As of July 18, 2003
Midas Family of Funds
11 Hanover Square
New York, NY 10005
Attention: Thomas B. Winmill, President
RE: Uncommitted Secured Redemption Facility
Ladies and Gentlemen:
State Street Bank and Trust Company (the "Bank") had previously made
available a $9,000,000 uncommitted unsecured redemption line of credit (the
"Uncommitted Line") to Midas Fund, Inc., Midas Special Equities Fund, Inc., and
Midas Dollar Reserves, Inc., each a Maryland corporation (each, an "Existing
Borrower") as described on Appendix I to that certain loan agreement dated July
1, 1997 by and between the Existing Borrowers and the Bank (as amended prior to
the date hereof, the "Existing Loan Agreement"). Obligations of the Existing
Borrowers with respect to loans made pursuant to the Uncommitted Line are
evidenced by an amended and restated promissory note in the original principal
amount of $9,000,000 dated as of June 27, 2001 (the "Existing Note").
The parties hereto have agreed to amend and restate the Existing Loan
Agreement in its entirety as set forth below. Therefore, for good and valuable
consideration, the receipt of which is hereby acknowledged, the Bank is please
to make available a $9,000,000 uncommitted secured redemption line of credit to
the borrowers listed on Appendix I hereto (each, a "Borrower") on the following
terms and conditions:
I. Uncommitted Line
1. Term. The Uncommitted Line shall commence on the date hereof and
expire July 16, 2004 (the "Expiration Date"), unless extended in the discretion
of the Bank or terminated by the Borrowers as provided herein. The Borrowers may
collectively terminate the Uncommitted Line upon five (5) days prior written
notice and payment of all outstanding principal, interest, fees, costs and
expenses on the effective date of termination.
2. Notice and Manner of Borrowings. In the sole discretion of the
Bank and subject to the terms and conditions hereof, the Bank will make
revolving loans to a Borrower under the Uncommitted Line (each such loan, a
"Loan") not to exceed in the aggregate outstanding at any time with respect to
any one Borrower
Midas Family of Funds
As of July 18, 2003
Page 2
the least of (a) $9,000,000, (b) the current Borrowing Base of the Borrower for
which a Loan is extended, (c) 20% of the value of the total assets of the
Borrower for which a Loan is extended less such Borrower's total liabilities not
represented by senior securities (as defined in the Investment Company Act),
less the value of any assets of the Borrower pledged to, or otherwise segregated
for the benefit of a party other than the Bank and in connection with a
liability not reflected in the calculation of the Borrower's total liabilities;
and (d) the maximum amount which the Borrower for which a Loan is made is
permitted to borrow at any time or in the aggregate pursuant to the Prospectus,
the Investment Company Act or any registration made thereunder, any vote of the
shareholders of the Borrower, any agreement of the Borrower with any foreign,
federal, state or local securities division to which the Borrower is subject,
any other applicable agreement or document to which the Borrower is a party or
any law, rule or regulation applicable to the Borrower (the least of (a), (b),
(c), and (d) the "Maximum Facility Amount"). Notwithstanding the foregoing, at
no time shall the aggregate outstanding amount of all Loans to all Borrowers
hereunder exceed $9,000,000 (the "Uncommitted Line Amount"). Each request for a
Loan hereunder or repayment thereof shall be made in an amount equal to or
exceeding $10,000, unless such transaction is a full repayment of all
outstanding borrowings to the Borrower. At the time of a borrowing request, the
Borrower shall deliver a completed loan request in the form of Exhibit B and a
completed current Borrowing Base Certificate in the form of Exhibit C, each
attached hereto, and received by the Bank not later than 3:00 P.M. Boston time
on the Business Day on which such Loan is to be made. Each Loan request
hereunder shall be deemed to be a confirmation by such Borrower that no Default
has occurred and is continuing hereunder with respect to such Borrower, that the
representations and warranties of the Borrower described below remain true and
correct and that no borrowing limitations applicable to the Borrower will be
exceeded after giving effect to the requested Loan, each of which shall be a
precondition to the making of any Loan hereunder.
3. Evidence of Indebtedness. All Loans will be evidenced by an
amended and restated promissory note in the form attached hereto as Exhibit A
(the "Note"). Each Borrower hereby authorizes the Bank to record each Loan and
the corresponding information on the schedule forming part of the Note, and,
absent manifest error, this record shall govern and control. The failure by the
Bank to record, or any error in so recording, any such amount on the Bank's
books and records, such schedule, or any other record maintained by the Bank,
shall not limit or otherwise affect the obligation of a Borrower to make
payments of principal and interest on each Loan as provided herein and in the
Note.
4. Interest Rate. Principal on each outstanding Loan shall bear
interest at a variable rate per annum equal to the Bank's Federal Funds Rate
plus a spread to be determined at the time of borrowing. Interest on each Loan
shall be calculated on the basis of a 360-day year for the actual number of days
elapsed. Following the occurrence of a Default hereunder, unpaid principal on
any Loan, and to the extent permitted by applicable law, unpaid interest on any
Loan, shall thereafter bear interest, compounded monthly and payable on demand,
until paid in full (after as well as before judgment) at a rate per annum equal
to two percent (2.0%) above the rate otherwise applicable to such Loan
hereunder.
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As of July 18, 2003
Page 3
5. Payments and Prepayment/Recourse. (a) Each Loan, together with
accrued and unpaid interest thereon, shall be due and payable upon the earliest
of (i) sixty (60) days following the date on which such Loan is made, (ii) the
date on which such Loan becomes due pursuant to Section II, Paragraph 4 below
following the occurrence of a Default, or (iii) the Expiration Date; provided,
however, that a Borrower may not have Loans outstanding hereunder for a period
in excess of sixty (60) consecutive calendar days. If not due sooner, interest
on all Loans shall be payable monthly in arrears on the fifteenth day of each
month; however, if such day is not a Business Day, interest shall be payable on
the preceding Business Day, with all accrued and unpaid interest due and payable
on the same day when principal is due and payable.
(b) Loans may be prepaid at any time without penalty. Any amounts
prepaid may be re-borrowed subject to the terms hereof. All payments of
principal and interest with respect to any Loan shall be made not later than
2:00 P.M. Boston time on the date due without set off or deduction in
immediately available United States dollars at the Bank's office at 225 Franklin
Street, Boston, Massachusetts or as otherwise directed in writing by the Bank.
(c) Each Borrower covenants and agrees to immediately repay any amount
by which (i) the then outstanding aggregate principal amount of the Loans made
on behalf of any one Borrower exceeds the Maximum Facility Amount of such
Borrower, or (ii) the then outstanding aggregate principal amount of all Loans
to all Borrowers hereunder exceeds the Uncommitted Line Amount, upon the earlier
to occur of such Borrower first becoming aware of any such excess or demand by
the Bank.
None of the directors, officers, agents or shareholders of a Borrower
assumes any personal liability for the obligations entered into on behalf of
such Borrower with respect to the Uncommitted Line. In addition, the principal
amount of the Loans and accrued interest thereon and any fees or additional
amounts payable in connection with or relating to such Loans pursuant to this
Agreement shall be paid or repaid solely from the assets of the Borrower on
whose behalf a Loan is made and the Bank shall have no right of recourse or
offset against the assets of any other Borrower. Notwithstanding anything to the
contrary herein, or in any of the Loan Documents, the making of any Loan
hereunder shall remain in the sole discretion of the Bank and the Bank shall
have no commitment with respect thereto.
6. Use of Loan Proceeds. Proceeds of Loans may be used only (a) to
temporarily finance the purchase or sale of securities for prompt delivery if
the Loan is to be repaid promptly in the ordinary course of business upon
completion of such purchase or sale transaction; (b) to finance the redemption
of the shares of an investor of a Borrower for which a Loan is made; or (c) to
enable the Borrower to meet emergency expenses not reasonably foreseeable. Each
Loan shall be made in compliance with, and subject to, Federal Reserve Board
Regulation U and no portion of any proceeds of any Loan shall be used directly
or indirectly in violation of any provision of any statute, regulation, order or
restriction applicable to the Bank or the Borrower.
7. Security. All obligations of the Borrowers with respect to the
Uncommitted Line shall be secured by all collateral as described in the Mutual
Fund Security Agreement from each Borrower to the Bank executed in connection
Midas Family of Funds
As of July 18, 2003
Page 4
herewith (as each may be amended, restated, supplemented or otherwise modified
and in effect from time to time, collectively the "Security Agreement", and all
now existing or hereafter acquired collateral in which the Bank has been granted
a security interest or which is assigned to the Bank under the Security
Agreement, the "Collateral").
8. Addition of Borrowers. Once per quarter, the Borrowers may
request, and the Bank in its discretion may agree to, the addition of one or
more registered investment companies advised by the Borrower's Investment
Advisor to the terms of this Agreement.
II. General Loan Terms
1. Covenants. Until all Obligations of the Borrowers with respect
to the Uncommitted Line have been paid in full and the Uncommitted Line has been
terminated, unless otherwise consented to in writing by the Bank, each Borrower
covenants and agrees as follows:
(a) not to issue any preferred stock or create, incur, assume or
guarantee any Indebtedness without the Bank's prior consent, other than, to the
extent permitted by the Prospectus (i) Indebtedness to the Bank, and
Indebtedness to the Custodian incurred in connection with such custody
relationship, (ii) Indebtedness and guarantees existing as of the date of this
Agreement and disclosed on Exhibit D, (iii) reverse repurchase agreements
aggregating not in excess of 5% of the Borrower's total assets; and (iv) other
Indebtedness incurred in the ordinary course of the Borrower's business in
connection with portfolio investments and investment techniques permissible
under the Investment Company Act (and not for the primary purpose of borrowing
money), but only to the extent such Indebtedness is reflected (if so required in
accordance with generally accepted accounting principles) in the calculation of
the Borrower's net assets;
(b) not to create, incur, assume or suffer to exist any mortgage,
pledge, security interest, lien or other charge or encumbrance upon any of its
assets or properties, or enter into any agreement preventing it from encumbering
any such assets or properties without the Bank's prior consent, other than, to
the extent permitted by the Prospectus (i) those in favor of the Bank or its
affiliates or subsidiaries, (ii) those shown on Exhibit E, (iii) those in favor
of any custodian of assets of the Borrower; and (iv) liens for taxes, fees,
assessments and other governmental charges not yet due and payable;
(c) to (i) duly observe and comply in all material respects with all
applicable laws, including, without limitation, the Investment Company Act and
any asset coverage ratio or borrowing restriction or restrictions on
indebtedness and extensions of credit contained therein and applicable to the
Borrower, and applicable securities laws and regulations, and pay all taxes and
governmental charges prior to the time they become delinquent, (ii) maintain in
full force and effect all licenses and permits necessary in any material respect
for the proper conduct of its business, (iii) maintain its current registration
as an open-end or closed-end management investment company registered under the
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As of July 18, 2003
Page 5
Investment Company Act and its status as a regulated investment company under
Subchapter M of the United States Internal Revenue Code of 1986, (iv) operate in
compliance with its organizational documents, the Prospectus and any other
applicable investment policies and restrictions and agreements relating thereto,
(v)not permit there to occur a change in the Investment Advisor of a Borrower
or permit any change in the fundamental investment objectives or in the
fundamental investment restrictions of any Borrower as described in the
Prospectus of such Borrower, without the prior written consent of the Bank in
each instance not to be unreasonably withheld, (vi) not permit there to occur a
change in the Custodian of a Borrower without the prior written consent of the
Bank not to be unreasonably withheld, (vii) comply with all terms and provisions
of all documents evidencing or securing any Indebtedness to the Bank and to or
with any party other than the Bank ("Other Indebtedness"), (viii) immediately
notify the Bank of any default or event of default with respect to Other
Indebtedness and of any default under or termination of any agreement with the
Custodian or with the Investment Advisor and to provide to the Bank a copy of
any notice received by the Borrower relating thereto and any notice or claim of
any such default or termination, and (ix) immediately notify the Bank of any
Default hereunder and of any litigation or governmental proceeding, inspection,
or investigation commenced, pending, or overtly threatened in writing against
the Borrower;
(d) to permit the Bank or its representatives and agents to visit and
inspect the properties of a Borrower during normal business hours and make
copies or abstracts from a Borrower's books and records;
(e) to pay all fees, costs and expenses incurred or paid by the Bank,
including the Bank's reasonable attorney's fees and expenses, in connection with
the administration, enforcement, amendment or termination of the Loan Documents;
(f) to submit to the Bank: (i) within sixty (60) days after the end of
each semi-annual period in each fiscal year, each Borrower's semi-annual or
annual, as the case may be, financial statements including a statement of
assets, liabilities and investments as of the end of each such period in a form
acceptable to the Securities and Exchange Commission and, in the case of annual
statements, audited by a certified public accountant of recognized standing,
(ii) all proxy materials, reports to shareholders and other information
delivered to the shareholders of each Borrower, or to the Securities and
Exchange Commission; including, in any event, copies of any material change to
the Prospectus or registration statement, (iii) while a Loan is outstanding, a
daily Borrowing Base Certificate in the form of Exhibit C hereto; and (iv) such
other financial statements and information as to each Borrower or the Investment
Advisor as the Bank may reasonably request from time to time. All financial
statements required hereunder shall be prepared in accordance with generally
accepted accounting principles consistently applied; and
(g) to execute and deliver such additional instruments and take such
further action as the Bank may reasonably request solely to effect the purpose
of the Loan Documents and the Loans.
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As of July 18, 2003
Page 6
2. Representations and Warranties. Each Borrower represents and warrants to
the Bank that:
(a) the Borrower is duly organized, validly existing and in good
standing under the laws of the state of its organization, and the Borrower is
currently registered as an open-end or closed-end management investment company
under the Investment Company Act, qualified as a regulated investment company
within the meaning of the United States Internal Revenue Code of 1986, has all
requisite power and authority to own its property and conduct its business as is
now conducted, is duly authorized to do business in each jurisdiction where the
nature of its properties or business requires such qualification and is in
compliance with its organizational documents and applicable law, including,
without limitation, the Investment Company Act. The Borrower has filed all
income tax returns and paid all taxes due pursuant to such returns and the
charges, accruals and reserves on the books and records of the Borrower with
respect to such taxes and charges are, in the opinion of the Borrower, adequate;
(b) the execution, delivery and performance of each of the Loan
Documents and the making of any Loan by the Bank to the Borrower hereunder (i)
are, and will be, within the Borrower's power and authority, (ii) have been
authorized by all necessary corporate or trust proceedings, as the case may be,
(iii) do not, and will not, require the consent of any shareholders of the
Borrower or approvals of any governmental authority other than those which have
been received, (iv) will not contravene any provision of, or exceed any
limitation contained in, the declaration of trust, articles of incorporation,
by-laws, or other organizational documents of the Borrower or the Prospectus or
any law, rule or regulation applicable to the Borrower; including, without
limitation, the Investment Company Act, and the same will be in compliance with
Federal Reserve Regulations T, U and X and the Investment Company Act, (v) does
not constitute a default under any other agreement, order or undertaking binding
on the Borrower, and (vi) does not require the consent or approval of any
obligee or holder of any instrument relating to the Other Indebtedness or any
other party other than for those consents and approvals which have been
received;
(c) each of the Loan Documents constitutes the legal, valid, binding
and enforceable obligation of the Borrower, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally and by general equitable principles;
(d) all financial statements previously furnished to the Bank by the
Borrower were prepared in accordance with generally accepted accounting
principles and present fairly and completely the financial position of the
Borrower. Since the date of such statements, there has been no material adverse
change in the assets, liabilities, financial condition or business of the
Borrower other than in the ordinary course of business. The Borrower has
disclosed to the Bank in writing any and all facts which, to the best of the
Borrower's knowledge after due inquiry, materially and adversely affect or may
affect the business, operations or financial condition of the Borrower or the
ability of the Borrower to perform its obligations under the Loan Documents;
(e) the Borrower has good and marketable title to all its material
properties, assets and rights of every name and nature purportedly owned by it,
except for encumbrances shown on Exhibit E;
Midas Family of Funds
As of July 18, 2003
Page 7
(f) there is no litigation, arbitration, proceeding or investigation
pending, or to the best of the Borrower's knowledge overtly threatened, against
the Borrower or the Investment Advisor except those previously disclosed by the
Borrower to the Bank in writing and except as described on Exhibit F attached
hereto;
(g) the shares of the Borrower have been registered under the Securities
Act of 1933 and are eligible for sale under applicable state and federal
securities laws and regulations;
(h) with regard to the Employee Retirement Income Security Act of 1974,
and the rules and regulations thereunder, collectively, as amended and in effect
from time to time ("ERISA") the Borrower is not treated as a single employer
with any other person under ERISA, and has no liability with respect to any
benefit arrangement, plan or multi-employer plan subject to ERISA;
(i) the Borrower is not an "Affiliated Person", as defined in the
Investment Company Act, of the Bank;
(j) the Investment Advisor serves as investment advisor to the Borrower
and the Custodian serves as custodian for the assets of the Borrower; and
(k) the Borrower has complied with, and is in compliance with, the
fundamental investment policies and fundamental investment restrictions set
forth in its respective Prospectus and Statement of Additional Information.
The making of each Loan hereunder to the Borrower shall be deemed to be a
reaffirmation by such Borrower as to the representations and warranties
contained in this paragraph and confirmation that no Default has occurred
hereunder or will occur after giving effect to the making of such Loan.
3. Default. It will be a Default hereunder with respect to a Borrower
if any of the following events occurs, as appropriate, with respect to such
Borrower:
(a) the Borrower fails to pay when due any amount of principal of any
Loan or any amount of interest thereon, or any fees or expenses payable
hereunder or under the Note; or
(b) the Borrower fails to perform any term, covenant or agreement
contained in any of the Loan Documents or pursuant to the Committed Secured
Leveraging Facility, or a default or event of default occurs thereunder; or
Midas Family of Funds
As of July 18, 2003
Page 8
(c) any material representation or warranty of the Borrower made in
any of the Loan Documents or as an inducement for the Bank to make any Loan
shall prove to have been false in any material respect upon the date when made
or deemed to have been made; or
(d) the Borrower fails to pay or perform when due any Obligation
whether now existing or hereafter arising, or the Borrower fails to pay at
maturity any obligations for Other Indebtedness or for the use of real or
personal property, or fails to observe or perform any term, covenant or
agreement evidencing or securing such Other Indebtedness or relating to such use
of real or personal property; or
(e) the Borrower or the Investment Advisor (i) applies for or consents
to the appointment of, or the taking of possession by, a receiver, custodian,
trustee, liquidator or similar official of itself or of all or a substantial
part of its property, (ii) is generally not paying its debts as such debts
become due, (iii) makes a general assignment for the benefit of its creditors,
(iv) commences any case or proceeding under any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts, or
any other law providing for the relief of debtors, (v) fails to contest in a
timely or appropriate manner, or acquiesces in writing to, any petition filed
against it in an involuntary case under the Federal Bankruptcy Code or other
law, (vi) takes any action under the laws of its jurisdiction of incorporation
or organization similar to any of the foregoing; or (vii) discontinues its
business; or
(f) a proceeding or case shall be commenced against the Borrower or
the Investment Advisor without the application or consent of such party, in any
court of competent jurisdiction, seeking (i) the liquidation, reorganization,
dissolution, winding-up, or composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of it or
of all or any substantial part of its assets, or (iii) similar relief in respect
of it, under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts or any other law providing for
the relief of debtors, and such proceeding or case shall continue undismissed,
or unstayed and in effect, for a period of sixty (60) days; or an order for
relief shall be entered in an involuntary case under the Federal Bankruptcy
Code, against the Borrower or the Investment Advisor or action under the laws of
the jurisdiction of incorporation or organization of the Borrower or the
Investment Advisor similar to any of the foregoing shall be taken with respect
to the Borrower or the Investment Advisor and shall continue unstayed and in
effect for any period of sixty (60) days; or
(g) a final judgment or final order for the payment of money is
entered against the Borrower by any court, or an execution or similar process is
issued or levied against property of the Borrower, that in the aggregate exceeds
5% of the net assets of such Borrower in value and such judgment, order, warrant
or process shall continue undischarged or unstayed for thirty (30) days; or
(h) there occurs a material adverse change in the business, assets,
financial condition or prospects of the Borrower (which shall not include a
decline in the net assets of the Borrower resulting from redemptions by
shareholders of the Borrower or a decline in market value of securities held by
the Borrower); or
Midas Family of Funds
As of July 18, 2003
Page 9
(i) the Borrower challenges the validity or enforceability of any
portion of any of the Loan Documents; or
(j) any investment advisory agreement which is in effect on the date
hereof relating to the Borrower terminates or the Investment Advisor ceases to
serve as the investment adviser for such Borrower or the Custodian ceases to
serve as the custodian for the Borrower's assets without the prior written
consent of the Bank in each instance which consent shall not be unreasonably
withheld; or
(k) the Borrower shall violate, or take any action that would result
in a material deviation from, any of its fundamental investment policies or
restrictions applicable to the Borrower as in effect from time to time,
including those as set forth in its Prospectus.; or
(l) the Bank fails to have a first priority perfected security
interest in the Collateral or an injunction is issued against the Borrower
affecting any of the Collateral.
4. Remedies. Upon the occurrence of a Default described in
subsections 3(e) and (f) immediately and automatically; and upon the occurrence
of any other Default, at any time thereafter while such Default is continuing,
at the Bank's option and upon the Bank's declaration:
(a) the Uncommitted Line established hereunder shall terminate with
respect to the defaulting Borrower;
(b) the unpaid principal amount of the Loans to the Borrower, together
with accrued interest and all other Obligations with respect to such Borrower,
shall become immediately due and payable without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived; and
(c) the Bank may exercise any and all rights it has under any of the
Loan Documents and proceed to protect and enforce the Bank's rights by any
action at law, in equity or other appropriate proceeding as it relates to such
Borrower.
5. Set-Off. Upon and during the continuance of a Default or event of
default hereunder, each Borrower authorizes the Bank and the Custodian to charge
and setoff against any deposit account or other account maintained with either
the Bank or the Custodian on behalf of such Borrower and apply the proceeds
thereof against repayment of any unpaid Obligations of such Borrower
individually, as appropriate. The foregoing shall be in addition to any other
rights or remedies the Bank and the Custodian may have against the Borrower
following the occurrence of a Default hereunder.
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As of July 18, 2003
Page 10
6. Amendments and Waivers. No waivers shall be effective unless in
writing. No right of the Bank shall be exclusive of any other right of the Bank
now or hereafter available under the Loan Documents, at law, in equity or
otherwise; or by statute or any other provision of law; and no course of dealing
or delay by the Bank in exercising any right hereunder shall operate as a waiver
thereof or otherwise affect any rights or remedies of the Bank. All amendments
hereto must be in writing signed by all parties hereto.
7. Assignments and Participations. A Borrower may not assign or
transfer or participate any of its rights under any of the Loan Documents
without the prior written consent of the Bank. The Bank may assign, pledge,
transfer or participate its rights hereunder to any Federal Reserve Bank or to
any other person or entity, provided however that no such person or entity
taking a participation interest in the Borrower's Obligations, without the
consent of the Borrower not to be unreasonably withheld, shall have any rights
with respect to such participation other than for the right to vote on changes
in interest, fees, commitment amount, principal payments, and any advance rate
described herein.
8. Mergers, Consolidations, and Sales of Assets. A Borrower will not
consolidate, merge, or reorganize its assets without the prior consent of the
Bank, except that:
(a) a Borrower may sell its assets in the ordinary course of business
as described in its Prospectus;
(b) a Borrower may merge, consolidate or reorganize its assets with
another Borrower; provided that the Borrower shall provide notice to the Bank of
its intention to merge, consolidate or reorganize its assets no later than ten
(10) Business Days prior to the date of such merger, consolidation or
reorganization, including a revised Appendix I attached hereto which gives
effect to such merger, consolidation, or reorganization;
(c) a Borrower may merge, consolidate, or reorganize its assets with
another entity (not a party to this Agreement) where the Borrower shall be the
surviving entity; provided, however, the Borrower shall provide notice to the
Bank of its intention to merge, consolidate, or reorganize its assets no later
than ten (10) Business Days prior to the date of such merger, consolidation, or
reorganization, and no Default shall exist or result from such merger,
consolidation, or reorganization;
(d) a Borrower may merge, consolidate or reorganize its assets with or
into any other entity, or otherwise liquidate its assets where the Borrower is
not the surviving entity; provided, however (i) the Borrower shall provide
notice to the Bank of its intention to merge, consolidate, reorganize or
liquidate its assets no later than ten (10) Business Days prior to the date of
merger, consolidation, reorganization or liquidation, including a revised
Appendix I attached hereto which gives effect to such merger, consolidation,
reorganization or liquidation, (ii) all Obligations of the Borrower shall have
been paid in full prior to such merger, consolidation, reorganization or
liquidation; and (iii) from the effective date of such merger, consolidation,
reorganization or liquidation, the Borrower shall no longer be permitted to make
a borrowing request hereunder and the Agreement shall be terminated as to such
Borrower.
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As of July 18, 2003
Page 11
9. Notices. All notices hereunder shall be in writing and shall be
deemed to have been given one Business Day after delivery to overnight courier
or when delivered by hand to the address given below and in each case such
delivery is confirmed to have been made. Notices to the Bank shall be given to
State Street Bank and Trust Company, Lafayette Corporate Center, 2 Avenue de
Lafayette, 2nd Floor, Boston, Massachusetts 02111 Attn.: Paul J. Koobatian, Vice
President or Mutual Fund Lending Department Head, and notices to the Borrower
shall be deemed to have been given if given at the address stated at the
beginning of this Agreement, Attention: Thomas B. Winmill, President.
10. Waiver of Jury Trial. Except as prohibited by law, neither the
Borrowers nor the Bank, nor any assignee or successor of the Borrowers or the
Bank, shall seek a jury trial in any lawsuit, proceeding, counterclaim or any
other litigation procedure based upon or arising out of any of the Loan
Documents. Neither the Borrowers nor the Bank will seek to consolidate any such
action, in which a jury trial has been waived, with any other action in which a
jury trial has not been waived. THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY
DISCUSSED BY THE PARTIES HERETO, AND THE PROVISIONS HEREOF SHALL BE SUBJECT TO
NO EXCEPTIONS. NO PARTY HERETO HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY
OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES.
11. Jurisdiction. EACH OF THE LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT
SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND
THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON SUCH BORROWER BY MAIL AT
THE ADDRESS SPECIFIED ABOVE. EACH 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.
12. Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be deemed to be an original document.
13. Definitions. Except as otherwise defined herein, all financial
terms shall be defined in accordance with generally accepted accounting
principles. The following defined terms as used herein shall have the following
meanings:
"Borrowing Base" shall mean for Loans constituting "purpose credit" or
otherwise subject to the requirements of Federal Reserve Board
Midas Family of Funds
As of July 18, 2003
Page 12
Regulation U, the maximum advance rate applicable to the Eligible
Collateral so that the Bank remains in compliance with the terms of
such Regulation U after giving effect to the making of such Loan, and
in all other cases the aggregate of the product of the following
advance rates times the current market value of the following types of
Eligible Collateral in which the Bank has a valid perfected first
security interest and assignment under the Security Agreement, which
is held by the Bank and which is subject to no other claims or
interests except as permitted hereby:
Advance Rate Collateral Type
----------- ---------------
90% United States, United Kingdom, German,
French, Dutch and Japanese government
and government agency securities and
commercial paper rated not less
favorably than A1 by Standard & Poor's
or P1 by Moody's Investor Services.
80% Bonds issued by entities located in the
United States, United Kingdom, Germany,
France, the Netherlands and Japan,
rated not less favorably than BBB- by
Standard & Poor's or Baa3 by Moody's
Investor Services; all commercial paper
rated A2 by Standard & Poor's or P2
by Moody's Investor Services.
75% Equity securities traded on major United
States, United Kingdom, French, German,
Dutch, and Japanese exchanges. In the
case of Loans used for leverage, the
Advance Rate shall be 50% for U.S.
equity securities.
65% Bonds issued by entities located in the
United States, United Kingdom, Germany,
France, the Netherlands and Japan,
rated not less favorably than BB (but
not BBB- or higher) by Standard & Poor's
or Ba2 (but not Baa3 or higher) by
Moody's Investor Services.
50% Bonds issued by entities located in the
United States, United Kingdom, Germany,
France, the Netherlands and Japan, rated
not less favorably than B (but not BB
or higher) by Standard & Poor's or B2
(but not Ba2 or higher) by Moody's
Investor Services.
Midas Family of Funds
As of July 18, 2003
Page 13
50% Bonds issued by entities located in any
OECD country (other than the United
States, United Kingdom, Germany, France,
the Netherlands and Japan) rated not
less favorably than BBB- by Standard &
Poor's or Baa3 by Moody's Investor
Services.
50% Equity securities traded on a major
exchange in any OECD country (other than
the United States, United Kingdom,
Germany, France, the Netherlands and
Japan).
The Bank's determination as to the eligibility or appropriate
collateral type and market value of such Eligible Collateral shall be
definitive absent manifest error, and the Bank may change the advance
rates as described above upon notice to the Borrower. The Bank will
exclude from calculation of the Borrowing Base as Eligible Collateral
(i) that portion of the current market value of any single item of
collateral, or items of collateral from any single issuer, comprising
investment grade bonds or equity securities which exceeds 20% of the
aggregate market value of all then Eligible Collateral and (ii) that
portion of the current market value of any single item of collateral,
or items of collateral from any single issuer, comprising bonds rated
below investment grade which exceeds 10% of the aggregate market value
of all then Eligible Collateral. The Eligible Collateral will be
valued daily at current market value by independent pricing sources
mutually acceptable to both the Bank and the Borrower. In the event
that the Standard & Poor's and Moody's rating on an item of collateral
shall differ, the lower of the two ratings shall be used in
determining the applicable Advance Rate.
"Business Day" shall mean any day excluding Saturday and Sunday
and excluding any other day which shall be in Boston, Massachusetts a legal
holiday or a day on which banking institutions are authorized by law to close.
"Committed Secured Leveraging Facility" shall mean that certain
committed secured line of credit facility not to exceed $9,000,000 made
available by the Bank to one or more of the Borrowers pursuant to a loan
agreement dated on or near the date hereof.
"Custodian" shall mean State Street Bank and Trust Company.
"Eligible Collateral" shall mean (a) OECD country equities,
excluding non-investment grade members, traded on major exchanges with a per
share value in excess of US$8.00 per share, (b) United States, United Kingdom,
German, French, Dutch, and Japanese government securities; and (c) bonds and
commercial paper rated by Moody's Investor Services and Standard & Poor's.
Midas Family of Funds
As of July 18, 2003
Page 14
"Federal Funds Rate" shall mean for any day, an interest rate per
annum (expressed as a decimal, rounded upwards, if necessary, to the next higher
1/100 of 1%) equal to the floating rate of interest quoted by the Bank as its
Federal Funds Rate for overnight loans.
"Indebtedness" shall mean all obligations for borrowed money and
other extensions of credit to a Borrower and all amounts payable in connection
therewith as permitted to be incurred by a registered investment company
pursuant to the Investment Company Act.
"Investment Advisor" shall mean the Borrower's investment advisor
appearing opposite such Borrower's name in the Appendix I attached hereto.
"Investment Company Act" means the Investment Company Act of
1940, as amended, together with all related rules and regulations promulgated by
the Securities and Exchange Commission relating thereto.
"Loan Documents" shall mean this Agreement, the Note, the
Security Agreement, and any other documents executed in connection herewith, as
the same may be amended, superseded or replaced.
"Obligations" shall mean any and all obligations of a Borrower to
the Bank of every kind and description, direct or indirect, absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising under the Loan Documents, and including obligations to perform
acts and refrain from taking action as well as obligations to pay money.
"Prospectus" shall mean the current Prospectus and Statement of
Additional Information in effect as of the date of this Agreement.
14. Amended and Restated Agreement. This Agreement amends and restates
in its entirety the Existing Loan Agreement. Any Loans, advances or extensions
of credit outstanding under the terms of the Existing Loan Agreement as of the
date hereof shall be deemed to be Loans outstanding under the terms of this
Agreement. This Agreement, and any documents executed in connection with this
Agreement, shall supersede and replace the Existing Loan Agreement and all
documents executed in connection therewith.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Midas Family of Funds
As of July 18, 2003
Page 15
If the foregoing satisfactorily sets forth the terms and conditions of the
Uncommitted Line, please execute and return to the undersigned each of the Loan
Documents and such other documents and agreements as the Bank may request. We
are pleased to provide the Uncommitted Line to the Borrowers and look forward to
the ongoing development of our relationship.
Sincerely,
STATE STREET BANK AND TRUST
COMPANY
By: _________________________
Paul J. Koobatian, Vice
President
Acknowledged and Accepted:
MIDAS FUND, INC.
By: ______________________________
Title: ____________________________
MIDAS SPECIAL EQUITIES FUND, INC.
By: ______________________________
Title: ____________________________
MIDAS DOLLAR RESERVES, INC.
By: ______________________________
Title: ____________________________
Midas Family of Funds
As of July 18, 2003
Page 16
STATE STREET BANK AND TRUST COMPANY,
as Custodian
By: ______________________________
Title: ____________________________
-2-
APPENDIX I
- ----------------------------------------- --------------------------------------
Borrower Investment Adviser
- ----------------------------------------- --------------------------------------
- ----------------------------------------- --------------------------------------
Midas Fund, Inc. Midas Management Corporation
- ----------------------------------------- --------------------------------------
- ----------------------------------------- --------------------------------------
Midas Special Equities Fund, Inc. Midas Management Corporation
- ----------------------------------------- --------------------------------------
- ----------------------------------------- --------------------------------------
Midas Dollar Reserves, Inc. Midas Management Corporation
- ----------------------------------------- --------------------------------------
EXHIBIT A
AMENDED AND RESTATED
UNCOMMITTED PROMISSORY NOTE
$____________ ___________, 2003
Boston, Massachusetts
For value received, the undersigned hereby promises to pay to State Street
Bank and Trust Company (the "Bank"), or order, at the head office of the Bank at
225 Franklin Street, Boston, Massachusetts 02110 in immediately available United
States dollars, the principal amount of _______________________ and no Dollars
($________________), or such lesser amount as shall not have been prepaid as
provided herein. Each loan shall be payable upon the earliest to occur of sixty
(60) days after the date on which such loan is made, the date on which the loan
becomes due whether following the occurrence of a Default or otherwise as
described in the Agreement (as hereinafter defined) or the Expiration Date, as
defined in the Agreement. Interest on the unpaid principal amount outstanding
hereunder shall be (i) payable at the rates and at the times as set forth in the
Agreement and (ii) shall be computed as set forth in the Agreement. All terms
not otherwise defined herein shall be used as defined in the Agreement.
All loans hereunder and all payments on account of principal and interest
hereof shall be recorded by the Bank. The entries on the records of the Bank
(including any appearing on this Note), absent manifest error, shall govern and
control as to amounts outstanding hereunder, provided that the failure by the
Bank to make any such entry shall not affect the obligation of the undersigned
to make payments of principal and interest on all loans as provided herein and
in the Agreement.
Following the occurrence of a Default hereunder, unpaid principal on any
loan, and to the extent permitted by applicable law, unpaid interest on any
loan, shall thereafter bear interest, compounded monthly and payable on demand,
until paid in full (after as well as before judgment) at a rate per annum equal
to two percent (2.0%) above the rate otherwise applicable to such loan
hereunder.
This Note is issued pursuant to, and entitled to the benefits of, and is
subject to, the provisions of a certain loan agreement dated ___________, 2003
by and between the undersigned and the Bank (herein, as the same may from time
to time be amended or extended, referred to as the "Agreement"), but neither
this reference to the Agreement nor any provision thereof shall affect or impair
the absolute and unconditional obligation of the undersigned maker of this Note
to pay the principal of and interest on this Note as herein provided.
This Note is secured by all Collateral as defined in the Security
Agreement.
The undersigned may at its option prepay all or any part of the principal
of this Note in accordance with the terms of the Agreement. Amounts prepaid may
be re-borrowed subject to the terms of the Agreement.
Any deposits or other sums at any time credited by or due from the Bank to
the undersigned and any securities or other property of the undersigned at any
time in the possession of the Bank may at all times be held and treated as
collateral for the payment of this Note.
The undersigned maker and every endorser and guarantor hereof hereby waives
presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement
hereof and consents that this Note may be extended from time to time and that no
such extension or other indulgence, and no substitution, release or surrender of
collateral and no discharge or release of any other party primarily or
secondarily liable hereon, shall discharge or otherwise affect the liability of
the undersigned, endorser or guarantor. No delay or omission on the part of the
Bank in exercising any right hereunder shall operate as a waiver of such right
or of any other right hereunder, and a waiver of any such right on any one
occasion shall not be construed as a bar to or waiver of any such right on any
future occasion.
This Note shall amend and restated in its entirety an amended and restated
promissory note in the original principal amount of $9,000,000 dated as of June
27, 2001 (the "Existing Note"). Any amounts outstanding under the Existing Note
shall be deemed to be outstanding under this Note.
This instrument shall have the effect of an instrument executed under seal
and shall be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts (without giving effect to any conflicts of laws
provisions contained therein).
WITNESS: [BORROWER]
________________________________
By: _____________________________
Title: _________________________
SCHEDULE I TO NOTE DATED _____________, 2003
FROM _____________________________
TO THE BANK
Date of Loan Amount of Principal Amount of Outstanding Notation
- ------------ ------------------- --------- ----------- --------
Principal Paid Balance Made By
-------------- ------- -------
EXHIBIT B
UNCOMMITTEDCREDIT FACILITY
ADVANCE/PAYDOWN REQUEST FORM
DATE:
---------------------------------------------------------------
TO: STATE STREET BANK AND TRUST COMPANY
---------------------------------------------------------------
ATTN: Howard Fan - tel. (617) 664-4005 fax (617) 664-3941
Monse Velazquez - tel. (617) 664-2145
---------------------------------------------------------------
FROM: [BORROWER]
---------------------------------------------------------------
FUND # (__________________) DDA # (_________________)
In connection with the loan agreement dated ________________ , as amended,
and all related documents currently in effect with State Street Bank and Trust
Company (collectively, the "Agreement"), please increase or reduce the
outstanding balance of $________________ by $________________ on ______[insert
date]__________on behalf of [Borrower]. The Loan should be recorded on the books
of the Borrower with the Bank and interest payable to the Bank should be
recorded at the agreed upon rate.
This request is (check one): ___ a Loan ___ a Paydown ___ Fed Funds Overnight
Rollover (Each request must be greater than or equal to $10,000, other than a
full repayment of all Loans.)
Further, the Borrower hereby represents and warrants that:
1. the proceeds of the Loan shall be used in conformance with the usage
specified in the Agreement, and no event of default has occurred
thereunder;
2. the Borrower is in compliance with all the terms and conditions in the
Agreement and will remain in compliance therewith after giving effect to
the making of the requested Loan; and
3. The following amounts and statements are true and correct after giving
effect to the requested Loan:
(a) Principal balance outstanding to the Borrower under this
credit facility (after giving effect
to the requested Loan): $_________________
(b) Principal balance outstanding to the Borrower under the
Committed Secured Leveraging
Facility: $_________________
(c) Aggregate Loans outstanding [(a) plus (b)]: $_________________
(d) Total assets of the Borrower (after giving
effect to the requested Loan): $_________________
(e) Total liabilities of the Borrower (without giving
effect to the requested Loan): $_________________
(f) Value of assets pledged to, or otherwise segregated for the
benefit of, a party other
than the Bank: $_________________
(g) The amount equal to [(d) minus (e) minus (f) $_________________
(h) 20% of the amount set forth in (g) above: $_________________
(i) The amount set forth on line No. 9 of Annex I
to Borrowing Base Certificate dated ________: $_________________
(i) The amount set forth in (a) above does not exceed the lesser of (i)
$9,000,000, (ii) the amount set forth in (h) above, (iii) the amount set forth
in (i) above, (iv) the Prospectus limitation for the Borrower, and (v) any other
limitation on borrowing imposed upon the Borrower by any other entity as
outlined in the Agreement.
(j) The amount set forth in (c) above does not exceed $18,000,000 in the
aggregate for the Borrowers that are also party to the Committed Secured
Leveraging Facility.
(k) The aggregate principal balance outstanding to all Borrowers under this
credit facility does not exceed $9,000,000.
4. The undersigned is a duly authorized officer of the Borrower with authority
to execute and deliver this document to the Bank and request the Loan
described herein on behalf of the Borrower.
By:
---------------------------------------
Name:
--------------------------------------
Title
--------------------------------------
Date:
--------------------------------------
EXHIBIT C
FORM OF
BORROWING BASE CERTIFICATE
____________, 2003
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Attn: Howard Fan/Monse Velazquez
Facsimile: (617) 664-3941
Ladies and Gentlemen:
Reference is hereby made to the loan agreement dated _____________, 2003
(as amended and in effect form time to time, the "Agreement"), by and among
Midas Fund, Inc., Midas Special Equities Fund, Inc., Midas Dollar Reserves,
Inc., and State Street Bank and Trust Company. Capitalized terms used herein and
not otherwise defined shall have the meanings as set forth in the Agreement.
This Borrowing Base Certificate is delivered to you pursuant to the terms
of the Agreement. The undersigned hereby certifies to you that he/she is an
authorized signatory and attached hereto as Annex I is a true and accurate
calculation of the Borrowing Base of ______________________ [BORROWER NAME] as
at the end of ___________________[INSERT DATE], determined in accordance with
the requirements of the Agreement.
Very truly yours,
-------------------------------
[BORROWER NAME]
By: __________________________
Title: _______________________
Authorized Signatory
Annex I
to Borrowing Base Certificate
As of: ___________, 2003
Column I Column II
Collateral for Loans under Eligible Collateral (After
this Agreement Applying Advance Rates to
Items in Column I)
Types of Collateral
1. United States, United Kingdom, German,
French, Dutch and Japanese government
and government agency securities and
commercial paper rated not less favorably
than A1 by Standard & Poors ("S&P") or P1
by Moody's Investor Services
("Moody's): $_____________
Multiplied by 90%: $_____________
2. Bonds issued by entities located in the
United States, United Kingdom, Germany,
France, the Netherlands and Japan rated
not less favorably than BBB- by S&P or
Baa3 by Moody's; all commercial paper
rated A2 by S&P or P2 by Moody's: $_____________
Multiplied by 80%: $_____________
3. Equity securities traded on major stock
exchanges in the United Kingdom, Germany,
France, the Netherlands and Japan, having
a market value equivalent in each instance
of not less than $8 per share: $_____________
Multiplied by 75%: $_____________
4. Equity securities (including American
depository receipts and bonds convertible
to equity securities) traded on the NYSE,
American stock exchange, NASDAQ or other
major stock exchange located in the United
States and having a market value of not
less than $8 per share: $_____________
Multiplied by 75% if the borrowing is not
used for leverage: $_____________
Multiplied by 50% if the borrowing is used
for leverage: $_____________
5. Bonds issued by entities located in the
Untied States, United Kingdom, Germany,
France, the Netherlands or Japan rated
not less favorably than BB (but not BBB-
or higher) by S&P or Ba2 (but not Baa3
or higher) by Moody's: $_____________
Multiplied by 65%: $_____________
Column I Column II
Collateral for Loans under Eligible Collateral (After
this Agreement Applying Advance Rates to
Items in Column I)
Types of Collateral
6. Bonds issued by entities located in the
United States, United Kingdom, Germany,
France, the Netherlands and Japan, rated
not less favorably than B (but not BB or
higher) by S&P or B2 (but not Ba2 or
higher) by Moody's; Bonds issued by
entities located in any OECD country (other
than the Untied States, United Kingdom,
Germany, France, the Netherlands and Japan)
rated not less favorably than BBB- by S&P
or Baa3 by Moody's; and equity securities
traded on a major exchange in any OECD
country (other than the Untied States,
United Kingdom, Germany, France, the
Netherlands and Japan) excluding those
countries rated below investment grade by
S&P and Moody's and having a market value
equivalent in each instance of not less
than $8 per share: Multiplied by 50%: $_____________
$_____________
7. Total Eligible Collateral: $_____________
8. Issuer Diversification Adjustment:
(Does not apply to securities that
are obligations of the United States
government and its instrumentalities):
That portion of the value of any single
item of investment grade Collateral, or
items of investment grade Collateral in
Column II from any single issuer, which
exceeds 20% of the value of Total Eligible
Collateral (No. 7 above); plus that portion
of the value of any single item of
non-investment grade Collateral, or items of
non-investment grade Collateral in Column II
from any single issuer, which exceeds 10% of
the value of Total Eligible Collateral
(No. 7 above): $_____________
9. Eligible Collateral
(No. 7 minus No. 8): $_____________
Footnote:
* If both Standard and Poor's and Moody's Investor Services provide a rating for
the same security, the lower of the two ratings will be used to determine the
Advance Rate.
EXHIBIT D
INDEBTEDNESS[To be completed by the Borrower]
EXHIBIT EENCUMBRANCES
[To be completed by the Borrower]
EXHIBIT F
LITIGATION
[To be completed by the Borrower]