Subscription Line Facility Agreement

Lenders often argue for a right of consent, even for transfers from non-included investors, or for the right to report a credit contract default when a number of investors transfer their interests or withdraw from the fund, on the grounds that such transfers or withdrawals are warning signs of a troubled fund. For similar reasons, lenders may endeavour to accept agreements for fund investments, such as valuation requirements or portfolio concentration limits and agreements limiting the occurrence of debt by the borrower, except as part of the underwriting facility. There are significant differences between credit agreements and typical revolving credit agreements. These differences are mainly due to the nature of the guarantees for underwriting credit facilities. The lender`s security interest in most of these guarantees can be easily enhanced by submitting a UCC funding statement. The perfection of the security interest in the bank account agreed by the investors is obtained by giving the lender „control“ in accordance with a tripartite agreement between the lender, the custodian bank and the fund. This is relatively simple, although the financial institution that manages the account may require problematic conditions that a lender would withstand the underwriting facility, including the lender`s claims and the custodian bank`s ability to claim rights at costs, expenses and compensation for the account`s assets. These issues should be addressed in a timely manner to avoid last-minute delays. Some lenders worry about the performance of a fund borrower is reasonable, as a fund failure or the failure of the mass investor could make it difficult for the lender to repay. However, since lenders rely primarily on the capital commitments of investors` inventories and not on the value of the borrower`s portfolio business investments and are generally over-insured (non-included investor liabilities are mortgaged when they are not included in the credit base calculation), lenders are likely not to need the same degree of control over the borrower`s activities.

they would have with a typical credit facility for businesses. Borrowers should oppose overly strict agreements that could limit liquidity, impose administrative constraints or force the Fund to provide attractive investment facilities, and strive to limit agreements to ensure the overall health of the Fund, so that they do not restrict investment and debt more strictly than is provided in the Fund`s documents. Other provisions, often accepted with respect to underwriting credit facilities, include restrictions on administrative fees and distributions during the continuation of a credit contract default, agreements or delay events relating to key person events that may trigger the end of the fund`s investment period and the lender`s right to accept that the fund or general partner apply corrective action in the event of a investor default (fuelled by the lender`s concerns that the exercise of certain corrective measures, such as the termination of the contribution right of a defaulting investor, may be inconsistent with the lender`s share of the guarantees).