Document:

Exhibit

10.31

 

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

 

This

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as

of November 5, 2002, between SILICON VALLEY BANK, a California chartered

bank, with its principal place of business at 3003 Tasman Drive, Santa

Clara, California 95054 and with a loan production office located at One Newton

Executive Park, Suite 200, 2221 Washington Street, Newton, Massachusetts  02462, doing business under the name

“Silicon Valley East” (“Bank”) and NMS COMMUNICATIONS CORPORATION, formerly

known as NATURAL MICROSYSTEMS CORPORATION, a Delaware corporation with its

chief executive office located at 100 Crossing Boulevard, Framingham,

Massachusetts  (“Borrower”), provides

the terms on which Bank shall lend to Borrower and Borrower shall repay Bank.

This Agreement amends and restates in its entirety a certain Loan and Security

Agreement dated as of May 14, 1999 by and between Borrower and Bank.  The parties agree as follows:

 

1.               ACCOUNTING AND

OTHER TERMS

 

Accounting terms not defined in this Agreement shall be construed

following GAAP.  Calculations and

determinations must be made following GAAP. 

The term “financial statements” includes the notes and schedules.  The terms “including” and “includes” always

mean “including (or includes) without limitation,” in this or any Loan

Document.  Capitalized terms in this

Agreement shall have the meanings set forth in Section 13.

 

2.               LOAN AND TERMS

OF PAYMENT

 

2.1                  Promise to

Pay.  Borrower hereby unconditionally

promises to pay Bank the unpaid principal amount of all Credit Extensions and

interest on the unpaid principal amount of the Credit Extensions as and when

due in accordance with this Agreement.

 

2.1.1       Revolving Advances.

 

                Availability under the Non-Formula Line.  Bank shall make Advances not  exceeding (i) the Non-Formula Line, minus

(ii) the amount of all outstanding Letters of Credit (including drawn but

unreimbursed Letters of Credit) issued under the Non-Formula Line, minus (iii)

the FX Reserve relevant to the Non-Formula Line, and minus (iv) the aggregate

outstanding Advances under the Non-Formula Line (including any Cash Management

Services relating thereto).  Amounts

borrowed under this Section may be repaid and reborrowed during the term of

this Agreement.   The outstanding

principal balance of all Credit Extensions less than or equal to Five Million

Dollars ($5,000,000.00) shall be deemed Credit Extensions under the Non-Formula

Line; the outstanding principal balance of all Credit Extensions greater than

Five Million Dollars ($5,000,000.00) shall be deemed to be Credit Extensions

under the Formula  Line.

 

                Availability under the Formula Line.  Upon Borrower’s utilization of all

availability under the Non-Formula Line in Section 2.1.1(a), Bank shall make

Advances under the Formula Line not 

exceeding (i) the Formula Line or the Borrowing Base, whichever is less,

minus (ii) the amount of all outstanding Letters of Credit (including drawn but

unreimbursed Letters of Credit) issued under the Formula Line, minus (iii) the

FX Reserve relevant to the Formula Line, and minus (iv) the aggregate

outstanding Advances under the Formula Line (including any Cash Management

Services relating thereto).  Amounts

borrowed under this Section may be repaid and reborrowed during the term of

this Agreement.    The outstanding

principal balance of all Credit Extensions less than or equal to Five Million

Dollars ($5,000,000.00) shall be deemed Credit Extensions under the Non-Formula

Line; the outstanding principal balance of all Credit Extensions greater than

Five Million Dollars ($5,000,000.00) shall be deemed to be Credit Extensions

under the Formula Line.

 

 

                Borrowing Procedure.  To obtain an Advance, Borrower must notify Bank by facsimile or

telephone by 3:00 p.m. Eastern time on the Business Day the Advance is to be

made.  If such notification is by

telephone, Borrower must promptly confirm the notification by delivering to

Bank a completed Payment/Advance Form in the form attached as Exhibit B.  Bank shall credit Advances to Borrower’s

deposit account.  Bank may make Advances

under this Agreement based on instructions from a Responsible Officer or his or

her designee or without instructions if the Advances are necessary to meet

Obligations which have become due.  Bank

may rely on any telephone notice given by a person whom Bank believes is a

Responsible Officer or designee. Borrower shall indemnify Bank for any loss

Bank suffers due to such reliance.

 

                Termination; Repayment.  The Revolving Line terminates on the Maturity

Date, when the principal amount of all Advances under the Revolving Line and

the unpaid interest thereon, shall be immediately due and payable.

 

2.1.2       Letters of Credit.

 

(a)           Bank shall issue or

have issued Letters of Credit for Borrower’s account in accordance with

Sections 2.1.1, however the face amount of outstanding Letters of Credit

(including drawn but unreimbursed Letters of Credit and any Letter of Credit

Reserve) may not exceed Ten Million Dollars ($10,000,000.00).  Each Letter of Credit shall have an expiry

date no later than 180 days after the Maturity Date provided Borrower’s Letter

of Credit reimbursement obligation shall be secured by cash on terms acceptable

to Bank on and after (i) the Maturity Date if the term of this Agreement is not

extended by Bank, or (ii) the occurrence of an Event of Default hereunder.  All 

Letters of Credit shall be, in form and substance, acceptable to Bank in

its sole discretion and shall be subject to the terms and conditions of Bank’s

form of standard Application and Letter of Credit Agreement.  Borrower agrees to execute any further

documentation in connection with the Letters of Credit as Bank may reasonably

request.

 

(b)           The obligation of

Borrower to immediately reimburse Bank for drawings made under Letters of

Credit shall be absolute, unconditional and irrevocable, and shall be performed

strictly in accordance with the terms of this Agreement and such Letters of

Credit, under all circumstances whatsoever. 

Borrower shall indemnify, defend, protect,  and hold Bank harmless from any loss, cost, expense or liability,

including, without limitation, reasonable attorneys’ fees, arising out of or in

connection with any Letters of Credit.

 

(c)           Borrower may request

that Bank issue a Letter of Credit payable in a currency other than

United States Dollars.  If a demand

for payment is made under any such Letter of Credit, Bank shall treat such

demand as an Advance to Borrower of the equivalent of the amount thereof (plus

cable charges) in United States currency at the then prevailing rate of

exchange in San Francisco, California, for sales of that other currency

for cable transfer to the country of which it is the currency.

 

                Upon the issuance of any letter of credit payable in

a currency other than United States Dollars, Bank shall create a reserve

(the “Letter of Credit Reserve”) under the Revolving Line for letters of credit

against fluctuations in currency exchange rates, in an amount equal to ten

percent (10%) of the face amount of such letter of credit.  The amount of such reserve may be amended by

Bank from time to time to account for fluctuations in the exchange rate.  The availability of funds under the

Revolving Line shall be reduced by the amount of such reserve for so long as

such letter of credit remains outstanding.

 

2.1.3       Foreign Exchange Sublimit.  In accordance with Section 2.1.1, Borrower

may enter in foreign exchange forward contracts with the Bank under which

Borrower commits to purchase from or sell to Bank a set amount of foreign

currency more than one business day after the contract date (the “FX Forward

Contract”).  Bank shall subtract 10% of

each outstanding FX Forward Contract from the foreign exchange sublimit which

is a maximum of Ten Million Dollars ($10,000,000.00) (the “FX Reserve”).  The total FX Forward Contracts at any one 

 

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time

may not exceed 10 times the amount of the FX Reserve.  Bank may terminate the FX Forward Contracts if an Event of

Default occurs.

 

2.1.4       Cash Management Services Sublimit.  In accordance with Section 2.1.1, Borrower

may use up to Ten Million Dollars ($10,000,000.00) for the Bank’s Cash

Management Services, which may include merchant services, direct deposit of

payroll, business credit card, and check cashing services identified in the

various cash management services agreements related to such Cash Management

Services (the “Cash Management Services”). 

Such aggregate amounts utilized under the Cash Management Services

Sublimit shall at all times reduce the amount otherwise available for Credit

Extensions.  Any amounts Bank pays on

behalf of Borrower or any amounts that are not paid by Borrower for any Cash

Management Services will be treated as Advances under this Agreement and will

accrue interest at the interest rate applicable to Advances.

 

2.1.5       Undisbursed Credit Extensions.  The Bank’s obligation to lend the

undisbursed portion of the Obligations shall terminate if, in Bank’s sole

discretion, there has been a Material Adverse Change, or there has been any

material adverse deviation by Borrower from the most recent financial

projections of Borrower presented to and accepted by Bank prior to the

execution of this Agreement.

 

2.2          Overadvances.  If Borrower’s Obligations under Section

2.1.1(b) exceed the lesser of either (i) the Formula Line or (ii) the Borrowing

Base, Borrower must immediately pay in cash to Bank the excess.

 

2.3          Interest Rate;

Payments.

 

                Interest Rate. The principal amounts

outstanding under the Revolving Line shall accrue interest at a per annum rate

equal to the aggregate of the Bank’s Prime Rate.   After an Event of Default, Obligations shall bear interest at

five percent (5.0%) above the rate effective immediately before the Event of

Default.  The applicable interest rate

hereunder shall increase or decrease when the Prime Rate changes. Interest is

computed on the basis of a 360 day year for the actual number of days elapsed.

 

                Payments. 

Interest is payable on the Payment Date of each month.  Payments received after 12:00 noon Eastern

time are considered received at the opening of business on the next Business

Day.  When a payment is due on a day

that is not a Business Day, the payment is due the next Business Day and

additional fees or interest, as applicable, shall continue to accrue.

 

(c)           Debit of Accounts.   Bank may debit any of Borrower’s deposit

accounts including Account Number

                   for

principal and interest payments or any amounts Borrower owes Bank. Bank shall

promptly notify Borrower when it debits Borrower’s accounts.  These debits are not a set-off.

 

2.4          Fees.  Borrower shall pay to Bank:

 

                Facility Fee. 

A fully earned, non–refundable facility fee of Twenty-Five

Thousand Dollars ($25,000.00) due on the Closing Date; and

 

                Unused Facility Fee.  In addition to the foregoing, as compensation for the Bank’s

maintenance of sufficient funds available for such  purpose, the Bank shall have earned a Unused Facility Fee (so

referred to herein), which fee shall be paid quarterly, in arrears, on a

calendar year basis, in an amount equal to One Quarter of One percent (0.25%)

of the average unused portion of the Revolving Line, as determined by the Bank.

The Borrower shall not be entitled to any credit, rebate or repayment of any

Facility Fee previously earned by the Bank 

 

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pursuant to this Section

notwithstanding any termination of the within Agreement, or suspension or

termination of the Bank’s obligation to make loans and advances hereunder; and

 

                Bank Expenses.  All Bank Expenses (including reasonable attorneys’ fees and

expenses incurred through and after the Closing Date) when due.

 

3.     CONDITIONS

OF LOANS

 

3.1          Conditions

Precedent to Initial Credit Extension.  The Bank’s obligation to make the initial  Credit Extension is subject

to the condition precedent that Bank shall have received, in form and substance

satisfactory to Bank, the following:

 

                this

Agreement;

 

                a

certificate of the Secretary of Borrower with respect to articles, bylaws,

incumbency and resolutions authorizing the execution and delivery of this

Agreement;

 

                a

legal opinion of Borrower’s in-house counsel, in form and substance acceptable  to

Bank;

 

                Ratification

of Guaranty;

 

                financing

statements (Forms UCC–1);

 

                Account

Control Agreement/ Investment Account Control Agreement;

 

                payment

of the fees and Bank Expenses then due specified in Section 2.4 hereof;

 

                Certificate

of Foreign Qualification (if applicable);

 

                Certificate

of Good Standing/Legal Existence; and

 

                such

other documents, and completion of such other matters, as Bank may reasonably

deem necessary or appropriate.

 

3.2          Conditions

Precedent to all Credit Extensions.  Bank’s obligations to make each Credit Extension, including the

initial Credit Extension, is subject to the following:

 

                timely receipt of any Payment/Advance Form; and

 

                the representations and warranties in Section 5 shall

be materially true on the date of the Payment/Advance Form and on the effective

date of each Credit Extension and no Event of Default shall have occurred and

be continuing, or result from the Credit Extension. Each Credit Extension is

Borrower’s representation and warranty on that date that the representations

and warranties in Section 5 remain true.

 

4.     CREATION

OF SECURITY INTEREST

 

4.1          Grant of

Security Interest.  Borrower

hereby grants Bank, to secure the payment and performance in full of all of the

Obligations and the performance of each of Borrower’s duties under the Loan

Documents, a continuing security interest in, and pledges and assigns to the

Bank, the Collateral, wherever located, whether now owned or hereafter acquired

or arising, and all proceeds and products thereof.  Borrower warrants and represents that

 

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the security interest granted herein shall be a first priority security

interest in the Collateral.  Bank may

place a “hold” on any deposit account pledged as Collateral.

 

Borrower

agrees that any disposition of the Collateral in violation of this Agreement,

by either the Borrower or any other Person, shall be deemed to violate the

rights of the Bank under the Code. If the Agreement is terminated, Bank’s lien

and security interest in the Collateral shall continue until Borrower fully

satisfies its Obligations.

 

4.2          Authorization to File Financing

Statements.  Borrower

hereby authorizes Bank to file financing statements, without notice to

Borrower, with all appropriate jurisdictions in order to perfect or protect

Bank’s interest or rights hereunder.

 

5.     REPRESENTATIONS

AND WARRANTIES

 

Borrower represents and warrants as follows:

 

5.1          Due

Organization and Authorization.  Borrower and each Subsidiary is duly existing and in good

standing in its state of formation and qualified and licensed to do business

in, and in good standing in, any state in which the conduct of its business or

its ownership of property requires that it be qualified except where the

failure to do so could not reasonably be expected to cause a Material Adverse

Change.   In connection with this

Agreement, the Borrower delivered to the Bank a certificate signed by the

Borrower and entitled “Perfection Certificate”.  The Borrower represents and warrants to the Bank that: (a) the

Borrower’s exact legal name is that indicated on the Perfection Certificate and

on the signature page hereof; and (b) the Borrower is an organization of the

type, and is organized in the jurisdiction, set forth in the Perfection

Certificate; and (c) the Perfection Certificate accurately sets forth the

Borrower’s organizational identification number or accurately states that the

Borrower has none; and (d) the Perfection Certificate accurately sets forth the

Borrower’s place of business, or, if more than one, its chief executive office

as well as the Borrower’s mailing address if different, and (e) all other

information set forth on the Perfection Certificate pertaining to the Borrower

is accurate and complete.  If the

Borrower does not now have an organizational identification number, but later

obtains one, Borrower shall forthwith notify the Bank of such organizational

identification number

 

The execution, delivery and performance of the Loan Documents have been

duly authorized, and do not conflict with Borrower’s organizational documents,

nor constitute an event of default under any material agreement by which

Borrower is bound.  Borrower is not in

default under any agreement to which or by which it is bound in which the

default could reasonably be expected to  cause a Material Adverse Change.

 

5.2          Collateral.  Borrower has good title to the Collateral,

free of Liens except Permitted Liens. 

Borrower has no deposit account, other than the deposit accounts with

Bank and deposit accounts described in the Perfection Certificate delivered to

the Bank in connection herewith.  The

Accounts are bona fide, existing obligations, and the service or property has

been performed or delivered to the account debtor or its agent for immediate

shipment to and unconditional acceptance by the account debtor. The Collateral

is not in the possession of any third party bailee (such as a warehouse) with the

exception of contract manufacturers listed on the Perfection Certificate, as

scheduled on this date.  In the event

that Borrower, after the date hereof, intends to store or otherwise deliver any

portion of the Collateral to a bailee, then Borrower will first receive the

written consent of Bank and such bailee must acknowledge in writing that the

bailee is holding such Collateral for the benefit of Bank.  Borrower has no knowledge of any actual or

imminent Insolvency Proceeding of any account debtor whose accounts are an

Eligible Account in any Borrowing Base Certificate.  All Inventory is in all material respects of good and marketable

quality, free from material defects.

 

5.3          Litigation.  Except as shown in the Perfection

Certificate, there are no actions or proceedings pending or, to the knowledge

of Borrower’s Responsible Officers or legal counsel, threatened by or against

Borrower or any Subsidiary in which an adverse decision could reasonably be

expected to  cause a Material Adverse Change.

 

5

 

5.4          No Material

Deviation  in Financial Statements.  All consolidated financial statements for

Borrower and any Subsidiary delivered to Bank fairly present in all material

respects Borrower’s consolidated financial condition and Borrower’s

consolidated results of operations. 

There has not been any material deterioration in Borrower’s consolidated

financial condition since the date of the most recent financial statements

submitted to Bank.

 

5.5          Solvency.  Borrower is able to pay its debts (including

trade debts) as they mature.

 

5.6          Regulatory

Compliance.  Borrower

is not an “investment company” or a company “controlled” by an “investment

company” under the Investment Company Act. 

Borrower is not engaged as one of its important activities in extending

credit for margin stock (under Regulations T and U of the Federal Reserve Board

of Governors).  Borrower has complied in

all material respects with the Federal Fair Labor Standards Act.  Borrower has not violated any laws,

ordinances or rules, the violation of which could reasonably be expected to

cause a Material Adverse Change.  None

of Borrower’s or any Subsidiary’s properties or assets has been used by

Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous

Persons, in disposing, producing, storing, treating, or transporting any

hazardous substance other than legally. 

Borrower and each Subsidiary has timely filed all required tax returns

and paid, or made adequate provision to pay, all material taxes, except those

being contested in good faith with adequate reserves under GAAP.  Borrower and each Subsidiary has obtained

all consents, approvals and authorizations of, made all declarations or filings

with, and given all notices to, all government authorities that are necessary

to continue its business as currently conducted  except where the failure to

make such declarations, notices or filings would  not reasonably be expected to cause a Material Adverse Change.

 

5.7          Subsidiaries.  Borrower does not own any stock, partnership

interest or other equity securities except for Permitted Investments.

 

5.8          Full Disclosure.  No written representation, warranty or other

statement of Borrower in any certificate or written statement given to Bank

taken together with all such written certificates and written statements given

to Bank contains any untrue statement of a material fact or omits to state a

material fact necessary to make the statements contained in the certificates or

statements not misleading  (it being recognized by Bank that the

projections and forecasts provided by Borrower in good faith and based upon

reasonable assumptions are not viewed as facts and that actual results during

the period or periods covered by such projections and forecasts may differ from

the projected or forecasted results).

 

6.     AFFIRMATIVE

COVENANTS

 

Borrower shall do all of the following:

 

6.1          Government

Compliance.  Borrower

shall maintain its and all Subsidiaries’ legal existence and good standing in

its jurisdiction of formation and maintain qualification in each jurisdiction

in which the failure to so qualify would reasonably be expected to have a

material adverse effect on Borrower’s business or operations.  Borrower shall comply, and have each

Subsidiary comply, with all laws, ordinances and regulations to which it is

subject, noncompliance with which could have a Material Adverse Change.

 

6.2          Financial

Statements, Reports, Certificates.

 

                Borrower shall deliver to Bank:  (i) quarterly, but no later than five (5)

days of filing with the Securities Exchange Commission (the “SEC”), a

Compliance Certificate signed by a Responsible Officer in the form of Exhibit D,

together with a company prepared consolidated balance sheet and income

statement covering the Borrower’s consolidated operations during such period;

(ii) annually, but not later than five(5) days of filing with the SEC, audited

consolidated financial statements prepared under GAAP, consistently applied,

together with an unqualified opinion on the financial statements from an

independent certified public accounting firm acceptable to Bank; (iii) within

five (5) days of filing, copies of all statements, reports and 

 

6

 

notices made available to

Borrower’s security holders or to any holders of Subordinated Debt and all

reports on Form 10-K, 10-Q and 8–K filed with the SEC; (iv) a prompt

report of any legal actions pending or threatened against Borrower or any

Subsidiary that could result in damages or costs to Borrower or any Subsidiary

of One Hundred Thousand Dollars ($100,000.00) or more; (v) as soon as

available, but no later than thirty days (30) of approval, revised budgets,

sales projections, operating plans; (vi) any other financial information

reasonably requested by Bank.

 

                Within thirty (30) days after the last day of each  quarter

in which either (i) Obligations under the Formula Line are outstanding, or (ii)

Advances under the Formula Line were made, Borrower shall deliver to Bank a

Borrowing Base Certificate signed by a Responsible Officer in the form of Exhibit C,

with aged listings of accounts receivable (by invoice date).

 

6.3          Inventory;

Returns.  Borrower shall keep all

Inventory in good and marketable condition, free from material defects.  Returns and allowances between Borrower and

its account debtors shall follow Borrower’s customary practices as they exist

at the Closing Date.  Borrower must

promptly notify Bank of all returns, recoveries, disputes and claims that involve

more than Fifty Thousand Dollars ($50,000.00).

 

6.4          Taxes.  Borrower shall make, and cause each

Subsidiary to make, timely payment of all material federal, state, and local

taxes or assessments (other than taxes and assessments which Borrower is

contesting in good faith, with adequate reserves maintained in accordance with

GAAP) and will deliver to Bank, on demand, appropriate certificates attesting

to such payments.

 

6.5          Insurance.  Borrower shall keep its business and the

Collateral insured for risks and in amounts,  

and as Bank may reasonably request. 

Insurance policies shall be in a form, with companies, and in amounts

that are satisfactory to Bank.  The Bank

acknowledges that it has been provided with a Certificate of Insurance with

acceptable coverage limits.  All

property policies shall have a lender’s loss payable endorsement showing Bank

as an additional  loss payee and all

liability policies shall show the Bank as an additional insured and  all policies shall provide that the insurer

must give Bank at least  twenty (20) days notice before canceling

its policy.  At Bank’s request, Borrower

shall deliver certified copies of policies and evidence of all premium

payments. Proceeds payable under any policy shall, at Bank’s option, be payable

to Bank on account of the Obligations. 

Notwithstanding the foregoing, so long as no Event of Default has

occurred and is continuing, Borrower shall have the option of applying the

proceeds of any casualty policy  up to

$200,000.00, in the aggregate, toward the replacement or repair of destroyed or

damaged property; provided that (i) any such replaced or repaired property (a)

shall be of equal or like value as the replaced or repaired Collateral and (b)

shall be deemed Collateral in which Bank has been granted a first priority

security interest and (ii) after the occurrence and during the continuation of

an Event of Default all proceeds payable under such casualty policy shall, at

the option of the Bank, be payable to Bank on account of the Obligations.  If Borrower fails to obtain insurance as

required under Section 6.5 or to pay any amount or furnish any required proof

of payment to third persons and the Bank, Bank may make all or part of such

payment or obtain such insurance policies required in Section 6.5, and take any

action under the policies Bank deems prudent.

 

6.6           Accounts. In order to

permit the Bank to monitor the Borrower’s financial performance and condition,

Borrower, and all Borrower’s Subsidiaries, shall maintain Borrower’s, and such

Subsidiaries’, primary depository, operating, and securities accounts with

Bank, except as set forth on the Perfection Certificate delivered to the Bank

as of the date hereof.  In

addition to the foregoing, on the Closing Date, and at all times thereafter,

Borrower shall maintain not less than Ten Million Dollars ($10,000,000.00) in

unrestricted cash or securities, in accounts with the Bank or a Bank

subsidiary, directed by Bank.  Any

Guarantor shall maintain all depository, operating and securities accounts with

Bank, except as set forth on the Perfection Certificate delivered to the Bank

as of the date hereof.  Borrower shall

identify to Bank, in writing, any bank or securities account opened by Borrower

with any institution other than Bank. 

In addition, for each such account that the Borrower or Guarantor at any

time opens or maintains, Borrower shall use reasonably efforts, at the Bank’s

request and option, pursuant to an agreement in form and substance acceptable

to the Bank, cause the depositary bank or securities intermediary to agree that

such account is the collateral of the Bank pursuant to the terms

hereunder.  The provisions of this 

 

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paragraph shall not apply to deposit accounts exclusively used for

payroll, payroll taxes and other employee wage and benefit payments to or for

the benefit of the Borrower’s employees.

 

6.7          Financial

Covenants.

 

Borrower shall maintain at all times, to be tested as of the last day

of each quarter, unless otherwise noted:

 

(a)  Tangible

Net Worth.  Borrower

shall maintain a Tangible Net Worth of not less than One Hundred Million

Dollars ($100,000,000.00).

 

6.8          Further

Assurances.  Borrower

shall execute any further instruments and take further action as Bank

reasonably requests to perfect or continue Bank’s security interest in the

Collateral or to effect the purposes of this Agreement.

 

6.9          Ratification of

Negative Pledge Agreement.   Borrower hereby ratifies, confirms and reaffirms, all and

singular, the terms and conditions of a certain Negative Pledge Agreement dated

as of May 14, 1999 between Borrower and Bank, and acknowledges, confirms and

agrees that said Negative Pledge Agreement shall remain in full force and

effect.

 

7.     NEGATIVE

COVENANTS

 

Borrower shall not do any of the following without the Bank’s prior

written consent which shall not be unreasonably withheld.

 

7.1          Dispositions.  Convey, sell, lease, transfer or otherwise

dispose of (collectively a “Transfer”), or permit any of its Subsidiaries to

Transfer, all or any part of its business or property, except for Transfers (i)

of Inventory in the ordinary course of business; (ii) of non-exclusive licenses

and similar arrangements for the use of the property of Borrower or its

Subsidiaries in the ordinary course of business; (iii) that constitute payment

of normal and usual operating expenses in the ordinary course of business; or

(iv) of worn–out or obsolete Equipment.

 

7.2          Changes in

Business, Ownership, Management or Business Locations.  Engage in or permit any of its Subsidiaries

to engage in any business other than the businesses currently engaged in by

Borrower or reasonably related thereto, or  have a material change in its ownership

(other than by the sale of Borrower’s equity securities in a public offering or

to venture capital investors so long as Borrower identifies to Bank the venture

capital investors prior to the closing of the investment), or management.  Borrower shall not, without at least ten

(10) days subsequent written notice to Bank: (i) relocate its chief executive

office, or (ii) change its jurisdiction of organization, or (iii) change its

organizational structure or type, or (iv) change its legal name, or (v) change

any organizational number (if any) assigned by its jurisdiction of

organization.

 

7.3          Mergers or

Acquisitions.  Merge or

consolidate, or permit any of its Subsidiaries to merge or consolidate, with

any other Person, or acquire, or permit any of its Subsidiaries to acquire, all

or substantially all of the capital stock or property of another Person.   A Subsidiary may merge or

consolidate into another Subsidiary or into Borrower.

 

7.4          Indebtedness.  Create, incur, assume, or be liable for any

Indebtedness, or permit any Subsidiary to do so, other than Permitted

Indebtedness.

 

7.5          Encumbrance.  Create, incur, or allow any Lien on any of its

property, or assign or convey any right to receive income, including the sale

of any Accounts, or permit any of its Subsidiaries to do so, except for

Permitted Liens, or permit any Collateral not to be subject to the first

priority security interest granted herein. 

The Collateral may also be subject to Permitted Liens.

 

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7.6          Distributions;

Investments.  (i)  Directly

or indirectly acquire or own any Person, or make any Investment in any Person,

other than Permitted Investments, or permit any of its Subsidiaries to do so;

or (ii) pay any dividends or make any distribution or payment or redeem, retire

or purchase any capital stock.

 

7.7          Transactions

with Affiliates.  Directly

or indirectly enter into or permit to exist any material transaction with any

Affiliate of Borrower, except for transactions that are in the ordinary course

of Borrower’s business, upon fair and reasonable terms that are no less

favorable to Borrower than would be obtained in an arm’s length transaction

with a non-affiliated Person.

 

7.8          Subordinated

Debt.  Make or permit any payment on

any Subordinated Debt, except under the terms of the Subordinated Debt, or

amend any provision in any document relating to the Subordinated Debt, without

Bank’s prior written consent.

 

7.9          Compliance.  Become an “investment company” or

a company controlled by an “investment company”, under the Investment Company

Act of 1940 or undertake as one of its important activities extending credit to

purchase or carry margin stock, or use the proceeds of any Credit Extension for

that purpose; fail to meet the minimum funding requirements of ERISA, permit a

Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail

to comply with the Federal Fair Labor Standards Act or violate any other law or

regulation, if the violation could reasonably be expected to  have

a material adverse effect on Borrower’s business or operations or would

reasonably be expected to  cause a Material Adverse Change, or permit

any of its Subsidiaries to do so.

 

8.     EVENTS

OF DEFAULT

 

Any one of the following is an Event of Default:

 

8.1          Payment Default.  Borrower fails to pay any of the Obligations

within three (3) days after their due date. During the additional period the

failure to cure the default is not an Event of Default (but no Credit Extension

shall be made during the cure period);

 

8.2            Covenant

Default.  Borrower fails or neglects

to perform any obligation in Section 6 or violates any covenant in Section 7 or

fails or neglects to perform, keep, or observe any other material term,

provision, condition,  covenant or

agreement contained in this Agreement, any Loan Documents, or in any present or

future agreement between Borrower and Bank and as to any default under such

other material term, provision, condition, covenant or agreement that can be

cured, has failed to cure the default within ten (10) days after the occurrence

thereof; provided, however, that if the default cannot by its nature be cured

within the ten (10) day period or cannot after diligent attempts by Borrower be

cured within such ten (10) day period, and such default is likely to be cured

within a reasonable time, then Borrower shall have an additional period  (which shall not in any case exceed thirty

(30) days) to attempt to cure such default, and within such reasonable time

period the failure to cure the default shall not be deemed an Event of Default

(but no Credit Extensions shall be made during such cure period).  Grace periods provided under this section

shall not apply, to financial covenants or any other covenants that are

required to be satisfied, completed or tested by a date certain.

 

8.3            Material

Adverse Change.  A Material Adverse

Change occurs;

 

8.4            Attachment.  (i) Any material portion of Borrower’s

assets is attached, seized, levied on, or comes into possession of a trustee or

receiver and the attachment, seizure or levy is not removed in fifteen (15)

days; (ii) the service of process upon the Borrower seeking to attach, by

trustee or similar process, any funds of the Borrower on deposit with the Bank;

(iii) Borrower is enjoined, restrained, or prevented by court order from

conducting a material part of its business; (iv) a judgment or other claim

becomes a Lien on a material portion of Borrower’s assets; or (v) a notice of

lien, levy, or assessment is filed against any of Borrower’s assets by any

government agency and not paid within fifteen (15) days after Borrower receives

notice.  These are not Events of Default

if stayed or if a bond is posted pending contest by Borrower (but no Credit

Extensions shall be made during the cure period);

 

9

 

8.5          Insolvency.  (i) Borrower becomes insolvent; (ii)

Borrower begins an Insolvency Proceeding; or (iii) an Insolvency Proceeding is

begun against Borrower and not dismissed or stayed within thirty (30) days (but

no Credit Extensions shall be made before any Insolvency Proceeding is

dismissed);

 

8.6          Other

Agreements.  If there

is a default in any agreement to which Borrower is a party with a third party

or parties resulting in a right by such third party or parties, whether or not

exercised, to accelerate the maturity of any Indebtedness in an amount in

excess of One Hundred Thousand Dollars ($100,000) or that could result in

a  Material Adverse Change;

 

8.7          Judgments.  If a judgment or judgments for the payment

of money in an amount, individually or in the aggregate, of at least Two

Hundred Thousand Dollars ($200,000) shall be rendered against Borrower and

shall remain unsatisfied and unstayed for a period of twenty  (20) days (provided that no Credit

Extensions will be made prior to the satisfaction or stay of such judgment);

 

8.8          Misrepresentations.  If Borrower or any Person acting for

Borrower makes any material misrepresentation or material misstatement now or

later in any warranty or representation in this Agreement or in any writing

delivered to Bank or to induce Bank to enter this Agreement or any Loan

Document.

 

8.1          ­Guaranty.  (i) Any guaranty of any Obligations

terminates or ceases for any reason to be in full force; or (ii) any Guarantor

does not perform any obligation under any guaranty of the Obligations; or (iii)

any material misrepresentation or material misstatement exists now or later in

any warranty or representation in any guaranty of the Obligations or in any

certificate delivered to Bank in connection with the guaranty; or (iv) any

circumstance described in Section 7, or Sections 8.4, 8.5 or 8.7 occurs to any

Guarantor, or (v) the death, liquidation, winding up, termination of existence,

or insolvency of any Guarantor.

 

9.     BANK’S

RIGHTS AND REMEDIES

 

9.1          Rights and

Remedies.  When an

Event of Default occurs and continues Bank may, without notice or demand, do

any or all of the following:

 

        Declare all Obligations immediately due and payable (but if

an Event of Default described in Section 8.5 occurs all Obligations are

immediately due and payable without any action by Bank);

 

        Stop advancing money or extending credit for Borrower’s

benefit under this Agreement or under any other agreement between Borrower and

Bank;

 

        Settle or adjust disputes and claims directly with account

debtors for amounts, on terms and in any order that Bank considers advisable

and notify any Person owing Borrower money of Bank’s security interest in such

funds and verify the amount of such account. 

Borrower shall collect all payments in trust for Bank and, if requested

by Bank, immediately deliver the payments to Bank in the form received from the

account debtor, with proper endorsements for deposit;

 

        Make any payments and do any acts it considers necessary or

reasonable to protect its security interest in the Collateral.  Borrower shall assemble the Collateral if

Bank requests and make it available as Bank designates.  Bank may enter premises where the Collateral

is located, take and maintain possession of any part of the Collateral, and

pay, purchase, contest, or compromise any Lien which appears to be prior or

superior to its security interest and pay all expenses incurred. Borrower

grants Bank a license to enter and occupy any of its premises, without charge,

to exercise any of Bank’s rights or remedies;

 

        Apply to the Obligations any (i) balances and deposits of

Borrower it holds, or (ii) any amount held by Bank owing to or for the credit

or the account of Borrower;

 

10

 

        Ship, reclaim, recover, store, finish, maintain, repair,

prepare for sale, advertise for sale, and sell the Collateral.  Bank is hereby granted a non-exclusive,

royalty-free license or other right, solely pursuant to the provisions of this

Section 9.1, to use, without charge, Borrower’s labels, patents, copyrights,

mask works, rights of use of any name, trade secrets, trade names, trademarks,

service marks, and advertising matter, or any similar property as it pertains

to the Collateral, in completing production of, advertising for sale, and

selling any Collateral.  In connection

with Bank’s exercise of its rights under this Section, Borrower’s rights under all

licenses and all franchise agreements inure to Bank’s benefit; and

 

        Dispose of the Collateral according to the Code.

 

9.2          Power of

Attorney.  Borrower

hereby irrevocably appoints Bank as its lawful attorney-in-fact, to be

effective upon the occurrence and during the continuance of an Event of

Default, to:  (i) endorse Borrower’s

name on any checks or other forms of payment or security; (ii) sign Borrower’s

name on any invoice or bill of lading for any Account or drafts against account

debtors; (iii) settle and adjust disputes and claims about the Accounts

directly with account debtors, for amounts and on terms Bank determines

reasonable; (iv) make, settle, and adjust all claims under Borrower’s insurance

policies; and (v) transfer the Collateral into the name of Bank or a third

party as the Code permits.  Borrower

hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on

any documents necessary to perfect or continue the perfection of any security

interest regardless of whether an Event of Default has occurred until all

Obligations have been satisfied in full and Bank is under no further obligation

to make Credit Extensions hereunder. 

Bank’s foregoing appointment as Borrower’s attorney in fact, and all of

Bank’s rights and powers, coupled with an interest, are irrevocable until all

Obligations have been fully repaid and performed and Bank’s obligation to

provide Credit Extensions terminates.

 

9.3          Bank Expenses.  Any amounts paid by Bank as provided herein

are Bank Expenses and are immediately due and payable, and shall bear interest

at the then applicable rate and be secured by the Collateral.  No payments by Bank shall be deemed an

agreement to make similar payments in the future or Bank’s waiver of any Event

of Default.

 

9.4          Bank’s Liability

for Collateral.  So long as

the Bank complies with reasonable banking practices regarding the safekeeping

of collateral, the Bank shall not be liable or responsible for: (a) the

safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c)

any diminution in the value of the Collateral; or (d) any act or default of any

carrier, warehouseman, bailee, or other person.  Borrower bears all risk of loss, damage or destruction of the

Collateral.

 

9.5          Remedies

Cumulative.  Bank’s

rights and remedies under this Agreement, the Loan Documents, and all other

agreements are cumulative.  Bank has all

rights and remedies provided under the Code, by law, or in equity. Bank’s

exercise of one right or remedy is not an election, and Bank’s waiver of any

Event of Default is not a continuing waiver. Bank’s delay is not a waiver,

election, or acquiescence. No waiver hereunder shall be effective unless signed

by Bank and then is only effective for the specific instance and purpose for

which it was given.

 

9.6          Demand Waiver.  Borrower waives demand, notice of default or

dishonor, notice of payment and nonpayment, notice of any default, nonpayment

at maturity, release, compromise, settlement, extension, or renewal of

accounts, documents, instruments, chattel paper, and guarantees held by Bank on

which Borrower is liable.

 

10.   NOTICES

 

All notices or demands by any party to this Agreement or any other

related agreement must be in writing and be personally delivered or sent by an

overnight delivery service, by certified mail, postage prepaid, return receipt

requested, or by telefacsimile at the addresses listed below.  Either Bank or Borrower  may change its notice address by giving the

other written notice.

 

If to Borrower:      NMS

Communications Corporation

100 Crossing Boulevard

 

11

 

Framingham, Massachusetts 01702

Attn: 

FAX:

 

If to Bank:              Silicon Valley Bank

One Newton Executive Park,

Suite 200

2221 Washington Street

Newton, Massachusetts  02462

Attn: Mr. Jonathan Gray

Fax:  (617) 969-5973

 

with a copy to:      Riemer & Braunstein LLP

Three Center Plaza

Boston, Massachusetts 02108

Attn: David A. Ephraim,

Esquire

FAX: (617) 880-3456

 

 

11.     CHOICE

OF LAW, VENUE AND JURY TRIAL WAIVER

 

Massachusetts law governs the Loan Documents without regard to

principles of conflicts of law. 

Borrower and Bank each submit to the exclusive jurisdiction of the State

and Federal courts in Massachusetts; provided, however, that if for any reason

Bank cannot avail itself of such courts in the Commonwealth of Massachusetts,

Borrower accepts jurisdiction of the courts and venue in Santa Clara County,

California.  NOTWITHSTANDING THE

FOREGOING,  THE BANK SHALL HAVE THE RIGHT

TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE

COURTS OF ANY OTHER JURISDICTION WHICH THE BANK DEEMS NECESSARY OR APPROPRIATE

IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE BANK’S RIGHTS

AGAINST THE BORROWER OR ITS PROPERTY.

 

BORROWER AND BANK EACH WAIVE THEIR

RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED

UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,

INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A

MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.  EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS

COUNSEL.

 

12.   GENERAL

PROVISIONS

 

12.1        Successors and

Assigns.  This Agreement binds and is

for the benefit of the successors and permitted assigns of each party.  Borrower may not assign this Agreement or

any rights or Obligations under it without Bank’s prior written consent which

may be granted or withheld in Bank’s discretion.  Bank has the right, without the consent of or notice to Borrower,

to sell, transfer, negotiate, or grant participation in all or any part of, or

any interest in, Bank’s obligations, rights and benefits under this Agreement,

the Loan Documents or any related agreement.

 

12.2        Indemnification.  Borrower hereby indemnifies, defends and

holds the Bank and its officers, employees and agents against:  (a) all obligations, demands, claims, and

liabilities asserted by any other party in connection with the transactions

contemplated by the Loan Documents; and (b) all losses or Bank Expenses

incurred, or paid by Bank from, following, or consequential to transactions

between Bank and Borrower (including reasonable attorneys’ fees and expenses),

except for losses caused by Bank’s gross negligence or willful misconduct.

 

12

 

12.3        Right of

Set-Off.   Borrower

and any guarantor hereby grant to Bank, a lien, security interest and right of

setoff as security for all Obligations to Bank, whether now existing or

hereafter arising upon and against all deposits, credits, collateral and property,

now or hereafter in the possession, custody, safekeeping or control of Bank or

any entity under the control of the Bank or in transit to any of them.  At any time after the occurrence and during

the continuance of an Event of Default, without demand or notice, Bank may set

off the same or any part thereof and apply the same to any liability or

obligation of Borrower and any guarantor even though unmatured and regardless

of the adequacy of any other collateral securing the Obligations.  ANY AND ALL RIGHTS TO REQUIRE BANK TO

EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH

SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT

TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE

HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

12.4        Time of Essence.  Time is of the essence for the performance

of all Obligations in this Agreement.

 

12.5        Severability of

Provision.  Each

provision of this Agreement is severable from every other provision in

determining the enforceability of any provision.

 

12.6        Amendments in

Writing; Integration.  All

amendments to this Agreement must be in writing signed by both Bank and

Borrower.  This Agreement and the Loan

Documents represent the entire agreement about this subject matter, and

supersede prior negotiations or agreements. 

All prior agreements, understandings, representations, warranties, and

negotiations between the parties about the subject matter of this Agreement and

the Loan Documents merge into this Agreement and the Loan Documents.

 

12.7        Counterparts.  This Agreement may be executed in any number

of counterparts and by different parties on separate counterparts, each of

which, when executed and delivered, are an original, and all taken together,

constitute one Agreement.

 

12.8        Survival.  All covenants, representations and

warranties made in this Agreement continue in full force while  any Obligations remain outstanding.  The obligation of Borrower in Section 12.2

to indemnify Bank shall survive until the statute of limitations with respect

to such claim or cause of action shall have run; provided that so long as the

Obligations have been satisfied, and Bank has no commitment to make any Credit

Extensions or to make any other loans to Borrower, Bank shall release all

security interests granted hereunder and redeliver all Collateral held by it in

accordance with applicable law.

 

12.9        Confidentiality.  In handling any confidential information,

Bank shall exercise the same degree of care that it exercises for its own

proprietary information, but disclosure of information may be made: (i) to

Bank’s subsidiaries or affiliates in connection with their business with

Borrower; (ii) to prospective transferees or purchasers of any interest in the

Credit Extensions (provided, however, Bank shall use commercially reasonable

efforts in obtaining such prospective transferee’s or purchaser’s agreement to

the terms of this provision); (iii) as required by law, regulation, subpoena,

or other order, (iv) as required in connection with Bank’s examination or

audit; and (v) as Bank considers appropriate in exercising remedies under this

Agreement.  Confidential information

does not include information that either: (a) is in the public domain or in

Bank’s possession when disclosed to Bank, or becomes part of the public domain

after disclosure to Bank; or (b) is disclosed to Bank by a third party, if Bank

does not know that the third party is prohibited from disclosing the

information.

 

12.10      Amended and

Restated Loan and Security Agreement.  This Agreements amends and restates in its entirety a certain

Loan and Security Agreement dated as of May 14, 1999 by and between Borrower

and Bank.

 

13.   DEFINITIONS

 

13.1        Definitions.  In this Agreement:

 

13

 

“Accounts”

are all accounts, contract rights, and 

other  obligations owed Borrower

in connection with its sale or lease of goods (including licensing software and

other technology) or provision of services,  all credit insurance, guaranties, other

security and  all merchandise returned

or reclaimed by Borrower and Borrower’s Books relating to any of the foregoing,

as such definition may be amended from time to time according to the Code.

 

“Advance”

or “Advances”

is a loan advance (or advances) under the Revolving Line.

 

“Affiliate”

of a Person is a Person that owns or controls directly or indirectly the

Person, any Person that controls or is controlled by or is under common control

with the Person, and each of that Person’s senior executive officers,

directors, partners and, for any Person that is a limited liability company,

that Person’s managers and members.

 

“Bank

Expenses” are all audit fees and expenses and reasonable costs or

expenses (including reasonable attorneys’ fees and expenses) for preparing,

negotiating, administering, defending and enforcing the Loan Documents

(including appeals or Insolvency Proceedings).

 

“Borrower’s

Books” are all Borrower’s books and records including ledgers,

records regarding Borrower’s assets or liabilities, the Collateral, business

operations or financial condition and all computer programs or discs or any

equipment containing such information.

 

“Borrowing

Base” is seventy-five percent (75.0%) of Eligible Accounts, as

determined by Bank from Borrower’s most recent Borrowing Base Certificate.

 

“Business

Day” is any day that is not a Saturday, Sunday or a day on which the

Bank is closed.

 

“Cash

Management Services” are defined in Section 2.1.4.

 

“Closing

Date” is the date of this Agreement.

“Code”

is the Uniform Commercial Code as adopted in Massachusetts, as amended and as

may be amended and in effect from time to time.

 

“Collateral”

is any and all properties, rights and assets of the Borrower listed on Exhibit A,

now, or in the future, in which the Borrower obtains an interest, or the power

to transfer rights.

 

“Contingent

Obligation” is, for any Person, any direct or indirect liability,

contingent or not, of that Person for (i) any indebtedness, lease, dividend,

letter of credit or other obligation of another such as an obligation directly

or indirectly guaranteed, endorsed, co–made, discounted or sold with

recourse by that Person, or for which that Person is directly or indirectly

liable; (ii) any obligations for undrawn letters of credit for the account of

that Person; and (iii) all obligations from any interest rate, currency or

commodity swap agreement, interest rate cap or collar agreement, or other

agreement or arrangement designated to protect a Person against fluctuation in

interest rates, currency exchange rates or commodity prices;  but “Contingent Obligation” does not include

endorsements in the ordinary course of business.  The amount of a Contingent Obligation is the stated or determined

amount of the primary obligation for which the Contingent Obligation is made

or, if not determinable, the maximum reasonably anticipated liability for it

determined by the Person in good faith; but the amount may not exceed the

maximum of the obligations under the guarantee or other support arrangement.

 

“Credit

Extension” is each Advance, Letter of Credit, Exchange Contract, or

any other extension of credit by Bank for Borrower’s benefit.

 

“Current

Assets” are amounts that under GAAP should be included on that date

as current assets on Borrower’s consolidated balance sheet.

 

14

 

“Eligible

Accounts” are billed Accounts in the ordinary course of Borrower’s

business that meet all Borrower’s representations and warranties in Section

5.2; but Bank may change eligibility standards by giving Borrower

notice.  Unless Bank agrees otherwise in

writing, Eligible Accounts shall not include:

 

        Accounts that the account debtor has not paid within ninety

(90) days of invoice date;

 

        Accounts for an account debtor, fifty percent (50%) or more

of whose Accounts have not been paid within ninety (90) days of invoice date;

 

        Credit balances over ninety (90) days from invoice date;

 

        Accounts for an account debtor, including Affiliates, whose

total obligations to Borrower exceed twenty-five (25%) of all Accounts, for the

amounts that exceed that percentage, unless Bank approves in writing;

 

        Accounts for which the account debtor does not have its

principal place of business in the United States;

 

        Accounts for which the account debtor is a federal, state or

local government entity or any department, agency, or instrumentality thereof;

 

        Accounts for which Borrower owes the account debtor, but only

up to the amount owed (sometimes called “contra” accounts, accounts payable,

customer deposits or credit accounts);

 

        Accounts for demonstration or promotional equipment, or in

which goods are consigned, sales guaranteed, sale or return, sale on approval,

bill and hold, or other terms if account debtor’s payment may be conditional;

 

        Accounts for which the account debtor is Borrower’s

Affiliate, officer, employee, or agent;

 

        Accounts in which the account debtor disputes liability or

makes any claim and Bank believes there may be a basis for dispute (but only up

to the disputed or claimed amount), or if the Account Debtor is subject to an

Insolvency Proceeding, or becomes insolvent, or goes out of business;

 

        Accounts for which Bank reasonably determines  after

reasonable inquiry and reasonable consultation with Borrower collection  to

be doubtful by reason of the account debtor’s financial condition.

 

“ERISA”

is the Employment Retirement Income Security Act of 1974, and its regulations.

 

“Formula

Line” is an Advance or Advances of up to Five Million Dollars

($5,000,000.00).

 

“FX Forward

Contract” is defined in Section 2.1.3.

 

“FX

Reserve” is defined in Section 2.1.3.

 

“GAAP”

is generally accepted accounting principles.

 

“Guarantor” is any present

or future guarantor of the Obligations, including Natural Microsystems

Securities Corporation.

 

“Indebtedness”

is (a) indebtedness for borrowed money or the deferred price of property or

services, such as reimbursement and other obligations for surety bonds and

letters of credit, (b) obligations evidenced by notes, bonds, debentures or

similar instruments, (c) capital lease obligations and (d) Contingent

Obligations.

 

15

 

“Insolvency

Proceeding” is any proceeding by or against any Person under the

United States Bankruptcy Code, or any other bankruptcy or insolvency law,

including assignments for the benefit of creditors, compositions, extensions

generally with its creditors, or proceedings seeking reorganization,

arrangement, or other relief.

 

“Intellectual

Property”

is  any copyright

rights, copyright applications, copyright registrations and like protections in

each work of authorship and derivative work, whether published or unpublished,

now owned or later acquired; any patents, trademarks, service marks and

applications therefor; any trade secret rights, including any rights to

unpatented inventions, now owned or hereafter acquired.

 

“Inventory”

is present and future inventory in which Borrower has any interest, including

merchandise, raw materials, parts, supplies, packing and shipping materials,

work in process and finished products intended for sale or lease or to be

furnished under a contract of service, of every kind and description now or

later owned by or in the custody or possession, actual or constructive, of

Borrower, including inventory temporarily out of its custody or possession or

in transit and including returns on any accounts or other proceeds (including

insurance proceeds) from the sale or disposition of any of the foregoing and

any documents of title.

 

“Investment”

is any beneficial ownership of (including stock, partnership interest or other

securities) any Person, or any loan, advance or capital contribution to any

Person.

 

“Letter of

Credit” means a letter of credit or similar undertaking

issued by Bank pursuant to Section 2.1.2.

 

“Letter of

Credit Reserve” has the meaning set forth in Section 2.1.2.

 

“Lien”

is a mortgage, lien, deed of trust, charge, pledge, security interest or other

encumbrance.

 

“Loan

Documents” are, collectively, this Agreement, any note, or notes or

guaranties executed by Borrower or Guarantor, and any other present or future

agreement between Borrower and/or for the benefit of Bank in connection with

this Agreement, all as amended, extended or restated.

 

“Material

Adverse Change “ is: (i) A material impairment in the perfection or

priority of Bank’s security interest in the Collateral or in the value of such

Collateral; (ii) a material adverse change in the business, operations, or

condition (financial or otherwise) of the Borrower and Guarantor taken as a

whole; or (iii)  a material impairment of the prospect of repayment of any

portion of the Obligations; or (iv) Bank determines, based upon information

available to it and in its reasonable judgment, that there is a substantial

likelihood that Borrower shall fail to comply with one or more of the financial

covenants in Section 6 during the next succeeding financial reporting period.

 

“Maturity

Date” is May 12, 2003.

 

“Non-Formula

Line” is an Advance or Advances of up to Five Million Dollars

($5,000,000.00).

 

“Obligations”

are debts, principal, interest, Bank Expenses and other amounts Borrower owes

Bank now or later, including letters of credit, cash management services, and

foreign exchange contracts, if any, and including interest accruing after

Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower

assigned to Bank.

 

“Other

Assets” means any asset represented by shares of stock in

another Person, including, without limitation, in the Borrower’s Subsidiaries

or Affiliates, or any instrument evidencing any indebtedness owing by any

Person to the Borrower (other than trade payables to the Borrower).

 

“Payment

Date” means the first calendar day of each month.

 

“Permitted

Indebtedness” is:

 

16

 

                Borrower’s indebtedness to Bank under this Agreement

or the Loan Documents;

 

                Indebtedness existing on the Closing Date and shown

on the Perfection Certificate;

 

                Subordinated Debt;

 

                Indebtedness to trade creditors incurred in the

ordinary course of business; and

 

                Indebtedness secured by Permitted Liens; and

 

                Extensions, refinancings, modifications, amendments

and restatements of any items of Permitted Indebtedness (a) through (f) above,

provided that the principal amount thereof is not increased or the terms

thereof are not modified to impose more burdensome terms upon Borrower or its

Subsidiary, as the case may be.

 

“Permitted

Investments” are:

 

2              Investments shown on the Perfection Certificate and

existing on the Closing Date; and

 

2              (i)  marketable

direct obligations issued or unconditionally guaranteed by the United States or

its agency or any state maturing within 1 year from its acquisition, (ii)

commercial paper maturing no more than 1 year after its creation and having the

highest rating from either Standard & Poor’s Corporation or Moody’s

Investors Service, Inc., (iii) certificates of deposit issued maturing no more

than 1 year after issue, (iv) any other investments administered through the

Bank.

 

“Permitted

Liens” are:

 

(a)           Liens

existing on the Closing Date and shown on the Perfection Certificate or arising

under this Agreement or other Loan Documents;

(b)           Liens

for taxes, fees, assessments or other government charges or levies, either not

delinquent or being contested in good faith and for which Borrower maintains

adequate reserves on its Books, if they have no priority over any of

Bank’s security interests;

 

(c)           Leases

or subleases and non-exclusive licenses or sublicenses granted in the ordinary

course of Borrower’s business, if the leases, subleases, licenses and

sublicenses do not prohibit granting Bank a security interest; and

 

(d)           Liens

incurred in the extension, renewal or refinancing of the indebtedness secured

by Liens described in (a) through (c), but any extension, renewal or

replacement Lien must be limited to the property encumbered by the existing

Lien and the principal amount of the indebtedness may not increase.

 

“Person”

is any individual, sole proprietorship, partnership, limited liability company,

joint venture, company, trust, unincorporated organization, association,

corporation, institution, public benefit corporation, firm, joint stock

company, estate, entity or government agency.

 

“Prime

Rate” is Bank’s most recently announced “prime rate,” even if it is

not Bank’s lowest rate.  Except as

otherwise provided elsewhere herein, any Credit Extension made hereunder based

on the Bank’s Prime Rate shall increase or decrease with the changes in the

Bank’s Prime Rate.

 

“Responsible

Officer”

is each of the Chief Executive Officer, President, Chief Financial Officer and

Controller of Borrower.

 

17

 

“Revolving

Line” means collectively, the Formula Line and Non-Formula Line.

 

“Subordinated

Debt” is debt incurred by Borrower subordinated to Borrower’s debt

to Bank on terms acceptable to Bank (and identified as being such by Borrower

and Bank).

 

“Subsidiary”

is any Person, corporation, partnership, limited liability company, joint

venture, or any other business entity of which more than 50% of the voting

stock or other equity interests is owned or controlled, directly or indirectly,

by the Person or one or more Affiliates of the Person.

 

“Tangible

Net Worth” means as of any applicable date, the consolidated total

assets of Borrower and its Subsidiaries plus (A) Subordinated Debt, minus

(B), without duplication: (i) the sum of any amounts attributable to (a)

goodwill, (b) intangible items such as unamortized debt discount and expense,

patents, trade and service marks and names, copyrights and research and

development expenses except prepaid expenses, and (c) all reserves not already

deducted from assets, and (ii) Total Liabilities; and (iii) Other Assets, and

(iv) tax assets, and (v) security deposits.

 

“Total

Liabilities”means

as of any applicable date, all obligations that should, in accordance with GAAP

be classified as liabilities on the consolidated balance sheet of Borrower,

including in any event all Indebtedness, but specifically excluding

Subordinated Debt.

 

 

 

 

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be

executed as a sealed instrument

under

the laws of the Commonwealth of Massachusetts as of the date first above

written.

 

18

 

 

	

  BORROWER:

  
	

   

  	

   

  
	

  NMS COMMUNICATIONS CORPORATION

  
	

   

  	

   

  
	

  By

  	

   

  
	

   

  	

   

  
	

  Name:

  	

   

  
	

   

  	

   

  
	

  Title:

  	

   

  
	

   

  	

   

  
	

  BANK:

  	

   

  
	

   

  	

   

  
	

  SILICON

  VALLEY BANK, d/b/a

  
	

  SILICON

  VALLEY EAST

  
	

   

  	

   

  
	

  By

  	

   

  
	

   

  	

   

  
	

  Name:

  	

   

  
	

   

  	

   

  
	

  Title:

  	

   

  
	

   

  	

   

  
	

  SILICON

  VALLEY BANK

  
	

   

  	

   

  
	

  By

  	

   

  
	

   

  	

   

  
	

  Name:

  	

   

  
	

   

  	

   

  
	

  Title:

  	

   

  
	

   

  	

  (Signed

  in Santa Clara County, California)

  
									

 

 

19

 

EXHIBIT A

 

The Collateral consists of all right, title and interest of Borrower in

and to the following:

 

All goods, equipment, inventory, contract rights or rights to payment

of money, license agreements, franchise agreements, general intangibles

(including payment intangibles), accounts (including health-care receivables),

documents, instruments (including any promissory notes), chattel paper (whether

tangible or electronic), cash, deposit accounts, fixtures, letters of credit

rights (whether or not the letter of credit is evidenced by a writing),

commercial tort claims, securities, and all other investment property

supporting obligations, and financial assets, whether now owned or hereafter

acquired, wherever located; and

 

All Borrower’s Books relating to the foregoing and any and all claims,

rights and interests in any of the above and all substitutions for, additions,

attachments, accessories, accessions and improvements to and replacements,

products, proceeds and insurance proceeds of any or all of the foregoing.

 

The Collateral does not include:

 

 Any copyright rights,

copyright applications, copyright registrations and like protections in each

work of authorship and derivative work, whether published or unpublished, now

owned or later acquired; any patents, trademarks, service marks and

applications therefor; any trade secret rights, including any rights to

unpatented inventions, now owned or hereafter acquired.  Notwithstanding the foregoing, the

Collateral shall include all accounts, license and royalty fees and other

revenues, proceeds, or income arising out of or relating to any of the

foregoing intellectual property.  To the

extent a court of competent jurisdiction holds that a security interest in any

Intellectual Property is necessary to have a security interest in any accounts,

license and royalty fees and other revenues, proceeds, or income arising out of

or relating to any of the foregoing Intellectual Property, then the Collateral

shall, effective as of the Closing Date, include the Intellectual Property, to

the extent necessary to permit perfection of the Bank’s security interest in

such accounts, license and royalty fees and other revenues, proceeds, or income

arising out of or relating to any of the Intellectual Property.

 

20

 

 EXHIBIT B

 

Loan

Payment/Advance Request Form

Deadline for same day processing is 3:00 E.S.T.

Fax To:  (617) 969–5965                                                                                        Date:

                                                     

 

LOAN

PAYMENT:

Sample documents Client Name (Borrower)

 

	

  From

  Account #

  	

   

  	

   

  	

  To

  Account #

  	

   

  
	

   

  	

  (Deposit Account #)

  	

   

  	

   

  	

  (Loan Account #)

  

 

Principal $                                                        

and/or Interest $                                                                                  

 

All Borrower’s representation and warranties in the

Loan and Security Agreement are true, correct and complete in all material

respects to on the date of the telephone transfer request for and advance, but

those representations and warranties expressly referring to another date shall

be true, correct and complete in all material respects as of the date:

 

Authorized

Signature:                                                                                                  Phone Number:                                    

Loan Advance:

Complete Outgoing

Wire Request section below if all or a portion of the funds from

this loan advance are for an outgoing wire.

 

	

  From

  Account #

  	

   

  	

   

  	

  To

  Account #

  	

   

  
	

   

  	

  (Loan Account #)

  	

   

  	

   

  	

  (Deposit Account #)

  

 

Amount of Advance $                                  

 

All Borrower’s representation and warranties in the

Loan and Security Agreement are true, correct and complete in all material

respects to on the date of the telephone transfer request for and advance, but

those representations and warranties expressly referring to another date shall

be true, correct and complete in all material respects as of the date:

 

Authorized Signature:                                                                                    Phone Number:                                                    

Outgoing Wire Request

Complete

only if all or a portion of funds from the loan advance above are to be wired.

Deadline for same day processing is 3:00pm, E.S.T.

 

	

  Beneficiary

  Name:

  	

   

  	

   

  	

   

  	

  Amount

  of Wire:

  	

   

  	

  $

  	

  ­

  
	

  Beneficiary

  Bank:

  	

   

  	

   

  	

   

  	

  Account

  Number:

  	

   

  	

   

  
	

  City

  and Sate:

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Beneficiary

  Bank Transit (ABA) #: 

  	

  __

  __ __ __ __ __ __

  	

   

  	

  Beneficiary

  Bank Code (Swift, Sort, Chip, etc.):

  
	

   

  	

   

  	

   

  	

   

  	

  (For

  International Wire Only)

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Intermediary

  Bank:

  	

   

  	

   

  	

   

  	

  Transit

  (ABA) #:

  	

   

  	

   

  
	

  For

  Further Credit to:

  	

   

  
	

  Special

  Instruction:

  	

   

  
										

 

By signing below, I (we) acknowledge and agree that

my (our) funds transfer request shall be processed in accordance with and

subject to the terms and conditions set forth in the agreements(s) covering

funds transfer service(s), which agreements(s) were previously received and

executed by me (us).

 

	

  Authorized Signature:

  	

   

  	

   

  	

  2nd Signature

  (If Required):

  	

   

  
	

  Print Name/Title:

  	

   

  	

   

  	

  Print

  Name/Title:

  	

   

  
	

  Telephone #

  	

   

  	

   

  	

  Telephone #

  	

   

  
									

 

21

 

EXHIBIT C

BORROWING BASE CERTIFICATE

 

 

Borrower:           NMS

Communications Corporation

 

Lender:       Silicon Valley Bank

 

Commitment Amount:     $5,000,000.00

under the Formula Line

 

 

 

	

  ACCOUNTS RECEIVABLE

  	

   

  	

   

  	

   

  
	

  1.

  	

   

  	

  Accounts Receivable Book

  Value as of 

  	

   

  	

  $

  	

   

  	

   

  
	

  2.

  	

   

  	

  Additions (please explain

  on reverse)

  	

   

  	

  $

  	

   

  	

   

  
	

  3.

  	

   

  	

  TOTAL ACCOUNTS RECEIVABLE

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  ACCOUNTS RECEIVABLE

  DEDUCTIONS (without duplication)

  	

   

  	

   

  	

   

  
	

  4.

  	

   

  	

  Amounts over 90 days due

  	

   

  	

  $

  	

   

  	

   

  
	

  5.

  	

   

  	

  Balance of 50 over 90 day

  accounts

  	

   

  	

  $

  	

   

  	

   

  
	

  6.

  	

   

  	

  Credit balances over 90

  days

  	

   

  	

  $

  	

   

  	

   

  
	

  7.

  	

   

  	

  Concentration Limits

  	

   

  	

  $

  	

   

  	

   

  
	

  8.

  	

   

  	

  Foreign Accounts

  	

   

  	

  $

  	

   

  	

   

  
	

  9.

  	

   

  	

  Governmental Accounts

  	

   

  	

  $

  	

   

  	

   

  
	

  10.

  	

   

  	

  Contra Accounts

  	

   

  	

  $

  	

   

  	

   

  
	

  11.

  	

   

  	

  Promotion or Demo Accounts

  	

   

  	

  $

  	

   

  	

   

  
	

  12.

  	

   

  	

  Intercompany/Employee

  Accounts

  	

   

  	

  $

  	

   

  	

   

  
	

  13.

  	

   

  	

  Other (please explain on

  reverse)

  	

   

  	

  $

  	

   

  	

   

  
	

  14.

  	

   

  	

  TOTAL ACCOUNTS RECEIVABLE

  DEDUCTIONS

  	

   

  	

  $

  	

   

  	

   

  
	

  15.

  	

   

  	

  Eligible Accounts (#3

  minus #14)

  	

   

  	

  $

  	

   

  	

   

  
	

  16.

  	

   

  	

  LOAN VALUE OF ACCOUNTS

  (75% of #15)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  BALANCES

  	

   

  	

   

  	

   

  
	

  17.

  	

   

  	

  Maximum Loan Amount

  	

   

  	

  $

  	

   

  	

   

  
	

  18.

  	

   

  	

  Total Funds Available

  (Lesser of #17 or #16)

  	

   

  	

  $

  	

   

  	

   

  
	

  19.

  	

   

  	

  Present balance owing on

  Line of Credit

  	

   

  	

  $

  	

   

  	

   

  
	

  20.

  	

   

  	

  Outstanding under

  Sublimits (L/C, Foreign Exchange, Cash Mgt.)

  	

   

  	

  $

  	

   

  	

   

  
	

  21.

  	

   

  	

  RESERVE POSITION

  (#18 minus #19 and #20)

  	

   

  	

  $

  	

   

  	

   

  

 

The

undersigned represents and warrants that this is true, complete and correct,

and that the information in this Borrowing Base Certificate complies with the

representations and warranties in the Loan and Security Agreement between the

undersigned and Silicon Valley Bank.

 

 

22Exhibit

10.102

 

EXECUTION COPY

 

REVOLVING CREDIT

AGREEMENT

Dated as of

September 6, 2002

 

among

 

ALLIANCE CAPITAL

MANAGEMENT L. P.,

as Borrower,

 

BANK OF AMERICA,

N.A.,

as Administrative

Agent,

 

BANC OF AMERICA

SECURITIES LLC,

as Arranger,

 

THE BANK OF NEW

YORK and

DEUTSCHE BANK

SECURITIES INC.,

as Co-Syndication

Agents,

 

CITIBANK, N.A. and

JPMORGAN CHASE BANK,

as

Co-Documentation Agents,

 

and

 

THE FINANCIAL

INSTITUTIONS WHOSE NAMES APPEAR

ON THE SIGNATURE

PAGES HEREOF AS “BANKS”

 

 

REVOLVING CREDIT

AGREEMENT

 

THIS REVOLVING CREDIT

AGREEMENT, dated as of September 6, 2002 (this “Credit Agreement”), by and

among ALLIANCE CAPITAL MANAGEMENT L.P., a Delaware limited partnership

(together with its permitted successors, the “Borrower”), the financial

institutions listed on Schedule 1(a) (collectively, the “Banks”), and

BANK OF AMERICA, N.A., as administrative agent for the Banks (in such capacity,

the “Administrative Agent”);

 

W I T N E S S E T

H:

 

WHEREAS, the Borrower

desires to obtain from the Banks certain credit facilities as described in this

Credit Agreement for general partnership purposes, including the support of the

Borrower’s issuance of commercial paper, and for other purposes as provided

below;

 

WHEREAS, the Banks are

willing to provide such credit facilities to the Borrower upon the terms and

conditions set forth in this Credit Agreement; and

 

WHEREAS, the

Administrative Agent is willing to act as administrative agent, for the Banks

in connection with such credit facilities as provided in this Credit Agreement;

 

NOW, THEREFORE, in

consideration of the foregoing, the mutual covenants and agreements set forth

hereinbelow, and other good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged by the parties, the parties hereto

do hereby agree as follows:

 

1.                                       DEFINITIONS AND RULES OF INTERPRETATION.

 

1.1                                 Definitions.  The following terms shall have the meanings

set forth in this Section 1.1 or elsewhere in the provisions of this Credit

Agreement referred to below:

 

Accounting Change.  As defined in Section 6.12.

 

Accounting Notice.  As defined in Section 6.12.

 

Acquisition.  As defined in Section 7.2.

 

Administrative

Agent.  Bank of

America, acting as administrative agent for the Banks, or any successor

Administrative Agent appointed pursuant to Section 13.9.

 

Administrative

Agent’s Head Office. 

The Administrative Agent’s head office located at 101 North Tryon

Street, Charlotte, North Carolina 28255, or at such other location as the

Administrative Agent may designate in a written notice to the other parties

hereto from time to time.

 

 

Administrative

Agent’s Overnight Investment Rate.  The annual rate of interest in effect from time to time that is

equal to the interest rate received by the Administrative Agent from time to

time with respect to funds invested in overnight repurchase agreements.

 

Affected

Computation.  As

defined in Section 6.12.

 

Affiliate.  As defined under Rule 144 (a) under the

Securities Act of 1933, as amended, but, in the case of the Borrower, not including

any Subsidiary or any investment fund which is managed or advised by the

Borrower.

 

Agent-Related

Person.  The

Administrative Agent, together with its Affiliates (including, in the case of

Bank of America, in its capacity as the Administrative Agent, and Banc of

America Securities LLC), and the officers, directors, employees, agents and

attorneys-in-fact of such Persons and Affiliates.

 

Alliance

Distributors. 

Alliance Fund Distributors, Inc., a Delaware corporation, or any

successor thereto as the primary distributor of securities of investment

companies sponsored by the Borrower or its Subsidiaries.

 

Alternate Base

Rate. A simple interest rate equal to the higher of (a) the

Federal Funds Rate Basis plus one-half of one percent (0.50%) or (b) the Prime

Rate.  The Alternate Base Rate shall be

adjusted automatically as of the opening of business as of the effective date

of each change in the Federal Funds Rate Basis or the Prime Rate, as the case

may be, to account for such change.

 

Alternate Base

Rate Loan. A Loan which bears interest at the Alternate Base

Rate.

 

Applicable Margin.  An annual percentage rate determined by the

Administrative Agent, as of any date of determination, in accordance with the

Borrower’s commercial paper rating in effect as of any date of determination as

follows:

 

	

  Borrower’s

  S&P Rating/Moody’s Rating

  	

   

  	

  Applicable

  Margin

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  A-1+/P-1

  	

   

  	

  0.175%

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  A-1/P-1

  	

   

  	

  0.215%

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  A-1/P-2 or A-2/P-1

  	

   

  	

  0.225%

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  A-2/P-2

  	

   

  	

  0.350%

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Less than A-2/P-2 or

  no S&P Rating or Moody’s Rating

  	

   

  	

  0.675%

  	

   

  

 

Notwithstanding the

foregoing, (a) if there is a split in the debt ratings of only one level, the

Applicable Margin of the lower debt rating shall apply and (b) if there is a

split in the debt ratings of more than one level, the Applicable Margin 

 

2

 

of the lower debt rating

shall apply, in any such case, subject, as applicable, to the provisions of

Section 4.10 hereof.

 

Assignment and

Acceptance.  As

defined in Section 17.1.

 

Attributable Indebtedness.  On any date with respect to any Person, in

respect of any Synthetic Lease Obligation of such Person, the capitalized

amount of the remaining lease payments under the relevant lease that would

appear on a balance sheet of such Person prepared as of such date in accordance

with GAAP if such lease were accounted for as a Capitalized Lease.

 

AXA Group.  AXA, a société anonyme organized under the laws

of France, and its Subsidiaries.

 

Bank of America.  Bank

of America, N.A., a national banking association.

 

Banks.  Bank of America, The Bank of New York,

Citibank, N.A., Deutsche Bank AG, New York Branch, JPMorgan Chase Bank, Credit

Suisse First Boston, acting through its Cayman Island Branch, State Street Bank

and Trust Company, BNP Paribas, Société Générale, ABN AMRO Bank, N.V., Bank

One, N.A., Fleet National Bank and Wachovia Bank, N.A., as listed on Schedule

1(a) hereto and any other Person who becomes an assignee of any rights and

obligations of a Bank pursuant to Section 17.1.

 

Borrower.  As defined in the preamble hereto.

 

Borrower Control

Change Notice.  As

defined in Section 6.5.4.

 

Borrower

Partnership Agreement. 

The Amended and Restated Agreement of Limited Partnership of the

Borrower, dated as of October 29, 1999, by and among the General Partner and

those other Persons who became partners of the Borrower as provided therein, as

such agreement has been amended and exists at the date of this Credit Agreement

and may be amended or modified from time to time in compliance with the

provisions of this Credit Agreement.

 

Broker-Dealer Debt.  The obligations incurred or otherwise

arising in connection with the Securities Trading Activities of any

Broker-Dealer Subsidiary.

 

Broker-Dealer

Subsidiaries.  The

Subsidiaries listed on Schedule 1(b) attached hereto and each other

Subsidiary that engages in activities of the type described in the definition

of Securities Trading Activities and that is so designated by the Borrower in

writing to the Administrative Agent; and “Broker-Dealer Subsidiary”

means any one of such Broker-Dealer Subsidiaries.

 

Business.  With respect to any Person, the assets,

properties, business, operations and condition (financial and otherwise) of

such Person.

 

Business Day.  Any day on which banking institutions in

Charlotte, North Carolina and New York, New York, are open for the transaction

of banking business and, in the case of LIBOR Loans, also a day which is a

LIBOR Business Day.

 

3

 

Capitalized Leases.  Leases under which the Borrower or any of

its Consolidated Subsidiaries is the lessee or obligor, the discounted future

rental payment obligations under which are required to be capitalized on the

balance sheet of the lessee or obligor in accordance with GAAP.

 

CERCLA.  As defined in Section 5.17(a).

 

Change of Control.  Each and every (a) issue, sale, or other

disposition of Voting Equity Securities of the Borrower that results in any

Person or group of Persons acting in concert (other than any of AXA Financial,

Inc. and its Subsidiaries, and any member of the AXA Group) beneficially owning

or controlling, directly or indirectly, more than eighty percent (80%) (by

number of votes) of the Voting Equity Securities of the Borrower or (b) issue,

sale, or other disposition of Voting Equity Securities of the General Partner

which results in any Person or group of Persons acting in concert (other than

any of AXA Financial, Inc. and its Subsidiaries, and any member of the AXA

Group) beneficially owning or controlling, directly or indirectly, more than

fifty percent (50%) (by number of votes) of the Voting Equity Securities of the

General Partner.

 

Change of Control

Date.  Any date upon

which a Change of Control occurs.

 

Closing Date.  The date, not later than September 30, 2002,

on which each of the conditions set forth in Section 9 is satisfied or waived.

 

Code.  The Internal Revenue Code of 1986, as

amended.

 

Co-Documentation

Agent.  Citibank, N.A.

and JPMorgan Chase Bank, acting as co-documentation agents.

 

Commitment.  With respect to each Bank, the amount set

forth on Schedule 1(a) hereto as the amount of such Bank’s obligation to

make Loans to the Borrower, as the same may be reduced from time to time; or if

such commitment is terminated pursuant to the provisions hereof, zero.

 

Commitment

Percentage.  With

respect to each Bank, the percentage set forth on Schedule 1(a) hereto

as such Bank’s percentage of the aggregate Commitments of all of the Banks.

 

Consolidated

or consolidated.  With reference

to any term defined herein, shall mean that term as applied to the accounts of

the Borrower and the Consolidated Subsidiaries, consolidated in accordance with

GAAP.

 

Consolidated

Adjusted Cash Flow. With respect to any fiscal period, the

sum of (A) EBITDA for such fiscal period, plus (B) non-cash charges (other than

charges for depreciation and amortization) for such fiscal period to the extent

deducted in determining Consolidated Net Income (or Loss) for such period.

 

Consolidated

Adjusted Funded Debt. At any time, the aggregate Outstanding

principal amount of Funded Debt of the Borrower and the Consolidated

Subsidiaries (whether owed by

 

4

 

more than one of them

jointly or by any of them singly) at such time determined on a consolidated

basis and, except with respect to items (f) and (g) of the definition of Funded

Debt, determined in accordance with GAAP.

 

Consolidated

Leverage Ratio. As of any date of determination, the ratio of

(a) Consolidated Adjusted Funded Debt as of such date to (b) Consolidated Adjusted

Cash Flow for the period of the four fiscal quarters most recently ended for

which the Borrower has delivered financial statements.

 

Consolidated Net

Income (or Loss). The consolidated net income (or

loss) of the Borrower, determined in accordance with GAAP, but excluding in any

event:

 

(a)                                  any

portion of the net earnings of any Subsidiary that, by virtue of a restriction

or Lien binding on such Subsidiary under a Contract or Government Mandate, is

unavailable for payment of dividends to the Borrower or any other  Subsidiary;

 

(b)                                 earnings

resulting from any reappraisal, revaluation, or write-up of assets; and

 

(c)                                  any

reversal of any contingency reserve, except to the extent that such provision

for such contingency reserve shall have been made from income arising during

the period subsequent to December 31, 2001, through the end of the period for

which Consolidated Net Income (or Loss) is then being determined, taken as one

accounting period.

 

Consolidated Net

Worth. The excess of Consolidated Total Assets over

Consolidated Total Liabilities, less, to the extent otherwise includible

in the computations of Consolidated Net Worth, any subscriptions receivable

with respect to Equity Securities of the Borrower or its Subsidiaries (with

such adjustments as may be appropriate so as not to double count intercompany

items).

 

Consolidated

Subsidiaries.  At any

point in time, the Subsidiaries of the Borrower that are consolidated with the

Borrower for financial reporting purposes with respect to the fiscal period of

the Borrower in which such point in time occurs.

 

Consolidated Total

Assets. All assets of the Borrower determined on a

consolidated basis in accordance with GAAP.

 

Consolidated Total

Liabilities. All liabilities of the Borrower determined on a

consolidated basis in accordance with GAAP.

 

Contracts.  Contracts, agreements, mortgages, leases,

bonds, promissory notes, debentures, guaranties, Capitalized Leases,

indentures, pledges, powers of attorney, proxies, trusts, franchises, or other

instruments or obligations.

 

Control Change

Notice.  As defined in

Section 6.5.4.

 

Conversion Request.  A notice given by the Borrower to the

Administrative Agent of the Borrower’s election to convert or continue a Loan

in accordance with Section 2.9.

 

5

 

Co-Syndication

Agent.  The Bank of

New York and Deutsche Bank Securities Inc., acting as co-syndication agents.

 

Credit Agreement.  This Revolving Credit Agreement, including

the Schedules and Exhibits hereto.

 

Default.

Any event or condition that constitutes an Event of Default or that, with the

giving of any notice, the passage of time, or both, would be an Event of

Default.

 

Delinquent Bank.  As defined in Section 13.12.

 

Disposition.  As defined in Section 7.1.

 

Distribution.

With respect to any Entity, the declaration or payment (without duplication) of

any dividend or distribution on or in respect of any Equity Securities of such

Entity, other than dividends payable solely in Equity Securities of such Entity

that are not required to be classified as liabilities on the balance sheet of

such Entity under GAAP; the purchase, redemption, or other retirement of any

Equity Securities of such Entity, directly or indirectly through a Subsidiary

of such Entity or otherwise; or the return of capital by such Entity to the

holders of its Equity Securities as such.

 

Dollars

or $.  Dollars in lawful currency

of the United States of America.

 

Domestic Lending

Office.  Initially,

the office of each Bank designated as such in Schedule 1(a) hereto;

thereafter, such other office of such Bank, if any, located within the United

States that will be making or maintaining Federal Funds Rate Loans or Alternate

Base Rate Loans.

 

Drawdown Date.  The date on which any Loan is made or is to

be made, and the date on which any Loan is converted or continued in accordance

with Section 2.9.

 

EBITDA.

The Consolidated Net Income (or Loss) for any period, plus provision for any

income taxes, interest (whether paid or accrued, but without duplication of

interest accrued for previous periods), depreciation, or amortization for such

period, in each case to the extent deducted in determining such Consolidated

Net Income (or Loss).

 

Effective Date.  As defined in Section 6.12(c).

 

Eligible Assignee.  Any of (a) a commercial bank or finance

company organized under the laws of the United States, any State thereof, or

the District of Columbia, and having total assets in excess of One Billion

Dollars ($1,000,000,000); (b) a commercial bank organized under the laws of any

other country that is a member of the Organization for Economic Cooperation and

Development (the “OECD”), or a political subdivision of any such country, and

having total assets in excess of One Billion Dollars ($1,000,000,000), provided

that such bank is acting through a branch or agency located in the country in

which it is organized or another country which is also a member of the OECD;

and (c) the central bank of any country which is a member of the OECD.

 

6

 

Employee Benefit

Plan.  Any employee

benefit plan within the meaning of §3(2) of ERISA maintained or contributed to

by the Borrower or any ERISA Affiliate, other than a Multiemployer Plan.

 

Entity.  Any corporation, partnership, trust, unincorporated

association, joint venture, limited liability company, or other legal or

business entity.

 

Environmental Laws.  As defined in Section 5.17(a).

 

EPA.  As defined in Section 5.17(b).

 

Equity Securities.

With respect to any Entity, all equity securities of such Entity, including any

(a) common or preferred stock, (b) limited or general partnership interests,

(c) limited liability company member interests, (d) options, warrants, or other

rights to purchase or acquire any equity security, or (e) securities

convertible into any equity security.

 

ERISA.  The Employee Retirement Income Security Act

of 1974, as amended.

 

ERISA Affiliate.  Any Person that is treated as a single

employer together with the Borrower under §414 of the Code.

 

ERISA Reportable

Event.  A reportable

event with respect to a Guaranteed Pension Plan within the meaning of §4043 of

ERISA and the regulations promulgated thereunder as to which the requirement of

notice has not been waived.

 

Event of Default.  As defined in Section 11.

 

Examining

Authority. The meaning set forth in Rule 15c3-1(c)(12) under

the Securities Exchange Act of 1934, as amended.

 

Federal Funds Rate.

A simple interest rate equal to the sum of the Federal Funds Rate Basis plus

the Applicable Margin.  The Federal

Funds Rate shall be adjusted automatically as of the opening of business of the

effective date of each change in the Federal Funds Rate Basis to account for

such change.

 

Federal Funds Rate

Basis. For any day, the rate per annum equal to the weighted

average of the rates on overnight federal funds transactions with members of

the Federal Reserve System arranged by federal funds brokers, as published for

such day (or if such day is not a Business Day, for the next preceding Business

Day) by the Federal Reserve Bank of New York, or, if such rate is not so

published for any day that is a Business Day, the average of the quotations for

such day on such transactions received by the Administrative Agent from three

funds brokers of recognized standing selected by the Administrative Agent.

 

Federal Funds Rate

Loan.  A Loan (other

than an Alternate Base Rate Loan) which bears interest at the Federal Funds

Rate.

 

Fee Letter.  That certain fee letter dated July 17, 2002

among the Borrower, Bank of America, and Banc of America Securities LLC.

 

7

 

Fully Effective.  With respect to any Contract, that (a) such

Contract is the legal, valid, and binding obligation of the Borrower or its

Subsidiary, as the case may be, enforceable against such party according to its

terms, and (b) if such Contract exists on or before the date of this Credit

Agreement, such Contract shall remain in full force and effect notwithstanding

the execution and delivery of the Loan Documents and the consummation of the

transactions contemplated by the Loan Documents.

 

Funded Debt.

With respect to the Borrower or any Consolidated Subsidiary, (a) all

Indebtedness for money borrowed of such Person, (b) in respect of Capitalized

Leases, the capitalized amount thereof that would appear on a balance sheet of

such Person prepared in accordance with GAAP, (c) all reimbursement obligations

of such Person with respect to letters of credit, bankers’ acceptances, or

similar facilities issued for the account of such Person, (d) Indebtedness in

respect of the disposition of 12b-1 Fees, (e) all guarantees, endorsements,

acceptances, and other contingent obligations of such Person, whether direct or

indirect, in respect of Indebtedness for borrowed money of others, including

any obligation to supply funds to or in any manner to invest in, directly or

indirectly, the debtor, to purchase Indebtedness for borrowed money, or to

assure the owner of Indebtedness for borrowed money against loss, through an

agreement to purchase goods, supplies, or services for the purpose of enabling

the debtor to make payment of the Indebtedness held by such owner or otherwise,

(f) net obligations of such Person under any Swap Contract in an amount equal

to the Swap Termination Value thereof, and (g) Attributable Indebtedness of

such Person.  Notwithstanding the

foregoing, Funded Debt shall not include Broker-Dealer Debt.

 

GAAP.  Subject to Section 6.12, (a) when used in

financial covenants set forth in Section 8, whether directly or indirectly

through reference to a capitalized term used therein,  (i) principles that are consistent with the principles

promulgated or adopted by the Financial Accounting Standards Board and its

predecessors, in effect for the fiscal year ended on December 31, 2001, and

(ii) to the extent consistent with such principles, the accounting practices of

the Borrower reflected in its consolidated financial statements for the year

ended on December 31, 2001, and (b) when used in general, other than as

provided above, means principles that are (i) consistent with the principles

promulgated or adopted by the Financial Accounting Standards Board and its

predecessors, as in effect from time to time and (ii) consistently applied with

past financial statements of the Borrower adopting the same principles,

provided that in each case referred to in this definition of “GAAP” a certified

public accountant would, insofar as the use of such accounting principles is

pertinent, be in a position to deliver an unqualified opinion (other than a

qualification regarding changes in GAAP) as to financial statements in which

such principles have been properly applied.

 

General Partner.  (a) Alliance Capital Management Corporation,

a Delaware corporation, in its capacity as general partner of the Borrower and (b)

any other Persons who satisfy the requirements for admitting general partners

without causing a Default or an Event of Default as set forth in Section

11.1(n) and who are so admitted, each in its capacity as a general partner of

the Borrower, and their respective successors.

 

Government

Authority.  The United

States of America or any state, district, territory, or possession thereof, any

local government within the United States of America or any of its territories

and possessions, any foreign government having appropriate jurisdiction or any

 

8

 

province, territory, or

possession thereof, or any court, tribunal, administrative or regulatory

agency, taxing or revenue authority, central bank or banking regulatory agency,

commission, or body of any of the foregoing.

 

Government Mandate.  With respect to (a) any Person, any statute,

law, rule, regulation, code, or ordinance duly adopted by any Government

Authority, any treaty or compact between two (2) or more Government

Authorities, and any judgment, order, decree, ruling, finding, determination,

or injunction of any Government Authority, in each such case that is, pursuant

to appropriate jurisdiction, legally binding on such Person, any of its

Subsidiaries or any of their respective properties, and (b) the Administrative

Agent or any Bank, in addition to subsection (a) hereof, any policy, guideline,

directive, or standard duly adopted by any Government Authority with respect to

the regulation of banks, monetary policy, lending, investments, or other

financial matters.

 

Granting Lender.  As defined in Section 17.10.

 

Guarantee.  As to any Person, (a) any obligation,

contingent or otherwise, of such Person guaranteeing or having the economic

effect of guaranteeing any Funded Debt or other obligation payable or

performable by another Person (the “primary obligor”) in any manner, whether

directly or indirectly, and including any obligation of such Person, direct or

indirect, (i) to purchase or pay (or advance or supply funds for the purchase

or payment of) such Funded Debt or other obligation, (ii) to purchase or lease

property, securities or services for the purpose of assuring the obligee in

respect of such Funded Debt or other obligation of the payment or performance

of such Funded Debt or other obligation, (iii) to maintain working capital,

equity capital or any other financial statement condition or liquidity or level

of income or cash flow of the primary obligor so as to enable the primary

obligor to pay such Funded Debt or other obligation, or (iv) entered into for

the purpose of assuring in any other manner the obligee in respect of such

Funded Debt or other obligation of the payment or performance thereof or to

protect such obligee against loss in respect thereof (in whole or in part), or

(b) any Lien on any assets of such Person securing any Funded Debt or other

obligation of any other Person, whether or not such Funded Debt or other

obligation is assumed by such Person. 

The amount of any Guarantee shall be deemed to be an amount equal to the

stated or determinable amount of the related primary obligation, or portion

thereof, in respect of which such Guarantee is made or, if not stated or

determinable, the maximum reasonably anticipated liability in respect thereof

as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a

corresponding meaning.

 

Guaranteed Pension

Plan.  Any employee

pension benefit plan within the meaning of §3(2) of ERISA maintained or

contributed to by the Borrower or any ERISA Affiliate the benefits of which are

guaranteed on termination in full or in part by the PBGC pursuant to Title IV

of ERISA, other than a -Multiemployer Plan.

 

Hazardous

Substances.  As

defined in Section 5.17(b).

 

Indebtedness.

All obligations, contingent and otherwise, that in accordance with GAAP should

be classified upon the obligor’s balance sheet as liabilities, or to which

reference should be made by footnotes thereto in accordance with GAAP,

including: (a) all debt and similar monetary obligations, whether direct or

indirect; (b) all liabilities secured by any Lien existing on property 

 

9

 

owned or acquired subject

thereto, whether or not the liability secured thereby shall have been assumed;

(c) all obligations in respect of hedging contracts, including, without

limitation, interest rate and currency swaps, caps, collars and other financial

derivative products; and (d) all guarantees, endorsements, and other contingent

obligations whether direct or indirect in respect of indebtedness of others,

including any obligation to supply funds to or in any manner to invest in,

directly or indirectly, the debtor, to purchase indebtedness, or to assure the

owner of indebtedness against loss, through an agreement to purchase goods,

supplies, or services for the purpose of enabling the debtor to make payment of

the indebtedness held by such owner or otherwise, and the obligations to

reimburse the issuer in respect of any letters of credit.  Notwithstanding the foregoing, Indebtedness

shall not include Broker-Dealer Debt.

 

Indemnified

Liabilities.  As

defined in Section 15.

 

Interest Payment

Date.  (a) As to any

Federal Funds Rate Loan or Alternate Base Rate Loan, the second Business Day of

each calendar quarter for the immediately preceding calendar quarter during all

or a portion of which such Federal Funds Rate Loan or Alternate Base Rate Loan

were Outstanding and the maturity of such Federal Funds Rate Loan or Alternate

Base Rate Loan; (b) as to any LIBOR Loan, the last day of each Interest Period

with respect to such LIBOR Loan, the maturity of such LIBOR Loan, and, if the

Interest Period of such LIBOR Loan is longer than three (3) months, the date

that is three (3) months from the first day of such Interest Period and the

last day of each successive three (3) month period during such Interest Period.

 

Interest Period.  With respect to any LIBOR Loan, (a)

initially, the period commencing on the Drawdown Date of such Loan and ending

on the last day of, as selected by the Borrower in a Loan Request, one (1), two

(2), or three (3) weeks, or one (1), two (2), three (3), four (4), five (5), or

six (6) months, if available in readily ascertainable markets; and (b)

thereafter, each period commencing on the last day of the next preceding

Interest Period applicable to such Loan and ending on the last day of one of

the periods set forth above, as selected by the Borrower in a Conversion

Request; provided that all of the foregoing provisions relating to Interest

Periods are subject to the following:

 

(i)                                     if

any Interest Period for a LIBOR Loan would otherwise end on a day that is not a

LIBOR Business Day, that Interest Period shall be extended to the next

succeeding LIBOR Business Day unless the result of such extension would be to

carry such Interest Period into another calendar month, in which event such

Interest Period shall end on the immediately preceding LIBOR Business Day; and

 

(ii)                                  any

Interest Period commencing prior to the Maturity Date that would otherwise

extend beyond the Maturity Date shall end on the Maturity Date.

 

Investment.  As to any Person, any direct or indirect

acquisition or investment by such Person, whether by means of (a) the purchase

or other acquisition of capital stock or other securities of another Person,

(b) a loan, advance or capital contribution to, Guarantee or assumption of debt

of, or purchase or other acquisition of any other debt or equity participation

or interest in, another Person, including any partnership or joint venture

interest in such other Person, or (c) the purchase or other acquisition (in one

transaction or a series of transactions) of assets of another Person that

constitute a business unit.  For

purposes of covenant compliance, the

 

10

 

amount of any Investment

shall be the amount actually invested, without adjustment for subsequent

increases or decreases in the value of such Investment.

 

LIBOR Business Day.  Any day on which commercial banks are open

for international business (including dealings in Dollar deposits) in London,

England.

 

LIBOR Lending

Office.  Initially,

the office of each Bank designated as such in Schedule 1(a) hereto;

thereafter, such other office of such Bank, if any, that shall be making or

maintaining LIBOR Loans.

 

LIBOR Loan.  A Loan which bears interest at the LIBOR

Rate.

 

LIBOR Rate.  A simple per annum interest rate equal to

the sum of (a) the quotient of (i) the LIBOR Rate Basis divided by (ii) one

minus the LIBOR Reserve Percentage, stated as a decimal, plus (b) the

Applicable Margin.  The LIBOR Rate shall

be rounded upward to four decimal places and shall apply to the applicable

Interest Period, and, once determined, shall be subject to the provisions of

this Credit Agreement and shall remain unchanged during the applicable Interest

Period, except for changes to reflect adjustments in the LIBOR Reserve

Percentage.

 

LIBOR Rate Basis.  For any Interest Period, the interest rate

per annum equal to the offered rate for deposits in United States dollars

(rounded to four decimal places) in amounts comparable to the principal amount

of, and for a length of time comparable to and commencing on the first day of

the Interest Period for, the LIBOR Loan to be made by the Banks, which interest

rate appears on Telerate Page 3750 as of 11:00 a.m. (London time) two (2)

Business Days prior to the first day of such Interest Period; provided,

however, that (i) if more than one such offered rate appears on Telerate Page

3750, the LIBOR Rate Basis shall be the arithmetic average (rounded to four

decimal places) of such offered rates, or (ii) if no such offered rates appear

on such page, the LIBOR Rate Basis shall be the interest rate per annum

(rounded to four decimal places) at which United States dollar deposits are

offered to the Administrative Agent in the London interbank borrowing market at

approximately 9:00 a.m. (Charlotte, North Carolina time) on the date two (2)

Business Days prior to the first day of such Interest Period in an amount

comparable to and commencing on the first day of the principal amount of, and

for a length of time comparable to the Interest Period for, the LIBOR Loan to

be made by the Banks.

 

LIBOR Reserve

Percentage.  The

percentage which is in effect from time to time under Regulation D of the Board

of Governors of the Federal Reserve System, as such regulation may be amended

from time to time, as the actual reserve requirement applicable with respect to

Eurocurrency Liabilities (as that term is defined in Regulation D), to the extent

that any Bank has any Eurocurrency Liabilities subject to such reserve

requirement at that time. The LIBOR Rate for any LIBOR Loan shall be adjusted

as of the effective date of any change in the LIBOR Reserve Percentage.

 

Lien.  Any lien, mortgage, security interest,

pledge, charge, beneficial or equitable interest or right, hypothecation,

collateral assignment, easement, or other encumbrance.

 

Loan Documents.  This Credit Agreement, any Notes and any

instrument or document designated by the parties thereto as a “Loan Document”

for purposes hereof.

 

11

 

Loan Request.  As defined in Section 2.8.

 

Loans.  Revolving credit loans made or to be made by

the Banks to the Borrower pursuant to Section 2.

 

Majority Banks.  The Banks whose aggregate Commitments

constitute more than fifty percent (50%) of the Total Commitment or, if the

Commitments have been terminated, more than fifty percent (50%) of the

aggregate amount of the Loans.

 

Material Adverse

Effect.  A material

adverse effect on (a) the ability of the Borrower to enter into and to perform

and observe its Obligations under the Loan Documents, or (b) the assets,

properties, business, operations and condition (financial or otherwise) of the

Borrower and its Subsidiaries taken as a whole.

 

Material

Broker-Dealer Subsidiary. 

Any Broker-Dealer Subsidiary that has total assets as of the date of

determination equal to not less than five (5%) of the Consolidated Total Assets

of the Borrower as set forth in the consolidated balance sheet of the Borrower

included in the most recent available annual or quarterly report of the

Borrower.

 

Material

Subsidiary.  Any

Subsidiary of the Borrower or Alliance Distributors that, singly or together

with any other such Subsidiaries then subject to one or more of the conditions

described in Section 11.1(h), Section 11.1(i), or Section 11.1(m), either (a)

at the date of determination owns Significant Assets, or (b) has total assets

as of the date of determination equal to not less than five percent (5%) of the

Consolidated Total Assets of the Borrower as set forth in the consolidated

balance sheet of the Borrower included in the most recent available annual or

quarterly report of the Borrower.

 

Maturity Date.  September 6, 2007.

 

Moody’s Rating.  With respect to any Entity which is the

issuer or obligor with respect to commercial paper, the rating assigned to such

Entity by Moody’s Investors Service, Inc. from time to time in effect.

 

Multiemployer Plan.  Any multiemployer plan within the meaning of

§3(37) of ERISA maintained or contributed to by the Borrower or any ERISA

Affiliate.

 

Net Capital Rule.  Rule 15c3-1 under the Securities Exchange

Act of 1934, as amended.

 

1940 Act.  The Investment Company Act of 1940, as

amended.

 

Notes.  Any Notes of the Borrower to the Banks in

respect of the Borrower’s Obligations under this Credit Agreement of even date

herewith, substantially in the form of Exhibit A, as amended, modified

and renewed from time to time.

 

Obligations.  All indebtedness, obligations, and

liabilities of any of the Borrower or its Subsidiaries to any of the Banks and

the Administrative Agent, individually or collectively, existing on the date of

this Credit Agreement or arising thereafter, direct or indirect, joint or

several, absolute or contingent, matured or unmatured, liquidated or

unliquidated, secured or

 

12

 

unsecured, arising or

incurred under this Credit Agreement or any of the other Loan Documents or in

respect of any of the Loans made or any of the Notes or other instruments at

any time evidencing any thereof.

 

Outstanding.  With respect to the Loans, the aggregate

unpaid principal thereof as of any date of determination.

 

PBGC.  The Pension Benefit Guaranty Corporation

created by §4002 of ERISA and any successor entity or entities having similar

responsibilities.

 

Permits.  Permits, licenses, franchises, patents,

copyrights, trademarks, trade names, approvals, clearances, and applications

for or rights in respect of the foregoing of any Government Authority.

 

Permitted Liens.  Liens permitted by Section 7.3.

 

Person.  Any individual, Entity or Government

Authority.

 

Prime Rate.  The rate of interest adopted by the

Administrative Agent as its reference rate for the determination of interest

rates for loans of varying maturities in United States dollars to United States

residents of varying degrees of creditworthiness and being quoted at such time

by the Administrative Agent as its “prime rate”.  The Prime Rate is not necessarily the lowest rate of interest

charged to borrowers of the Administrative Agent.  Each change in the Prime Rate shall take effect simultaneously

with the change in the Administrative Agent’s “prime rate.”

 

Proceedings.  Any (a) actions at law, (b) suits in equity,

(c) bankruptcy, insolvency, receivership, dissolution, or reorganization cases

or proceedings, (d) administrative or regulatory hearings or other proceedings,

(e) arbitration and mediation proceedings, (f) criminal prosecutions, (g)

judgment levies, foreclosure proceedings, pre-judgment security procedures, or

other enforcement actions, and (h) other litigation, actions, suits, and

proceedings conducted by, before, or on behalf of any Government Authority.

 

RCRA.  As defined in Section 5.17(a).

 

Real Estate.  All real property at any time owned or

leased (as lessee or sublessee) by the Borrower or any of its Subsidiaries.

 

Record.  The grid attached to a Note, or the

continuation of such grid, or any other similar record, including computer records,

maintained by any Bank with respect to any Loan referred to in such Note or in

this Credit Agreement.

 

Register.  As defined in Section 17.3.

 

Reorganization and

Reorganize.  As

defined in Section 7.2.

 

SARA.  As defined in Section 5.17(a).

 

Securities Trading

Activities. The activities in the ordinary course of business

of a Broker-Dealer Subsidiary, including, without limitation, acting as a

broker for clients and/or as a

 

13

 

dealer in the purchase and

sale of securities traded on exchanges or in the over-the-counter markets,

entering into securities repurchase agreements and reverse repurchase

agreements, securities lending and borrowing and securities clearing, either

through agents or directly through clearing systems.

 

Significant Assets.  At the date of any sale, transfer,

assignment, or other disposition of assets of the Borrower or any of its

Subsidiaries (or as of the date of any Default or Event of Default), assets of

the Borrower or any of its Subsidiaries (including Equity Securities of

Subsidiaries of the Borrower) which generated thirty-three and one-third

percent (33 1/3%) or more of the consolidated revenues of the Borrower

during the four (4) fiscal quarters of the Borrower most recently ended (the

“Measuring Period”), provided that assets of the Borrower or any of its

Subsidiaries (including Equity Securities of Subsidiaries of the Borrower)

which do not meet the definition of Significant Assets in the first part of

this sentence shall nonetheless be deemed to be Significant Assets if such

assets generated revenues for the Measuring Period that if subtracted from the

consolidated revenues of the Borrower for the Measuring Period would result in

consolidated revenues of the Borrower for the Measuring Period of less than

$1,200,000,000.

 

S&P Rating.  With respect to any Entity which is the

issuer or obligor with respect to commercial paper, the rating assigned to such

Entity by Standard & Poor’s Rating Service from time to time in effect.

 

SPC.  As defined in Section 17.10.

 

Subsidiary.  Any Entity of which the designated parent

shall at any time own directly or indirectly through a Subsidiary or

Subsidiaries at least a majority (by number of votes) of the outstanding Voting

Equity Securities of such Entity. 

Unless otherwise provided herein, any reference to a “Subsidiary” shall

mean a Subsidiary of the Borrower. Notwithstanding the foregoing, the term

“Subsidiary” shall not include any entity that is an investment company,

investment fund or similar entity managed or advised by the Borrower or any

Subsidiary of the Borrower and in which the Borrower’s or such Subsidiary’s

ownership of Voting Equity Securities is a function of its role as manager or

adviser (whether as general partner or otherwise) rather than its economic or

beneficial interest in the entity, unless and until such time as the entity is

required in accordance with GAAP to be consolidated with the Borrower for

financial reporting purposes with respect to the fiscal period of the Borrower

in which such point in time occurs.

 

Swap Contract.  A Swap Contract is:  (a) any and all rate swap transactions,

basis swaps, credit derivative transactions, forward rate transactions,

commodity swaps, commodity options, forward commodity contracts, equity or

equity index swaps or options, bond or bond price or bond index swaps or

options or forward bond or forward bond price or forward bond index

transactions, interest rate options, forward foreign exchange transactions, cap

transactions, floor transactions, collar transactions, currency swap

transactions, cross-currency rate swap transactions, currency options, spot

contracts, or any other similar transactions or any combination of any of the

foregoing (including any options to enter into any of the foregoing), whether

or not any such transaction is governed by or subject to any master agreement,

and (b) any and all transactions of any kind, and the related confirmations,

which are subject to the terms and conditions of, or governed by, any form of

master agreement published by the International Swaps and Derivatives

Association, Inc., or any International Foreign Exchange Master 

 

14

 

Agreement (any such

master agreement, together with any related schedules, a “Master Agreement”),

including any such obligations or liabilities under any Master Agreement.

 

Swap Termination

Value.  In respect of

any one or more Swap Contracts, after taking into account the effect of any

legally enforceable netting agreement relating to such Swap Contracts, (a) for

any date on or after the date such Swap Contracts have been closed out and

termination value(s) determined in accordance therewith, such termination

value(s), and (b) for any date prior to the date referenced in clause (a), the

amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as

determined by the Borrower based upon one or more mid-market or other readily

available quotations provided by one or more recognized dealers in such Swap Contracts

(which may include a Bank or any affiliate of a Bank).

 

Synthetic Lease

Obligation.  The

monetary obligation of a Person under a so-called synthetic, off-balance sheet

or tax retention lease, where such transaction is considered borrowed money

Indebtedness for tax purposes but which is classified as an operating lease

pursuant to GAAP.

 

Telerate Page 3750.  Telerate Page 3750 means the display page so

designated on Reuters (or such other page as may replace that page on that

service, or such other service as may be nominated as the information vendor by

the Administrative Agent, for the purpose of displaying rates or prices

comparable to those displayed on Telerate Page 3750 at the time of execution of

this Agreement).

 

Total Commitment.  The sum of the Commitments of the Banks, as

in effect from time to time.  As of the

Closing Date the Total Commitment is $800,000,000.

 

12b-1 Fees.  All or any portion of (a) the compensation

or fees paid, payable, or expected to be payable to the Borrower or any of its

Subsidiaries for acting as the distributor of securities as permitted under

Rule 12b-l under the 1940 Act, (b) the contingent deferred sales charges or

redemption fees paid, payable, or expected to be paid to the Borrower or any of

its Subsidiaries, and (c) any right, title, or interest in or to any such

compensation or fees.

 

Type.  As to any Loan, its nature as a Federal

Funds Rate Loan, Alternate Base Rate Loan or LIBOR Loan, as the case may be.

 

Units.  Units representing assignments of beneficial

ownership of limited partnership interests in the Borrower.

 

Voting Equity

Securities.  Equity

Securities of any class or classes (however designated), the holders of which

are at the time entitled, as such holders, to vote for the election of a

majority of the directors (or persons performing similar functions) of the

Entity that issued such Equity Securities.

 

1.2                                 Rules of Interpretation.

 

(a)                                  A reference to any Contract or other

document shall include such Contract or other document as amended, modified, or

supplemented from time to time in accordance with its terms and the terms of

this Credit Agreement.

 

15

 

(b)                                 The singular includes the plural and the

plural includes the singular.

 

(c)                                  A reference to any Government Mandate

includes any amendment or modification to such Government Mandate or any

successor Government Mandate.

 

(d)                                 A reference to any Person includes its

permitted successors and permitted assigns. 

Without limiting the generality of the foregoing, a reference to any

Bank shall include any Person that succeeds generally to its assets and

liabilities.

 

(e)                                  Accounting terms not otherwise defined

herein have the meanings assigned to them by GAAP.

 

(f)                                    The words “include”, “includes”, and

“including” are not limiting.

 

(g)                                 All terms not specifically defined herein

or by GAAP, which terms are defined in the Uniform Commercial Code as in effect

in The State of New York, have the meanings assigned to them therein.

 

(h)                                 Reference to a particular “§”, Section,

Schedule, or Exhibit refers to that Section, Schedule, or Exhibit of this

Credit Agreement unless otherwise indicated.

 

(i)                                     The words “herein”, “hereof”, and

“hereunder” and words of like import shall refer to this Credit Agreement as a

whole and not to any particular section or subdivision of this Credit

Agreement.

 

2.                                       THE REVOLVING CREDIT FACILITY.

 

2.1                                 Commitment to Lend.

 

(a)                                  Subject to the terms and conditions set

forth in Section 10 hereof, each of the Banks severally shall lend to the

Borrower, and the Borrower may borrow, repay, and reborrow from time to time

between the Closing Date and the Maturity Date upon notice by the Borrower to

the Administrative Agent given in accordance with Section 2.8, such sums as are

requested by the Borrower up to a maximum aggregate principal amount

Outstanding (after giving effect to all amounts requested) at any one time

equal to such Bank’s Commitment, provided that the Outstanding amount of the

Loans (after giving effect to all amounts requested) shall not at any time

exceed the Total Commitment.  The Loans

shall be made pro rata in accordance with each Bank’s Commitment

Percentage; provided that the failure of any Bank to lend in accordance

with this Credit Agreement shall not release any other Bank or the Administrative

Agent from their obligations hereunder, nor shall any Bank have any

responsibility or liability in respect of a failure of any other Bank to lend

in accordance with this Credit Agreement. 

Each request for a Loan and each borrowing hereunder shall constitute a

representation and warranty by the Borrower that the conditions set forth in

Section 10 have been satisfied on the date of such request.

 

(b)                                 In the event that, at any time when the

conditions precedent for any Loan have been satisfied, a Bank or the

Administrative Agent, as the case may be, fails or refuses to fund its portion

of such Loan, then, until such time as such Bank or the Administrative Agent,

as 

 

16

 

the case may be, has funded its portion of such Loan,

or all of the other Banks and/or the Administrative Agent, as the case may be,

have received (in accordance with Section 13.12.3) payment in full of the

principal and interest due in respect of such Loan, such non-funding Bank or Administrative

Agent, as the case may be, shall not have the right to receive payment of any

principal, interest or fees from the Borrower in respect of its Loans.

 

2.2                                 Facility Fee.  The Borrower shall pay to the Administrative

Agent for the accounts of the Banks in accordance with their respective

Commitment Percentages a facility fee on the daily average amount of the Total

Commitment as of the most recently completed calendar quarter calculated at the

rate per annum, on the basis of a 360-day year for the actual number of days

elapsed, as determined in accordance with the chart below with respect to the

Borrower’s commercial paper rating as of the last Business Day of each calendar

quarter.  The facility fee shall be

payable quarterly in arrears on the second Business Day of each calendar

quarter for the immediately preceding calendar quarter commencing on the first

such date following the date hereof, with a final payment on the Maturity Date

or any earlier date on which the Total Commitment shall terminate.  In no case shall any portion of the facility

fee be refundable.

 

The facility fee shall be

calculated based upon the Borrower’s commercial paper rating in effect as of

any date of determination as follows:

 

	

  Borrower’s

  S&P Rating/Moody’s Rating

  	

   

  	

  Facility

  Fee

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  A-1+/P-1

  	

   

  	

  0.075%

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  A-1/P-1

  	

   

  	

  0.085%

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  A-1/P-2 or A-2/P-1

  	

   

  	

  0.125%

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  A-2/P-2

  	

   

  	

  0.150%

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Less than A-2/P-2 or

  no S&P Rating or Moody’s Rating

  	

   

  	

  0.200%

  	

   

  

 

Notwithstanding the

foregoing, (a) if there is a split in the debt ratings of only one level, the

facility fee of the lower debt rating shall apply and (b) if there is a split

in the debt ratings of more than one level, the facility fee that is one level

higher than the facility fee of the lower debt rating shall apply, in any such

case, subject, as applicable, to the provisions of Section 4.10 hereof.

 

2.3                                 Utilization Fee.  For any calendar quarter in which the

average aggregate daily Outstanding balance of the Loans is greater than 50% of

the daily average amount of the Total Commitment for such quarter, the Borrower

shall pay to the Administrative Agent for the accounts of the Banks in

accordance with their respective Commitment Percentages a utilization fee on

the average aggregate Outstanding amount of the Loans during such calendar

quarter calculated at the rate per annum, on the basis of a 360-day year for

the actual number of days elapsed, as determined in accordance with the chart

below with respect to the Borrower’s commercial paper rating as of the last

Business Day of each calendar quarter. 

The utilization fee shall be payable on the earlier of the second

Business Day of a calendar quarter for any immediately preceding calendar

quarter in which such fee shall be due and owing in accordance

 

17

 

with this Section

2.3 or the Maturity Date or any earlier date on which the Total Commitment

shall terminate.  In no case shall any

portion of the utilization fee be refundable.

 

The utilization fee shall

be calculated based upon the Borrower’s commercial paper rating in effect as of

any date of determination as follows:

 

	

  Borrower’s

  S&P Rating/Moody’s Rating

  	

   

  	

  Utilization

  Fee

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  A-1+/P-1

  	

   

  	

  0.100%

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  A-1/P-1

  	

   

  	

  0.100%

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  A-1/P-2 or

  A-2/P-1

  	

   

  	

  0.100%

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  A-2/P-2

  	

   

  	

  0.100%

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Less than

  A-2/P-2 or

  no S&P Rating or Moody’s Rating

  	

   

  	

  0.375%

  	

   

  

 

Notwithstanding the

foregoing, (a) if there is a split in the debt ratings of only one level, the

utilization fee of the lower debt rating  shall apply and (b) if there is a split in

the debt ratings of more than one level, the utilization fee that is one level

higher than the utilization fee of the lower debt rating shall apply, in any

such case, subject, as applicable, to the provisions of Section 4.10 hereof.

 

2.4                                 Other Fees. 

The Borrower shall pay the fees described in the Fee Letter as and when

the same become due and payable pursuant to the terms of the Fee Letter.

 

2.5                                 Reduction of Total Commitment.  The Borrower shall have the right at any

time and from time to time upon three (3) Business Days’ prior written notice

to the Administrative Agent to reduce by at least $10,000,000 or integral

multiples of $1,000,000 in excess thereof, or to terminate entirely, the

unborrowed portion of the Total Commitment, whereupon the Commitments of the Banks

shall be reduced pro rata in accordance with their respective Commitment

Percentages of the amount specified in such notice or, as the case may be,

terminated.  Promptly after receiving

any notice of the Borrower delivered pursuant to this Section 2.5, the

Administrative Agent will notify the Banks of the substance thereof.  Upon the effective date of any such

reduction or termination, the Borrower shall pay to the Administrative Agent

for the respective accounts of the Banks the full amount of any facility fee

then accrued on the amount of the reduction. 

No reduction or termination of the Commitments may be reinstated.

 

2.6                                 The Notes; the Record.  Upon the request of the Administrative Agent

or any Bank, the Loans shall be evidenced by separate promissory notes of the

Borrower in substantially the form of Exhibit A hereto (each a “Note”),

dated as of the Closing Date and completed with appropriate insertions. One

Note shall be payable to the order of each Bank requesting a Note in a

principal amount equal to such Bank’s Commitment or, if less, the Outstanding

amount of all Loans made by such Bank, plus interest accrued thereon, as set

forth below.  The Borrower irrevocably

authorizes each Bank to make or cause to be made, at or about the time of the

Drawdown Date of any Loan or at the time of receipt of any payment of principal

on such Bank’s

 

18

 

Loans, an

appropriate notation on such Bank’s Record reflecting the making of such Loan

or (as the case may be) the receipt of such payment.  The Outstanding amount of the Loans set forth on such Bank’s

Record shall be prima facie evidence of the principal amount thereof

owing and unpaid to such Bank, but the failure to record, or any error in so

recording, any such amount on such Bank’s Record shall not limit or otherwise

affect the obligations of the Borrower hereunder or under any Note to make

payments of principal of or interest on any Loans when due.  In recognition of the fact that the Loans

may be made without having been evidenced by a written Note, the Borrower

hereby promises to pay to each Bank the principal amount of the Loans made by

such Bank, and accrued and unpaid interest and fees thereon, as the same become

due and payable in accordance with this Credit Agreement.

 

2.7                                 Interest on Loans.

 

2.7.1                        Interest Rates. 

Except as otherwise provided in Section 4.10, the Loans shall bear

interest as follows:

 

(a)                                  Each Federal Funds Rate Loan shall bear

interest at an annual rate equal to the Federal Funds Rate as in effect from

time to time while such Federal Funds Rate Loan is Outstanding.

 

(b)                                 Each LIBOR Loan shall bear interest for

each Interest Period at an annual rate equal to the LIBOR Rate for such

Interest Period in effect from time to time during such Interest Period.

 

(c)                                  Each Alternate Base Rate Loan shall bear

interest at an annual rate equal to the Alternate Base Rate as in effect from

time to time while such Alternate Base Rate Loan is Outstanding.

 

2.7.2                        Interest Payment Dates. 

The Borrower shall pay all accrued interest on each Loan in arrears on

each Interest Payment Date with respect thereto.

 

2.8                                 Requests for Loans.  The Borrower shall give to the

Administrative Agent written notice in the form of Exhibit B hereto (or

telephonic notice confirmed in a writing in the form of Exhibit C

hereto) of each Loan requested hereunder (a “Loan Request”) no later

than (a) 11:00 a.m. (Charlotte, North Carolina time) on the proposed Drawdown

Date of any Federal Funds Rate Loan or Alternate Base Rate Loan and (b) three

(3) LIBOR Business Days prior to the proposed Drawdown Date of any LIBOR

Loan.  Each such notice shall specify

(i) the principal amount of the Loan requested, (ii) the proposed Drawdown Date

of such Loan, (iii) the Type of such Loan, and (iv) the Interest Period for

such Loan if such Loan is a LIBOR Loan. 

Promptly upon receipt of any such Loan Request, the Administrative Agent

shall notify each of the Banks thereof. 

Each Loan Request shall be irrevocable and binding on the Borrower and

shall obligate the Borrower to accept the Loan requested from the Banks on the

proposed Drawdown Date.  Each Loan

Request shall be in a minimum aggregate amount of $3,000,000 or in an integral

multiple of $1,000,000 in excess thereof.

 

19

 

2.9                                 Conversion Options.

 

2.9.1                        Conversion to LIBOR Loan. 

The Borrower may elect from time to time, subject to Section 2.11, to

convert any Outstanding Federal Funds Rate Loan or Alternate Base Rate Loan to

a LIBOR Loan, provided that (a) the Borrower shall give the

Administrative Agent at least three (3) LIBOR Business Days’ prior written

notice of such election; and (b) no Federal Funds Rate Loan or Alternate Base

Rate Loan may be converted into a LIBOR Loan when any Default or Event of

Default has occurred and is continuing. 

Each notice of election of such conversion, and each acceptance by the

Borrower of such conversion, shall be deemed to be a representation and

warranty by the Borrower that no Default or Event of Default has occurred and

is continuing.  The Administrative Agent

shall notify the Banks promptly of any such notice.  On the date on which such conversion is being made, each Bank

shall take such action as is necessary to transfer its Commitment Percentage of

such Loans to its LIBOR Lending Office. 

All or any part of Outstanding Federal Funds Rate Loans or Alternate

Base Rate Loans may be converted into a LIBOR Loan as provided herein, provided

that any partial conversion shall be in an aggregate principal amount of $3,000,000

or an integral multiple of $1,000,000 in excess thereof.

 

2.9.2                        Continuation of Type of Loan.

 

(a)                                  All Federal Funds Rate Loans or Alternate

Base Rate Loans shall continue as Federal Funds Rate Loans or Alternate Base

Rate Loans, as the case may be, until converted into LIBOR Loans as provided in

Section 2.9.1.

 

(b)                                 Any LIBOR Loan may, subject to Section

2.11, be continued, in whole or in part, as a LIBOR Loan upon the expiration of

the Interest Period with respect thereto, provided that (i) the Borrower

shall give the Administrative Agent at least three (3) LIBOR Business Days’

prior written notice of such election; (ii) no LIBOR Loan may be continued as

such when any Default or Event of Default has occurred and is continuing, but

shall be automatically converted to a Federal Funds Rate Loan on the last day

of the first Interest Period relating thereto ending during the continuance of

any Default or Event of Default; and (iii) any partial continuation of a LIBOR

Loan shall be in an aggregate principal amount of $3,000,000 or an integral

multiple of $1,000,000 in excess thereof. 

Each notice of election of such continuance of a LIBOR Loan, and each

acceptance by the Borrower of such continuance, shall be deemed to be a

representation and warranty by the Borrower that no Default or Event of Default

has occurred and is continuing.

 

(c)                                  If the Borrower shall fail to give any

notice of continuation of a LIBOR Loan as provided under this Section 2.9.2,

the Borrower shall be deemed to have requested a conversion of the affected

LIBOR Loan to a Federal Funds Rate Loan on the last day of the then current

Interest Period with respect thereto.

 

(d)                                 The Administrative Agent shall notify the

Banks promptly when any such continuation or conversion contemplated by this

Section 2.9.2 is scheduled to occur.  On

the date on which any such continuation or conversion is to occur, each Bank

shall take such action as is necessary to transfer its Commitment Percentage of

such Loans to its Domestic Lending Office or its LIBOR Lending Office as

appropriate.

 

20

 

2.9.3                        LIBOR Loans. 

Any conversion to or from LIBOR Loans shall be in such amounts and be

made pursuant to such elections so that, after giving effect thereto, the

aggregate principal amount of all LIBOR Loans having the same Interest Period

shall not be less than $3,000,000 or an integral multiple of $1,000,000 in

excess thereof.

 

2.9.4                        Conversion Requests. 

All notices of the conversion or continuation of a Loan provided for in

this Section 2.9 shall be in writing in the form of Exhibit D hereto (or

shall be given by telephone and confirmed by a writing in the form of Exhibit

E hereto).  Each such notice shall

specify (a) the principal amount and Type of the Loan subject thereto, (b) the

date on which the current Interest Period of such Loan ends if such Loan is a

LIBOR Loan, and (c) the new Interest Period for such Loan if such Loan is a

LIBOR Loan. Promptly upon receipt of any such notice, the Administrative Agent

shall notify each of the Banks thereof. 

Each such notice shall be irrevocable and binding on the Borrower.

 

2.10                           Funds for Loans.

 

2.10.1                  Funding Procedures.  Not later

than 1:00 p.m. (Charlotte, North Carolina time) on the proposed Drawdown Date

of any Loan, each of the Banks will make available to the Administrative Agent,

at the Administrative Agent’s Head Office, in immediately available funds, the

amount of such Bank’s Commitment Percentage of the amount of the requested

Loan.  Upon receipt from each Bank of

such amount, and upon receipt of the documents required by Section 10 and the

satisfaction of the other conditions set forth therein, to the extent

applicable, the Administrative Agent will make available to the Borrower the

aggregate amount of such Loan made available to the Administrative Agent by the

Banks.  The failure or refusal of any

Bank to make available to the Administrative Agent at the aforesaid time and

place on any Drawdown Date the amount of its Commitment Percentage of the

requested Loan shall not relieve any other Bank from its several obligation

hereunder to make available to the Administrative Agent the amount of such

other Bank’s Commitment Percentage of any requested Loan, but no other Bank

shall be liable in respect of the failure of such Bank to make available such

amount.

 

2.10.2                  Advances by Administrative Agent. 

The Administrative Agent may, unless notified to the contrary by any

Bank prior to a Drawdown Date, assume that such Bank has made available to the

Administrative Agent on such Drawdown Date the amount of such Bank’s Commitment

Percentage of the Loans to be made on such Drawdown Date, and the

Administrative Agent may (but it shall not be required to), in reliance upon

such assumption, make available to the Borrower a corresponding amount.  If any Bank makes available to the

Administrative Agent such amount on a date after such Drawdown Date, such Bank

shall pay to the Administrative Agent on demand an amount equal to the weighted

average interest rate paid by the Administrative Agent for federal funds

acquired by the Administrative Agent during each day included in such period,

times the amount of such Bank’s Commitment Percentage of such Loans calculated

on the basis of a 360-day year for the actual number of days elapsed.  A statement of the Administrative Agent

submitted to such Bank with respect to any amounts owing under this paragraph

shall be prima facie evidence of the amount due and owing to the Administrative

Agent by such Bank.  If the amount of

such Bank’s Commitment Percentage of such Loans is not made available to the

Administrative Agent by such Bank within three (3) Business Days following such

Drawdown Date, the Administrative Agent shall be entitled to recover such

amount from the Borrower within one (1) Business Day after demand therefor,

with interest thereon at the rate per annum applicable to the Loans made on

such Drawdown Date.

 

21

 

2.11                           Limit on Number of LIBOR Loans.  At no time shall there be Outstanding LIBOR

Loans having more than fifteen (15) different Interest Periods.

 

3.                                       REPAYMENT OF LOANS.

 

3.1                                 Maturity.  The Borrower shall pay on the Maturity Date,

and there shall become absolutely due and payable on the Maturity Date, all of

the Loans Outstanding on such date, together with any and all accrued and

unpaid interest thereon. The Total Commitment shall terminate on the Maturity

Date.

 

3.2                                 Mandatory Repayments of Loans.

 

3.2.1                        Loans in Excess of Commitment. 

If at any time the sum of the Outstanding amount of the Loans exceeds

the Total Commitment, then the Borrower shall immediately pay the amount of

such excess to the Administrative Agent for application to the Loans.

 

3.2.2                        Change of Control. 

Upon the occurrence of a Change of Control or impending Change of

Control:

 

(a)                                  the Borrower shall notify the

Administrative Agent and each Bank of such Change of Control or impending

Change of Control as provided in Section 6.5.4;

 

(b)                                 the Commitments (but not the right of the

Borrower to convert and continue Types of Loans under Section 2.9) shall be

suspended for the period from the date of such notice (or any Change of Control

Notice given by the Administrative Agent or a Bank as provided in Section

6.5.4) through the later to occur of (i) the Change of Control Date or (ii) the

date forty (40) days after the date of such notice from the Borrower (the “Suspension

Period”) and neither the Banks nor the Administrative Agent shall have any

obligations to make Loans to the Borrower;

 

(c)                                  each Bank shall have the right within

fifteen (15) days after the date of such Bank’s receipt of a Change of Control

Notice under clause (a) above to demand payment in full of its pro rata share

of the Outstanding principal of all Loans, all accrued and unpaid interest

thereon, and any other amounts owing under the Loan Documents;

 

(d)                                 in the event that any Bank shall have

made a demand under clause (c) above the Borrower shall promptly, but in no

event later than five (5) Business Days after such demand, deliver notice to

each Bank (which notice shall identify the Bank making such demand) and,

notwithstanding the provisions of clause (c) above, the right of each Bank to

demand repayment shall remain in effect through the fifteenth (15th) day next

succeeding receipt by such Bank of any notice required to be given pursuant to

this clause (d), provided that the provisions of this clause (d) shall only

apply with respect to demands given by Banks prior to the expiration of the

period specified in clause (c); and

 

(e)                                  in the event any Bank makes a demand

under clause (c) or clause (d) above, the Borrower shall on the last day of the

Suspension Period pay to the Administrative Agent for the credit of such Bank

its pro rata share of the Outstanding principal of all Loans, all

 

22

 

accrued and unpaid interest thereon, and any other

amounts owing under the Loan Documents, (provided that (i) any Bank may require

the Borrower to postpone prepayment of a LIBOR Loan until the last day of the

Interest Period with respect to such LIBOR Loan, and (ii) if any Bank elects to

require prepayment of a LIBOR Loan that has an Interest Period ending less than

sixty (60) days after the date of such demand on a date that is not the last

day of the Interest Period for such LIBOR Loan, such Bank shall not be entitled

to receive any amounts payable under Section 4.9 in respect of the prepayment

of such LIBOR Loan).

 

Upon any demand for

payment by any Bank under this Section 3.2.2, the Commitment hereunder provided

by such Bank shall terminate, and such Bank shall be relieved of all further

obligations to make Loans to the Borrower. 

At the end of the Suspension Period referred to above, the Commitments

shall be restored from all Banks that have not made a demand for payment under

this Section 3.2.2, and this Credit Agreement and the other Loan Documents

shall remain in full force and effect among the Borrower, such Banks and the

Administrative Agent, with such changes as may be necessary to reflect the

termination of the credit provided by the Banks that made a demand for payment

under this Section 3.2.2.

 

3.3                                 Optional Repayments of Loans.  The Borrower shall have the right, at its

election, to repay the Outstanding amount of the Loans, as a whole or in part,

at any time without penalty or premium, provided that any full or

partial repayment of the Outstanding amount of any LIBOR Loans pursuant to this

Section 3.3 made on a date other than the last day of the Interest Period

relating thereto shall be subject to customary breakage charges as provided in

Section 4.9.  The Borrower shall give

the Administrative Agent, no later than 10:00 a.m., Charlotte, North Carolina

time, at least one (1) Business Day’s prior written notice, of any proposed

repayment pursuant to this Section 3.3 of Federal Funds Rate Loans or Alternate

Base Rate Loans, and two (2) LIBOR Business Days’ notice of any proposed

repayment pursuant to this Section 3.3 of LIBOR Loans, in each case, specifying

the proposed date of payment of Loans and the principal amount to be paid.  Each such partial repayment of the Loans

shall be in an amount of $1,000,000 or an integral multiple of $1,000,000 in

excess thereof, shall be accompanied by the payment of accrued interest on the

principal repaid to the date of payment, and shall be applied, in the absence

of instruction by the Borrower, first to the principal of Alternate Base Rate

Loans, second to the principal of Federal Funds Rate Loans and third to the

principal of LIBOR Loans (in inverse order of the last days of their respective

Interest Periods).  Each partial

repayment shall be allocated among the Banks, in proportion, as nearly as

practicable, to the respective unpaid principal amount of each Bank’s Loans,

with adjustments to the extent practicable to equalize any prior repayments not

exactly in proportion.  Any amounts

repaid under this Section 3.3 may be reborrowed prior to the Maturity Date as

provided in Section 2.8, subject to the conditions of Section 10.

 

4.                                       CERTAIN GENERAL PROVISIONS.

 

4.1                                 Application of Payments.  Except as otherwise provided in this Credit

Agreement, all payments in respect of any Loan shall be applied first to

accrued and unpaid interest on such Loan and second to the Outstanding

principal of such Loan.

 

23

 

4.2                                 Funds

for Payments.

 

4.2.1                        Payments to Administrative Agent. 

All payments of principal, interest, commitment fees, and any other

amounts due hereunder or under any of the other Loan Documents shall be made to

the Administrative Agent, for the respective accounts of the Banks and the

Administrative Agent, at the Administrative Agent’s Head Office, or at such

other location that the Administrative Agent may from time to time designate,

in each case in immediately available funds or directly from the proceeds of

Loans.

 

4.2.2                        No Offset, Etc. 

All payments by the Borrower hereunder and under any of the other Loan

Documents shall be made without setoff or counterclaim and free and clear of

and without deduction for any taxes, levies, imposts, duties, charges, fees,

deductions, withholdings, compulsory loans, restrictions, or conditions of any

nature now or hereafter imposed or levied by any Government Authority unless

the Borrower is compelled by Government Mandate to make such deduction or

withholding.  If any such obligation is

imposed upon the Borrower with respect to any amount payable by it hereunder or

under any of the other Loan Documents (other than with respect to taxes on the

income or profits of any Bank or the Administrative Agent), the Borrower will

pay to the Administrative Agent, for the account of the Banks or (as the case

may be) the Administrative Agent, on the date on which such amount is due and

payable hereunder or under such other Loan Document, such additional amount in

Dollars as shall be necessary to enable the Banks or the Administrative Agent

to receive the same net amount which the Banks or the Administrative Agent

would have received on such due date had no such obligation been imposed upon

the Borrower.  The Borrower will deliver

promptly to the Administrative Agent certificates or other valid vouchers for

all taxes or other charges deducted from or paid with respect to payments made

by the Borrower hereunder or under such other Loan Document.  If a refund is received (either in cash or

by means of a credit against future tax obligations) by the Administrative

Agent or any Bank in respect of an amount previously paid by the Borrower

pursuant to the immediately preceding sentence, such refund shall be promptly

paid over to the Borrower.

 

4.2.3                        Fees Non-Refundable. 

Except as expressly set forth herein, all fees payable hereunder are

non-refundable, provided that (a) if any of the Banks is finally

adjudicated or is found in final arbitration proceedings to have been grossly

negligent or to have committed willful misconduct with respect to the

transactions contemplated hereby in any material respect, then no facility fee

shall be payable to such Bank after the date of such final adjudication or

arbitration (and such Bank shall refund any facility fee paid to it and

attributable to the period from and after the date on which such grossly

negligent conduct or willful misconduct occurred), and (b) if the

Administrative Agent is finally adjudicated or is found in final arbitration

proceedings to have been grossly negligent or to have committed willful

misconduct with respect to the transactions contemplated hereby, then no

administrative agent’s fee will be due and payable after the date of such final

adjudication or arbitration.  If the

Administrative Agent is finally found to have been grossly negligent or to have

committed willful misconduct, the amount of any administrative agent’s fee paid

or prepaid by the Borrower and attributable to the period from and after the

date on which such grossly negligent conduct or willful misconduct occurred

shall be refunded.

 

4.3                                 Computations.  All computations of interest with respect to

both Federal Funds Rate Loans, Alternate Base Rate Loans and LIBOR Loans shall

be based on a year of 360 days and paid for the actual number of days elapsed.

Except as otherwise provided in the definition of the term “Interest Period”

with respect to LIBOR Loans, whenever a payment hereunder or under

 

24

 

any of the other

Loan Documents becomes due on a day that is not a Business Day, the due date

for such payment shall be extended to the next succeeding Business Day, and

interest shall accrue during such extension.

 

4.4                                 Inability to Determine LIBOR Rate Basis.  In the event, prior to the commencement of

any Interest Period relating to any LIBOR Loan, the Administrative Agent shall

determine that adequate and reasonable methods do not exist for ascertaining

the LIBOR Rate Basis that would otherwise determine the rate of interest to be

applicable to any LIBOR Loan during any Interest Period, the Administrative

Agent shall forthwith give notice of such determination (which shall be

conclusive and binding on the Borrower and the Banks) to the Borrower and the Banks.  In such event (a) any Loan Request or

Conversion Request with respect to LIBOR Loans shall be automatically withdrawn

and shall be deemed a request for Federal Funds Rate Loans, (b) each LIBOR Loan

will automatically, on the last day of the then current Interest Period

relating thereto, become a Federal Funds Rate Loan, and (c) the obligations of

the Banks to make LIBOR Loans shall be suspended until the Administrative Agent

determines that the circumstances giving rise to such suspension no longer exist,

whereupon the Administrative Agent shall so notify the Borrower and the Banks.

 

4.5                                 Illegality.  Notwithstanding any other provisions herein,

if any present or future Government Mandate shall make it unlawful for any Bank

to make or maintain LIBOR Loans, such Bank shall forthwith give notice of such

circumstances to the Borrower and the other Banks and thereupon (a) the

commitment of such Bank to make LIBOR Loans or convert Federal Funds Rate Loans

or Alternate Base Rate Loans to LIBOR Loans shall forthwith be suspended, and

(b) such Bank’s Loans then Outstanding as LIBOR Loans, if any, shall be

converted automatically to Federal Funds Rate Loans on the last day of each

then existing Interest Period applicable to such LIBOR Loans or within such

earlier period after the occurrence of such circumstances as may be required by

Government Mandate.  The Borrower shall

promptly pay the Administrative Agent for the account of such Bank, upon demand

by such Bank, any additional amounts necessary to compensate such Bank for any

costs incurred by such Bank in making any conversion in accordance with this

Section 4.5 other than on the last day of an Interest Period, including any

interest or fees payable by such Bank to lenders of funds obtained by it in

order to make or maintain its LIBOR Loans hereunder.

 

4.6                                 Additional Costs,

Etc. 

If any present or future applicable Government Mandate (whether or not

having the force of law), shall:

 

(a)                                  subject any Bank or the Administrative

Agent to any tax, levy, impost, duty, charge, fee, deduction, or withholding of

any nature with respect to this Credit Agreement, the other Loan Documents,

such Bank’s Commitment, or the Loans (other than taxes based upon or measured

by the income or profits of such Bank or the Administrative Agent), or

 

(b)                                 materially change the basis of taxation

(except for changes in taxes on income or profits) of payments to any Bank of

the principal of or the interest on any Loans or any other amounts payable to

any Bank or the Administrative Agent under this Credit Agreement or the other

Loan Documents, or

 

(c)                                  impose, increase, or render applicable

(other than to the extent specifically provided for elsewhere in this Credit

Agreement) any special deposit, reserve, 

 

25

 

assessment, liquidity, capital adequacy, or other

similar requirements (whether or not having the force of law) against assets

held by, or deposits in or for the account of, or loans by, or commitments of

an office of any Bank, or

 

(d)                                 impose on any Bank or the Administrative

Agent any other conditions or requirements with respect to this Credit

Agreement, the other Loan Documents, the Loans, such Bank’s Commitment, or any

class of loans or commitments of which any of the Loans or such Bank’s Commitment

forms a part, and the result of any of the foregoing is:

 

(i)                                     to increase by an amount deemed by such

Bank to be material with respect to the cost to any Bank of making, funding,

issuing, renewing, extending, or maintaining any of the Loans or such Bank’s

Commitment, or

 

(ii)                                  to reduce, by an amount deemed by such

Bank or the Administrative Agent, as the case may be, to be material, the

amount of principal, interest, or other amount payable to such Bank or the

Administrative Agent hereunder on account of such Bank’s Commitment, or any of

the Loans, or

 

(iii)                               to require such Bank or the Administrative Agent to

make any payment that, but for such conditions or requirements described in

clauses (a) through (d), would not be payable hereunder, or forego any interest

or other sum that, but for such conditions or requirements described in clauses

(a) through (d), would be payable to such Bank or the Administrative Agent

hereunder, in any case the amount of which payment or foregone interest or

other sum is deemed by such Bank or the Administrative Agent, as the case may

be, to be material and is calculated by reference to the gross amount of any

sum receivable or deemed received by such Bank or (as the case may be) the

Administrative Agent from the Borrower hereunder, then, and in each such case,

(aa) the Borrower will, upon demand made by such Bank or (as the case may be)

the Administrative Agent at any time and from time to time (such demand to be

made in any case not later than the first to occur of (I) the date one year

after such event described in clause (i), (ii), or (iii) giving rise to such

demand, and (II) the date ninety (90) days after both the payment in full of

all Outstanding Loans, and the termination of the Commitments) and as often as

the occasion therefor may arise, pay to such Bank or the Administrative Agent

such additional amounts as will be sufficient to compensate such Bank or the

Administrative Agent for such additional cost, reduction, payment, foregone

interest or other sum, (bb) the Borrower shall be entitled, upon notice to the

Administrative Agent and each Bank given within ninety (90) days of any demand

by a Bank under clause (aa), to repay in cash in full all, but not less than

all, of the Loans of such Bank, together with all accrued and unpaid interest

on such Loans and any other amounts owing to such Bank under the Loan Documents

and terminate (in full and not in part) such Bank’s Commitment, and, (cc) in

the event the Borrower elects to repay the Loans of any Bank under clause (bb),

each other Bank shall be entitled, by notice to the Administrative Agent and

the Borrower given within thirty (30) days after receipt of the notice referred

to in clause (bb), to require the Borrower to repay in cash in full, within

thirty (30) days of such notice under this clause (cc), all, but not less than

all, of the Loans, together with all accrued and unpaid interest thereon and

any other amounts owing to such other Bank under the Loan Documents.  Subject to the terms specified 

 

26

 

above

in this Section 4.6, the obligations of the Borrower under this Section 4.6

shall survive repayment of the Loans and termination of the Commitments.

 

4.7                                 Capital Adequacy.  If after the date hereof any Bank or the

Administrative Agent determines that (a) the adoption of or change in any

Government Mandate (whether or not having the force of law) regarding capital

requirements for banks or bank holding companies or any change in the

interpretation or application thereof by any Government Authority with

appropriate jurisdiction, or (b) compliance by such Bank or the Administrative

Agent, or any corporation controlling such Bank or the Administrative Agent,

with any Government Mandate (whether or not having the force of law) has the

effect of reducing the return on such Bank’s or the Administrative Agent’s

commitment with respect to any Loans to a level below that which such Bank or

(as the case may be) the Administrative Agent could have achieved but for such

adoption, change, or compliance (taking into consideration such Bank’s or the

Administrative Agent’s then existing policies with respect to capital adequacy

and assuming full utilization of such Entity’s capital) by any amount

reasonably deemed by such Bank or (as the case may be) the Administrative Agent

to be material, then such Bank or the Administrative Agent may notify the

Borrower of such fact.  To the extent

that the amount of such reduction in the return on capital is not reflected in

the Federal Funds Rate, (aa) the Borrower shall pay such Bank or (as the case

may be) the Administrative Agent for the amount of such reduction in the return

on capital as and when such reduction is determined upon presentation by such

Bank or (as the case may be) the Administrative Agent of a certificate in

accordance with Section 4.8 hereof (but in any case not later than the first to

occur of (I) the date one year after such adoption, change, or compliance

causing such reduction, and (II) as to adoptions of or changes in Government

Mandates occurring prior to the repayment of the Loans and the termination of

the Commitments the date ninety (90) days after both the payment in full of all

Outstanding Loans and termination of the Commitments), (bb) the Borrower shall

be entitled, upon notice to the Administrative Agent and each Bank given within

ninety (90) days of any notice by such Bank under the next preceding sentence,

to repay in cash in full all, but not less than all, of the Loans of such Bank,

together with all accrued and unpaid interest on such Loans and any other

amounts owing to such Bank under the Loan Documents and terminate (in full and

not in part) such Bank’s Commitment, and, (cc) in the event the Borrower elects

to repay the Loans of any Bank under clause (bb), each other Bank shall be

entitled, by notice to the Administrative Agent and the Borrower given within

thirty (30) days after receipt of the notice referred to in clause (bb), to

require the Borrower to repay in cash in full, within thirty (30) days of the

notice under this clause (cc), all, but not less than all, of the Loans of such

other Bank, together with all accrued and unpaid interest on such Loans and any

other amounts owing to such other Bank under the Loan Documents.  Each Bank shall allocate such cost increases

among its customers in good faith and on an equitable basis.  Subject to the terms specified above in this

Section 4.7, the obligations of the Borrower under this Section 4.7 shall

survive repayment of the Loans and termination of the Commitments.

 

4.8                                 Certificate.  A certificate setting forth any additional

amounts payable pursuant to Section 4.6 or Section 4.7 and a brief explanation

of such amounts which are due and in reasonable detail the basis of the

calculation and allocation thereof, submitted by any Bank or the Administrative

Agent to the Borrower, shall be conclusive evidence, absent manifest error,

that such amounts are due and owing.

 

4.9                                 Indemnity.  The Borrower shall indemnify and hold

harmless each Bank from and against any loss, cost, or expense (excluding loss

of anticipated profits) that such Bank may 

 

27

 

sustain or incur

as a consequence of (a) default by the Borrower in payment of the principal

amount of or any interest on any LIBOR Loans as and when due and payable,

including any such loss or expense arising from interest or fees payable by

such Bank to lenders of funds obtained by it in order to maintain its LIBOR

Loans, (b) default by the Borrower in making a borrowing or conversion after

the Borrower has given (or is deemed to have given) a Loan Request or a

Conversion Request; or (c) except as otherwise expressly provided in Section

3.2.2, the making of any payment of a LIBOR Loan or the making of any

conversion of any such Loan to a Federal Funds Rate Loan or an Alternate Base

Rate Loan on a day that is not the last day of the applicable Interest Period

with respect thereto, including interest or fees payable by such Bank to

lenders of funds obtained by it in order to maintain any such Loans.  The obligations of the Borrower under this

Section 4.9 shall survive repayment of the Loans and termination of the

Commitments.

 

4.10                           Interest After Default.  All amounts Outstanding under the Loan

Documents that are not paid when due, including all overdue principal and (to

the extent permitted by applicable Government Mandate) interest and all other

overdue amounts (after giving effect to any applicable grace period), shall to

the extent permitted by applicable Government Mandate bear interest until such

amount shall be paid in full (after as well as before judgment) at a rate per

annum equal to two percent (2%) above the interest rate otherwise applicable to

such amounts in the case of principal and two percent (2%) above the Alternate

Base Rate in the case of other amounts payable hereunder.  Any interest accruing under this section on

overdue principal or interest shall be due and payable upon demand.

 

5.                                       REPRESENTATIONS AND WARRANTIES.

 

The Borrower represents

and warrants to the Banks and the Administrative Agent as follows:

 

5.1                                 Corporate Authority.

 

5.1.1                        Incorporation; Good Standing. 

Each of the Borrower, its Subsidiaries, and the General Partner (a) is a

corporation, limited partnership, general partnership, trust or limited

liability company, as the case may be, duly organized, validly existing, and,

if applicable, in good standing, under the laws of its jurisdiction of

organization, (b) has all requisite corporate, partnership or equivalent power

to own its material properties and conduct its material business as now

conducted and as presently contemplated, and (c) is, if applicable, in good

standing as a foreign corporation, limited partnership, general partnership,

trust or limited liability company, as the case may be, and is duly authorized

to do business in each jurisdiction where it owns or leases properties or

conducts any business so as to require such qualification except where a

failure to be so qualified would not be likely to have a Material Adverse

Effect.

 

5.1.2                        Authorization. 

The execution, delivery, and performance of this Credit Agreement and

the other Loan Documents to which the Borrower, any of its Subsidiaries, or the

General Partner is or is to become a party and the transactions contemplated

hereby and thereby (a) are within the corporate, partnership, limited liability

company or other equivalent power of each such Entity, (b) have been duly

authorized by all necessary corporate, partnership, limited liability company

or other applicable proceedings on behalf of each such Entity, (c) do not

conflict with or result in any breach or contravention of any Government

Mandate to which any such Entity is subject, (d) do not conflict with or

violate any provision of the corporate charter or

 

28

 

bylaws, the limited partnership certificate or

agreement, or its governing documents in the case of any general partnership,

limited liability company or trust, as the case may be, of any such Entity, and

(e) do not violate, conflict with, constitute a default or event of default

under, or result in any rights to accelerate or modify any obligations under

any Contract to which any such Entity is party or subject, or to which any of

its respective assets are subject, except, as to the foregoing clauses (c) and

(e) only, where the same would not be likely to have a Material Adverse Effect.

 

5.1.3                        Enforceability. 

The execution and delivery of this Credit Agreement and the other Loan

Documents to which the Borrower, any of its Subsidiaries, or the General

Partner is or is to become a party will result in valid and legally binding

obligations of such Person enforceable against it in accordance with the

respective terms and provisions hereof and thereof, except as enforceability is

limited by bankruptcy, insolvency, reorganization, moratorium, or other laws

relating to or affecting generally the enforcement of creditors’ rights and by

general principles of equity, regardless of whether enforcement is sought in a

Proceeding in equity or at law.

 

5.1.4                        Equity Securities. 

The General Partner is the only general partner of the Borrower.  All of the outstanding Equity Securities of

the Borrower are validly issued, fully paid, and non-assessable.

 

5.2                                 Governmental Approvals.  The execution, delivery, and performance by

the Borrower, its Subsidiaries, and the General Partner of this Credit

Agreement and the other Loan Documents to which the Borrower, any of its

Subsidiaries, or the General Partner is or is to become a party and the transactions

contemplated hereby and thereby do not require the approval or consent of, or

filing with, any Government Authority other than those already obtained and set

forth on Schedule 5.2.

 

5.3                                 Liens; Leases.  The assets reflected in the consolidated

balance sheet of the Borrower dated as of December 31, 2001, and delivered to

the Administrative Agent and the Banks under Section 5.4 are subject to no

Liens except Permitted Liens.  Each of

the Borrower and its Subsidiaries enjoys quiet possession under all leases

relating to Real Estate or personal property to which it is party as a lessee,

and each such lease is Fully Effective.

 

5.4                                 Financial Statements.   There has been furnished to the

Administrative Agent and each of the Banks (a) a consolidated balance sheet of

the Borrower as at December 31, 2001, and a consolidated statement of income

and cash flow of the Borrower for the fiscal year then ended, certified by the

Borrower’s independent certified public accountants, and (b) unaudited interim

condensed consolidated balance sheets of the Borrower and the Consolidated

Subsidiaries as at June 30, 2002, and interim condensed consolidated statements

of income and of cash flow of the Borrower and the Consolidated Subsidiaries

for the respective fiscal periods then ended and as set forth in the Borrower’s

Quarterly Reports on Form 10-Q for such fiscal quarters.  With respect to the financial statement

prepared in accordance with clause (a) above, such balance sheet and statement

of income have been prepared in accordance with GAAP and present fairly in all

material respects the financial position of the Borrower and the Consolidated

Subsidiaries as at the close of business on the respective dates thereof and

the results of operations of the Borrower and the Consolidated Subsidiaries for

the fiscal periods then ended; or, in the case of the financial statements

referred to in clause (b), have been prepared in a manner consistent with the

accounting practices and policies employed with respect to the audited

financial statements

 

29

 

reported in the

Borrower’s most recent Form 10-K filed with the Securities and Exchange

Commission and prepared in accordance with Rule 10-01 of Regulation S-X of the

Securities and Exchange Commission, and contain all adjustments necessary for a

fair presentation of (A) the results of operations of the Borrower for the

periods covered thereby, (B) the financial position of the Borrower at the date

thereof, and (C) the cash flows of the Borrower for periods covered thereby

(subject to year-end adjustments). 

There are no contingent liabilities of the Borrower or the Consolidated

Subsidiaries as of such dates involving material amounts, known to the executive

management of the Borrower that (aa) should have been disclosed in said balance

sheets or the related notes thereto in accordance with GAAP and the rules and

regulations of the Securities and Exchange Commission, and (bb) were not so

disclosed.

 

5.5                                 No Material Changes,

Etc.  

No change in the Business of the Borrower and its Consolidated

Subsidiaries, taken as a whole, has occurred since June 30, 2002 that has

resulted in a Material Adverse Effect.

 

5.6                                 Permits.   The Borrower and its Subsidiaries have all

Permits necessary or appropriate for them to conduct their Business, except

where the failure to have such Permits would not be likely to have a Material

Adverse Effect.  All of such Permits are

in full force and effect.  Without

limiting the foregoing, the Borrower is duly registered as an “investment

adviser” under the Investment Advisers Act of 1940 and under the applicable

laws of each state in which such registration is required in connection with

the investment advisory business of the Borrower and in which the failure to

obtain such registration would be likely to have a Material Adverse Effect;

Alliance Distributors is duly registered as a “broker/dealer” under the

Securities Exchange Act of 1934 and under the securities or blue sky laws of

each state in which such registration is required in connection with the

business conducted by Alliance Distributors and where a failure to obtain such

registration would be likely to have a Material Adverse Effect, and is a member

in good standing of the National Association of Securities Dealers, Inc.; no

Proceeding is pending or threatened with respect to the suspension, revocation,

or termination of any such registration or membership, and the termination or

withdrawal of any such registration or membership is not contemplated by the

Borrower or Alliance Distributors, except, only with respect to registrations

by the Borrower and Alliance Distributors required under state law, as would

not be likely to have a Material Adverse Effect.

 

5.7                                 Litigation.   There is no Proceeding of any kind pending

or threatened, in writing, against the Borrower, any of its Subsidiaries, or

the General Partner that questions the validity of this Credit Agreement or any

of the other Loan Documents, or any action taken or to be taken pursuant hereto

or thereto.  Except as may be set forth

in information provided pursuant to Section 6.4 hereof or as otherwise

disclosed by the Borrower to the Banks, there is no Proceeding of any kind

pending or threatened, in writing, against the Borrower, any of its

Subsidiaries, or the General Partner that, if adversely determined, is

reasonably likely to, either in any case or in the aggregate, result in a

Material Adverse Effect or impair or prevent the Borrower’s performance and

observance of its obligations under this Credit Agreement or the other Loan

Documents.

 

5.8                                 Material Contracts.   Except as would not be likely to have a

Material Adverse Effect, each Contract to which any of the Borrower and its

Subsidiaries is party or subject, or by which any of their respective assets

are bound (including investment advisory contracts and investment company

distribution plans) (a) is Fully Effective, (b) is not subject to any default

or event of default with respect to the Borrower, any of its Subsidiaries or,

to the best knowledge of

 

30

 

the executive

management of the Borrower, any other party, (c) is not subject to any notice

of termination given or received by the Borrower or any of its Subsidiaries,

and (d) is, to the best knowledge of the executive management of the Borrower,

the legal, valid, and binding obligation of each party thereto other than the

Borrower and its Subsidiaries enforceable against such parties according to its

terms.

 

5.9                                 Compliance

with Other Instruments. Laws, Etc.  None of the Borrower, its Subsidiaries, and

the General Partner is, in any respect material to the Borrower and its

Consolidated Subsidiaries taken as a whole, in violation of or default under

(a) any provision of its certificate of incorporation or by-laws, or its

certificate of limited partnership or agreement of limited partnership, or its

governing documents in the case of any general partnership, as the case may be,

(b) any Contract to which it is or may be subject or by which it or any of its

properties are or may be bound, or (c) any Government Mandate, including

Government Mandates relating to occupational safety and employment matters.

 

5.10                           Tax Status.  The Borrower and its Subsidiaries (a) have

made or filed all federal and state income and all other tax returns, reports,

and declarations required by any Government Authority to which any of them is

subject, except where the failure to make or file the same would not be likely

to have a Material Adverse Effect, (b) have paid all taxes and other governmental

assessments and charges due, except those being contested in good faith and by

appropriate Proceedings or those where a failure to pay is not reasonably

likely to have a Material Adverse Effect, and (c) have set aside on their books

provisions reasonably adequate for the payment of all taxes for periods

subsequent to the periods to which such returns, reports, or declarations

apply.  There are no unpaid taxes in any

material amount claimed to be due from the Borrower or any of its Subsidiaries

by any Government Authority, and the executive management of the Borrower knows

of no basis for any such claim.

 

5.11                           No Event of Default.  No Default or Event of Default has occurred

and is continuing.

 

5.12                           Holding Company and Investment Company

Acts.  Neither the Borrower nor any of its

Subsidiaries is a “holding company”, or a “subsidiary company” of a “holding

company”, as such terms are defined in the Public Utility Holding Company Act

of 1935.  Neither the Borrower nor any

of its Subsidiaries (excluding investment companies in which the Borrower or a

Consolidated Subsidiary has made “seed money” investments permitted by Section

8.6(b)) is an “investment company”, as such term is defined in the 1940 Act.

 

5.13                           Insurance.  The Borrower and its Subsidiaries maintain

insurance with financially sound and reputable insurers in such coverage

amounts, against such risks, with such deductibles and upon such other terms,

or are self-insured in respect of such risks (with appropriate reserves to the

extent required by GAAP), as is reasonable and customary for firms engaged in

businesses similar to those of the Borrower and its Subsidiaries.  All policies of insurance maintained by the

Borrower or its Subsidiaries are Fully Effective.  All premiums due on such policies have been paid or accrued on

the books of the Borrower or its Subsidiaries, as appropriate.

 

5.14                           Certain Transactions.  Except in connection with transactions

occurring in the ordinary course of business, and, taking into account the

totality of the relationships involved, with respect to transactions occurring

on fair and reasonable terms no less favorable to the 

 

31

 

Borrower and its

Consolidated Subsidiaries taken as a whole than would be obtained in comparable

arms’ length transactions with Persons that are not Affiliates of the Borrower

or its Subsidiaries, none of the officers, directors, partners, or employees of

the Borrower or any of its Subsidiaries, or, to the knowledge of the executive

management of the Borrower, any Entity (other than a Subsidiary) in which any

such officer, director, partner, or employee has a substantial interest or is

an officer, director, trustee, or partner, is at present a party to any

transaction with the Borrower or any of its Subsidiaries (other than for or in

connection with services as officers, directors, partners, or employees, as the

case may be), including any Contract providing for the furnishing of services

to or by, providing for rental of real or personal property to or from, or

otherwise requiring payments to or from any such officer, director, partner,

employee, or Entity.

 

5.15                           Employee

Benefit Plans. 

Each contribution required to be made to a Guaranteed Pension Plan,

whether required to be made to avoid the incurrence of an accumulated funding

deficiency, the notice or lien provisions of §302(f) of ERISA, or otherwise,

has been timely made.  No waiver of an

accumulated funding deficiency or extension of amortization periods has been

received with respect to any Guaranteed Pension Plan.  No liability to the PBGC (other than required insurance premiums,

all of which have been paid) has been incurred by the Borrower or any ERISA

Affiliate with respect to any Guaranteed Pension Plan and there has not been

any ERISA Reportable Event, or any other event or condition which presents a

material risk of termination of any Guaranteed Pension Plan by the PBGC.  Based on the latest valuation of each

Guaranteed Pension Plan (which in each case occurred within fifteen (15) months

of the date of the representation), and on the actuarial methods and

assumptions employed for that valuation, the aggregate benefit liabilities of

all such Guaranteed Pension Plans within the meaning of §4001 of ERISA did not

exceed the aggregate value of the assets of all such Guaranteed Pension Plans

by more than $50,000,000, disregarding for this purpose the benefit liabilities

and assets of any Guaranteed Pension Plan with assets in excess of benefit

liabilities.

 

5.16                           Regulations U and X.  The proceeds of the Loans shall be used by

the Borrower for general partnership purposes, including, without limitation,

for working capital purposes and the support of the Borrower’s issuance of

commercial paper.  No portion of any

Loan is to be used for the purpose of purchasing or carrying any “margin

security” or “margin stock” as such terms are used in Regulations U and X of

the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and

224.

 

5.17                           Environmental Compliance.  To the best of the Borrower’s knowledge:

 

(a)                                  none of the Borrower, its Subsidiaries,

the General Partner, and any operator of the Real Estate or any operations

thereon is in violation, or alleged violation, of any Government Mandate or

Permit pertaining to environmental, safety or public health matters, including

the Resource Conservation and Recovery Act (“RCRA”), the Comprehensive

Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), the

Superfund Amendments and Reauthorization Act of 1986 (“SARA”), the Federal

Clean Water Act, the Federal Clean Air Act, and the Toxic Substances Control

Act (hereinafter “Environmental Laws”), which violation would be likely

to have a material adverse effect on the environment or a Material Adverse

Effect;

 

32

 

(b)                                 neither the Borrower nor any of its

Subsidiaries has received notice from any third party, including any Government

Authority, (i) that any one of them has been identified by the United States

Environmental Protection Agency (“EPA”) as a potentially responsible

party under CERCLA with respect to a site listed on the National Priorities

List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that any hazardous waste, as

defined by 42 U.S.C. §9601(5), any hazardous substances as defined by 42 U.S.C.

§9601(14), any pollutant or contaminant as defined by 42 U.S.C. §9601(33) and

any toxic substances, oil, hazardous materials, or other chemicals or

substances regulated by any Environmental Laws (“Hazardous Substances”)

that any one of them has generated, transported, or disposed of has been found

at any site at which a Government Authority or other third party has conducted,

or has ordered that other parties conduct, a remedial investigation, removal,

or other response action pursuant to any Environmental Law; or (iii) that it is

or shall be a named party to any Proceeding (in each case, contingent or

otherwise) arising out of any third party’s incurrence of costs, expenses,

losses, or damages of any kind whatsoever in connection with the release of

Hazardous Substances; and

 

(i)                                     no portion of the Real Estate has been

used for the handling, processing, storage, or disposal of Hazardous Substances

except in accordance with applicable Environmental Laws;

 

(ii)                                  no underground tank or other underground

storage receptacle for Hazardous Substances is located on any portion of the

Real Estate;

 

(iii)                               in the course of any activities conducted by any of

the Borrower, its Subsidiaries, the General Partner, and operators of any Real

Estate, no Hazardous Substances have been generated or are being used on the

Real Estate except in accordance with applicable Environmental Laws;

 

(iv)                              there have been no releases (i.e. any

past or present releasing, spilling, leaking, pumping, pouring, emitting, emptying,

discharging, injecting, escaping, disposing, or dumping) or threatened releases

of Hazardous Substances on, upon, into, or from the Real Estate that would have

a material adverse effect on the value of the Real Estate or the environment;

 

(v)                                 there have been no releases of Hazardous

Substances on, upon, from, or into any real property in the vicinity of any of

the Real Estate that (A) may have come to be located on the Real Estate through

soil or groundwater contamination, and, (B) if so located, would have a

material adverse effect on the value of the Real Estate or the environment; and

 

(vi)                              any Hazardous Substances that have been

generated by any of the Borrower and its Subsidiaries, or on the Real Estate by

any other Person, have been transported offsite only by carriers having an

identification number issued by the EPA, treated or disposed of only by

treatment or disposal facilities maintaining valid Permits as required under

applicable Environmental Laws, which transporters and facilities have been and

are, to the best of the Borrower’s knowledge, operating in compliance with such

Permits and applicable Environmental Laws.

 

33

 

5.18                           Subsidiaries,

Etc. 

Schedule 5.18 sets forth a list of (a) each Subsidiary of the

Borrower (in which each Consolidated Subsidiary at the date hereof is

specifically identified as such), (b) the percentage of authorized and

outstanding Equity Securities of each class of each Subsidiary of the Borrower

owned, directly or indirectly, by the Borrower, and (c) any partnership or

joint venture in which the Borrower or any of its Subsidiaries is engaged with

any other Person.  Those Equity

Securities of each Subsidiary of the Borrower that are owned directly or

indirectly by the Borrower are validly issued, fully paid, and non-assessable.

 

5.19                           Funded Debt.  Schedule

5.19 sets forth as of July 31, 2002 all outstanding Funded Debt of the

Borrower and its Subsidiaries.

 

5.20                           General.  The Borrower’s Annual Report on Form 10-K

for the fiscal year ended December 31, 2001, and Quarterly Reports on Form 10-Q

referred to in Section 5.4 (a) conform in all material respects to the

requirements of the Securities Exchange Act of 1934, as amended, and to all

applicable rules and regulations of the Securities and Exchange Commission, and

(b) as amended by interim filings, do not contain an untrue statement of any

material fact or omit to state a material fact required to be stated therein or

necessary to make the statements therein, in light of the circumstances in

which they are made, not misleading.

 

6.                                       AFFIRMATIVE COVENANTS OF THE BORROWER.

 

The Borrower covenants

and agrees that, so long as any Loan or any Note is Outstanding or any Bank has

any obligation to make any Loans:

 

6.1                                 Punctual Payment.  The Borrower will duly and punctually pay or

cause to be paid the principal and interest on the Loans, the facility fee, the

utilization fee, and all other amounts provided for in this Credit Agreement

and the other Loan Documents to which the Borrower is party, all in accordance

with the terms of this Credit Agreement and such other Loan Documents.

 

6.2                                 Maintenance of Office.  The Borrower will maintain its chief

executive office in New York, New York, or at such other place in the United

States of America as the Borrower shall designate upon prior written notice to

the Administrative Agent, where notices, presentations, and demands to or upon

the Borrower in respect of the Loan Documents may be given or made.

 

6.3                                 Records and Accounts.  The Borrower will, and will cause each of

its Subsidiaries to, keep complete and accurate records and books of account.

 

6.4                                 Financial

Statements, Certificates, and Information.  The Borrower will deliver to each of the

Banks:

 

(a)                                  as soon as practicable, but in any event

not later than ninety-five (95) days after the end of each fiscal year of the

Borrower:

 

(i)                                     the consolidated balance sheet of the

Borrower as at the end of such fiscal year;

 

34

 

(ii)                                  the consolidating balance sheet of the

Borrower as at the end of such fiscal year;

 

(iii)                               the consolidated statement of income and consolidated

statement of cash flows of the Borrower for such fiscal year; and

 

(iv)                              the consolidating statement of income and

consolidating statement of cash flows of the Borrower for such fiscal year.

 

Each of the balance

sheets and statements delivered under this Section 6.4(a) shall (I) set forth

in comparative form the figures for the previous fiscal year; (II) be in

reasonable detail and prepared in accordance with GAAP based on the records and

books of account maintained as provided in Section 6.3; (III) as to items (i)

and (iii) above, be accompanied by (or be delivered concurrently with the

financial statements under this Section 6.4(a)) a certification by the

principal financial or accounting officer of the Borrower that the information

contained in such financial statements presents fairly in all material respects

the financial position of the Borrower and the Consolidated Subsidiaries on the

date thereof and results of operations and cash flows of the Borrower and the

Consolidated Subsidiaries for the periods covered thereby; and (IV) as to items

(i) and (iii) above, be certified, without limitation as to scope, by KPMG LLP

or another firm of independent certified public accountants reasonably

satisfactory to the Administrative Agent, and shall be accompanied by (or be

delivered concurrently with the financial statements under this Section 6.4(a))

a written statement from such accountants to the effect that in connection with

their audit of such financial statements nothing has come to their attention

that caused them to believe that the Borrower has failed to comply with the

terms, covenants, provisions or conditions of Section 6.3, Section 7, and

Section 8 of this Credit Agreement as to accounting matters (provided that such

accountants may also state that the audit was not directed primarily toward

obtaining knowledge of such noncompliance), or, if such accountants shall have

obtained knowledge of any such noncompliance, they shall disclose in such

statement any such noncompliance; provided that such accountants shall

not be liable to the Banks for failure to obtain knowledge of any such

noncompliance;

 

(b)                                 as soon as practicable, but in any event

not later than fifty (50) days after the end of the first three fiscal quarters

of each fiscal year of the Borrower, (i) the unaudited interim condensed

consolidated balance sheet of the Borrower as at the end of such fiscal

quarter, and (ii) the unaudited interim condensed consolidated statement of

income and unaudited interim condensed consolidated statement of cash flow of

the Borrower for such fiscal quarter and for the portion of the Borrower’s

fiscal year then elapsed, all in reasonable detail and prepared in a manner

consistent with the accounting practices and policies employed with respect to

the audited financial statements reported in the Borrower’s most recent Form

10-K filed with the Securities and Exchange Commission and prepared in accordance

with Rule 10-01 of Regulation S-X of the Securities and Exchange Commission,

and concurrently therewith a certification by the principal financial or

accounting officer of the Borrower that, in the opinion of management of the

Borrower, all adjustments necessary for a fair presentation of (A) the results

of operations of the Borrower for the periods covered thereby, (B) the

financial position of the Borrower at the date thereof, and (C) the cash flows

of the Borrower for periods covered thereby have been made (subject to year-end

adjustments);

 

35

 

(c)                                  simultaneously with the delivery of the

financial statements referred to in subsections (a) and (b) above, a statement

certified by the principal financial officer, treasurer or general counsel of

the Borrower in substantially the form of Exhibit F hereto and setting

forth in reasonable detail computations evidencing compliance with the

covenants contained in Section 8 and (if applicable) reconciliations to reflect

changes in GAAP since December 31, 2001;

 

(d)                                 promptly after the same are available,

copies of each annual report, proxy, if any, or financial statement or other

report or communication sent to the holders of Equity Securities of the

Borrower who are not Affiliates of the Borrower, and copies of all annual,

interim and current reports and any other report of a material nature (it being

understood that filings in the ordinary course of business pursuant to Sections

13(d), (f) and (g) of the Securities Exchange Act of 1934 are not material)

which the Borrower may file or be required to file with the SEC under Section

13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required

to be delivered to the Administrative Agent pursuant hereto; and

 

(e)                                  from time to time such other financial

data and information (including accountants’ management letters) as the

Administrative Agent (having been requested to do so by any Bank) may

reasonably request; provided, however, that each of the Administrative

Agent and the Banks agrees that with respect to any data and information

obtained by it as a result of any request pursuant to this clause (e) (and with

respect to any other data and information that is by the terms of this Credit

Agreement to be held subject to this Section 6.4(e)), to the extent that such

data and information has not theretofore otherwise been disclosed in such a

manner as to render such data and information no longer confidential, each of

the Administrative Agent and the Banks will use its reasonable efforts

(consistent with its established procedures) to reasonably maintain (and cause

its employees and officers to maintain) the confidential nature of the data and

information therein contained; provided, however, that anything

herein contained to the contrary notwithstanding, each of the Administrative

Agent and the Banks may, to the extent necessary, disclose or disseminate such

data and information to: (i) its employees, Affiliates, directors, agents,

attorneys, accountants, auditors, and other professional advisers who would

ordinarily have access to such data and information in the normal course of the

performance of their duties in accordance with the Administrative Agent’s or

such Bank’s customary procedures relating to confidential information; (ii)

such third parties as it may, in its discretion, deem reasonably necessary or

desirable (A) in connection with or in response to any Government Mandate or

request of any Government Authority, or (B) in connection with any Proceeding

pending (or on its face purported to be pending) before any Government

Authority (including Proceedings involving the Borrower); (iii) any prospective

purchaser, participant or investment banker in connection with the resale or

proposed resale of any portion of the Loans, or of a participation therein, who

shall agree in writing to accept such information subject to the provisions of

this clause (e); (iv) any Person holding the Equity Securities or Funded Debt

of the Administrative Agent or such Bank who, subject to the provisions of this

clause (e), shall have requested to inspect such information; and (v) any

Entity utilizing such information to rate or classify the Equity Securities or

Funded Debt of the Administrative Agent or such Bank or to report to the public

concerning the industry of which the Administrative Agent or such Bank is a

part; provided, however, that none of the Administrative Agent

and the Banks shall be liable to the Borrower or any other Person for damages

arising hereunder from the disclosure of non-public information despite its

reasonable efforts in accordance with the provisions of this clause (e) or from

a failure by any other party to perform and observe its covenants in this

clause (e).

 

36

 

(f)                                    Documents required to be delivered

pursuant to Section 6.4(a), (b) or (d) (to the extent any such

financial statements, reports or proxy statements are included in materials

otherwise filed with the SEC) may be delivered electronically and if so

delivered, shall be deemed to have been delivered on the date (i) on which the

Borrower posts such documents, or provides a link thereto on the Borrower’s

internet website at www.alliancecapital.com or such other replacement

website of which the Borrower has given proper notice to the Administrative

Agent and each Bank; or (ii) on which such documents are posted on the

Borrower’s behalf on IntraLinks/IntraAgency or another relevant website, if

any, to which each Bank and the Administrative Agent have access (whether a

commercial, third-party website or whether sponsored by the Administrative

Agent); provided that: (i) the Borrower shall deliver paper copies of

such documents to the Administrative Agent or any Bank who requests, in

writing, the Borrower to deliver such paper copies until written request to

cease delivering paper copies is given by the Administrative Agent or such Bank

and (ii) the Borrower shall notify (which may be by facsimile or electronic

mail) the Administrative Agent and each Bank of the posting of any such

documents.  Notwithstanding anything

contained herein, in every instance the Borrower shall be required to provide

paper copies of the certificates or statements of officers required by Section

6.4(a) or (b) to the Administrative Agent and each of the

Banks.  Except for such certificates or

statements of officers, the Administrative Agent shall have no obligation to

request the delivery or to maintain copies of the documents referred to above,

and in any event shall have no responsibility to monitor compliance by the

Borrower with any such request for delivery, and each Bank shall be solely

responsible for requesting delivery to it or maintaining its copies of such

documents.

 

6.5                                 Notices.

 

6.5.1                        Defaults.  The Borrower

will promptly after the executive management of the Borrower (which for

purposes of this covenant shall mean the chairman of the board, president,

principal financial officer, treasurer or general counsel of the Borrower)

becomes aware thereof (and in any case within three (3) Business Days after the

executive management becomes aware thereof) notify the Administrative Agent and

each of the Banks in writing of the occurrence of any Default or Event of

Default.  If any Person shall give any

notice in writing of a claimed default (whether or not constituting an Event of

Default) under the Loan Documents or any other Contract relating to Funded Debt

equal to or in excess of $75,000,000 to which or with respect to which the

Borrower or any of its Subsidiaries is a party or obligor, whether as

principal, guarantor, surety, or otherwise, the Borrower shall forthwith give

written notice thereof to the Administrative Agent and each of the Banks,

describing the notice or action and the nature of the claimed default.

 

6.5.2                        Environmental Events. 

The Borrower will promptly give notice to the Administrative Agent and

each of the Banks (a) of any violation of any Environmental Law that the

Borrower or any of its Subsidiaries reports in writing, or that is reportable

by any such Person in writing (or for which any written report supplemental to

any oral report is made) to any Government Authority, and (b) upon becoming

aware thereof, of any Proceeding, including a notice from any Government

Authority of potential environmental liability, that has the potential, in the

Borrower’s reasonable judgment, to have a Material Adverse Effect.

 

6.5.3                        Notice of Proceedings and Judgments.  

The Borrower will give notice to the Administrative Agent and each of

the Banks in writing within ten (10) Business Days of the

 

37

 

executive management of the Borrower (as defined in

Section 6.5.1) becoming aware of any Proceedings pending affecting the Borrower

or any of its Subsidiaries or to which the Borrower or any of its Subsidiaries

is or becomes a party that could reasonably be expected by the Borrower to have

a Material Adverse Effect (or of any material adverse change in any such

Proceedings of which the Borrower has previously given notice).  Any such notice will state the nature and

status of such Proceedings.  The

Borrower will give notice to the Administrative Agent and each of the Banks, in

writing, in form and detail satisfactory to the Administrative Agent, within

ten (10) Business Days of any settlement or any judgment, final or otherwise,

against the Borrower or any of its Subsidiaries where the amount payable by the

Borrower or any of its Subsidiaries, after giving effect to insurance, is in

excess of the lesser of $50,000,000 or 10% of Consolidated Net Worth as at the

end of the most recent fiscal quarter.

 

6.5.4                        Notice of Change of Control. 

In the event the Borrower obtains knowledge of a Change of Control or an

impending Change of Control, the Borrower will promptly give written notice (a

“Borrower Control Change Notice”) of such fact to the Administrative

Agent and the Banks at least forty (40) days prior to the proposed Change of

Control Date; provided, however, that in no event shall such a Borrower

Control Change Notice be delivered to the Administrative Agent and the Banks

more than three (3) Business Days after the Change of Control Date.  Without limiting the foregoing, upon

obtaining actual knowledge of any Change of Control or impending Change of

Control, any of the Administrative Agent and the Banks may (but in no case

shall any of them be obligated to) deliver written notice to the Borrower of

such event, indicating that such event requires the Borrower to prepay the

Loans pursuant to Section 3.2.2 (and in any such notice a Bank may make demand

for payment of its Loans under Section 3.2.2). 

Promptly upon receipt of such notice, but in no event later than five

(5) Business Days after actual receipt thereof, the Borrower will give written

notice (such notice, together with a Borrower Control Change Notice, a “Control

Change Notice”) of such fact to the Administrative Agent and the Banks

(including the Bank that has so notified the Borrower).  Any Control Change Notice shall (a) describe

the principal facts and circumstances of such Change of Control known to the

Borrower in reasonable detail (including the Change of Control Date or, if the

Borrower does not have knowledge of the Change of Control Date, the Borrower’s

best estimate of such Change of Control Date), (b) make reference to Section

3.2.2 and the rights of the Banks to require the Borrower to prepay the Loans

on the terms and conditions provided for therein, and (c) state that each Bank

may make a demand for payment of its Loans by providing written notice to the

Borrower within fifteen (15) days after the effective date of such Control

Change Notice.  In the event the

Borrower shall not have designated the Change of Control Date in its Control

Change Notice, the Borrower shall keep the Administrative Agent and the Banks

informed as to any changes in the estimated Change of Control Date and shall

provide written notice to the Administrative Agent and the Banks specifying the

Change of Control Date promptly upon obtaining knowledge thereof.

 

6.6                                 Existence; Business; Properties.

 

6.6.1                        Legal Existence. 

The Borrower will, and will cause each of its Consolidated Subsidiaries

to do or cause to be done all things necessary to preserve and keep in full

force and effect its existence, rights and franchises as a limited partnership,

general partnership, corporation, limited liability company or trust, as the

case may be, except, with respect to rights and franchises, where the failure

to preserve and keep in full force and effect such rights and franchises would

not be likely to have a Material Adverse Effect, provided,

 

38

 

however, this section shall not prohibit any merger,

consolidation, or reorganization of the Borrower or any of its Subsidiaries

permitted pursuant to Section 7.2.

 

6.6.2                        Conduct of Business. 

Except as otherwise disclosed to the Administrative Agent and the Banks

in the Borrower’s Form 8-Ks for the period prior to the Closing Date, the

Borrower will, and will cause each of its Consolidated Subsidiaries to, engage

in business related to investment management.

 

6.6.3                        Maintenance of Properties. 

The Borrower will, and will cause each of its Consolidated Subsidiaries

to, cause its properties used or useful in the conduct of its business and

which are material to the Business of the Borrower and its Consolidated

Subsidiaries taken as a whole to be maintained and kept in good condition,

repair, and working order and supplied with all necessary equipment, ordinary

wear and tear excepted; provided that nothing in this Section 6.6.3

shall prevent the Borrower or any of its Consolidated Subsidiaries from

discontinuing the operation and maintenance of any properties if such

discontinuance (i) is, in the judgment of the Borrower or such Subsidiary,

desirable in the conduct of its business, and (ii) does not have a Material

Adverse Effect.

 

6.6.4                        Status Under Securities Laws. 

The Borrower shall maintain its status as a registered “investment

adviser”, under (a) the Investment Advisers Act of 1940 and (b) under the laws

of each state in which such registration is required in connection with the

investment advisory business of the Borrower and, as to (b) only, where a

failure to obtain such registration would be likely to have a Material Adverse

Effect.  The Borrower shall cause

Alliance Distributors (i) to maintain its status as a registered

“broker/dealer” under the Securities Exchange Act of 1934 and under the laws of

each state in which such registration is required in connection with the

business of Alliance Distributors and where a failure to obtain such

registration would be likely to have a Material Adverse Effect, and (ii) to

maintain its membership in the National Association of Securities Dealers, Inc.

 

6.7                                 Insurance.  The Borrower will, and will cause each of

its Consolidated Subsidiaries to, maintain with financially sound and reputable

insurers insurance with respect to its properties and business against such

casualties and contingencies, in such amounts, containing such terms, in such

forms, and for such periods, or shall be self-insured in respect of such risks

(with appropriate reserves to the extent required by GAAP), as shall be

customary in the industry for companies engaged in similar activities in

similar geographic areas.

 

6.8                                 Taxes.  The Borrower will, and will cause each of

its Consolidated Subsidiaries to, duly pay and discharge, or cause to be paid

and discharged, before the same shall become overdue, all taxes, assessments,

and other governmental charges imposed upon it or its real property, sales, and

activities, or any part thereof, or upon the income or profits therefrom, as

well as all claims for labor, materials, or supplies that if unpaid (a) might

by law become a Lien upon any of its property and (b) would be reasonably

likely to result in a Material Adverse Effect; provided that any such

tax, assessment, charge, levy, or claim need not be paid if the validity or

amount thereof shall currently be contested in good faith by appropriate

proceedings and if the Borrower or such Subsidiary shall have set aside on its

books, if and to the extent permitted by GAAP, adequate accruals with respect

thereto.

 

39

 

6.9                                 Inspection of Properties and Books, Etc.

 

6.9.1                        General.  The Borrower

shall, and shall cause each of its Subsidiaries to, permit the Banks, through

the Administrative Agent or any of the Banks’ other designated representatives,

to visit and inspect any of the properties of the Borrower or any of its

Subsidiaries, to examine the books of account of the Borrower and its

Subsidiaries (and to make copies thereof and extracts therefrom), and to

discuss the affairs, finances, and accounts of the Borrower and its

Subsidiaries with, and to be advised as to the same by, its and their officers,

all at such reasonable times and intervals as the Administrative Agent or any

Bank may request.  The costs incurred by

the Administrative Agent and the Banks in connection with any such inspection

shall be borne by the Banks making or requesting the inspection (or, if the

Administrative Agent makes an inspection on its own initiative after notice to

the Banks, by the Banks jointly, on a pro rata basis according to their

Outstanding Loans or, if no Loans are Outstanding, their respective

Commitments), except as otherwise provided by Section 14(f).  Any data and information that is obtained by

the Administrative Agent or any Bank pursuant to this Section 6.9.1 shall be

held subject to Section 6.4(e).

 

6.9.2                        Communication with Accountants. 

The Borrower authorizes the Administrative Agent and, if accompanied by

the Administrative Agent, the Banks to communicate directly with the Borrower’s

independent certified public accountants and authorizes such accountants to

disclose to the Administrative Agent and the Banks any and all financial statements

and other supporting financial documents and schedules, including copies of any

management letter with respect to the Business of the Borrower or any of its

Subsidiaries.  The Borrower shall be

entitled to reasonable prior notice of any such meeting with its independent

certified public accountants and shall have the opportunity to have its

representatives present at any such meeting. 

At the request of the Administrative Agent, the Borrower shall deliver a

letter addressed to such accountants instructing them to comply with the

provisions of this Section 6.9.2.  Any

data and information that is obtained by the Administrative Agent or any Bank

pursuant to this Section 6.9.2 shall be held subject to Section 6.4(e).

 

6.10                           Compliance with Government Mandates,

Contracts, and Permits. 

The Borrower will and will cause each of its Consolidated Subsidiaries

to, comply (if and to the extent that a failure to comply would be likely to

have a Material Adverse Effect) with (a) all applicable Government Mandates

wherever the business of the Borrower or any such Subsidiary is conducted,

including all Environmental Laws and all Government Mandates relating to

occupational safety and employment matters; (b) the provisions of the

certificate of incorporation and by-laws, or the agreement of limited

partnership and certificate of limited partnership, or its governing documents

in the case of any general partnership, as the case may be, of the Borrower and

such Subsidiary; (c) all Contracts to which the Borrower or any such Subsidiary

is party, by which the Borrower or any such Subsidiary is or may be bound, or

to which any of their respective properties are or may be subject; and (d) the

terms and conditions of any Permit used in the Business of the Borrower or any such

Subsidiary.  If any Permit shall become

necessary or required in order that the Borrower may fulfill any of its

obligations hereunder or under any of the other Loan Documents to which the

Borrower is a party, the Borrower will immediately take or cause its

Subsidiaries to take all reasonable steps within the power of the Borrower and

its Subsidiaries to obtain and maintain in full force and effect such Permit

and furnish the Administrative Agent and the Banks with evidence thereof.

 

40

 

6.11                           Use of Proceeds. 

The Borrower will use the proceeds of the Loans solely as provided in

Section 5.16.

 

6.12                           Certain Changes in Accounting Principles.  In the event of a change after the date of

this Credit Agreement in (a) GAAP (as defined in clause (b) of the definition

of “GAAP” in Section 1.1) or (b) any regulation issued by the Securities and

Exchange Commission (either such event being referred to herein as an “Accounting

Change”), that results in a material change in the calculations as to

compliance with any financial covenant contained in Section 8 or in the

calculation of any item to be taken into account in the calculations as to

compliance with any such covenant (the “Affected Computation”) in such a

manner and to such an extent that, in the good faith judgment of the Chief

Financial Officer of the Borrower or the Majority Banks, as evidenced by notice

from such Majority Banks to the Borrower and the Administrative Agent (the “Accounting

Notice”), the application of the Accounting Change to the Affected

Computation would no longer reflect the intention of the parties to this Credit

Agreement, then and in any such event:

 

(a)                                  the Borrower shall, promptly after either

a determination by its Chief Financial Officer as provided above or receipt of

an Accounting Notice, give written notice thereof to the Administrative Agent

and each Bank, which notice shall be accompanied by a copy of any Accounting

Notice and a certificate of the Chief Financial Officer of the Borrower:

 

(i)                           describing the Accounting Change in

question and the particular covenant or covenants that will be affected by such

Accounting Change;

 

(ii)                        setting forth in reasonable detail

(including detailed calculations) the manner and extent to which the covenant

or covenants listed in such certificate are affected by such Accounting Change;

and

 

(iii)                     setting forth in reasonable detail

(including detailed calculations) the information required in order to

establish that the Borrower would be in compliance with the requirements of the

covenant or covenants listed in such certificate if such Accounting Change was

not effective (or, if the Borrower would not be so in compliance, setting forth

in reasonable detail calculations of the extent of such non-compliance);

 

(b)                                 the Borrower and the Banks will enter

into good faith negotiations with each other for an equitable amendment of such

covenant or covenants, and the definition of GAAP set forth in Section 1.1,

pursuant to Section 24 so as to place the parties, insofar as possible, in the

same relative position as if such Accounting Change had not occurred;

 

(c)                                  for the period from the date on which

such Accounting Change becomes effective (the “Effective Date”) to the

effective date of an amendment to this Credit Agreement pursuant to Section 24,

the Borrower shall be deemed to be in compliance with the covenant or covenants

listed in such certificate if and so long as (but only if and so long as) the

Borrower would be in compliance with such covenant or covenants if such

Accounting Change had not occurred; and

 

(d)                                 if no amendment to this Credit Agreement

has become effective within ninety (90) days after the Effective Date of such

Accounting Change, then all accounting

 

41

 

computations required to be made for purposes of this

Credit Agreement thereafter shall be made in accordance with GAAP as in effect

immediately prior to such Effective Date.

 

6.13                           Broker-Dealer Subsidiaries.

 

6.13.1                  Maintain Net Capital.  Each

Material Broker-Dealer Subsidiary of the Borrower that is a U.S. regulated

broker-dealer shall not fail to maintain net capital in an amount not less than

that required by the Net Capital Rule for a period in excess of five (5)

Business Days of the date such Material Broker-Dealer Subsidiary knew of such

failure, and each Material Broker-Dealer Subsidiary of the Borrower that is a

non-U.S. regulated broker-dealer shall not fail to maintain net capital or

capital (or the equivalent) in an amount not less than that required by any

similar rule, regulation or requirement (including any capital adequacy

requirement) of the relevant regulatory authority or authorities in any

relevant jurisdiction for a period in excess of five (5) Business Days of the

date such Material Broker-Dealer Subsidiary knew of such failure, and

 

6.13.2                  Registration; Qualification. 

Each Broker-Dealer Subsidiary must maintain its registration or

comparable qualification with its applicable Examining Authority to the extent

such registration or comparable qualification is material to the business of

the Borrower and its Subsidiaries taken as a whole.

 

7.                                       CERTAIN NEGATIVE COVENANTS OF THE

BORROWER.

 

The Borrower

covenants and agrees that, so long as any Loan or any Note is Outstanding or any

Bank has any obligation to make any Loans:

 

7.1                                 Disposition of Assets. 

The Borrower will not, and will not cause, permit, or suffer any of its

Consolidated Subsidiaries to, in any single transaction or in multiple

transactions within any fiscal year of the Borrower, sell, transfer, assign, or

otherwise dispose of assets of the Borrower and its Consolidated Subsidiaries,

or enter into any Contract for any such sale, transfer, assignment, or

disposition (a “Disposition”), provided, however:

 

(a)                                  Consolidated Subsidiaries of the Borrower

may sell, transfer, assign, or dispose of assets (including 12b-1 Fees) to the

Borrower or another Consolidated Subsidiary;

 

(b)                                 the Borrower and any Consolidated

Subsidiary of the Borrower may make any Disposition (other than a Disposition

(whether in one or a series of transactions) of all or substantially all of the

assets of the Borrower and its Consolidated Subsidiaries) so long as (i) no

Default exists or would be caused thereby, (ii) after giving effect to such

Disposition the Borrower will, on a pro forma basis, be in compliance with the

financial covenants set forth in Section 8 hereof, and (c) the assets disposed

of in any fiscal year in the aggregate did not generate more than 33 1/3% of

the consolidated revenues of the Borrower during the immediately preceding

fiscal four quarters or if such assets generated revenues during the

immediately preceding fiscal four quarters that if subtracted from the

consolidated revenues of the Borrower during this period would result in

consolidated revenues of the Borrower of less than $1,200,000,000; and

 

42

 

(c)                                  the Borrower and any Consolidated

Subsidiary of the Borrower may sell, transfer or assign, or dispose of 12b-1

Fees to Persons other than the Borrower and its Consolidated Subsidiaries.  Any Indebtedness in respect of obligations

of the Borrower and its Consolidated Subsidiaries arising out of such

transactions shall constitute “Funded Debt”.

 

This covenant is not

intended to restrict the conversion of a short-term investment of the Borrower

into cash or into another investment which remains an asset of the Borrower.

 

7.2                                 Fundamental Changes.  The Borrower

will not, and will not cause, permit, or suffer any of its Consolidated

Subsidiaries to, become a party to any merger, dissolution or consolidation

involving all or substantially all of its assets (whether in one or a series of

transactions) (any such transaction, a “Reorganization” and the term “Reorganize”shall have a correlative meaning) or purchase or acquire all or

substantially all of the assets or Equity Securities of a Person or a business

unit of a Person (whether in one or a series of transactions) (each, an

“Acquisition”) or enter into any Contract providing for any Reorganization or

Acquisition, provided, however, so long as no Default or Event of

Default then exists or would be caused thereby:

 

(a)                                  any Consolidated Subsidiary may merge

with (i) the Borrower, provided that the Borrower shall be the continuing or surviving

Person, or (ii) any one or more Consolidated Subsidiaries;

 

(b)                                 any Person may merge with (i) the

Borrower provided that (x) the Borrower shall be the continuing or surviving

Person, and (y) such Person merging into the Borrower is in the same line of

business as the Borrower and its Subsidiaries or a line of business reasonably

related thereto, or (ii) any one or more Consolidated Subsidiaries, provided

that (x) such Consolidated Subsidiary shall be the continuing or surviving

Person, (y) such Person merging into a Consolidated Subsidiary is in the same

line of business as the Borrower and its Subsidiaries or a line of business

reasonably related thereto; and

 

(c)                                  the Borrower or any Consolidated

Subsidiary may purchase or acquire all or substantially all of the Equity

Securities or assets of a Person or a business unit of a Person, provided that

(i) such Person is in the same line of business as the Borrower and its

Subsidiaries or a line of business related thereto and (ii) after giving effect

to such purchase or acquisition, the Borrower will, on a pro forma basis, be in

compliance with the financial covenants set forth in Section 8.

 

7.3                                 Restrictions on Liens. 

The Borrower will not, and will not cause, permit, or suffer any of its

Consolidated Subsidiaries to, (a) create or incur, or cause, permit, or suffer

to be created or incurred or to exist, any Lien upon any of its property or

assets of any character whether now owned or hereafter acquired, or upon the

income or profits therefrom; (b) transfer any of such property or assets or the

income or profits therefrom for the purpose of subjecting the same to the

payment of Indebtedness or performance of any other obligation in priority to

payment of its general creditors; (c) acquire, or agree or have an option to

acquire, any property or assets upon conditional sale or other title retention

or purchase money security agreement, device, or arrangement; (d) suffer to

exist any Indebtedness or claim or demand for a period of time such that the

same by Government Mandate or upon bankruptcy or insolvency, or otherwise,

would be given any priority whatsoever over its general creditors; or (e)

assign, pledge, or

 

43

 

otherwise transfer any

accounts, contract rights, general intangibles, chattel paper, or instruments,

with or without recourse, other than a transfer or assignment in connection

with a Disposition permitted under Section 7.1 or Reorganization or Acquisition

permitted under Section 7.2 or an Investment permitted under Section 7.4; provided

that the Borrower and any Subsidiary of the Borrower may create or incur, or

cause, permit, or suffer to be created or incurred or to exist:

 

(i)                           Liens imposed by Government Mandate to

secure taxes, assessments, and other government charges in respect of

obligations not overdue or which are being contested in good faith and by

appropriate proceedings diligently conducted, if adequate reserves are

maintained in accordance with GAAP;

 

(ii)                        statutory Liens of carriers, warehousemen,

mechanics, suppliers, laborers, and materialmen, and other like Liens in the

ordinary course of business, in each case in respect of obligations not overdue

for a period of more than 30 days or which are being contested in good faith

and by appropriate proceedings diligently conducted, if adequate reserves are

maintained in accordance with GAAP;

 

(iii)                     Liens arising out of pledges or deposits

in the ordinary course of business in connection with workers’ compensation,

unemployment insurance and other social security legislation, other than any

Lien imposed by ERISA;

 

(iv)                    Liens on deposits to secure performance

of bids or performance bonds and other similar Liens, in the ordinary course of

business;

 

(v)                       Liens on Real Estate consisting of easements,

rights of way, zoning restrictions, restrictions on the use of real property,

defects and irregularities in the title thereto, and other minor Liens, provided,

none of such Liens in the reasonable opinion of the Borrower interferes

materially with the use of the affected property in the ordinary conduct of the

business of the Borrower and its Subsidiaries;

 

(vi)                    the rights and interests of landlords and

lessors under leases of Real Estate leased by the Borrower or one of its

Subsidiaries, as lessee;

 

(vii)                 Liens outstanding on the Closing Date and

set forth on Schedule 7.3;

 

(viii)              Liens in favor of either the Borrower or

a Consolidated Subsidiary on all or part of the assets of any Subsidiary of the

Borrower securing Indebtedness owing by such Subsidiary to the Borrower or such

Consolidated Subsidiary, as the case may be;

 

(ix)                      Liens on interests of the Borrower or its

Subsidiaries in partnerships or joint ventures consisting of binding rights of

first refusal, rights of first offer, take-me-along rights, third-party offer

provisions, buy-sell provisions, other transfer restrictions and conditions

relating to such partnership or joint venture interests, and Liens granted to

other participants in such partnership or joint venture as security for the performance

by the Borrower or its Subsidiaries of their obligations in respect of such

partnership or joint venture;

 

44

 

(x)                         UCC notice filings in connection with

non-recourse sales of 12b-1 Fees (other than sales constituting a collateral

security device);

 

(xi)                      Liens securing purchase money

Indebtedness so long as such Liens are only on the asset acquired with such

purchase money Indebtedness and secure only the Indebtedness incurred to

purchase such asset;

 

(xii)                   Liens incurred or otherwise arising in

connection with the Securities Trading Activities of the Broker-Dealer

Subsidiaries;

 

(xiii)                Liens in favor of the Administrative

Agent or any Bank to secure the Obligations; and

 

(xiv)               Liens (in addition to those specified in

clauses (i) through (xiii) above) securing Indebtedness in an aggregate amount

for the Borrower and all of its Consolidated Subsidiaries taken together not in

excess of $80,000,000 outstanding at any point in time (but excluding from the amount

of any such Indebtedness that portion which is fully covered by insurance and

as to which the insurance company has acknowledged to the Administrative Agent

its coverage obligation in writing).

 

7.4                                 Restrictions on Investments.  The Borrower will not, and will not cause,

permit, or suffer any of its Consolidated Subsidiaries to, make or permit to

exist or to remain outstanding any Investment except:

 

(a)                                  Investments in marketable securities,

liquid investments, and other financial instruments that are acquired for

investment purposes and that have a value that may be readily established,

including any such Investment that may be readily sold or otherwise liquidated

in any mutual fund for which the Borrower or one of its Subsidiaries serves as

investment manager or adviser;

 

(b)                                 Investments received in connection with

the settlement of past due accounts;

 

(c)                                  Guarantees otherwise constituting

permitted Funded Debt;

 

(d)                                 So long as no Event of Default exists or

would be caused thereby, Investments in funds or other vehicles managed by the

Borrower or one of its affiliates in the ordinary course;

 

(e)                                  Investments by the Broker-Dealer

Subsidiaries consisting of purchases, borrowings and other acquisitions of

securities and other financial instruments in connection with the Securities

Trading Activities of the Broker Dealer Subsidiaries;

 

(f)                                    Investments existing on the Closing Date

and set forth on Schedule 7.4; and

 

(g)                                 Other Investments, so long as no Default

exists or would be caused thereby and the Borrower would be, on a pro forma

basis, in compliance with the financial

 

45

 

covenants set forth in

Section 8 hereof; provided, however, that with respect to any acquisition of

Equity Securities or all or substantially all of the Equity Securities or

assets of a Person, such acquisition shall relate solely to Equity Securities

in another Person engaged primarily in, or assets of another Person used

primarily for, the same line of business as the Borrower and its Subsidiaries

or a line of business reasonably related thereto.

 

7.5                                 Restrictions on Funded Debt.  The Borrower will not cause, permit, or

suffer any of the Consolidated Subsidiaries to, create, incur, assume,

guarantee, or be or remain liable, contingently or otherwise, with respect to

any Funded Debt if as a result the Borrower will not be in compliance with the

financial covenants set forth in Section 8 hereof.

 

7.6                                 Distributions.  The Borrower shall not cause, permit, or

suffer any restriction or Lien on the ability of any Consolidated Subsidiary to

(a) pay, directly or indirectly, any

Distributions to the Borrower or any other Subsidiary of the Borrower, (b) make

any payments, directly or indirectly, in respect of any Indebtedness or other

obligation owed to the Borrower or any of its Subsidiaries, (c) make loans or

advances to the Borrower or any other Subsidiary of the Borrower, or (d) sell,

transfer, assign, or otherwise dispose of any property or assets to the

Borrower or any other Subsidiary of the Borrower, except, in each such case,

restrictions or Liens (aa) that exist under or by reason of applicable

Government Mandates, including any net capital rules, (bb) that are imposed

only, as to Indebtedness of the Borrower or any Consolidated Subsidiary incurred

prior to the date hereof, upon a failure to pay when due any of such

Indebtedness, or, as to Indebtedness of the Borrower or any Consolidated

Subsidiary incurred on or after the date hereof, upon an acceleration of such

Indebtedness or a failure to pay the full amount of such Indebtedness at

maturity, or (cc) that arise by reason of the maintenance by any Subsidiary

that is not a Consolidated Subsidiary of a level of net worth for the purpose

of ensuring that limited partnerships for which it serves as general partner

will be treated as partnerships for federal income tax purposes.  Notwithstanding the foregoing, any portion

of net earnings of any Consolidated Subsidiary that is unavailable for payment

of dividends to the Borrower or any other Consolidated Subsidiary by reason of

a restriction or Lien permitted under any of clauses (aa), (bb), and (cc) shall

be excluded from the calculation of Consolidated Net Income (or Loss).

 

7.7                                 Transactions with Affiliates.  The Borrower will not, and will not cause,

permit, or suffer any of its Subsidiaries to, directly or indirectly, enter

into any Contract or other transaction with any Affiliate of the Borrower or

any of its Subsidiaries that is material to the Borrower and the Consolidated

Subsidiaries taken as a whole, unless either: (a) such Contract or transaction

relates solely to compensation arrangements with directors, officers, or

employees of the Borrower, the General Partner, or the Consolidated

Subsidiaries, or (b) such transaction is in the ordinary course of business and

is, taking into account the totality of the relationships involved, on fair and

reasonable terms no less favorable to the Borrower and the Consolidated

Subsidiaries taken as a whole than would be obtained in comparable arm’s length

transactions with Persons that are not Affiliates of the Borrower or its

Subsidiaries, or (c) the Contract or other transaction is in connection with a

Reorganization or Acquisition permitted under Section 7.2 hereof, or (d) such

transaction is an unsecured loan with one or more Affiliates of the Borrower as

lender, in a principal amount not to exceed $300,000,000 and on terms

substantially similar to this Credit Agreement.

 

46

 

7.8                                 Fiscal Year. 

The Borrower shall not change its fiscal year unless the parties to the

Loan Documents shall first enter into amendments to the Loan Documents such

that the rights of the parties to the Loan Documents will not be affected by

the change in the fiscal year of the Borrower, and the parties shall enter into

such amendments as may be required in connection with a change of the

Borrower’s fiscal year.

 

7.9                                 Compliance with Environmental Laws.  The Borrower will not, and will not cause,

permit, or suffer any of its Subsidiaries to, (a) use any of the Real Estate or

any portion thereof for the handling, processing, storage, or disposal of

Hazardous Substances, (b) cause, permit, or suffer to be located on any of the

Real Estate any underground tank or other underground storage receptacle for

Hazardous Substances, (c) generate any Hazardous Substances on any of the Real

Estate, (d) conduct any activity at any Real Estate or use any Real Estate in

any manner so as to cause a release (i.e., releasing, spilling, leaking,

pumping, pouring, emitting, emptying, discharging, injecting, escaping,

leaching, disposing, or dumping) or threatened release of Hazardous Substances

on, upon, or into the Real Estate, or (e) otherwise conduct any activity at any

Real Estate or use any Real Estate in any manner that would violate any

Environmental Law or bring such Real Estate in violation of any Environmental

Law, in each case, so as would be likely to have a Material Adverse Effect.

 

7.10                           Employee  Benefit  Plans.  The Borrower will not, and will not cause,

permit, or suffer any ERISA Affiliate to:

 

(a)                                  engage in any “prohibited transaction”

within the meaning of §406 of ERISA or §4975 of the Code that could result in a

material liability for the Borrower and its Consolidated Subsidiaries taken as

a whole;

 

(b)                                 permit any Guaranteed Pension Plan to

incur an “accumulated funding deficiency”, as such term is defined in §302 of

ERISA, whether or not such deficiency is or may be waived;

 

(c)                                  fail to contribute to any Guaranteed

Pension Plan to an extent that, or terminate any Guaranteed Pension Plan in a

manner that, could result in the imposition of a Lien on the assets of the

Borrower or any of its Subsidiaries pursuant to §302(f) or §4068 of ERISA; or

 

(d)                                 permit or take any action that would

result in the aggregate benefit liabilities (within the meaning of §4001 of

ERISA) of all Guaranteed Pension Plans exceeding the value of the aggregate

assets of such Plans by more than $50,000,000, disregarding for this purpose

the benefit liabilities and assets of any such Plan with assets in excess of

benefit liabilities.

 

7.11                           Amendments to Certain Documents.  The Borrower shall not, without the prior

written consent of the Administrative Agent in each instance, permit or suffer

any material amendments, modifications, supplements, or restatements of its

certificate of limited partnership or the Borrower Partnership Agreement (or,

following any conversion of the Borrower to a corporation, its certificate of

incorporation or by-laws) that (i) relate to the determination of Available

Cash Flow or Operating Cash Flow under the Borrower Partnership Agreement, or

(ii) could reasonably be expected to materially adversely affect the ability of

the Borrower to perform

 

47

 

and observe its obligations under the Loan Documents

or the legal rights and remedies of the Banks and the Administrative Agent

under any of the Loan Documents.

 

8.                                       FINANCIAL COVENANTS OF THE BORROWER.

 

The Borrower covenants

and agrees that, so long as any Loan or any Note is Outstanding or any Bank has

any obligation to make any Loans:

 

8.1                                 Consolidated Leverage Ratio.  The Borrower will not at any time permit its

Consolidated Leverage Ratio to exceed 3.00 to 1.00.

 

8.2                                 Minimum Consolidated Net Worth.  As of the last day of each calendar quarter,

the Borrower shall not permit its Consolidated Net Worth to be less than

$1,000,000,000.

 

8.3                                 Miscellaneous. 

For purposes of this Section 8, demand obligations shall be deemed to be

due and payable during any fiscal year during which such obligations are

outstanding.

 

9.                                       CLOSING CONDITIONS.

 

The obligations of the

Banks to enter into this Credit Agreement shall be subject to the satisfaction

of the following conditions precedent at or before the Closing Date:

 

9.1                                 Financial Statements and Material Changes.  The Banks shall be reasonably satisfied that

(a) the financial statements of the Borrower and the Consolidated Subsidiaries

referred to in Section 5.4 fairly present in all material respects the business

and financial condition and the results of operations of the Borrower and the

Consolidated Subsidiaries as of the dates and for the periods to which such

financial statements relate, and (b) there shall have been no material adverse

change in the Business of the Borrower and the Consolidated Subsidiaries taken

as a whole since the dates of such financial statements.

 

9.2                                 Loan Documents.  Each of the Loan Documents shall have been

duly executed and delivered by the respective parties thereto and shall be in

full force and effect.  Each Bank and

the Administrative Agent shall have received a fully executed copy of each such

document.

 

9.3                                 Certified Copies of Charter Documents.  Each of the Banks and the Administrative

Agent shall have received from the Borrower and the General Partner (a) a copy

of its certificate of incorporation, certificate of limited partnership, or

other charter document duly certified as of a recent date by the Secretary of

State of Delaware, (b) a copy, certified by a duly authorized officer of such

Entity to be true and complete on the Closing Date, of its by-laws, agreement

of limited partnership, or equivalent document as in effect on such date, and

(c) a certificate of the Secretary of State of Delaware as to the due

organization, legal existence, and good standing of such Entity. The

certificate of incorporation and by-laws or partnership agreement and

certificate of limited partnership, as the case may be, of the Borrower and the

General Partner shall be in all respects satisfactory in form and substance to

the Banks and the Administrative Agent.

 

48

 

9.4                                 Partnership and Corporate Action.  All partnership action necessary for the

valid execution, delivery, and performance by the Borrower of this Credit

Agreement and the other Loan Documents to which it is or is to become a party,

and all corporate action necessary for the General Partner to cause the

Borrower to execute, deliver, and perform this Credit Agreement and the other

Loan Documents to which the Borrower is or is to become a party, shall have

been duly and effectively taken, evidence thereof reasonably satisfactory to

the Banks and the Administrative Agent shall have been provided to each of the

Banks, and such action shall be in full force and effect at the Closing Date.

 

9.5                                 Consents.  Each party hereto shall have duly obtained

all consents and approvals of Government Authorities and other third parties,

and shall have effected all notices, filings, and registrations with Government

Authorities and other third parties, as may be required in connection with the

execution, delivery, performance, and observance of the Loan Documents; all of

such consents, approvals, notices, filings, and registrations shall be in full

force and effect; and the Banks and the Administrative Agent shall have each

received evidence thereof satisfactory to them.

 

9.6                                 Opinions of Counsel.  Each of the Banks and the Administrative

Agent shall have received a favorable opinion addressed to the Banks and the

Administrative Agent, dated as of the Closing Date, from Sidley Austin Brown

& Wood LLP, counsel to the Borrower, in the form of Exhibit G

hereto.

 

9.7                                 Proceedings.  Except as may be disclosed in the Borrower’s

Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, there shall

be no Proceedings pending or threatened the result of which, if adversely

determined, is reasonably likely to impair or prevent the Borrower’s

performance and observance of its obligations under this Credit Agreement and

the other Loan Documents.

 

9.8                                 Incumbency

Certificate.  Each of the Banks and the Administrative

Agent shall have received from the Borrower an incumbency certificate, dated as

of the Closing Date, signed by a duly authorized officer of the Borrower and

giving the name and bearing a specimen signature of each individual who shall

be authorized: (a) to sign, in the name and on behalf of the Borrower, each of

the Loan Documents to which the Borrower is or is to become a party; (b) to

make Loan Requests and Conversion Requests; and (c) to give notices and to take

other action on behalf of the Borrower under the Loan Documents.

 

9.9                                 Fees.  The Borrower shall have paid to the

Administrative Agent for the accounts of the Banks all fees then payable.

 

9.10                           Representations and Warranties True; No

Defaults.  The Administrative Agent and the Banks shall

have received a certificate of an officer of the General Partner, in form and

substance satisfactory to the Administrative Agent and the Banks, to the effect

that (i) each of the representations and warranties set forth herein and

each of the other Loan Documents is true and correct in all material respects

on and as of the Closing Date, and (ii) no material defaults exist under

any material contract or agreement of the Borrower, including, without

limitation, this Credit Agreement and the other Loan Documents.

 

49

 

9.11                           Termination of Prior Credit Agreements.  The Administrative Agent and the Banks shall

have received evidence, in form and substance satisfactory to the

Administrative Agent (it being understood by the Administrative Agent that

copies of respective notices of termination of such credit facilities properly

delivered pursuant to the terms of each of the following Revolving Credit

Agreements shall be deemed to be satisfactory), of the termination of (a) that

certain Revolving Credit Agreement, dated as of July 20, 1998 (as amended),

among the Borrower, the financial institutions party thereto and Bank of

America, as Administrative Agent, and (b) that certain Revolving Credit

Agreement, dated as of October 30, 2000 (as amended), among the Borrower, the

financial institutions party thereto and Bank of America, as administrative

agent, in each case, confirming repayment in full of all obligations arising

thereunder.

 

10.                                 CONDITIONS TO ALL BORROWINGS.

 

The obligations of the

Banks to make any Loan, whether on or after the Closing Date, shall also be

subject to the satisfaction of the conditions precedent set forth below.  Each of the submission of a Loan Request by

the Borrower and the acceptance by the Borrower of any Loan shall constitute a

representation and warranty by the Borrower that the conditions set forth below

have been satisfied.

 

10.1                           No Default.  No Default or Event of Default shall have

occurred and be continuing.

 

10.2                           Representations True.  Each of the representations and warranties

of the Borrower and its Subsidiaries contained in this Credit Agreement (other

than the Borrower’s representation and warranty set forth in Section 5.5), the

other Loan Documents, or in any document or instrument delivered pursuant to or

in connection with this Credit Agreement shall be true and correct in all

material respects as of the time of the making of such Loan, with the same effect

as if made at and as of that time (except (a) to the extent that such

representations and warranties expressly relate to a prior date, in which case

they shall be true and correct in all material respects as of such earlier

date, and (b) to the extent of changes resulting from transactions contemplated

or permitted by this Credit Agreement and the other Loan Documents and changes

occurring in the ordinary course of business that singly or in the aggregate

are not materially adverse to the Borrower and its Consolidated Subsidiaries

taken as a whole).

 

10.3                           Loan Request. 

The Administrative Agent shall have received a Loan Request as provided

in Section 2.8.

 

10.4                           Payment of Fees. 

Without limiting any other condition, the Borrower shall have paid to

the Administrative Agent, for the account of the Banks and the Administrative

Agent as appropriate, all fees and other amounts due and payable under the Loan

Documents at or prior to the time of the making of such Loan.

 

10.5                           No Legal Impediment. 

No change shall have occurred in any

Government Mandate that in the reasonable opinion of any Bank would make it

illegal for such Bank to make such Loan (it being understood that this section

shall be a condition only for the Bank or Banks affected by such Government

Mandate).

 

50

 

11.                                 EVENTS OF DEFAULT; ACCELERATION;

ETC.

 

11.1                           Events of Default and Acceleration.  If any of the following events (“Events

of Default” or, if the giving of notice or the lapse of time or both is

required, then, prior to such notice or lapse of time, “Defaults”) shall

occur:

 

(a)                                  the Borrower shall fail to pay any

principal of the Loans when the same shall become due and payable, whether at

the stated date of maturity or any accelerated date of maturity or at any other

date fixed for payment;

 

(b)                                 the Borrower shall fail to pay any

interest on the Loans when the same shall become due and payable, whether at

the stated date of maturity or any accelerated date of maturity or at any other

date fixed for payment, and such failure shall continue for five (5) days after

written notice of such failure has been given to the Borrower by the

Administrative Agent;

 

(c)                                  the Borrower shall fail to perform or

observe any of its covenants contained in Sections 6.5.1, 6.6.1, 7.1, 7.2,

7.3(xiv), 7.11, 8, or, if such failure relates to a Lien securing Funded Debt,

7.3;

 

(d)                                 the Borrower or any of its Subsidiaries

shall fail to perform or observe any term, covenant, or agreement contained

herein or in any of the other Loan Documents (other than those specified

elsewhere in this Section 11) for thirty (30) days after written notice of such

failure has been given to the Borrower by the Administrative Agent, provided,

that a failure to perform or observe the terms, covenants and agreements set

forth in Section 6.4, Section 6.5.3, Section 6.9 or Section 6.13.1 that

continues for more than ten (10) days (regardless of whether notice of such

failure is given to the Borrower) shall constitute an Event of Default hereunder;

 

(e)                                  any representation or warranty of the

Borrower or any of its Subsidiaries in this Credit Agreement, any of the other

Loan Documents, or in any other document or instrument delivered pursuant to or

in connection with this Credit Agreement shall prove to have been incorrect in

any material respect upon the date when made or deemed to have been made or

repeated;

 

(f)                                    failure to make a payment of principal or

interest, or the occurrence of a default, event of default, or other event

permitting (with or without the passage of time or the giving of notice)

acceleration or exercise of remedies or, with respect to any Swap Contract, as

to which the Borrower or any Subsidiary is the defaulting party, permitting

early termination thereof shall occur with respect to (i) any Indebtedness for

money borrowed, (ii) any Indebtedness in respect of the deferred purchase price

of goods or services,  (iii) any

Capitalized Lease, (iv) any Broker-Dealer Debt, (v) any Swap Contract or (vi)

any Synthetic Lease Obligation, of the Borrower or any of its Subsidiaries,

having a principal amount (or (x) in the case of a Capitalized Lease, scheduled

rental payments with a discounted present value from the last day of the

initial term to the date of determination as determined in accordance with

generally accepted accounting principles or (y) in the case of a Swap Contract,

the Swap Termination Value or (z) in the case of a Synthetic Lease Obligation,

the amount of Attributable Indebtedness with respect thereto), (A) in any one

case, of  $75,000,000  or more, or (B) in the

aggregate, of $200,000,000 or more, and such failure to make a payment of

principal or interest, or a default, event of default, or other event shall

continue for such period of time as would entitle the holder of such

Indebtedness,

 

51

 

Capitalized Lease, Swap

Contract or Synthetic Lease Obligation (with or without notice) to accelerate

such Indebtedness or terminate such Capitalized Lease, Swap Contract or

Synthetic Lease Obligation;

 

(g)                                 any of the Loan Documents shall be

cancelled, terminated, revoked, or rescinded otherwise than in accordance with

the terms thereof or with the express prior written agreement, consent, or

approval of the Banks, or any Proceeding to cancel, revoke, or rescind any of

the Loan Documents shall be commenced by or on behalf of the Borrower or any of

its Subsidiaries party thereto, or any Government Authority of competent

jurisdiction shall make a determination that, or issue a Government Mandate to

the effect that, any material provision of one or more of the Loan Documents is

illegal, invalid, or unenforceable in accordance with the terms thereof;

 

(h)                                 the Borrower, Alliance Distributors, the

General Partner, or any Material Subsidiary shall make an assignment for the

benefit of creditors, or admit in writing its inability to pay or generally

fail to pay its debts as they mature or become due, or shall petition or apply

for the appointment of a trustee or other custodian, liquidator, or receiver of

the Borrower, Alliance Distributors, the General Partner or any Material

Subsidiary or of any substantial part of the assets of the Borrower, Alliance

Distributors, the General Partner, or any Material Subsidiary, or shall

commence any Proceeding relating to the Borrower, Alliance Distributors, the

General Partner, or any Material Subsidiary under any bankruptcy,

reorganization, arrangement, insolvency, readjustment of debt, dissolution,

liquidation, or similar law of any jurisdiction, now or hereafter in effect, or

shall take any action to authorize or in furtherance of any of the foregoing,

or if any such petition or application shall be filed or any such Proceeding

shall be commenced against the Borrower, Alliance Distributors, the General

Partner, or any Material Subsidiary and any of such parties shall indicate its

approval thereof, consent thereto, or acquiescence therein;

 

(i)                                     either (i) an involuntary Proceeding

relating to the Borrower, Alliance Distributors, the General Partner, or any

Material Subsidiary under any bankruptcy, reorganization, arrangement,

insolvency, readjustment of debt, dissolution, liquidation, or similar law of

any jurisdiction, now or hereafter in effect is commenced and not dismissed or

vacated within sixty (60) days following entry thereof, or (ii) a decree or

order is entered appointing any trustee, custodian, liquidator, or receiver

described in (h) or adjudicating the Borrower, Alliance Distributors, the

General Partner, or any Material Subsidiary bankrupt or insolvent, or approving

a petition in any such Proceeding, or a decree or order for relief is entered

in respect of the Borrower, Alliance Distributors, the General Partner, or any

Material Subsidiary in an involuntary Proceeding under federal bankruptcy laws

as now or hereafter constituted;

 

(j)                                     there shall remain in force,

undischarged, unsatisfied, and unstayed, for more than forty-five (45) days,

any final judgment or order against the Borrower or any of its Subsidiaries,

that, with any other such outstanding final judgments or orders, undischarged,

against the Borrower and its Subsidiaries taken together exceeds in the

aggregate $50,000,000;

 

(k)                                  with respect to any Guaranteed Pension

Plan, an ERISA Reportable Event shall have occurred and the Majority Banks shall

have determined in their reasonable discretion that such event reasonably could

be expected to result in liability of the Borrower or any of its Subsidiaries

to the PBGC or such Guaranteed Pension Plan in an aggregate amount

 

52

 

exceeding $50,000,000 and such event in the circumstances occurring

reasonably could constitute grounds for the termination of such Guaranteed

Pension Plan by the PBGC or for the appointment by the appropriate United

States District Court of a trustee to administer such Guaranteed Pension Plan;

or a trustee shall have been appointed by the United States District Court to

administer such Guaranteed Pension Plan; or the PBGC shall have instituted

proceedings to terminate such Guaranteed Pension Plan;

 

(l)                                     any of the following: (i) the Borrower

shall fail to be duly registered as an “investment adviser” under the

Investment Advisers Act of 1940; or (ii) Alliance Distributors shall cease to

be duly registered as a “broker/dealer” under the Securities Exchange Act of

1934 or shall cease to be a member in good standing of the National Association

of Securities Dealers, Inc., in each case, to the extent required;

 

(m)                               the Borrower, Alliance Distributors, the

General Partner, or any Material Subsidiary shall either (i) be indicted for a

federal or state crime and, in connection with such indictment, Government

Authorities shall seek to seize or attach, or seek a civil forfeiture of,

property of the Borrower, Alliance Distributors, the General Partner, or one or

more of such Material Subsidiaries having a fair market value in excess of

$50,000,000, or (ii) be found guilty of, or shall plead guilty, no contest, or nolo

contendere to, any federal or state crime, a punishment for which could

include a fine, penalty, or forfeiture of any assets of the Borrower, Alliance

Distributors, the General Partner, or such Material Subsidiary having in any

such case a fair market value in excess of $50,000,000; or

 

(n)                                 Alliance Capital Management Corporation shall

cease to be the sole general partner of the Borrower, and such circumstance

shall continue for thirty (30) days after written notice of such circumstance

has been given to the Borrower, provided,  that  the

admission of additional Persons as general partner of the Borrower shall not

constitute an Event of Default if, prior to the admission of any such general

partner, the Borrower delivers to the Banks (i) the documentation with respect

to such general partner that would be required under Section 9.3 if such Person

were a General Partner on the Closing Date, (ii) an incumbency certificate for

such general partner as required for the Borrower pursuant to Section 9.8, and

(iii) an opinion from counsel reasonably acceptable to the Banks, in form and

substance reasonably satisfactory to the Banks, as to such general partner’s

power and authority to act on behalf of the Borrower as a general partner of

the Borrower;

 

then, and in any such

event, so long as the same may be continuing, the Administrative Agent, upon

the request of the Majority Banks, shall by notice in writing to the Borrower

declare all amounts owing with respect to this Credit Agreement, any Notes, and

the other Loan Documents to be, and they shall thereupon forthwith become,

immediately due and payable without presentment, demand, protest, or other

notice of any kind, all of which are hereby expressly waived by the Borrower;

provided that in the event of any Event of Default specified in Section 11.1(h)

or Section 11.1(i), all such amounts shall become immediately due and payable

automatically and without any requirement of notice from the Administrative

Agent or any Bank; and provided, further, that any such declaration may be

rescinded by the Majority Banks after the Events of Default leading to such

declaration are cured or waived.

 

11.2                           Termination of Commitments .  If any one or more of the Events of Default

specified in Section 11.1(h) or Section 11.1(i) shall occur, any unused portion

of the Total

 

53

 

Commitment hereunder

shall forthwith terminate and each of the Banks shall be relieved of all

obligations to make Loans to the Borrower. 

If any other Event of Default shall have occurred and be continuing, or

if on any Drawdown Date the conditions precedent to the making of the Loans to

be made on such Drawdown Date are not satisfied, the Administrative Agent may

with the consent of the Majority Banks and, upon the request of the Majority

Banks, shall, by notice to the Borrower, terminate the unused portion of the

Total Commitment hereunder, and upon such notice being given such unused

portion of the Total Commitment hereunder shall terminate immediately and each

of the Banks shall be relieved of all further obligations to make Loans.  If any such notice is given to the Borrower,

the Administrative Agent will forthwith furnish a copy thereof to each of the

Banks. No termination of the Total Commitment hereunder shall relieve the

Borrower of any of the Obligations or any of its existing obligations to any of

the Banks arising under other agreements or instruments.

 

11.3                           Remedies

 

(a)                                  In case any one or more of the Events of

Default shall have occurred and be continuing, and whether or not the

Administrative Agent shall have accelerated the maturity of the Loans pursuant

to Section 11.1, each Bank, if owed any amount with respect to the Loans may

with the consent of the Majority Banks but not otherwise, proceed to protect

and enforce its rights by any appropriate Proceeding, whether for the specific

performance of any covenant or agreement contained in this Credit Agreement and

the other Loan Documents or any instrument pursuant to which the Obligations to

such Bank are evidenced, including as permitted by applicable Government

Mandate the obtaining of the ex parte appointment of a receiver, and, if such

amount shall have become due, by declaration or otherwise, proceed to enforce

the payment thereof or any other legal or equitable right of such Bank.

 

(b)                                 No remedy herein conferred upon any Bank

or the Administrative Agent or the holder of any Note is intended to be

exclusive of any other remedy, and each and every remedy shall be cumulative

and shall be in addition to every other remedy given hereunder or now or

hereafter existing at law or in equity or by any Government Mandate.

 

11.4                           Application of Monies.  In the event that, during the continuance of

any Default or Event of Default, the Administrative Agent or any Bank, as the

case may be, receives any monies in connection with the enforcement of rights

under the Loan Documents, such monies shall be distributed for application as

follows:

 

(a)                                  First, to the payment of, or (as the case

may be) the reimbursement of the Administrative Agent and the Banks for or in

respect of all costs, expenses, disbursements, and losses that shall have been

incurred or sustained by the Administrative Agent and the Banks in connection

with the collection of such monies by the Administrative Agent or any such

Banks, for the exercise, protection, or enforcement by the Administrative Agent

or any such Banks of all or any of the rights, remedies, powers, and privileges

of the Administrative Agent or any such Banks under this Credit Agreement or

any of the other Loan Documents, or in support of any provision of adequate

indemnity to the Administrative Agent or any such Banks against any taxes or

Liens that by Government Mandate shall have, or may have, priority over the

rights of the Administrative Agent or any such Banks to such monies;

 

54

 

(b)                                 Second, to all other Obligations in such

order or preference as the Majority Banks may determine; provided, however,

that distributions among Obligations owing to the Banks and the Administrative

Agent with respect to each type of Obligation such as interest, principal,

fees, and expenses, shall be made among the Banks and the Administrative Agent pro

rata according to the respective amounts thereof; and provided, further,

that the Administrative Agent may in its discretion make proper allowance to

take into account any Obligations not then due and payable; and

 

(c)                                  Third, the excess, if any, shall be

returned to the Borrower or to such other Persons as are entitled thereto.

 

12.                                 SETOFF.

 

Regardless of the

adequacy of any collateral, during the continuance of any Event of Default, any

deposits or other sums credited by or due from any of the Banks to the Borrower

and any securities or other property of the Borrower in the possession of such

Bank may be applied to or set off by such Bank against the payment of

Obligations and any and all other liabilities, direct, or indirect, absolute or

contingent, due or to become due, now existing or hereafter arising, of the

Borrower to such Bank.  Each of the

Banks agrees with each other Bank that if such Bank shall receive from the

Borrower, whether by voluntary payment, exercise of the right of setoff,

counterclaim, cross action, enforcement of the Obligations held by such Bank by

Proceedings against the Borrower, by proof thereof in bankruptcy, reorganization,

liquidation, receivership, or similar Proceedings, or otherwise, and shall

retain and apply to the payment of the Obligations held by such Bank, any

amount in excess of its ratable portion of the payments received by all of the

Banks with respect to the Obligations held by all of the Banks (exclusive of

payments to be made for the account of less than all of the Banks as provided

in Sections 3.2.2, 4.8, and 4.9), such Bank will make such disposition and

arrangements with the other Banks with respect to such excess, either by way of

distribution, pro  tanto assignment of claims, subrogation or

otherwise as shall result in each Bank receiving in respect of the Obligations

held by it, its proportionate payment as contemplated by this Credit Agreement;

provided that if all or any part of such excess payment is thereafter

recovered from such Bank, such disposition and arrangements shall be rescinded

and the amount restored to the extent of such recovery, but without interest.

 

13.                                 THE ADMINISTRATIVE AGENT.

 

13.1                           Appointment and Authorization of

Administrative Agent.  Each Bank hereby irrevocably appoints,

designates and authorizes the Administrative Agent to take such action on its

behalf under the provisions of this Credit Agreement and each other Loan Document

and to exercise such powers and perform such duties as are expressly delegated

to it by the terms of this Credit Agreement or any other Loan Document,

together with such powers as are reasonably incidental thereto.  Notwithstanding any provision to the

contrary contained elsewhere herein or in any other Loan Document, the

Administrative Agent shall not have any duties or responsibilities, except

those expressly set forth herein, nor shall the Administrative Agent have or be

deemed to have any fiduciary relationship with any Bank or participant, and no

implied covenants, functions, responsibilities, duties, obligations or

liabilities shall be read into this Credit Agreement or any other Loan Document

or otherwise exist against the Administrative Agent.  Without limiting the generality of the foregoing sentence, the

use of the term “agent” herein and in the other Loan Documents with reference

to the Administrative Agent is not intended to

 

55

 

connote any fiduciary or

other implied (or express) obligations arising under agency doctrine of any

applicable law.  Instead, such term is

used merely as a matter of market custom, and is intended to create or reflect

only an administrative relationship between independent contracting parties.

 

13.2                           Delegation of Duties.  The Administrative Agent may execute any of

its duties under this Credit Agreement or any other Loan Document by or through

agents, employees or attorneys-in-fact and shall be entitled to advice of counsel

and other consultants or experts concerning all matters pertaining to such

duties.  The Administrative Agent shall

not be responsible for the negligence or misconduct of any agent or

attorney-in-fact that it selects in the absence of gross negligence or willful

misconduct.

 

13.3                           Liability of Administrative Agent.  No Agent-Related Person shall (a) be liable

for any action taken or omitted to be taken by any of them under or in

connection with this Credit Agreement or any other Loan Document or the transactions

contemplated hereby (except for its own gross negligence or willful misconduct

in connection with its duties expressly set forth herein), or (b) be

responsible in any manner to any Bank or participant for any recital,

statement, representation or warranty made by the Borrower or any officer

thereof, contained herein or in any other Loan Document, or in any certificate,

report, statement or other document referred to or provided for in, or received

by the Administrative Agent under or in connection with, this Credit Agreement

or any other Loan Document, or the validity, effectiveness, genuineness,

enforceability or sufficiency of this Credit Agreement or any other Loan

Document, or for any failure of the Borrower or any other party to any Loan

Document to perform its obligations hereunder or thereunder.  No Agent-Related Person shall be under any

obligation to any Bank or participant to ascertain or to inquire as to the

observance or performance of any of the agreements contained in, or conditions

of, this Credit Agreement or any other Loan Document, or to inspect the

properties, books or records of the Borrower or any Affiliate thereof.

 

13.4                           Reliance by Administrative Agent..

 

(a)                                  The Administrative Agent shall be

entitled to rely, and shall be fully protected in relying, upon any writing,

communication, signature, resolution, representation, notice, consent,

certificate, affidavit, letter, telegram, facsimile, telex or telephone

message, electronic mail message, statement or other document or conversation

reasonably believed by it to be genuine and correct and to have been signed,

sent or made by the proper Person or Persons, and upon advice and statements of

legal counsel (including counsel to the Borrower), independent accountants and

other experts selected by the Administrative Agent.  The Administrative Agent shall be fully justified in failing or

refusing to take any action under any Loan Document unless it shall first

receive such advice or concurrence of the Majority Banks (or, if required hereunder,

all directly-affected Banks) as it deems appropriate and, if it so requests, it

shall first be indemnified to its reasonable satisfaction by the Banks against

any and all liability and expense which may be incurred by it by reason of

taking or continuing to take any such action. 

The Administrative Agent shall in all cases be fully protected in

acting, or in refraining from acting, under this Credit Agreement or any other

Loan Document in accordance with a request or consent of the Majority Banks or

all the Banks, if required hereunder, and such request and any action taken or

failure to act pursuant thereto shall be binding upon all the Banks and

participants.

 

56

 

(b)                                 For purposes of determining compliance

with the conditions specified in Section 9, each Bank that has signed this

Credit Agreement shall be deemed to have consented to, approved or accepted or

to be satisfied with, each document or other matter required thereunder to be

consented to or approved by or acceptable or satisfactory to a Bank unless the

Administrative Agent shall have received notice from such Bank prior to the

proposed Closing Date specifying its objection thereto.

 

13.5                           Notice of Default.  The Administrative Agent shall not be deemed

to have knowledge or notice of the occurrence of any Default, except with

respect to defaults in the payment of principal, interest and fees required to

be paid to the Administrative Agent for the account of the Banks, unless the

Administrative Agent shall have received written notice from a Bank or the

Borrower referring to this Credit Agreement, describing such Default and

stating that such notice is a “notice of default.”  The Administrative Agent will notify the Banks of its receipt of

any such notice.  The Administrative

Agent shall take such action with respect to such Default as may be directed by

the Majority Banks in accordance with Section 11; provided, however, that

unless and until the Administrative Agent has received any such direction, the

Administrative Agent may (but shall not be obligated to) take such action, or

refrain from taking such action, with respect to such Default as it shall deem

advisable or in the best interest of the Banks.

 

13.6                           Credit Decision; Disclosure of Information

by Administrative Agent. 

Each Bank acknowledges that no Agent-Related Person has made any

representation or warranty to it, and that no act by the Administrative Agent

hereafter taken, including any consent to and acceptance of any assignment or

review of the affairs of the Borrower or any Affiliate thereof, shall be deemed

to constitute any representation or warranty by any Agent-Related Person to any

Bank as to any matter, including whether Agent-Related Persons have disclosed

material information in their possession. 

Each Bank represents to the Administrative Agent that it has,

independently and without reliance upon any Agent-Related Person and based on

such documents and information as it has deemed appropriate, made its own

appraisal of and investigation into the business, prospects, operations,

property, financial and other condition and creditworthiness of the Borrower

and its Subsidiaries, and all applicable bank or other regulatory laws relating

to the transactions contemplated hereby, and made its own decision to enter

into this Agreement and to extend credit to the Borrower hereunder.  Each Bank also represents that it will,

independently and without reliance upon any Agent-Related Person and based on

such documents and information as it shall deem appropriate at the time,

continue to make its own credit analysis, appraisals and decisions in taking or

not taking action under this Credit Agreement and the other Loan Documents, and

to make such investigations as it deems necessary to inform itself as to the

business, prospects, operations, property, financial and other condition and

creditworthiness of the Borrower. 

Except for notices, reports and other documents expressly required to be

furnished to the Banks by the Administrative Agent herein, the Administrative

Agent shall not have any duty or responsibility to provide any Bank with any

credit or other information concerning the business, prospects, operations,

property, financial and other condition or creditworthiness of any of the

Borrower or any of its Affiliates which may come into the possession of any

Agent-Related Person.

 

13.7                           Indemnification of Administrative Agent.

 Whether or not the transactions contemplated hereby are

consummated, the Banks shall indemnify upon demand each Agent-Related Person

(to the extent not reimbursed by or on behalf of the Borrower and without

limiting the obligation of the Borrower to do so), pro rata, and hold harmless

each Agent-Related Person

 

57

 

from and against any and

all Indemnified Liabilities incurred by it; provided, however, that no Bank

shall be liable for the payment to any Agent-Related Person of any portion of

such Indemnified Liabilities to the extent determined in a final, nonappealable

judgment by a court of competent jurisdiction to have resulted from such

Agent-Related Person’s own gross negligence or willful misconduct; provided,

however, that no action taken in accordance with the directions of the Majority

Banks shall be deemed to constitute gross negligence or willful misconduct for

purposes of this Section.  Without

limitation of the foregoing, each Bank shall reimburse the Administrative Agent

upon demand for its ratable share of any costs or out-of-pocket expenses

(including reasonable attorneys’ fees and expenses and non-duplicative

reasonable costs of internal legal counsel) incurred by the Administrative

Agent in connection with the preparation, execution, delivery, administration,

modification, amendment or enforcement (whether through negotiations, legal

proceedings or otherwise) of, or legal advice in respect of rights or

responsibilities under, this Credit Agreement, any other Loan Document, or any

document contemplated by or referred to herein, to the extent that the

Administrative Agent is not reimbursed for such expenses by or on behalf of the

Borrower.  The undertaking in this

Section shall survive termination of the Total Commitment, the payment of all

Obligations hereunder and the resignation of the Administrative Agent.

 

13.8                           Individual Capacity. 

Bank of America and its affiliates may make loans to, issue letters of

credit for the account of, accept deposits from, acquire equity interests in

and generally engage in any kind of banking, trust, financial advisory,

underwriting or other business with the Borrower and its Affiliates as though

Bank of America were not the Administrative Agent hereunder and without notice

to or consent of the Banks.  The Banks

acknowledge that, pursuant to such activities, Bank of America or its affiliates

may receive information regarding the Borrower or its Affiliates (including

information that may be subject to confidentiality obligations in favor of the

Borrower or such Affiliate) and acknowledge that the Administrative Agent shall

be under no obligation to provide such information to them.  With respect to its Loans, Bank of America

shall have the same rights and powers under this Agreement as any other Bank

and may exercise such rights and powers as though it were not the

Administrative Agent, and the terms “Bank” and “Banks” include Bank of America

in its individual capacity.

 

13.9                           Successor Administrative Agent.  The Administrative Agent may resign as

Administrative Agent upon sixty (60) days’ prior written notice to the Banks

and the Borrower.  If the Administrative

Agent resigns under this Agreement, the Majority Banks shall appoint from among

the Banks a successor administrative agent for the Banks which successor

administrative agent shall be subject to consent by the Borrower at all times other

than during the existence of an Event of Default (which consent of the Borrower

shall not be unreasonably withheld or delayed).  If no successor administrative agent is appointed within thirty

(30) days of the date of such notice of resignation of the Administrative

Agent, the Administrative Agent may appoint, after consulting with the Banks

and the Borrower, a successor administrative agent from among the Banks,

provided that, such successor administrative agent shall be a financial

institution having a rating of not less than A or its equivalent by Standard

& Poor’s Ratings Services.  Upon the

acceptance of its appointment as successor administrative agent hereunder, the

Person acting as such successor administrative agent shall succeed to all the

rights, powers and duties of the retiring Administrative Agent and the term

“Administrative Agent” shall mean such successor administrative agent and the

retiring Administrative Agent’s appointment, powers and duties as

Administrative Agent shall be terminated. 

After any retiring Administrative Agent’s resignation hereunder as

Administrative Agent, the provisions of this Section 13 and Sections 14 and 15

shall

 

58

 

inure to its benefit as

to any actions taken or omitted to be taken by it while it was Administrative

Agent under this Credit Agreement.  If

no successor administrative agent has accepted appointment as Administrative

Agent by the date which is sixty (60) days following a retiring Administrative

Agent’s notice of resignation, the retiring Administrative Agent’s resignation

shall nevertheless thereupon become effective and the Banks shall perform all

of the duties of the Administrative Agent hereunder until such time, if any, as

the Majority Banks appoint a successor agent as provided for above.

 

13.10                     Administrative Agent May File Proofs of

Claim. 

 

In case of the pendency

of any receivership, insolvency, liquidation, bankruptcy, reorganization,

arrangement, adjustment, composition or other judicial proceeding relative to

the Borrower, the Administrative Agent (irrespective of whether the principal

of any Loan shall then be due and payable as herein expressed or by declaration

or otherwise and irrespective of whether the Administrative Agent shall have made

any demand on the Borrower) shall be entitled and empowered, by intervention in

such proceeding or otherwise

 

(a)                                  to file and prove a claim for the whole

amount of the principal and interest owing and unpaid in respect of the Loans

and all other Obligations that are owing and unpaid and to file such other

documents as may be necessary or advisable in order to have the claims of the

Banks and the Administrative Agent (including any claim for the reasonable

compensation, expenses, disbursements and advances of the Banks and the

Administrative Agent and their respective agents and counsel and all other

amounts due the Banks and the Administrative Agent under Sections 2.2, 2.3, the

Fee Letter and Section 14) allowed in such judicial proceeding; and

 

(b)                                 to collect and receive any monies or

other property payable or deliverable on any such claims and to distribute the

same;

 

and any custodian, receiver, assignee, trustee,

liquidator, sequestrator or other similar official in any such judicial

proceeding is hereby authorized by each Bank to make such payments to the

Administrative Agent and, in the event that the Administrative Agent shall

consent to the making of such payments directly to the Banks, to pay to the

Administrative Agent any amount due for the reasonable compensation, expenses,

disbursements and advances of the Administrative Agent and its agents and

counsel, and any other amounts due the Administrative Agent under Sections 2.2,

2.3, the Fee Letter and Section 14.

 

Nothing contained herein

shall be deemed to authorize the Administrative Agent to authorize or consent

to or accept or adopt on behalf of any Bank any plan of reorganization,

arrangement, adjustment or composition affecting the Obligations or the rights

of any Bank or to authorize the Administrative Agent to vote in respect of the

claim of any Bank in any such proceeding.

 

13.11                     Other Agents; Arrangers and Managers.  None of the Banks or other Persons identified

on the facing page or signature pages of this Agreement as a “co-syndication agent,”

“co-documentation agent,” “book manager,” or “arranger” shall have any right,

power, obligation, liability, responsibility or duty under this Credit

Agreement other than, in the case of such Banks, those applicable to all Banks

in their individual capacity as parties hereto.  Without

 

59

 

limiting the foregoing,

none of the Banks or other Persons so identified shall have or be deemed to

have any fiduciary relationship with any Bank. 

Each Bank acknowledges that it has not relied, and will not rely, on any

of the Banks or other Persons so identified in deciding to enter into this

Credit Agreement or in taking or not taking action hereunder.

 

13.12                     Payments.

 

13.12.1            Payments to Administrative Agent. 

A payment by the Borrower to the Administrative Agent hereunder or under

any of the other Loan Documents for the account of any Bank shall constitute a

payment to such Bank.  The

Administrative Agent shall promptly distribute to each Bank such Bank’s pro

rata share of payments received by the Administrative Agent for the account

of the Banks except as otherwise expressly provided herein or in any of the

other Loan Documents.

 

13.12.2            Distribution by Administrative Agent.  If in the

reasonable opinion of the Administrative Agent the distribution of any amount

received by it in such capacity hereunder, under any Notes, or under any of the

other Loan Documents might involve it in liability, it may refrain from making

distribution until its right to make the same shall have been adjudicated by a

court of competent jurisdiction.  If any

Government Authority shall adjudge that any amount received and distributed by

the Administrative Agent is to be repaid, each Person to whom any such

distribution shall have been made shall either repay to the Administrative

Agent its proportionate share of the amount so adjudged to be repaid or shall

pay over the same in such manner and to such Persons as shall be determined by

such Government Authority.

 

13.12.3            Delinquent Banks.  Notwithstanding anything to

the contrary contained in this Credit Agreement or any of the other Loan

Documents, any Bank that fails (a) to make available to the Administrative

Agent its pro  rata share of any Loan, or (b) to comply with the

provisions of Section 12 with respect to making dispositions and arrangements

with the other Banks, where such Bank’s share of any payment received, whether

by setoff or otherwise, is in excess of its pro  rata share of

such payments due and payable to all of the Banks, in each case as, when, and

to the full extent required by the provisions of this Credit Agreement, shall

be deemed delinquent (a “Delinquent  Bank”) and shall be deemed a

Delinquent Bank until such time as such delinquency is satisfied.  A Delinquent Bank shall be deemed to have

assigned any and all payments due to it from the Borrower, whether on account

of Outstanding Loans, interest, fees, or otherwise, to the remaining

nondelinquent Banks for application to, and reduction of, their respective pro

rata shares of all Outstanding Loans. 

The Delinquent Bank hereby authorizes the Administrative Agent to

distribute such payments to the nondelinquent Banks in proportion to their

respective pro  rata shares of all Outstanding Loans.  A Delinquent Bank shall be deemed to have

satisfied in full a delinquency when and if, as a result of application of the

assigned payments to all Outstanding Loans of the non-delinquent Banks, the

Banks’ respective pro  rata shares of all Outstanding Loans have

returned to those in effect immediately prior to such delinquency and without

giving effect to the nonpayment causing such delinquency.

 

13.13                     Holders of Notes.  Subject to Section 17, the Administrative

Agent may deem and treat the payee of any Note as the absolute owner thereof

for all purposes hereof until it shall have been furnished in writing with a

different name by such payee or by a subsequent holder, assignee, or

transferee.

 

60

 

14.                                 EXPENSES.

 

The Borrower shall

upon demand either, as the Banks or the Administrative Agent may require and

regardless of whether any Loans are made hereunder, pay in the first instance

or reimburse the Banks and the Administrative Agent (to the extent that

payments for the following items are not made under the other provisions

hereof) for (a) the reasonable out-of-pocket costs of producing and reproducing

this Credit Agreement, the other Loan Documents, and the other agreements and

instruments mentioned herein, (b) reasonable out-of-pocket expenses incurred in

connection with the syndication of this facility, (c) any taxes (including any

interest and penalties in respect thereto) payable by the Administrative Agent

or any of the Banks (other than taxes based upon the Administrative Agent’s or

any Bank’s income or profits) on or with respect to the transactions

contemplated by this Credit Agreement, (d) the reasonable fees, expenses, and

disbursements of the Administrative Agent’s special counsel incurred in

connection with the preparation, the administration, or interpretation of the

Loan Documents, the other instruments mentioned herein, and the term sheet for

the transactions contemplated by this Credit Agreement, each closing hereunder,

and amendments, modifications, approvals, consents or waivers hereto or

hereunder, (e) the reasonable fees, expenses, and disbursement of the

Administrative Agent incurred by the Administrative Agent in connection with

the preparation, administration, or interpretation of the Loan Documents and

other instruments mentioned herein, (f) all reasonable out-of-pocket expenses

(including reasonable attorneys’ fees and costs, which attorneys may be

employees of any Bank or the Administrative Agent (provided such fees are

non-duplicative of fees of outside counsel), and reasonable consulting,

accounting, appraisal, investment banking, and similar professional fees and

charges) incurred by any Bank or the Administrative Agent in connection with

(i) the enforcement of or preservation of rights under any of the Loan

Documents against the Borrower or any of its Subsidiaries or the administration

thereof after the occurrence of a Default or Event of Default and (ii) any

Proceeding or dispute whether arising hereunder or otherwise, in any way

related to any Bank’s or the Administrative Agent’s relationship with the

Borrower or any of its Subsidiaries. 

The Borrower shall not be responsible under clause (f) above for the

fees and costs of more than one law firm in any one jurisdiction with respect

to any one Proceeding or set of related Proceedings for the Administrative

Agent and the Banks, unless any of the Administrative Agent and the Banks shall

have reasonably concluded that there are legal defenses available to it that

are different from or additional to those available to the Borrower or there

are other circumstances that in the reasonable judgment of the Administrative

Agent and the Banks make separate counsel advisable.  The covenants of this Section 14 shall survive payment or

satisfaction of all other Obligations.

 

15.                                 INDEMNIFICATION.

 

The Borrower

shall, regardless of whether any Loans are made hereunder, indemnify and hold

harmless the Administrative Agent and the Banks, together with their respective

shareholders, directors, agents, officers, Subsidiaries, and Affiliates, from

and against any and all damages, losses, settlement payments, obligations,

liabilities, claims, causes of action, and Proceedings, and reasonable costs

and expenses in connection therewith, incurred, suffered, sustained, or

required to be paid by an indemnified party by reason of or resulting, directly

or indirectly, from the transactions contemplated by the Loan Documents,

including (a) any actual or proposed use by the Borrower or any of its

Subsidiaries of the proceeds of any of the Loans, (b) the Borrower or any of

its Subsidiaries entering into or performing this Credit Agreement or any of

the other Loan Documents, or (c) with respect to the Borrower and its

Subsidiaries and

 

61

 

their respective properties and assets, the violation of any

Environmental Law, the presence, disposal, escape, seepage, leakage, spillage,

discharge, emission, release, or threatened release of any Hazardous Substances

or any Proceeding brought or threatened with respect to any Hazardous

Substances (including claims with respect to wrongful death, personal injury,

or damage to property), in each case including the reasonable fees and

disbursements of legal counsel and non-duplicative reasonable allocated costs

of internal legal counsel incurred in connection with any such Proceeding

(collectively, the “Indemnified Liabilities”), provided, however,

the Borrower shall not be obligated to indemnify any party for any damages,

losses, settlement payments, obligations, liabilities, claims, causes of

action, Proceedings, costs, and expenses that were caused directly by (i) the

gross negligence or willful misconduct of the indemnified party or (ii) any

breach by any Bank of its obligation to fund a Loan pursuant to this Credit

Agreement, provided that the Borrower is not then in Default.  In Proceedings, or the preparation therefor,

the indemnified parties shall be entitled to select their legal counsel and, in

addition to the foregoing indemnity, the Borrower shall, promptly upon demand,

pay in the first instance, or reimburse the indemnified parties for, the

reasonable fees and expenses of such legal counsel.  The Borrower shall not be responsible under this section for the

fees and costs of more than one law firm in any one jurisdiction for the

Borrower and the indemnified parties with respect to any one Proceeding or set

of related Proceedings, unless any indemnified party shall have reasonably

concluded that there are legal defenses available to it that are different from

or additional to those available to the Borrower or there are other

circumstances that in the reasonable judgment of the indemnified parties make

separate counsel advisable.  If, and to

the extent that the obligations of the Borrower under this Section 15 are

unenforceable for any reason, the Borrower shall make the maximum contribution

to the payment in satisfaction of such obligations that is permissible under

applicable law.  The covenants contained

in this Section 15 shall survive payment or satisfaction in full of all other

Obligations.

 

16.                                 SURVIVAL OF COVENANTS, ETC.

 

All covenants,

agreements, representations, and warranties made herein, in any Notes, in any

of the other Loan Documents, or in any documents or other papers delivered by

or on behalf of the Borrower or any of its Subsidiaries pursuant hereto shall

be deemed to have been relied upon by the Banks and the Administrative Agent,

notwithstanding any investigation heretofore or hereafter made by any of them,

and shall survive the making by the Banks of the Loans, as herein contemplated,

and shall continue in full force and effect so long as any amount due under

this Credit Agreement or any Notes or any of the other Loan Documents remains

outstanding or any Bank has any obligation to make any Loans, and for such

further time as may be otherwise expressly specified in this Credit

Agreement.  All statements contained in

any certificate or other paper delivered to any Bank or the Administrative

Agent at any time by or on behalf of the Borrower or any of its Subsidiaries

pursuant hereto or in connection with the transactions contemplated hereby

shall constitute representations and warranties by the Borrower or such

Subsidiary hereunder.

 

17.                                 ASSIGNMENT AND PARTICIPATION.

 

17.1                           Conditions to Assignment by Banks.  Except as provided herein, each Bank may

assign to one or more Eligible Assignees all or a portion of its interests,

rights, and obligations under this Credit Agreement (including all or a portion

of its Commitment Percentage and Commitment and the same portion of the Loans

at the time owing to it) and any Notes held by it;

 

62

 

provided

that (a) the Administrative Agent and, so long as no Event of Default has

occurred and is continuing, the Borrower shall have given its prior written

consent to such assignment, which consents will not be unreasonably withheld,

provided that, if no Event of Default has occurred and is continuing, no Bank

may assign its rights and obligations hereunder if such assignment would result

in a reduction of or a withdrawal of the then current rating of the commercial

paper notes of the Borrower (b) each such assignment shall be of a constant,

and not a varying, percentage of all the assigning Bank’s rights and

obligations under this Credit Agreement, (c) each assignment of less than all

of the assigning Bank’s rights and obligations under this Credit Agreement,

shall be in an amount equal to $10,000,000 or in integral multiples of

$1,000,000 in excess thereof, and (d) the parties to such assignment shall

execute and deliver to the Administrative Agent, for recording in the Register

(as hereinafter defined), an Assignment and Acceptance, substantially in the

form of Exhibit H hereto (an “Assignment and Acceptance”),

together with any Notes subject to such assignment.  Upon such execution, delivery, acceptance, and recording, from

and after the effective date specified in each Assignment and Acceptance, which

effective date shall be at least five (5) Business Days after the execution

thereof, (i) the assignee thereunder shall be a party hereto and, to the extent

provided in such Assignment and Acceptance, have the rights and obligations of

a Bank hereunder, and (ii) the assigning Bank shall, to the extent provided in

such assignment and upon payment to the Administrative Agent of the

registration fee referred to in Section 17.3, be released from its obligations

under this Credit Agreement.

 

17.2                           Certain Representations and Warranties;

Limitations; Covenants.  By executing and delivering an Assignment

and Acceptance, the parties to the assignment thereunder confirm to and agree

with each other and the other parties hereto as follows: (a) other than the

representation and warranty that it is the legal and beneficial owner of the

interest being assigned thereby free and clear of any adverse claim, the

assigning Bank makes no representation or warranty, express or implied, and

assumes no responsibility with respect to any statements, warranties, or

representations made in or in connection with this Credit Agreement or the

execution, legality, validity, enforceability, genuineness, sufficiency, or

value of this Credit Agreement, the other Loan Documents or any other

instrument or document furnished pursuant hereto; (b) the assigning Bank makes

no representation or warranty and assumes no responsibility with respect to the

financial condition of the Borrower and its Subsidiaries or any other Person

primarily or secondarily liable in respect of any of the Obligations, or the

performance or observance by the Borrower and its Subsidiaries or any other

Person primarily or secondarily liable in respect of any of the Obligations or

any of their obligations under this Credit Agreement or any of the other Loan

Documents or any other instrument or document furnished pursuant hereto or

thereto; (c) such assignee confirms that it has received a copy of this Credit

Agreement, together with copies of the most recent financial statements

referred to in Section 5.4 and Section 6.4 and such other documents and information

as it has deemed appropriate to make its own credit analysis and decision to

enter into such Assignment and Acceptance; (d) such assignee will,

independently and without reliance upon the assigning Bank, the Administrative

Agent, or any other Bank and based on such documents and information as it

shall deem appropriate at the time, continue to make its own credit decisions

in taking or not taking action under this Credit Agreement; (e) such assignee

represents and warrants that it is an Eligible Assignee; (f) such assignee

appoints and authorizes the Administrative Agent to take such action as agent

on its behalf and to exercise such powers under this Credit Agreement and the

other Loan Documents as are delegated to the Administrative Agent by the terms

hereof or thereof, together with such powers as are reasonably incidental

thereto; (g) such assignee agrees that it will perform in

 

63

 

accordance with their

terms all of the obligations that by the terms of this Credit Agreement are

required to be performed by it as a Bank; and (h) such assignee represents and

warrants that it is legally authorized to enter into such Assignment and

Acceptance.

 

17.3                           Register.  The Administrative Agent shall maintain a

copy of each Assignment and Acceptance delivered to it and a register or

similar list (the “Register”) for the recordation of the names and

addresses of the Banks and the Commitment Percentage of, and principal amount

of the Loans owing to the Banks from time to time.  The entries in the Register shall be conclusive, in the absence

of manifest error, and the Borrower, the Administrative Agent, and the Banks

may treat each Person whose name is recorded in the Register as a Bank

hereunder for all purposes of this Credit Agreement.  The Register shall be available for inspection by the Borrower

and the Banks at any reasonable time and from time to time upon reasonable

prior notice.  Upon each such

recordation, the assigning Bank agrees to pay to the Administrative Agent a

registration fee in the sum of $3,500.

 

17.4                           New Notes.  Upon its receipt of an Assignment and

Acceptance executed by the parties to such assignment, together with any Note

subject to such assignment, the Administrative Agent shall (a) record the information

contained therein in the Register, and (b) give prompt notice thereof to the

Borrower and the Banks (other than the assigning Bank).  Within five (5) Business Days after receipt

of such notice, if requested by the Eligible Assignee, the Borrower, at its own

expense, shall execute and deliver to the Administrative Agent, in exchange for

each surrendered Note, a new Note to the order of such Eligible Assignee in an

amount equal to the amount assumed by such Eligible Assignee pursuant to such

Assignment and Acceptance and, at the request of the Administrative Agent or

the assigning Bank, if the assigning Bank has retained some portion of its

obligations hereunder, a new Note to the order of the assigning Bank in an

amount equal to the amount retained by it hereunder. Such new Notes shall

provide that they are replacements for the surrendered Notes, shall be in an

aggregate principal amount equal to the aggregate principal amount of the

surrendered Notes, shall be dated the effective date of such Assignment and

Acceptance and shall otherwise be in substantially the form of the assigned

Notes.  The surrendered Notes shall be

cancelled and returned to the Borrower.

 

17.5                           Participations.  Each Bank may sell participations to one or

more banks or other entities in all or a portion of such Bank’s rights and

obligations under this Credit Agreement and the other Loan Documents; provided

that (a) any such sale or participation shall not affect the rights and duties

of the selling Bank hereunder to the Borrower, (b) the only rights granted to

the participant pursuant to such participation arrangements with respect to

waivers, amendments, or modifications of the Loan Documents shall be the rights

to approve waivers, amendments or modifications that require the unanimous

consent of the Banks pursuant to Section 24 and (c) such participation shall be

in a minimum amount of $1,000,000 or in integral multiples of $1,000,000 in

excess thereof.  Each Bank shall,

promptly upon request of the Borrower in each instance, disclose to the

Borrower the parties to which such Bank has granted participations under this

section unless such Bank is subject to a contractual restriction not to do so.

 

17.6                           Disclosure.  Any Bank may disclose information obtained by

such Bank pursuant to this Credit Agreement to assignees or participants and

potential assignees or participants hereunder subject to Section 6.4(e).

 

64

 

17.7                           Assignee or Participant Affiliated with

the Borrower.  If any assignee Bank is an Affiliate of the

Borrower, then any such assignee Bank shall have no right to vote as a Bank

hereunder or under any of the other Loan Documents for purposes of granting

consents or waivers or for purposes of agreeing to amendments or other modifications

to any of the Loan Documents or for purposes of making requests to the

Administrative Agent pursuant to Section 11, and the determination of the

Majority Banks shall for all purposes of this Credit Agreement and the other

Loan Documents be made without regard to such assignee Bank’s interest in any

of the Loans.  If any Bank sells a

participating interest in any of the Loans to a participant, and such

participant is the Borrower or an Affiliate of the Borrower, then such

transferor Bank shall promptly notify the Administrative Agent of the sale of

such participation.  A transferor Bank

shall have no right to vote as a Bank hereunder or under any of the other Loan

Documents for purposes of granting consents or waivers or for purposes of

agreeing to amendments or modifications to any of the Loan Documents or for

purposes of making requests to the Administrative Agent pursuant to Section 11

to the extent that such participation is beneficially owned by the Borrower or

any Affiliate of the Borrower, and the determination of the Majority Banks

shall for all purposes of this Credit Agreement and the other Loan Documents be

made without regard to the interest of such transferor Bank in the Loans to the

extent of such participation.

 

17.8                           Miscellaneous Assignment Provisions.  Any assigning Bank shall retain its rights

to be indemnified pursuant to Sections 4.8, 4.9, 14, and 15 with respect to any

claims or actions arising prior to the date of the assignment.  If any assignee Bank is not incorporated

under the laws of the United States of America or any state thereof, it shall,

prior to the date on which any interest or fees are payable hereunder or under

any of the other Loan Documents for its account, deliver to the Borrower and

the Administrative Agent certification as to its exemption from deduction or

withholding of any United States federal income taxes.  Anything contained in this Section 17 to the

contrary notwithstanding, any Bank may at any time pledge all or any portion of

its interest and rights under this Credit Agreement (including all or any

portion of its Notes) to any of the twelve Federal Reserve Banks organized

under §4 of the Federal Reserve Act, 12 U.S.C. §341.  No such pledge or the enforcement thereof shall release the

pledgor Bank from its obligations hereunder or under any of the other Loan

Documents.

 

17.9                           Assignment by Borrower.  The Borrower shall not assign or transfer

any of its rights or obligations under any of the Loan Documents without the

prior written consent of each of the Banks.

 

17.10                     SPC Provision.  Notwithstanding anything to the contrary

contained herein, any Bank (a “Granting Lender”) may grant to a special purpose

funding vehicle identified as such in writing from time to time by the Granting

Lender to the Administrative Agent and the Borrower (an “SPC”) the option to

provide all or any part of any Loan that such Granting Lender would otherwise

be obligated to make pursuant to this Credit Agreement; provided that (i)

nothing herein shall constitute a commitment by any SPC to fund any Loan, and

(ii) if an SPC elects not to exercise such option or otherwise fails to make

all or any part of such Loan, the Granting Lender shall be obligated to make

such Loan pursuant to the terms hereof. 

Each party hereto hereby agrees that (i) neither the grant to any SPC

nor the exercise by any SPC of such option shall increase the costs or expenses

or otherwise increase or change the obligations of the Borrower under this

Credit Agreement, (ii) no SPC shall be liable for any indemnity or similar

payment obligation under this Credit Agreement for which a Bank would be

liable, and (iii) the

 

65

 

Granting Lender shall for

all purposes, including the approval of any amendment, waiver or other modification

of any provision of any Loan Document, remain the Bank of record

hereunder.  The making of a Loan by an

SPC hereunder shall utilize the Commitment of the Granting Lender to the same

extent, and as if, such Loan were made by such Granting Lender.  In furtherance of the foregoing, each party

hereto hereby agrees (which agreement shall survive the termination of this

Credit Agreement) that, prior to the date that is one year and one day after

the payment in full of all outstanding commercial paper or other senior debt of

any SPC, it will not institute against, or join any other Person in instituting

against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or

liquidation proceeding under the laws of the United States or any State thereof;

provided, with respect to such agreement by the Borrower, that the related

Granting Lender shall not be in breach of its obligations to make Loans to the

Borrower hereunder.  Notwithstanding the

foregoing, the Granting Lender unconditionally agrees to indemnify the

Borrower, the Administrative Agent and each Bank against all liabilities,

obligations, losses, damages, penalties, actions, judgments, suits, costs,

expenses or disbursements of any kind or nature whatsoever which may be

incurred by or asserted against the Borrower, the Administrative Agent or such

Bank, as the case may be, in any way relating to or arising as a consequence of

any such forbearance or delay in the initiation of any such proceeding against

its SPC.  Notwithstanding anything to

the contrary contained herein, any SPC may (i) with notice to, but without

prior consent of the Borrower and the Administrative Agent and without the

payment of a registration fee of $3,500, assign all or any portion of its right

to receive payment with respect to any Loan to the Granting Lender and (ii)

disclose on a confidential basis any non-public information relating to its

funding of Loans to any rating agency, commercial paper dealer or provider of

any surety or guarantee or credit or liquidity enhancement to such SPC.  This Section may not be amended, waived or

otherwise modified without the written consent of each Granting Lender all or

any part of whose Loans are being funded by a SPC at the time of such amendment,

waiver or other modification.

 

18.                                 NOTICES, ETC.

 

18.1                           Notices.

 

Except as otherwise

expressly provided in this Credit Agreement, all notices and other

communications made or required to be given pursuant to this Credit Agreement

or any Notes shall be in writing and shall be delivered in hand, mailed by

United States registered or certified first class mail, postage prepaid, sent

by overnight courier, or sent by telegraph, telecopy, telefax or telex and

confirmed by delivery via courier or postal service or (subject to Section

18.2) via electronic mail at the address specified below or on Schedule 1(a),

addressed as follows:

 

(a)                                  if

to the Borrower, at 767 Fifth Avenue, New York, New York 10153-0185 (Telecopy

Number (212) 823-8520), Attention: 

Treasurer; with a copy sent via the same means to General Counsel of the

Borrower at 1345 Avenue of the Americas, New York, New York 10105 (Telecopy

Number (212) 969-1334), or at such other address for notice as any of such

Persons shall last have furnished in writing to the Person giving the notice;

 

(b)                                 if

to Bank of America, whether individually or as Administrative Agent,

 

(i)                                     at

101 North Tryon Street, 15th Floor, Charlotte, North Carolina 28255, Agency

Services – Independence Center NC1-001-15-01 (Telecopy Number

 

66

 

(704) 409–0002),

Attention: Merci Owens, Ref: Alliance Capital Management L.P.; electronic

mail:  merci.r.owens@bankofamerica.com.

 

(ii)                                  all

financial information at 101 North Tryon Street, 8th Floor, Charlotte, North

Carolina 28255, Agency Management NC1-001-08-19 (Telecopy Number (704)

409-0180), Attention: Cindy King; electronic mail:  cindy.king@ bankofamerica.com and Credit Compliance, 231 South

LaSalle Street, Chicago, Illinois  60697

(Telecopy Number (312) 987-0889), Attention: Elizabeth Bishop and Susan Jalics,

in each case Ref: Alliance Capital Management; electronic mail:  elizabeth.w.f.bishop@bankofamerica.com and

susan.c.jalics@bankofamerica.com.

 

(iii)                               with

a copy sent via the same means to Paul, Hastings, Janofsky & Walker LLP,

600 Peachtree Street, N.E., Suite 2400, Atlanta, Georgia 30308-2222 (Telecopy

Number:  (404) 815-2424),

Attention: Chris D. Molen, Esq.,

 

or such other address for

notice as such Person shall last have furnished in writing to the Person giving

the notice;

 

(c)                                  if

to any Bank, at such Bank’s address set forth on Schedule 1(a) hereto,

or such other address for notice as such Bank shall have last furnished in

writing to the Person giving the notice.

 

Any such notice or

demand shall be deemed to have been duly given or made and to have become

effective (i) if delivered by hand, overnight courier or telecopy to a

responsible officer of the party to which it is directed, at the time of the

receipt thereof by such officer or the sending of such telecopy, or when delivery

(if other than by telecopy) is duly attempted and refused, (ii) if sent by

registered or certified first-class mail, postage prepaid, on the third

Business Day following the mailing thereof and (iii) if delivered by electronic

mail (which form of delivery is subject to Section 18.2), when delivered.

 

18.2                           Electronic Notices. 

Electronic mail and internet and intranet websites may be used only to

the extent permitted by Section 6.4(f) and to distribute Loan Documents for

execution by the parties thereto, and may not be used for any other purpose

under this Credit Agreement or any other Loan Document.

 

19.                                 GOVERNING LAW.

 

THIS CREDIT

AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, EACH OF THE

OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE STATE OF NEW YORK AND

SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS

OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED

WHOLLY WITHIN SUCH STATE.  EACH OF THE

ADMINISTRATIVE AGENT THE BANKS, AND THE BORROWER AGREES THAT ANY SUIT FOR THE

ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE

BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING

THEREIN AND CONSENTS TO THE NONEXCLUSIVE

 

67

 

JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT

BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION

18.  EACH OF THE ADMINISTRATIVE AGENT

THE BANKS, AND THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR

HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH

SUIT IS BROUGHT IN AN INCONVENIENT COURT.

 

20.                                 HEADINGS.

 

The captions in

this Credit Agreement are for convenience of reference only and shall not

define or limit the provisions hereof.

 

21.                                 COUNTERPARTS.

 

This Credit Agreement and

any amendment hereof may be executed in several counterparts and by each party

on a separate counterpart, each of which when so executed and delivered shall

be an original, and all of which together shall constitute one instrument.  In proving this Credit Agreement it shall

not be necessary to produce or account for more than one such counterpart

signed by the party against whom enforcement is sought.  Any signatures delivered after the Closing

Date by a party by facsimile transmission shall be deemed an original signature

hereto.

 

22.                                 ENTIRE AGREEMENT, ETC.

 

The Loan Documents and

any other documents executed in connection herewith or therewith express the entire

understanding of the parties with respect to the transactions contemplated

hereby.  Neither this Credit Agreement

nor any term hereof may be changed, waived, discharged or terminated, except as

provided in Section 24.

 

23.                                 WAIVER OF JURY TRIAL.

 

EACH OF THE

ADMINISTRATIVE AGENT, THE BANKS, AND THE BORROWER HEREBY WAIVES ITS RIGHT TO A

JURY TRIAL WITH RESPECT TO ANY PROCEEDING ARISING OUT OF ANY DISPUTE IN

CONNECTION WITH THIS CREDIT AGREEMENT, THE NOTES, OR ANY OF THE OTHER LOAN

DOCUMENTS, AND RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE

PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. 

EXCEPT AS PROHIBITED BY LAW, EACH OF THE ADMINISTRATIVE AGENT, THE BANKS

AND THE BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY

PROCEEDING REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY,

PUNITIVE, OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION

TO, ACTUAL DAMAGES.  THE BORROWER (A)

CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY BANK OR THE ADMINISTRATIVE

AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH BANK OR THE

ADMINISTRATIVE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE

FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT EACH OF THE ADMINISTRATIVE AGENT

AND THE BANKS HAS BEEN INDUCED TO ENTER INTO THIS CREDIT AGREEMENT AND THE

OTHER

 

68

 

LOAN DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE

WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.

 

24.                                 CONSENTS, AMENDMENTS, WAIVERS,

ETC.

 

Except as otherwise

expressly provided in this Credit Agreement, any term of this Credit Agreement,

the other Loan Documents, or any other instrument related hereto or mentioned

herein may be amended with, but only with, the written consent of the Borrower

and the Majority Banks.  Any consent or

approval required or permitted by this Credit Agreement to be given by the

Banks may be given, any acceleration of amounts owing under the Loan Documents

may be rescinded, and the performance or observance by the Borrower of any

terms of this Credit Agreement, the other Loan Documents, or any other

instrument related hereto or mentioned herein or the continuance of any Default

or Event of Default may be waived (either generally or in a particular instance

and either retroactively or prospectively) with, but only with, the written

consent of the Majority Banks. Notwithstanding the foregoing, the rate of

interest on the Loans (other than interest accruing pursuant to Section 4.10

following the effective date of any waiver by the Majority Banks of the Default

or Event of Default relating thereto), the term of the Loans, the definition of

Maturity Date, the extension of any scheduled date of payment of any principal,

interest or fees hereunder or any mandatory payment of principal under Section

3.2.1, the pro rata sharing provisions of Section 13.12.1 and the amount of

facility fees hereunder may not be changed and the Outstanding principal amount

of the Loans, or any portion thereof, may not be forgiven without the written

consent of the Borrower and the written consent of Banks holding one hundred

percent (100%) of the Outstanding principal amount of the Loans (or, if no

Loans are Outstanding, Commitments representing one hundred percent (100%) of

the Total Commitment); neither this Section 24 nor the definition of Majority

Banks may be amended without the written consent of all of the Banks; the

amount of the Administrative Agent’s fee and Section 13 may not be amended

without the written consent of the Administrative Agent; and the amount of the

Commitment of any Bank may not be increased without the consent of such

Bank.  No waiver shall extend to or

affect any obligation not expressly waived or impair any right consequent

thereon.  No course of dealing or delay

or omission on the part of any Bank in exercising any right shall operate as a

waiver thereof or otherwise be prejudicial thereto.  No notice to or demand upon the Borrower shall entitle the

Borrower to other or further notice or demand in similar or other

circumstances.  Neither the

Administrative Agent nor any Bank has any fiduciary relationship with or

fiduciary duty to the Borrower arising out of or in connection with this Credit

Agreement or any of the other Loan Documents, and the relationship between the

Administrative Agent and the Banks, on the one hand, and the Borrower, on the

other hand, in connection herewith or therewith is solely that of debtor and

creditor.

 

69

 

25.                                 SEVERABILITY.

 

The provisions of

this Credit Agreement are severable and if any one clause or provision hereof

shall be held invalid or unenforceable in whole or in part in any jurisdiction,

then such invalidity or unenforceability shall affect only such clause or

provision, or part thereof, in such jurisdiction, and shall not in any manner

affect such clause or provision in any other jurisdiction, or any other clause

or provision of this Credit Agreement in any jurisdiction.

 

THE REMAINDER OF

THIS PAGE IS INTENTIONALLY LEFT BLANK

 

70

 

IN WITNESS WHEREOF, the

undersigned have duly executed this Credit Agreement as of the date first set

forth above.

 

	

  BORROWER:

  	

  ALLIANCE CAPITAL

  MANAGEMENT L.P.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  Alliance Capital

  Management

  Corporation, its General Partner

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/

  Robert H. Joseph, Jr.

  	

   

  
	

   

  	

  Name:

  	

  Robert H. Joseph, Jr.

  
	

   

  	

  Title:

  	

  Senior Vice President

  and

  Chief Financial Officer

  
								

 

71

 

	

  ADMINISTRATIVE AGENT :

  AND BANKS

  	

  BANK OF AMERICA, N.A.,

  as Administrative

  Agent and a Bank

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Elizabeth W. F.

  Bishop

  	

   

  
	

   

  	

  Name:

  	

  Elizabeth W. F. Bishop

  
	

   

  	

  Title:

  	

  Managing Director

  
					

 

72

 

	

   

  	

  THE BANK OF NEW YORK,

  as a Bank

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Timothy J. Somers

  	

   

  
	

   

  	

  Name:

  	

  Timothy J. Somers

  
	

   

  	

  Title:

  	

  Vice President

  
					

 

73

 

	

   

  	

  CITIBANK, N.A., as a

  Bank

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Jervis Smith

  	

   

  
	

   

  	

  Name:

  	

  Jervis Smith

  
	

   

  	

  Title:

  	

  Director

  
					

 

74

 

	

   

  	

  DEUTSCHE BANK AG, NEW

  YORK

  BRANCH, as a Bank

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Gayma Z. Shivnarian

  	

   

  
	

   

  	

  Name:

  	

  Gayma Z. Shivnarian

  
	

   

  	

  Title:

  	

  Director

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Elizabeth

  Zieglmeier

  
	

   

  	

  Name:

  	

  Elizabeth Zieglmeier

  
	

   

  	

  Title:

  	

  Managing Director

  

 

75

 

	

   

  	

  JPMORGAN CHASE BANK, as

  a Bank

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Helen L. Newcomb

  	

   

  
	

   

  	

  Name:

  	

  Helen L. Newcomb

  
	

   

  	

  Title:

  	

  Vice President

  
					

 

76

 

	

   

  	

  CREDIT SUISSE FIRST

  BOSTON, ACTING

  THROUGH ITS CAYMAN ISLANDS

  BRANCH, as a Bank

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Jay Chall

  	

   

  
	

   

  	

  Name:

  	

  Jay Chall

  
	

   

  	

  Title:

  	

  Director

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Paul J. Corona

  	

   

  
	

   

  	

  Name:

  	

  Paul J. Corona

  
	

   

  	

  Title:

  	

  Director

  

 

77

 

	

   

  	

  STATE STREET BANK AND TRUST

  COMPANY, as a Bank

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Anne Marie

  Gualtieri

  	

   

  
	

   

  	

  Name:

  	

  Anne Marie Gualtieri

  
	

   

  	

  Title:

  	

  Vice President

  
					

 

78

 

	

   

  	

  BNP PARIBAS, as a Bank

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Marguerite L. Lebon

  	

   

  
	

   

  	

  Name:

  	

  Marguerite L. Lebon

  
	

   

  	

  Title:

  	

  Vice President

  
					

 

 

	

   

  	

  BNP PARIBAS, as a Bank

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Barry K. Chung

  	

   

  
	

   

  	

  Name:

  	

  Barry K. Chung

  
	

   

  	

  Title:

  	

  Vice President

  
					

 

79

 

	

   

  	

  SOCIÉTÉ GÉNÉRALE, as a

  Bank

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Frank Bonavita

  	

   

  
	

   

  	

  Name:

  	

  Frank Bonavita

  
	

   

  	

  Title:

  	

  Managing Director

  
					

 

80

 

	

   

  	

  ABN AMRO BANK N.V., as

  a Bank

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Bryan A. Manning

  	

   

  
	

   

  	

  Name:

  	

  Bryan A. Manning

  
	

   

  	

  Title:

  	

  Vice President

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Philip A. Mondrowski

  	

   

  
	

   

  	

  Name:

  	

  Philip A. Mondrowski

  
	

   

  	

  Title:

  	

  Group Vice President

  

 

81

 

	

   

  	

  BANK ONE, N.A. (Main

  Office Chicago), as a

  Bank

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Nicole Holzapfel

  	

   

  
	

   

  	

  Name:

  	

  Nicole Holzapfel

  
	

   

  	

  Title:

  	

  Director, Capital Markets

  
					

 

82

 

	

   

  	

  FLEET NATIONAL BANK, as

  a Bank

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Lawrence Davis

  	

   

  
	

   

  	

  Name:

  	

  Lawrence Davis

  
	

   

  	

  Title:

  	

  Portfolio Manager

  
					

 

83

 

	

   

  	

  WACHOVIA BANK, N.A., as

  a Bank

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Daniel J. Norton

  	

   

  
	

   

  	

  Name:

  	

  Daniel J. Norton

  
	

   

  	

  Title:

  	

  Director

  
					

 

84

 

TABLE OF CONTENTS

 

	

  1.

  	

  DEFINITIONS

  AND RULES OF INTERPRETATION.

  
	

   

  	

  1.1

  	

  Definitions

  
	

   

  	

  1.2

  	

  Rules

  of Interpretation.

  
	

  2.

  	

  THE REVOLVING CREDIT

  FACILITY.

  
	

   

  	

  2.1

  	

  Commitment

  to Lend.

  
	

   

  	

  2.2

  	

  Facility Fee

  
	

   

  	

  2.3

  	

  Utilization Fee

  
	

   

  	

  2.4

  	

  Other Fees

  
	

   

  	

  2.5

  	

  Reduction of Total

  Commitment

  
	

   

  	

  2.6

  	

  The

  Notes; the Record

  
	

   

  	

  2.7

  	

  Interest on

  Loans

  
	

   

  	

  2.8

  	

  Requests

  for Loans

  
	

   

  	

  2.9

  	

  Conversion

  Options

  
	

   

  	

  2.10

  	

  Funds for Loans

  
	

   

  	

  2.11

  	

  Limit on Number of

  LIBOR Loans

  
	

  3.

  	

  REPAYMENT

  OF LOANS

  
	

   

  	

  3.1

  	

  Maturity

  
	

   

  	

  3.2

  	

  Mandatory Repayments of

  Loans

  
	

   

  	

  3.3

  	

  Optional Repayments of

  Loans

  
	

  4.

  	

  CERTAIN GENERAL PROVISIONS

  
	

   

  	

  4.1

  	

  Application

  of Payments

  
	

   

  	

  4.2

  	

  Funds for

  Payments

  
	

   

  	

  4.3

  	

  Computations

  
	

   

  	

  4.4

  	

  Inability to

  Determine LIBOR Rate Basis

  
	

   

  	

  4.5

  	

  Illegality

  
	

   

  	

  4.6

  	

  Additional Costs, Etc

  
	

   

  	

  4.7

  	

  Capital

  Adequacy

  
	

   

  	

  4.8

  	

  Certificate

  
	

   

  	

  4.9

  	

  Indemnity

  
	

   

  	

  4.10

  	

  Interest

  After Default

  
	

  5.

  	

  REPRESENTATIONS AND

  WARRANTIES.

  

 

i

 

	

   

  	

  5.1

  	

  Corporate

  Authority

  
	

   

  	

  5.2

  	

  Governmental

  Approvals

  
	

   

  	

  5.3

  	

  Liens; Leases

  
	

   

  	

  5.4

  	

  Financial

  Statements

  
	

   

  	

  5.5

  	

  No Material Changes, Etc

  
	

   

  	

  5.6

  	

  Permits

  
	

   

  	

  5.7

  	

  Litigation

  
	

   

  	

  5.8

  	

  Material

  Contracts

  
	

   

  	

  5.9

  	

  Compliance with Other Instruments. Laws, Etc

  
	

   

  	

  5.10

  	

  Tax Status

  
	

   

  	

  5.11

  	

  No Event

  of Default

  
	

   

  	

  5.12

  	

  Holding

  Company and Investment Company Acts

  
	

   

  	

  5.13

  	

  Insurance

  
	

   

  	

  5.14

  	

  Certain

  Transactions

  
	

   

  	

  5.15

  	

  Employee Benefit Plans

  
	

   

  	

  5.16

  	

  Regulations

  U and X

  
	

   

  	

  5.17

  	

  Environmental Compliance

  
	

   

  	

  5.18

  	

  Subsidiaries, Etc

  
	

   

  	

  5.19

  	

  Funded Debt

  
	

   

  	

  5.20

  	

  General

  
	

  6.

  	

  AFFIRMATIVE

  COVENANTS OF THE BORROWER

  
	

   

  	

  6.1

  	

  Punctual

  Payment

  
	

   

  	

  6.2

  	

  Maintenance

  of Office

  
	

   

  	

  6.3

  	

  Records

  and Accounts

  
	

   

  	

  6.4

  	

  Financial Statements, Certificates, and

  Information

  
	

   

  	

  6.5

  	

  Notices

  
	

   

  	

  6.6

  	

  Existence; Business;

  Properties

  
	

   

  	

  6.7

  	

  Insurance

  
	

   

  	

  6.8

  	

  Taxes

  
	

   

  	

  6.9

  	

  Inspection

  of Properties and Books, Etc.

  

 

ii

 

	

   

  	

  6.10

  	

  Compliance with Government

  Mandates, Contracts, and Permits

  
	

   

  	

  6.11

  	

  Use of Proceeds

  
	

   

  	

  6.12

  	

  Certain

  Changes in Accounting Principles

  
	

   

  	

  6.13

  	

  Broker-Dealer Subsidiaries

  
	

  7.

  	

  CERTAIN

  NEGATIVE COVENANTS OF THE BORROWER

  
	

   

  	

  7.1

  	

  Disposition

  of Assets

  
	

   

  	

  7.2

  	

  Fundamental

  Changes

  
	

   

  	

  7.3

  	

  Restrictions

  on Liens

  
	

   

  	

  7.4

  	

  Restrictions on

  Investments

  
	

   

  	

  7.5

  	

  Restrictions

  on Funded Debt

  
	

   

  	

  7.6

  	

  Distributions

  
	

   

  	

  7.7

  	

  Transactions with

  Affiliates

  
	

   

  	

  7.8

  	

  Fiscal Year

  
	

   

  	

  7.9

  	

  Compliance with

  Environmental Laws

  
	

   

  	

  7.10

  	

  Employee

  Benefit Plans

  
	

   

  	

  7.11

  	

  Amendments to Certain

  Documents

  
	

  8.

  	

  FINANCIAL

  COVENANTS OF THE BORROWER.

  
	

   

  	

  8.1

  	

  Consolidated Leverage Ratio

  
	

   

  	

  8.2

  	

  Minimum Consolidated

  Net Worth

  
	

   

  	

  8.3

  	

  Miscellaneous

  
	

  9.

  	

  CLOSING

  CONDITIONS.

  
	

   

  	

  9.1

  	

  Financial

  Statements and Material Changes

  
	

   

  	

  9.2

  	

  Loan Documents

  
	

   

  	

  9.3

  	

  Certified Copies

  of Charter Documents

  
	

   

  	

  9.4

  	

  Partnership and

  Corporate Action

  
	

   

  	

  9.5

  	

  Consents

  
	

   

  	

  9.6

  	

  Opinions of

  Counsel

  
	

   

  	

  9.7

  	

  Proceedings

  
	

   

  	

  9.8

  	

  Incumbency

  Certificate

  
	

   

  	

  9.9

  	

  Fees

  

 

iii

 

	

   

  	

  9.10

  	

  Representations

  and Warranties True; No Defaults

  
	

   

  	

  9.11

  	

  Termination of

  Prior Credit Agreements

  
	

  10.

  	

  CONDITIONS TO ALL

  BORROWINGS

  
	

   

  	

  10.1

  	

  No Default

  
	

   

  	

  10.2

  	

  Representations

  True

  
	

   

  	

  10.3

  	

  Loan Request

  
	

   

  	

  10.4

  	

  Payment of Fees

  
	

   

  	

  10.5

  	

  No

  Legal Impediment

  
	

  11.

  	

  EVENTS OF DEFAULT;

  ACCELERATION; ETC

  
	

   

  	

  11.1

  	

  Events of Default

  and Acceleration

  
	

   

  	

  11.2

  	

  Termination of

  Commitments

  
	

   

  	

  11.3

  	

  Remedies

  
	

   

  	

  11.4

  	

  Application

  of Monies

  
	

  12.

  	

  SETOFF

  
	

  13.

  	

  THE ADMINISTRATIVE AGENT

  
	

   

  	

  13.1

  	

  Appointment

  and Authorization of Administrative Agent

  
	

   

  	

  13.2

  	

  Delegation

  of Duties

  
	

   

  	

  13.3

  	

  Liability of

  Administrative Agent

  
	

   

  	

  13.4

  	

  Reliance by

  Administrative Agent

  
	

   

  	

  13.5

  	

  Notice of

  Default

  
	

   

  	

  13.6

  	

  Credit

  Decision; Disclosure of Information by Administrative Agent

  
	

   

  	

  13.7

  	

  Indemnification

  of Administrative Agent

  
	

   

  	

  13.8

  	

  Individual

  Capacity

  
	

   

  	

  13.9

  	

  Successor Administrative

  Agent

  
	

   

  	

  13.10

  	

  Administrative

  Agent May File Proofs of Claim

  
	

   

  	

  13.11

  	

  Other Agents;

  Arrangers and Managers

  
	

   

  	

  13.12

  	

  Payments

  
	

   

  	

  13.13

  	

  Holders of

  Notes

  
	

  14.

  	

  EXPENSES

  
	

  15.

  	

  INDEMNIFICATION

  

 

iv

 

	

  16.

  	

  SURVIVAL OF COVENANTS, ETC

  
	

  17.

  	

  ASSIGNMENT AND

  PARTICIPATION

  
	

   

  	

  17.1

  	

  Conditions to

  Assignment by Banks

  
	

   

  	

  17.2

  	

  Certain

  Representations and Warranties; Limitations; Covenants

  
	

   

  	

  17.3

  	

  Register

  
	

   

  	

  17.4

  	

  New Notes

  
	

   

  	

  17.5

  	

  Participations

  
	

   

  	

  17.6

  	

  Disclosure

  
	

   

  	

  17.7

  	

  Assignee

  or Participant Affiliated with the Borrower

  
	

   

  	

  17.8

  	

  Miscellaneous

  Assignment Provisions

  
	

   

  	

  17.9

  	

  Assignment

  by Borrower

  
	

   

  	

  17.10

  	

  SPC Provision

  
	

  18.

  	

  NOTICES, ETC

  
	

   

  	

  18.1

  	

  Notices

  
	

   

  	

  18.2

  	

  Electronic

  Notices

  
	

  19.

  	

  GOVERNING LAW

  
	

  20.

  	

  HEADINGS

  
	

  21.

  	

  COUNTERPARTS

  
	

  22.

  	

  ENTIRE

  AGREEMENT, ETC

  
	

  23.

  	

  WAIVER

  OF JURY TRIAL.

  
	

  24.

  	

  CONSENTS, AMENDMENTS,

  WAIVERS, ETC

  
	

  25.

  	

  SEVERABILITY

  

 

v

 

	

  Schedules

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Schedule 1(a)

  	

  -

  	

  Banks and Commitments

  
	

  Schedule 1(b)

  	

  -

  	

  Broker-Dealer Subsidiaries

  
	

  Schedule 5.2

  	

  -

  	

  Governmental Approvals

  
	

  Schedule 5.18

  	

  -

  	

  Subsidiaries

  
	

  Schedule 5.19

  	

  -

  	

  Funded Debt

  
	

  Schedule 7.3

  	

  -

  	

  Certain Permitted Liens

  
	

  Schedule 7.4

  	

  -

  	

  Certain Investments

  

 

	

  Exhibits

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Exhibit A

  	

  -

  	

  Form of Note

  
	

  Exhibit B

  	

  -

  	

  Form of Loan Request

  
	

  Exhibit C

  	

  -

  	

  Form of Confirmation of Loan Request

  
	

  Exhibit D

  	

  -

  	

  Form of Conversion Request

  
	

  Exhibit E

  	

  -

  	

  Form of Confirmation of Conversion Request

  
	

  Exhibit F

  	

  -

  	

  Form of Compliance Certificate

  
	

  Exhibit G

  	

  -

  	

  Opinion Letter

  
	

  Exhibit H

  	

  -

  	

  Form of Assignment and Acceptance

  

 

vi

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