THIRD AMENDMENT AND WAIVER
TO THE
CREDIT AGREEMENT
Dated as of September 30, 1997
This THIRD AMENDMENT AND WAIVER dated as of September 30, 1997 (this "Third
Amendment") is between Xxxx Holding Corp., a Delaware corporation (the
"Borrower"), and FLEET NATIONAL BANK, a national banking association, formerly
known as Fleet National Bank of Connecticut and Shawmut Bank Connecticut, N.A.
(the "Bank").
PRELIMINARY STATEMENTS. The Borrower and the Bank entered into a Credit
Agreement dated as of October 2, 1995, which Credit Agreement was amended by a
First Amendment to the Credit Agreement dated as of March 31, 1996 and by a
Second Amendment to the Credit Agreement dated as of May 15, 1996 (as so
amended, the "Credit Agreement"). The Borrower and the Bank wish to amend the
Credit Agreement further to: (i) extend the Revolving Loan Termination Date,
(ii) increase the Applicable Eurodollar Margin, (iii) amend the schedule
pursuant to which the Bank's Commitment with respect to the Revolving Loans
shall be automatically reduced, (iv) amend the covenant applicable to minimum
interest coverage for the fiscal quarter ended September 30, 1997, (v) waive the
covenant applicable to minimum fixed charge coverage for the fiscal quarters
ending March 31, 1997 and June 30, 1997 and amend such covenant for each fiscal
quarter thereafter, (vi) consent to the prepayment of the unsecured debt of Xxxx
Insurance Associates, Inc. and waive the covenants applicable to such prepayment
and to Distributions to permit such prepayment and, (vii) consent to the merger
of Xxxx Holding Corp. into Xxxx Group Inc. and waive the covenant applicable to
mergers to permit such merger.
NOW THEREFORE, the Borrower and the Bank agree as follows:
Section 1. Amendments to the Credit Agreement. Effective as of September
30, 1997 and subject to the satisfaction of the conditions precedent set forth
in Section 3 hereof, the Credit Agreement is hereby amended as follows:
(a) Section 1.1 (Definitions) of the Credit Agreement is amended by
substituting for the defined terms "Applicable Eurodollar Margin" and "Revolving
Loan Termination Date" the following:
"Applicable Eurodollar Margin" means, for each Eurodollar Rate Loan
comprising part of the same Borrowing, an amount equal to 2.50%
"Revolving Loan Termination Date" means June 30, 2001; provided, however,
if not fewer than sixty (60) days nor more than ninety (90) days prior to
each
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Anniversary Date, the Borrower requests the Bank to extend the Revolving
Loan Termination Date for an additional year and if the Bank, in its sole
discretion in writing within thirty (30) days of such request, grants such
request, the Revolving Loan Termination Date means the date to which the
Revolving Loan Termination Date has been so extended. If such day is not a
Business Day, the Revolving Loan Termination Date shall be the next
preceding Business Day.
(b) Subsection (a) of Section 2.5 (Quarterly Reduction of Commitment) of
the Credit Agreement is replaced with the following:
"(a) On each March 31, June 30, September 30 and December 31, of each
calendar year commencing on September 30, 1996 (the "Reduction Commencement
Date") until the Revolving Loan Termination Date, the Commitment of the
Bank shall be reduced automatically by an amount equal to the following:
$625,000 for each of such dates from and including September 30, 1996 to
and including June 30, 1997 and $468,750 for each of such dates
thereafter."
(c) Subsection (a) of Section 2.8 (Interest on the Revolving Loans) of the
Credit Agreement is replaced with the following:
"(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Base Rate Loan is
made until it becomes due, at a rate per annum equal to the Base Rate for
such day. Interest shall be payable on the last day of the Interest Period
applicable thereto. Such interest shall accrue from and including the date
of such Borrowing to but excluding the date of any repayment thereof and
shall be computed on the basis of a fraction, the numerator of which is the
actual number of days elapsed from the date of Borrowing and the
denominator of which is three hundred sixty (360). Overdue principal of
and, to the extent permitted by law, overdue interest on the Base Rate
Loans shall bear interest for each day until paid at a rate per annum equal
to the Default Rate."
(d) Section 7.10 (Capital Expenditures) of the Credit Agreement is replaced
with the following:
"Make or permit to be made any Capital Expenditure in any fiscal year,
or commit to make any Capital Expenditure in any fiscal year, which when
added to the aggregate Capital Expenditures of the Borrower and its
Subsidiaries theretofore made or committed to be made in that fiscal year,
would exceed $1,500,000 excluding the aggregate amount of rentals and other
costs paid and payable in such fiscal year with respect to leases (other
than Capital Leases)."
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(e) Section 7.14 (Minimum Interest Coverage) of the Credit Agreement is
amended to provide that for the fiscal quarter ending September 30, 1997, and
only for such quarter, the minimum interest coverage requirement set forth in
Section 7.14 shall be 2.75 to 1.
(f) Section 7.15 (Minimum Fixed Charge Coverage) of the Credit Agreement is
amended to provide that the minimum fixed charge coverage requirement set forth
in Section 7.15 for the fiscal quarter ending September 30, 1997 shall be 1.1 to
1 and for each fiscal quarter thereafter shall be 1.25 to 1.
Section 2. Waivers and Consents
(a) The Bank hereby waives those Events of Default that occurred under the
Credit Agreement as a result of the failure of the Borrower to comply with
Section 7.14 for the fiscal quarters ending March 31, 1997 and June 30, 1997.
(b) The Bank hereby consents to the prepayment (the "Prepayment") by the
Borrower of $6,000,000 principal amount of unsecured debt of Xxxx Insurance
Associates, Inc. which debt has been assumed by the Borrower, and waives any
Events of Default occurring under the Credit Agreement as a result of the
failure of the Borrower thereby to comply with Sections 7.1(e) and 7.18 of the
Credit Agreement.
(c) The Bank hereby consents to the merger of Xxxx Holding Corp. into Xxxx
Group Inc. (the "Merger") and waives any Events of Default occurring under the
Credit Agreement as a result of the failure of the Borrower thereby to comply
with Section 7.6 of the Credit Agreement.
(d) Subject to Section 3, the foregoing waivers shall be effective only for
those Events of Default specified in subsections (a), (b) and (c) above and
shall not entitle the Borrower to any future waiver in similar or other
circumstances.
Section 3. Conditions of Effectiveness. Subject to the receipt by the Bank
of a counterpart of this Third Amendment duly executed by the Borrower, this
Third Amendment shall become effective as of September 30, 1997; provided,
however, that the effectiveness of the consent and waiver with respect to the
Merger described in Section 2(c) shall be subject to the execution and delivery
by Xxxx Group Inc. of (i) a confirmation and assumption agreement satisfactory
to the Bank confirming Xxxx Group Inc.'s assumption of all of the Borrower's
obligations under the Credit Agreement and the Pledge Agreements and (ii) a
replacement Revolving Note naming Xxxx Group Inc. as borrower.
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Section 4. Representations and Warranties of the Borrower. The Borrower
represents as follows:
(a) The execution, delivery and performance by the Borrower of this
Third Amendment and the Prepayment have been duly authorized by all
necessary corporate action and do not and will not (i) require any consent
or approval of its shareholders; (ii) violate any provisions of its
articles of incorporation or by-laws; (iii) violate any provision of, or
require any filing, registration, consent or approval under, any law, rule,
regulation (including without limitation, Regulations U and X), order,
writ, judgment, injunction, decree, determination or award presently in
effect having applicability to and binding upon the Borrower or any
Subsidiary; (iv) result in a breach of or constitute a default or require
any consent under any indenture or loan or credit agreement (other than the
Credit Agreement) or any other material agreement, lease or instrument to
which the Borrower or any Subsidiary is a party or by which it or its
Properties may be bound; or (v) result in, or require, the creation or
imposition of any Lien upon or with respect to any of the Properties now
owned or hereafter acquired by the Borrower.
(b) The consummation of the Merger will not (i) result in a breach of
or constitute a default or require any consent under any indenture or loan
or credit agreement (other than the Credit Agreement) or any other material
agreement, lease or instrument to which the Borrower or any Subsidiary is a
party or by which it or its Properties may be bound; or (ii) result in, or
require, the creation or imposition of any Lien upon or with respect to any
of the Properties now owned or hereafter acquired by the Borrower.
(c) No authorization, consent, approval, order, license or permit
from, or filing, registration or qualification with, or exemption by, any
governmental or public body or authority, or any subdivision thereof, or
any other Person, is required to authorize, or is required in connection
with the execution, delivery and performance by the Borrower of, or the
legality, validity, binding effect or enforceability of, this Third
Amendment.
(d) This Third Amendment, when delivered, will constitute the legal,
valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally and by general
principles of equity.
(e) The representations and warranties contained in Article 5 of the
Credit Agreement are correct on and as of the date hereof as though made on
and as of the date hereof.
(f) Except for those waived by this Third Amendment, no Event of
Default or Default has occurred and is continuing or would result from the
signing of this Third Amendment, the Prepayment or the Merger or the
transactions contemplated hereby.
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(g) There has been no material adverse change in the financial
condition, operations, Properties, business or business prospects of the
Borrower and its Subsidiaries, if any, since the date of the last financial
statements furnished to the Bank.
(h) No actions, suits or proceedings or investigations (other than
routine examinations performed by insurance regulatory authorities) are
pending or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any Subsidiary, or any Property of any of them
before any court, governmental agency or arbitrator, which, if determined
adversely to the Borrower or any Subsidiary, would, in any one case or in
the aggregate, materially adversely affect the financial condition,
operations, Properties, business or, to the knowledge of the Borrower,
prospects of the Borrower and its Subsidiaries taken as a whole or the
ability of the Borrower to perform its obligations under the Credit
Agreement, as amended by this Third Amendment.
(i) No information, exhibit or report furnished in writing by or on
behalf of the Borrower or any officer or director of the Borrower to the
Bank in connection with the negotiation of, or pursuant to the terms of,
this Third Amendment contained when made any material misstatement of fact
or omitted to state a material fact necessary to make the statements
contained therein not misleading.
Section 5. Reference to and Effect on the Credit Agreement.
(a) Upon the effectiveness of this Third Amendment, on and after the date
hereof, each reference in the Credit Agreement to "this Credit Agreement",
"hereunder", "hereof", "herein" or words of like import and each reference in
the Revolving Note to the Credit Agreement shall mean and be a reference to the
Credit Agreement as amended hereby.
(b) Except as specifically amended above, the Credit Agreement shall remain
in full force and effect and is hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Third Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Bank under the Credit Agreement, nor constitute a waiver
of any provision of the Credit Agreement.
Section 6. Costs, Expenses and Taxes. The Borrower agrees to pay on demand
all reasonable costs and expenses of the Bank in connection with the
preparation, execution and delivery of this Third Amendment and any other
instruments and documents to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Bank with respect thereto and with respect to advising the Bank as to its rights
and responsibilities hereunder. In addition, the Borrower shall pay any and all
stamp and other
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taxes payable or determined to be payable in connection with the execution and
delivery of this Third Amendment and any other instruments and documents to be
delivered hereunder, and agrees to save the Bank harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes.
Section 7. Execution in Counterparts. This Third Amendment may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument.
Section 8. Governing Law. This Third Amendment shall be governed by, and
construed in accordance with, the laws of the State of Connecticut.
Section 9. Defined Terms. Capitalized terms used herein which are not
expressly defined herein shall have the meanings ascribed to them in the Credit
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
XXXX HOLDING CORP.
By
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Name:
Title:
FLEET NATIONAL BANK
By /s/ Vijay Nazareth
Name: Vijay Nazareth
Title: Vice President
