taxes shown to be due and payable on said returns or in any
assessments made against it (other than those being contested in good faith and
by appropriate proceedings diligently conducted, and for which adequate reserves
have been set aside in accordance with Applicable Accounting Principles) which,
if not so filed or paid, could reasonably be expected to result in a Material
Adverse Effect, and no tax Liens (other than those permitted by Section 7.2(b))
have been filed against the Borrower or any of its property. The charges,
accruals and reserves on the books of the Borrower with respect to all federal,
state, local and other Taxes are adequate, and the Borrower knows of no unpaid
assessment which is due and payable against or any claims being asserted against
it which could reasonably be expected to have a Material Adverse Effect, except
such thereof as are being contested in good faith and by appropriate proceedings
diligently conducted, and for which adequate reserves have been set aside in
accordance with Applicable Accounting Principles.
Section 4.8 Compliance
The Borrower is not in default with respect to any judgment,
order, writ, injunction, decree or decision of any Governmental Authority, which
default could reasonably be expected to have a Material Adverse Effect. The
Borrower is complying in all material respects with all applicable statutes and
regulations, including the ICA and the Securities Act, and of all Governmental
Authorities, a violation of which could reasonably be expected to have a
Material Adverse Effect.
Section 4.9 Property
The Borrower has good and marketable title to all of its
property with respect to which the absence of such marketable title could
reasonably be expected to result in a Material Adverse Effect, subject to no
Liens other than Permitted Liens.
Section 4.10 Federal Reserve Regulations; Use of Proceeds
Except for the Federal Reserve Form to be executed and delivered
by the Borrower, no filing or other action is required under the provisions of
Regulations T, U or X in connection with the execution and delivery by the
Borrower of this Credit Agreement and neither the making of any Credit Extension
in accordance with this Credit Agreement nor the use of the proceeds thereof,
will violate or be inconsistent with the provisions of Regulations T, U or X.
Section 4.11 No Material Adverse Change
Since the Measurement Date, the Borrower has conducted its
businesses only in the ordinary course and there has been no material adverse
change in its business, assets or condition, financial or otherwise, of the
Borrower, other than redemptions pursuant to any duly authorized tender offers
by the Borrower that, immediately after giving effect thereto, do not
(individually or in the aggregate) cause a Default under Section 7.7.
Section 4.12 Material Agreements
Each of (i) the custody agreements to which the Borrower is a
party are in full force and effect in all material respects and (ii) all
agreements between the Borrower and the Investment Adviser are in full force and
effect, except to the extent that failure of such other agreements to be in full
force and effect could not reasonably be expected to have a Material Adverse
Effect.
22
Section 4.13 Financial Condition
The statement of assets and liabilities of the Borrower as of
the Measurement Date and the related statements of operations and changes in net
assets for the fiscal year then ended, copies of which, certified by independent
public accountants, have heretofore been delivered to the Bank, fairly present,
in all material respects, the financial position of the Borrower as of such date
and the results of its operations for such period in conformity with Applicable
Accounting Principles.
Section 4.14 No Misrepresentation
No representation or warranty contained in any Loan Document and
no certificate or report from time to time furnished by the Borrower to the Bank
in connection with the transactions contemplated thereby, contains or will
contain a misstatement of material fact, or, to the best knowledge of the
Borrower, omits or will omit to state a material fact required to be stated in
order to make the statements therein contained not misleading in the light of
the circumstances under which made.
Section 4.15 Legal Status
(a) The Borrower is not an "enemy" or an "ally of the enemy"
within the meaning of Section 2 of the Trading with the Enemy Act of the United
States of America (50 U.S.C. App. ss.ss. 1 et seq.), as amended. The Borrower is
not in violation of (i) the Trading with the Enemy Act, as amended, (ii) any of
the foreign assets control regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto or (iii) the Patriot Act (as defined in Section
9.15). The Borrower (I) is not a blocked person described in section 1 of the
Anti-Terrorism Order or (II) to the best of its knowledge, is not engaged in any
dealings or transactions, or is otherwise associated, with any such blocked
person.
(b) The Borrower (i) is not a Sanctioned Person, (ii) does not
have more than 15% of its assets in Sanctioned Countries, and (iii) does not
derive more than 15% of its operating income from investments in, or
transactions with Sanctioned Persons or Sanctioned Countries. Neither any Credit
Extension nor any part of the proceeds thereof will be used directly or
indirectly to fund any operations in, finance any investments or activities in
or make any payments to, a Sanctioned Person or a Sanctioned Country.
(c) The Borrower is in compliance with the Foreign Corrupt
Practices Act, 15 U.S.C. ss.ss. 78dd-1, et seq., and any foreign counterpart
thereto. The Borrower has not made a payment, offering, or promise to pay, or
authorized the payment of, money or anything of value (i) in order to assist in
obtaining or retaining business for or with, or directing business to, any
foreign official, foreign political party, party official or candidate for
foreign political office, (ii) to a foreign official, foreign political party or
party official or any candidate for foreign political office, and (iii) with the
intent to induce the recipient to misuse his or her official position to direct
business wrongfully to the Borrower in violation of the Foreign Corrupt
Practices Act, 15 U.S.C. ss.ss. 78dd-1, et seq.
Section 4.16 Investment Company Status
(a) The Borrower has the following status ("Status"): (i) it
qualifies as a Regulated Investment Company, (ii) it is a "registered investment
company" within the meaning of Section 8 of the ICA, (iii) it is a "closed-end
company" and a "diversified company" in each case within the meaning of Section
5 of the ICA, (iv) it is not an Affiliate of the Bank, (v) as of the Effective
Date, it has only two classes or series of capital stock: 4,924,349 authorized
and outstanding shares of common stock and 2,280 authorized and outstanding MMP
23
Shares, and (vi) it is in compliance with the Fundamental Policies and the MMP
Statement.
(b) The Borrower is not subject to any statute, rule, regulation
or organizational or offering document which prohibits or limits the incurrence
of Indebtedness under the Loan Documents, except for the limitations set forth
in the ICA, state securities laws to the extent applicable, and the Fundamental
Policies.
(c) The Borrower has not issued any of its securities in
violation of any Federal or State securities laws applicable thereto, except to
the extent that any such violation could not reasonably be expected to have a
Material Adverse Effect.
Section 4.17 MMP Defeasance and Redemption
Upon the payment by the Bank of the proceeds of the first Loan
hereunder to the MMP Auction Agent (together with the payment by the Borrower to
the MMP Auction Agent of an amount equal to the accumulated but unpaid dividends
on not less than 1,400 MMP Shares), in each case on the date selected by the
Borrower in the MMP Redemption Notice for the redemption of MMP Shares, the
following shall occur (the "MMP Defeasance"): (i) all rights of the holders of
not less than 1,400 MMP Shares (as shareholders of the Borrower) by reason of
the ownership thereof will cease and will be terminated (except their right to
receive from the MMP Auction Agent accumulated but unpaid dividends and the
redemption price in respect thereof but without interest), and (ii) by the terms
of the MMP Statement, not fewer than 1,400 MMP Shares will be deemed to be no
longer outstanding.
ARTICLE 5. CONDITIONS
Section 5.1 Effective Date
The obligation of the Bank to make Credit Extensions shall not
become effective until the date (the "Effective Date") on which each of the
following conditions is satisfied, or waived in accordance with Section 9.2 (and
the Bank shall notify the Borrower of the Effective Date, and such notice shall
be conclusive and binding):
(a) The Bank shall have received either (i) a counterpart of
this Credit Agreement signed on behalf of the Borrower or (ii) written evidence
satisfactory to the Bank (which may include telecopy transmission of a signed
signature page of this Credit Agreement) that the Borrower has signed a
counterpart of this Credit Agreement.
(b) The Bank shall have received a Note, dated the Effective
Date, executed on behalf of the Borrower.
(c) The Bank shall have received a favorable written opinion
(addressed to the Bank and dated the Effective Date) from counsel to the
Borrower acceptable to the Bank, the substance of which is set forth in Exhibit
B. The Borrower hereby requests such counsel to deliver such opinion.
(d) The Bank shall have received a certificate, dated the
Effective Date and signed by authorized representatives (who shall be acceptable
to the Bank) of the Borrower, substantially in the form of Exhibit D hereto.
24
(e) The Bank shall have received a copy of an initial Federal
Reserve Form, substantially in the form of Exhibit E hereto, duly executed and
delivered by or on behalf of the Borrower, in form and substance acceptable to
the Bank.
(f) The Bank shall have received a security agreement, dated the
Effective Date and signed by an authorized representative (who shall be
acceptable to the Bank) on behalf of the Borrower, substantially in the form of
Exhibit G hereto (the "Security Agreement").
(g) The Bank shall have received a control agreement, dated the
Effective Date and signed by an authorized representative (who shall be
acceptable to the Bank) on behalf of the Borrower, substantially in the form of
Exhibit H hereto (the "Control Agreement").
(h) The Bank shall have received Uniform Commercial Code,
federal tax and judgment lien search reports with respect to each applicable
public office where Liens would customarily be filed against the Borrower and
each trustee thereof disclosing that there are no Liens of record in such
official's office covering the Borrower, any trustee thereof or any asset or
property thereof.
(i) The Bank shall have received all fees and other
amounts due and payable by the Borrower on or prior
to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all reasonable
out-of-pocket costs and expenses required to be
reimbursed or paid by the Borrower hereunder.
Section 5.2 Each Credit Event
The obligation of the Bank to make any Credit Extension is
subject to the satisfaction of the following conditions:
(a) In the event that, immediately after giving effect to such
Credit Extension and any simultaneous repayment of a Loan or an LC Disbursement,
or the surrender of the Letter of Credit, the Credit Exposure would exceed the
Credit Exposure immediately prior to giving effect to such Loan, (i) the
representations and warranties of the Borrower set forth in each Loan Document
to which it is a party shall be true and correct in all respects on and as of
the date of such Loan, and (ii) no Default shall have occurred and be
continuing.
(b) The Bank shall have received a written Credit Extension
Request signed by the Borrower setting forth the information required by Section
2.2.
(c) To the extent required by Regulation U, the Bank shall have
received (i) a copy of a Federal Reserve Form, duly executed and delivered by
the Borrower and completed for delivery to the Bank, in form acceptable to the
Bank, or (ii) a current list of Margin Stock and Non-Margin Assets of the
Borrower, in a form acceptable to the Bank and in all respects in compliance
with Regulation U, including Section 221.3((c)(2)(iv) hereof.
(d) The Bank shall have received such other documentation and
assurances as shall be reasonably required by it in connection herewith.
Each request for a Credit Extension by the Borrower shall be
deemed to constitute a representation and warranty by the Borrower on the date
thereof as to the matters specified in paragraph (a) of this Section.
25
ARTICLE 6. AFFIRMATIVE COVENANTS
Until the Commitment has expired or been terminated and the
principal of and interest on each Loan and LC Disbursement, and all fees and
other amounts payable by the Borrower under the Loan Documents, shall have been
paid in full, the Borrower covenants and agrees with the Bank that:
Section 6.1 Financial Statements and Other Information
The Borrower shall furnish or cause to be furnished to the Bank:
(a) as soon as available, but in any event within 90 days after
the end of each fiscal year of the Borrower, a copy of its Statement of Assets
and Liabilities as at the end of such fiscal year, together with the related
Schedule of Investments and Statements of Operations and Changes in Net Assets
as of and through the end of such fiscal year; each such Statement of Assets and
Liabilities and the related Schedule of Investments and Statements of Operations
and Changes in Net Assets shall be certified without qualification by
independent public accountants, which certification shall (i) state that the
examination by such independent public accountants in connection with such
financial statements has been made in accordance with those auditing standards
required by the ICA and prescribed by the SEC for the Borrower or, to the extent
not so required or prescribed, generally accepted auditing standards in the
United States and (ii) include the opinion of such independent public
accountants that such financial statements have been prepared in conformity with
Applicable Accounting Principles, except as otherwise specified in such opinion;
(b) as soon as available, but in any event within 90 days after
the end of the first semiannual accounting period in each fiscal year of the
Borrower, a copy of the Borrower's Statement of Assets and Liabilities as at the
end of such semiannual period, together with the related Schedule of Investments
and Statements of Operations and Changes in Net Assets for such period;
(c) as soon as available, but in any event not later than 90
days after the end of each quarterly accounting period in each fiscal year of
the Borrower, the Borrower shall deliver to the Bank a duly completed
certificate of a duly authorized representative (who shall be acceptable to the
Bank) of the Borrower, substantially in the form of Exhibit F hereto;
(d) as soon as available, but in any event not later than 15
days after the end of each calendar month, the Borrower shall deliver to the
Bank a duly completed certificate of a duly authorized representative (who shall
be acceptable to the Bank) of the Borrower, substantially in the form of Exhibit
F hereto;
(e) prompt written notice in the event that the Borrower decides
to seek the approval of its Board and, if necessary, its shareholders to effect
a change in any of its Fundamental Policies;
(f) as soon as practicable, a copy of each general mailing to
the shareholders of the Borrower to the extent such mailing includes a
Prospectus or any material change in the terms thereof, including any material
change in the investment objectives or any change in (i) its Fundamental
Policies, (ii) limitations on borrowings, or (iii) the identity of the members
of the Board, executive officers or other similar Person of the Borrower or of
its Investment Advisor;
(g) promptly after the execution thereof, copies of all material
amendments or other material changes to the Fundamental Policies, all investment
advisory contracts, and any new investment advisory contracts entered into after
the Effective Date;
26
(h) prompt written notice of any contest referred to in Sections
6.5 or 6.6;
(i) promptly after delivery thereof to the MMP Auction Agent, a
copy of the notice of redemption required to be delivered to the MMP Auction
Agent pursuant to Section 3(a)(i) of the MMP Statement (the "MMP Redemption
Notice"), and (Y) promptly after delivery thereof to the SEC, a copy of the
notice of redemption required to be delivered to the SEC pursuant to Section
3(b) of the MMP Statement (the "SEC Notice"); and
(j)promptly after request therefor, such other information as
the Bank may reasonably request from time to time.
Section 6.2 Notice of Material Events
The Borrower shall furnish or cause to be furnished to the Bank
prompt written notice of the following, together with a statement of a duly
authorized representative (who shall be acceptable to the Bank) of the Borrower
setting forth in reasonable detail the event or development requiring such
notice and, if applicable, any action taken or proposed to be taken with respect
thereto:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding
by or before any Governmental Authority against or affecting the Borrower that,
if adversely determined, could in the good faith opinion of the Borrower
reasonably be expected to result in a Material Adverse Effect; and
(c) the occurrence of any other development that has resulted,
or could reasonably be expected to result, in a Material Adverse Effect.
Section 6.3 Legal Existence
The Borrower shall maintain its legal existence in good standing
in the jurisdiction of its organization and shall maintain its qualification to
do business in each other jurisdiction in which the failure so to do could
reasonably be expected to have a Material Adverse Effect.
Section 6.4 Insurance
The Borrower shall maintain insurance with financially sound
insurance carriers in at least such amounts and against at least such risks as
are usually insured against by entities engaged in the same or a similar
business or as may otherwise be required by the ICA or the SEC (including such
fidelity bond coverage as shall be required by Rule 17g-1 promulgated under the
ICA or any successor provision and errors and omissions insurance); and furnish
to the Bank, upon written request, full information as to the insurance carried.
Section 6.5 Payment of Indebtedness and Performance of Obligations
The Borrower shall pay and discharge when due all lawful
Indebtedness, obligations and claims for labor, materials and supplies or
otherwise which, if unpaid, could reasonably be expected to (a) have a Material
Adverse Effect on the Borrower or (b) give rise to the imposition of a Lien
(other than a Permitted Lien) upon the property of the Borrower, unless and to
the extent only that the validity of such Indebtedness, obligation or claim
shall be contested in good faith and by appropriate proceedings diligently
conducted by or on behalf of the Borrower, and provided that such reserve or
other appropriate
27
provision as shall be required in accordance with Applicable Accounting
Principles shall have been made therefor.
Section 6.6 Observance of Legal Requirements
The Borrower shall observe and comply in all material respects
with all laws (including the ICA and the Code), ordinances, orders, judgments,
rules, regulations, certifications, franchises, permits, licenses, directions
and requirements of all Governmental Authorities, which may then be applicable
to the Borrower, a violation of which could reasonably be expected to have a
Material Adverse Effect, except such thereof as shall be contested in good faith
and by appropriate proceedings diligently conducted by or on behalf of the
Borrower, provided that such reserve or other appropriate provision as shall be
required in accordance with Applicable Accounting Principles shall have been
made therefor.
Section 6.7 Books and Records; Visitation
The Borrower shall (a) keep proper books of record and account
in which complete, true and correct entries in conformity with Applicable
Accounting Principles and all material requirements of law shall be made of all
material dealings and transactions in relation to its business and activities,
(b) upon reasonable prior notice (which shall in no event be required to be more
than (i) one Business Day prior, at any time that a Default has occurred and is
continuing, or (ii) five Business Days prior, at all other times) permit
representatives of the Bank to visit the offices of the Borrower and to discuss
the properties, assets, income and financial condition of the Borrower with the
duly authorized representatives thereof and to inspect the books, property and
records of the Borrower, and (c) upon the reasonable request of the Bank,
deliver to the Bank a detailed list of assets of the Borrower.
Section 6.8 Purpose of Credit Extensions
The Borrower shall use each Credit Extension (and the proceeds
thereof if any) for its general business purposes, including the purchase of
investment securities, provided that in no event shall (a) any Credit Extension
or the proceeds thereof be used for purposes which would violate any provision
of any applicable statute, rule, regulation, order or restriction applicable to
the Borrower or Regulation U, and (b) the Borrower, prior to the redemption of
not less than 1,400 MMP Shares, use the proceeds of any Loan for any purpose
other than the payment of the redemption price of MMP Shares in accordance with
the MMP Redemption Notice and the MMP Statement.
Section 6.9 Maintenance of Status
The Borrower will maintain at all times its Status.
Section 6.10 Notices
Upon the date of the issuance of the Letter of Credit, (i) the
Borrower will duly execute and deliver the MMP Redemption Notice to the MMP
Auction Agent and (ii) the Borrower shall have duly executed and delivered the
SEC Notice to the SEC.
ARTICLE 7. NEGATIVE COVENANTS
Until the Commitment has expired or been terminated and the
principal of and interest on each Loan and LC Disbursement, and all fees and
other amounts payable by the Borrower under the Loan Documents, shall have been
paid in full, the Borrower covenants and agrees with the Bank that:
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Section 7.1 Indebtedness Senior Securities
The Borrower will not (a) create, incur, assume or suffer to
exist any liability for Indebtedness, except (i) Indebtedness under the Loan
Documents, (ii) Indebtedness (other than Indebtedness for borrowed money) (A)
incurred in the ordinary course of business, (B) permitted to be incurred in
accordance with the Fundamental Policies, and (C) which, immediately after
giving effect thereto and any simultaneous repayment of any other Indebtedness,
would not cause the Borrower to have exceeded the Maximum Permitted Borrowing,
and (iii) Indebtedness to the Custodian (1) incurred for the purposes of
clearing and settling purchases and sales of securities, or (2) up to an
aggregate amount not to exceed $100,000 at any one time outstanding under this
clause (2), (I) for temporary or emergency purposes or (II) related to any
foreign exchange transactions, or (b) issue, sell, create, incur, assume or
suffer to exist any Senior Security, except Senior Securities Representing
Indebtedness otherwise permitted hereunder.
Section 7.2 Liens
The Borrower will not create, incur, assume or suffer to exist
any Lien upon any of its property or assets, whether now owned or hereafter
acquired, except:
(a) Liens in respect of Indebtedness permitted under Section
7.1(a)(ii) and (iii);
(b) Liens for Taxes, assessments or similar charges incurred in
the ordinary course of business which are not delinquent or which are being
contested in good faith and by appropriate proceedings diligently conducted, and
for which adequate reserves have been set aside in accordance with Applicable
Accounting Principles, provided that enforcement of such Liens is stayed pending
such contest;
(c) Liens imposed by law created in the ordinary course of
business for amounts not yet due or which are being contested in good faith and
by appropriate proceedings diligently conducted, and for which adequate reserves
have been set aside in accordance with Applicable Accounting Principles,
provided that enforcement of such Liens is stayed pending such contest;
(d) Liens arising out of judgments or decrees affecting the
property attributable to the Borrower which are being contested in good faith
and by appropriate proceedings diligently conducted, and for which adequate
reserves have been set aside in accordance with Applicable Accounting
Principles, provided that enforcement thereof is stayed pending such contest;
(e) Liens in respect of obligations arising from any (i)
repurchase, reverse repurchase or securities lending agreement, (ii) option
contract, futures contract, forward contract, (iii) contract for the delayed
delivery of securities, or (iv) Hedging Agreement, provided that (1) each such
obligation is incurred in the ordinary course of business and in accordance with
the Fundamental Policies, and (2) the aggregate Value of all assets subject to
Liens permitted under this Section 7.2(e) shall not at any time exceed 10% of
Total Net Assets;
(f) Liens created or arising out of the Loan Documents; and
(g) Liens arising in the ordinary course of business under the
Custody Agreement, to the extent permitted by the Control Agreement.
29
Section 7.3 Fundamental Changes
The Borrower will not (a) consolidate or merge into or with any
Person, or (b) in any single transaction or series of related transactions,
sell, lease or otherwise transfer, directly or indirectly, all or substantially
all of its property.
Section 7.4 Restricted Payments
The Borrower will not declare or pay, or allow to be declared or
paid, any dividend, distribution or similar payment (including a purchase or
repurchase of the shares issued by the Borrower) in respect of, or redeem any
of, its shares if, immediately before or after giving effect thereto, an Event
of Default shall or would exist, except to the extent required in order to
qualify as a Regulated Investment Company and to otherwise minimize or eliminate
federal or state income taxes payable by the Borrower.
Section 7.5 Fundamental Policies
The Borrower will not (a) make or maintain any investment other
than as permitted by the ICA and the Fundamental Policies or (b) amend or
otherwise modify the Fundamental Policies.
Section 7.6 Amendments and Changes
(a) The Borrower will not amend or otherwise modify (i) its
Organization Documents or the Custody Agreement, in each case in any way which
would adversely affect the rights or remedies of the Bank under the Loan
Documents, or (ii) the MMP Statement.
(b) The Borrower will not change its fiscal year if such change
would have a Material Adverse Effect. Subject to Section 1.3, the Borrower will
not change or permit any change in the accounting principles applied to it,
except as required by Applicable Accounting Principles, if such change would
have a Material Adverse Effect.
Section 7.7 Financial Covenants
(a) The Borrower will not permit the Adjusted Asset Coverage to
be less than 3.00:1.00 at any time.
(b) The Borrower shall not permit Senior Debt to at any time
exceed the Maximum Permitted Borrowing.
Section 7.8 Investment
(a) The Borrower will not purchase, acquire, or otherwise have
exposure (including pursuant to any Derivative Agreement) to, any Investment,
other than Permitted Investments.
(b) The Borrower will not enter into or otherwise acquire or
hold any Derivative except to mitigate a risk to which the Borrower is subject,
provided that the Borrower may be a party to one or more credit default swaps,
as the seller, having an aggregate notional amount at any one time not in excess
of 5.0% of Adjusted Total Net Assets.
(c) The Borrower will not purchase or otherwise acquire, or sell
or otherwise dispose of, any Investment if, immediately after giving effect
thereto, an Investment Limitation Default would occur.
(d) The Borrower will not allow an Investment Limitation Default
to occur.
30
ARTICLE 8. EVENTS OF DEFAULT
Section 8.1 Events of Default
Each of the following shall constitute an "Event of Default":
(a) any principal of any Loan or LC Disbursement shall not be
paid when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise;
(b) any interest on any Loan or LC Disbursement any fee,
commission or any other amount (other than an amount referred to in paragraph
(a) of this Section 8.1) payable under any Loan Document shall not be paid when
and as the same shall become due and payable, and such failure shall continue
unremedied for a period of five Business Days;
(c) any representation or warranty made or deemed made by or on
behalf of the Borrower in or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;
(d) (i) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Sections 6.3, 6.8 or 6.9 or in
Article 7 (other than Section 7.8(d)) or (ii) the Borrower shall fail to observe
or perform any covenant, condition or agreement contained in Section 7.8(d), and
such failure shall continue unremedied for a period of ten Business Days;
(e) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in this Credit Agreement (other than those
specified in paragraphs (a), (b) or (d) of this Section 8.1), and such failure
shall continue unremedied for a period of 30 days after the Borrower shall, or
reasonably should, have obtained knowledge thereof;
(f) the Borrower shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness when and as the same shall become due and payable (after giving
effect to any applicable grace period);
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits the holder or holders of any such Material Indebtedness or any trustee
or agent on its or their behalf to cause any such Material Indebtedness to
become due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity, provided that this paragraph (g) shall
not apply to secured Indebtedness that becomes due solely as a result of the
voluntary sale or transfer of the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of the Borrower, or the debts of the Borrower, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or for a substantial part of the assets of the
Borrower; and, in any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered;
31
(i) the Borrower shall (i) voluntarily commence (directly or on
its behalf) any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii) consent
to (directly or on its behalf) the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in paragraph
(h) of this Section 8.1, (iii) apply for or consent to (in either case, directly
or on its behalf) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) the Borrower shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;
(k) (1) the Investment Adviser shall fail to be First Trust
Advisors L.P., or an Affiliate thereof, (2) the custodian for all of the assets
of the Borrower shall fail to be PFPC Trust Company, or an Affiliate thereof, or
any successor thereto agreed to in writing by the Bank in its sole and absolute
discretion, (3) the sole administrator for the Borrower shall fail to be PFPC,
Inc., or an Affiliate thereof, or any successor thereto agreed to in writing by
the Bank in its sole and absolute discretion, or (4) the independent auditors
for the Borrower shall fail to be reasonably acceptable to the Bank;
(l) one or more judgments for the payment of money (not paid or
covered by insurance) in an aggregate amount in excess of the Threshold Amount
shall be rendered against the Borrower and the same shall remain undischarged
for a period of 60 consecutive days during which execution shall not be
effectively stayed, vacated or bonded or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of the Borrower to enforce
any such judgment;
(m) any Loan Document shall cease, for any reason other than
pursuant to its terms, to be in full force and effect, or with respect to the
Borrower, the Borrower shall so assert in writing or shall disavow any of its
obligations thereunder;
(n) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in any Security Document;
(o) except as a result of any sale or other transfer of any
asset in accordance with the terms of the Loan Documents, any Lien purported to
be created under the Security Agreement shall cease to be, or shall be asserted
by the Borrower not to be, a valid and perfected Lien on any Collateral (as
defined in the Security Agreement), with the priority required by the applicable
Security Document;
(p) the Borrower's shares shall be suspended from trading on The
New York Stock Exchange for more than two consecutive days upon which trading in
shares generally occurs on such exchange, or shall be delisted; or
(q) if for any reason the MMP Redemption shall not occur in
accordance with the MMP Redemption Notice.
Section 8.2 Remedies
If any Event of Default shall occur and be continuing then, and
in every such event (other than an event described in paragraph (h) or (i) of
Section 8.1), and at any time thereafter during the continuance of such event,
the Bank may, by notice to the Borrower, take either or both of the following
actions, at the same or different times: (a) declare the Commitment terminated,
and thereupon
32
the Commitment shall terminate immediately and/or (b) declare the Loans and LC
Disbursements then outstanding to be due and payable in whole (or in part, in
which case any principal not so declared to be due and payable may thereafter be
declared to be due and payable), and thereupon the principal of such Loans and
LC Disbursements so declared to be due and payable, together with accrued and
unpaid interest thereon and all fees and other obligations of the Borrower
accrued and unpaid under the Loan Documents, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in the case of any event
described in paragraph (h) or (i) of Section 8.1, the Commitment shall
automatically terminate and the principal of the Loans and LC Disbursements then
outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued and unpaid under the Loan Documents, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.
ARTICLE 9. MISCELLANEOUS
Section 9.1 Notices
Except in the case of notices and other communications expressly
permitted to be given by telephone, all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopy, as follows:
(a) if to the Borrower, to it at First Trust/Four Corners Senior
Floating Rate Income Fund, 1001 Warrenville Road, Suite 300, Lisle, Illinois
60532, Attention: W. Scott Jardine, General Counsel (Telephone: (630) 241-4141;
Facsimile: (630) 241-8792); or
(b) if to the Bank, to it at, (i) in all cases, One Liberty
Plaza, 26th Floor, New York, New York 10006, Attention: John M. Morale
(Telephone: (212) 225-5062; Facsimile: (212) 225-5254); and (ii) in the case of
all notices and other communications pursuant to Article 2, with a copy to 720
King Street, Toronto, Canada M5K1J8, Attention: Tamara Mohan (Telephone: (212)
225-5705; Facsimile: (212) 225-5709).
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Credit Agreement shall be deemed to have been given on the date of
receipt.
Section 9.2 Waivers; Amendments
(a) No failure or delay by the Bank in exercising any right or
power under any Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Bank under the Loan Documents are cumulative and are not
exclusive of any rights or remedies that the Bank would otherwise have. No
waiver of any provision of any Loan Document or consent to any departure by the
Borrower therefrom shall in any event be effective unless the Bank shall have
consented thereto in writing, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. Without
limiting the generality of the foregoing, the making of a Credit Extension shall
not be construed as a waiver of any Default, regardless of whether the Bank may
have had notice or knowledge of such Default at the time.
33
(b) Neither this Credit Agreement nor any provision hereof may
be waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower and the Bank.
Section 9.3 Expenses; Indemnity; Damage Waiver
(a) The Borrower shall pay (i) all reasonable out-of-pocket
expenses incurred by the Bank and its Affiliates, including the reasonable fees,
charges and disbursements of counsel for the Bank, in connection with the
preparation, negotiation, closing and administration of this Credit Agreement or
any amendments, modifications or waivers of the provisions of any Loan Document
(whether or not the transactions contemplated thereby shall be consummated) and
(ii) all out-of-pocket expenses incurred by the Bank, including the fees,
charges and disbursements of any counsel for the Bank, in connection with the
enforcement or protection of its rights against the Borrower in connection with
the Loan Documents, including its rights under this Section, or in connection
with the Credit Extensions made hereunder, including all such out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Credit Extensions.
(b) The Borrower shall indemnify the Bank and each Related Party
thereof (each such Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from all losses, claims, damages, liabilities and related
expenses (collectively, "Losses"), including the reasonable fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of or as a result of (i) the execution or delivery by
the Borrower of any Loan Document or any agreement or instrument contemplated
thereby, the performance by the Borrower of its obligations under the Loan
Documents or the consummation of the Transactions or any other transactions
contemplated thereby, (ii) any Credit Extension or the use of the proceeds
thereof, or (iii) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory and regardless of whether any Indemnitee is a party thereto.
Subject to Section 9.3(c), nothing herein contained shall prevent or prohibit
the Borrower from bringing any action against the Bank to recover any Losses
suffered by the Borrower to the extent caused by the Bank's failure to exercise
due care in the performance of its obligations under the Loan Documents. The
parties hereto expressly agree that, in the absence of gross negligence, bad
faith or willful misconduct on the part of the Bank (as found by a final and
nonappealable decision of a court of competent jurisdiction), the Bank shall be
deemed to have exercised due care.
(c) To the extent permitted by applicable law, the Borrower
shall not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, any Loan Document or any agreement, instrument or other document
contemplated thereby, the Transactions or any Credit Extension or the use of the
proceeds thereof.
(d) All amounts due under this Section shall be payable promptly
but in no event later than 10 days after written demand therefor.
Section 9.4 Successors and Assigns
The provisions of this Credit Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns permitted hereby, except that (a) the Borrower shall not assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of the Bank (and any attempted assignment or transfer by the
Borrower without such consent shall be null and void), and (b) the Bank shall
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of the Borrower, such consent not to be
unreasonably
34
withheld or delayed. Nothing in this Credit Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby and, to the extent
expressly contemplated hereby, the Related Parties of the Bank) any legal or
equitable right, remedy or claim under or by reason of any Loan Document.
Notwithstanding anything to the contrary herein contained, the Bank may at any
time pledge or assign a security interest in all or any portion of its rights
under the Loan Documents to secure obligations of the Bank, including any pledge
or assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release the Bank from any of its obligations
hereunder or substitute any such pledgee or assignee for the Bank as a party
hereto.
Section 9.5 Survival
All covenants, agreements, representations and warranties made
by the Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Credit Agreement shall be considered to have
been relied upon by the other parties hereto and shall survive the execution and
delivery of this Credit Agreement and the making of any Credit Extensions,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Bank may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or LC Disbursement or any fee
or any other amount payable under the Loan Documents is outstanding and unpaid
and so long as the Commitment has not expired or terminated. The provisions of
Sections 3.3, 3.7 and 9.3 shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans and the LC Disbursements and the termination of the
Commitment or the termination of this Credit Agreement or any provision hereof.
Section 9.6 Counterparts; Integration; Effectiveness
This Credit Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute
but one contract. This Credit Agreement and any separate letter agreements with
respect to fees payable to the Bank constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 5.1, this Credit Agreement shall become
effective when it shall have been executed by the Bank and when the Bank shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of this Credit
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart of this Credit Agreement.
Section 9.7 Severability
In the event any one or more of the provisions contained in this
Credit Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction). The parties shall endeavor in good-faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions the legal
35
and economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
Section 9.8 Right of Setoff
If an Event of Default shall have occurred and be continuing,
the Bank and its Affiliates are hereby authorized at any time and from time to
time, to the fullest extent permitted by applicable law, to set-off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other obligations at any time owing by it to or for the
credit or the account of the Borrower against any of and all the obligations of
the Borrower now or hereafter owing under this Credit Agreement held by it,
irrespective of whether or not it shall have made any demand under this Credit
Agreement and although such obligations may be unmatured. The rights of the Bank
under this Section are in addition to other rights and remedies (including other
rights of set-off) that it may have.
Section 9.9 Governing Law; Jurisdiction; Consent to
Service of Process
(a) THIS CREDIT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS
OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
(b) The Borrower hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any New York
State court or Federal court of the United States of America sitting in New York
City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to the Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that, to the extent permitted by applicable law, all
claims in respect of any such action or proceeding may be heard and determined
in such New York State court or, to the extent permitted by applicable law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Credit Agreement shall affect any right that the Bank may
otherwise have to bring any action or proceeding relating to this Credit
Agreement or the other Loan Documents against the Borrower, or any of its
property, in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to the Loan Documents in any court
referred to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(d) Each party to this Credit Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.1. Nothing in
this Credit Agreement will affect the right of any party to this Credit
Agreement to serve process in any other manner permitted by law.
Section 9.10 WAIVER OF JURY TRIAL
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS CREDIT AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING
36
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS CREDIT AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 9.11 Headings
Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Credit
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Credit Agreement.
Section 9.12 Interest Rate Limitation
Notwithstanding anything herein to the contrary, if at any time
the interest rate applicable to any Loan or LC Disbursement, together with all
fees, charges and other amounts that are treated as interest on such Loan or LC
Disbursement under applicable law (collectively the "charges"), shall exceed the
maximum lawful rate (the "maximum rate") that may be contracted for, charged,
taken, received or reserved by the Bank in accordance with applicable law, the
rate of interest payable in respect of such Loan or LC Disbursement, together
with all of the charges payable in respect thereof, shall be limited to the
maximum rate and, to the extent lawful, the interest and the charges that would
have been payable in respect of such Loan or LC Disbursement but were not
payable as a result of the operation of this Section shall be cumulated, and the
interest and the charges payable to the Bank in respect of other Loans and LC
Disbursements or periods shall be increased (but not above the maximum rate
therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Effective Rate to the date of repayment, shall have been received
by the Bank.
Section 9.12 Non-Recourse
The Bank hereby agrees for the benefit of each and every
trustee, director, officer and record owner of any outstanding shares of the
Borrower and any successor, assignee, heir, estate, executor, administrator or
personal representative of any such trustee, director, officer and record owner
of any outstanding shares (a "Non-Recourse Person") that (a) no Non-Recourse
Person shall have any personal liability for any obligation of the Borrower
under any Loan Document or other instrument or document delivered pursuant
hereto or thereto; (b) no claim against any Non-Recourse Person may be made for
any obligation of the Borrower under any Loan Document or other instrument or
document delivered pursuant hereto or thereto, whether for the payment of
principal of, or interest on, the Loans or LC Disbursements or for any fees,
expenses or other amounts payable by the Borrower hereunder or thereunder; and
(c) the obligations or liabilities of the Borrower under any Loan Document or
other instrument or document delivered pursuant hereto or thereto, are
enforceable solely against the Borrower and its properties and assets.
Section 9.14 Treatment of Certain Information
The Bank agrees to use reasonable precautions to keep
confidential, in accordance with the Bank's customary procedures for handling
confidential information of the same nature, all non-public information supplied
by the Borrower pursuant to this Credit Agreement which (a)(i) is clearly
identified by such Person as being confidential at the time the same is
delivered to the Bank, or (ii) constitutes any financial statement, financial
projections or forecasts, budget, compliance certificate, audit report,
management letter or accountants' certification delivered hereunder, and (b) as
of any date of determination, was received by the Bank within the immediately
preceding two year period ("Information"), provided, however, that nothing
herein shall limit the disclosure of any such Information (i) to such of its
respective Related Parties as need to know such Information, (ii) to the extent
required by applicable laws
37
or regulations or by any subpoena or similar legal process, or requested by any
bank regulatory authority, (iii) on a confidential basis, to prospective lenders
or their counsel, (iv) to auditors or accountants, and any analogous counterpart
thereof, (v) in connection with any litigation to which the Bank is a party,
(vi) to the extent such Information (A) becomes publicly available other than as
a result of a breach of this Credit Agreement, (B) becomes available to the Bank
on a non-confidential basis from a source other than the Borrower, or (C) was
available to the Bank on a non-confidential basis prior to its disclosure to the
Bank by the Borrower; and (vii) to the extent the Borrower shall have consented
to such disclosure in writing. Notwithstanding anything to the contrary
contained in any Loan Document, no provision thereof shall (1) restrict the Bank
from providing information to Federal Reserve supervisory staff, (2) require or
permit, without the prior approval of the Federal Reserve, the Bank to disclose
to the Borrower or any Affiliate that any information will be or was provided to
Federal Reserve supervisory staff, or (3) require or permit, without the prior
approval of the Federal Reserve, the Bank to inform the Borrower or any
Affiliate of a current or upcoming Federal Reserve examination or any nonpublic
Federal Reserve supervisory initiative or action.
Section 9.15 USA Patriot Act Notice
The Bank hereby notifies the Borrower that pursuant to the
requirements of the Patriot Act, it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow the Bank to
identify the Borrower in accordance with the Patriot Act.
Section 9.16 Limitation on Liability
The Borrower's Declaration of Trust is on file with the
Secretary of the Commonwealth of Massachusetts. This Credit Agreement is
executed on behalf of the Borrower by the Borrower's officers as officers and
not individually and the obligations imposed upon the Borrower by this Agreement
are not binding upon any of the Borrower's trustees, officers or shareholders
individually but are binding only upon the Borrower and it assets and property.
Section 9.17 Security
All of the obligations of the Borrower under the Loan Documents
are secured by the Security Documents.
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed by their respective authorized representatives as
of the day and year first above written.
FIRST TRUST/FOUR CORNERS SENIOR
FLOATING RATE INCOME FUND
By: /s/ James A. Bowen
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Name: James A. Bowen
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Title: President
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THE BANK OF NOVA SCOTIA
By: /s/ David L. Mahmood
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Name: David L. Mahmood
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Title: Managing Director
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