EXHIBIT 4(d)
AMENDED AND RESTATED COMMERCIAL CREDIT AGREEMENT
THIS AMENDED AND RESTATED COMMERCIAL CREDIT AGREEMENT is made November ___, 2002
by and among XXXXXXX BANK ("XXXXXXX"), a federally chartered savings bank with a
place of business at Xxxxxxx Plaza, 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx
00000 as agent (in such capacity, the "AGENT"), FLEET NATIONAL BANK, a national
banking association with an office at 000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx
00000, as Lender ("FLEET"), and together with Xxxxxxx in its capacity as Lender,
the "LENDERS") and ACMAT CORPORATION a Connecticut corporation with a place of
business at 000 Xxxx Xxxxxx, Xxx Xxxxxxx, XX 00000 ("BORROWER") and ACSTAR
HOLDINGS, INC., a Delaware corporation with a place of business at 000 Xxxx
Xxxxxx, Xxx Xxxxxxx, XX 00000 ("GUARANTOR"). For valuable consideration, receipt
of which is hereby acknowledged, the parties agree as follows:
BACKGROUND
1. Xxxxxxx, Borrower and Guarantor are parties to an Amended and Restated
Commercial Credit Agreement dated September 1, 1999 (the "ORIGINAL RESTATED
CREDIT AGREEMENT").
2. Pursuant to the Original Restated Credit Agreement Xxxxxxx made certain
loans to Borrower, including, but not limited to, a Revolving Credit in the
amount of $10,000,000, a Term Loan in the amount of $4,500,000, a Term Loan II
in the amount of $5,000,000 and a Mortgage Loan in the amount of $7,800,000.
Capitalized terms used in this subsection are defined in the Original Restated
Credit Agreement.
3. Borrower has requested that the Revolving Credit be renewed and that
Lenders make a new term loan to the Borrower in the amount of $10,000,000 ("TERM
LOAN III").
4. Lenders have agreed to renew the Revolving Credit and make Term Loan III.
5. The parties have agreed to enter into this Agreement in order to amend and
restate the Original Restated Credit Agreement, to add Fleet as a party, to
include the renewal of the Revolving Credit, the making of Term Loan III and to
modify certain terms and conditions of the Original Restated Credit Agreement.
NOW, THEREFORE, for valuable consideration the receipt of which is hereby
acknowledged, the parties agree as follows:
AGREEMENTS
1. LOANS; GUARANTY.
a. THE LOANS.
i. REVOLVING CREDIT.
(1) Lenders severally and not jointly agree from time to time,
until the Termination Date, at the request of Borrower, and provided that all of
the Conditions Precedent have been met by Borrower at the time of such request,
to make advances (each an "ADVANCE" and collectively "ADVANCES") to Borrower as
a Revolving Credit (the "REVOLVING CREDIT"), which Advances may be repaid and
readvanced from time to time, and which shall bear interest at the rate set
forth in Section 1ei provided that the aggregate amount of all outstanding
Advances shall not at any time exceed the amount of $10,000,000.00. The
Revolving Credit shall be evidenced by two (2) Revolving Credit Notes one in the
amount of up to $7,500,000 payable to Xxxxxxx in form and substance set forth as
EXHIBIT A attached hereto and one in the amount of up to $2,500,000 payable to
Fleet in form and substance set forth as EXHIBIT B attached hereto (together,
the "REVOLVING NOTES"). The obligation of each Lender to advance funds under the
Revolving Credit Notes shall not exceed the amounts set forth in the preceding
sentence and neither Lender shall have any obligation to advance any funds
beyond the maximum amount indicated. Advances shall be made in Lenders'
discretion and each advance shall be funded 75% by Xxxxxxx and 25% by Fleet.
(2) On and before the Termination Date, Lenders shall
determine in their absolute discretion whether they are willing to extend the
Termination Date. On and after the Termination Date, as extended, if at all, any
obligation of Lenders to make Advances shall automatically terminate and all
Advances, together with accrued and unpaid interest thereon and expenses related
thereto, shall become immediately due and payable in full.
ii. TERM LOAN I. On September 1, 1999 Xxxxxxx loaned to
Borrower and Borrower borrowed from Lender the sum of $4,500,000.00 as a Term
Loan ("TERM LOAN I"), which Term Loan I is payable in quarterly payments of
principal, each in the amount of $250,000.00 payable on the first day of each
March, June, September and December following such date, each to be accompanied
by a payment of interest at the rate set forth in Section 1eii hereof until the
Term Loan I Maturity Date, when the entire unpaid balance of the Term Loan I,
together with all accrued and unpaid interest, shall be due and payable, all as
more particularly set forth in the Term Loan I Note delivered to Lender in form
and substance as set forth in EXHIBIT C attached hereto, (together with any note
which from time to time extends, amends, supplements, modifies, renews or
substitutes for such note, the "TERM LOAN I NOTE").
iii. TERM LOAN II. Xxxxxxx has loaned to Borrower and
Borrower has borrowed from Lender the sum of $5,000,000.00 as a second Term Loan
(the "TERM LOAN II"), which Term Loan II is payable in quarterly payments of
principal, each in the amount of $250,000 payable on the first day of each
March, June, September and December commencing March 1, 2004, each to be
accompanied by a payment of interest at the rate set forth in 1eiii hereof until
the Term Loan II Maturity Date, when the entire unpaid balance of Term Loan II,
together with all accrued and unpaid interest, shall be due and payable, all as
more particularly set forth in the Term Loan II Note delivered to Lender in form
and substance as set forth in EXHIBIT D attached hereto, (together with any note
which from time to time extends, amends,
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supplements, modifies, renews or substitutes for such note, the "TERM LOAN II
NOTE").
iv. TERM LOAN III. Lenders are lending to Borrower and
Borrower is borrowing from Lenders the sum of $10,000,000.00 as a third Term
Loan (the "TERM LOAN III"), which Term Loan III is payable in monthly payments
of principal as provided in each Term Loan III Note and each such payment to be
accompanied by a payment of interest at the rate set forth in Section 1eiv
hereof until the Term Loan III Maturity Date, when the entire unpaid balance of
Term Loan III, together with all accrued and unpaid interest, shall be due and
payable. Term Loan III shall be evidenced by two (2) Term Loan III Notes one in
the amount of $2,500,000 payable to Xxxxxxx in form and substance set forth as
EXHIBIT E attached hereto and one in the amount of $7,500,000 payable to Fleet
in form and substance set forth as EXHIBIT F attached hereto (together, the
"TERM LOAN III NOTES").
v. THE MORTGAGE LOAN. On December 23,1998, Xxxxxxx loaned
to Borrower and Borrower borrowed from Lender the original principal amount of
$7,800,000.00 dated December 23, 1998 as a Mortgage Loan (the "MORTGAGE LOAN"),
which Mortgage Loan is evidenced by a promissory note delivered to Lender in
form and substance as set forth in Exhibit G attached hereto, (together with any
note which from time to time extends, amends, supplements, modifies, renews or
substitutes for such promissory note, the "MORTGAGE NOTE"), which Mortgage Note
is payable in monthly payments of principal and interest each in the amount of
$90,749.64 payable on the first day of each month, until January 1, 2009, when
the entire unpaid balance of the Mortgage Loan, together with all accrued and
unpaid interest, shall be due and payable.
b. CONDITIONS PRECEDENT TO ADVANCES. Lenders' obligation to make any
Advance shall be subject to the conditions precedent ("CONDITIONS PRECEDENT")
that on the date on which Lenders make the Advance:
i. Borrower must have received and provided to Lenders such
approvals, opinions, consents or documents evidencing compliance with this
Agreement as Lenders may reasonably request.
ii. Borrower must have submitted all financial statements
required hereunder to Lenders showing an availability for Advances under the
Revolving Credit, and such Advance when added to all outstanding Advances must
be within such availability.
iii. The following statements must be true, and each request
for an Advance shall be deemed to be a representation and warranty by Borrower
to the effect that, at and as of the date of such request:
(1) The representations and warranties contained in this
Agreement are true and correct on and as of the date of such request as though
made on and as of such date; and
(2) no Default or Event of Default has occurred and/or is
continuing or would result from the Advance.
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c. PROCEDURES FOR REQUESTING ADVANCES. Provided that all Conditions
Precedent have been satisfied, Borrower may from time to time request Advances
by a telephone call from such person as Borrower may hereafter designate in
writing to Agent, each of which request must be for an amount not less than
$100,000.00. Any request for an Advance made prior to 12:00 noon on a Business
Day shall result in the Advance being made on such Business Day as to Prime Rate
Advances and on the second (2nd) London Business Day following such request as
to LIBOR Advances. Any request made after 12:00 noon shall result in such
Advance being made on the next Business Day as to Prime Rate Advances and on the
third (3rd) London Business Day following such request as to LIBOR Advances. Any
and all Advances to be made to Borrower by Xxxxxxx under this Agreement shall be
deposited in Account #DDA 0000000 maintained by Borrower with Xxxxxxx and any
and all Advances to be made to Borrower by Fleet under this Agreement shall be
wired in accordance with the instructions set forth on SCHEDULE 1c attached
hereto for further credit to Borrower's account 0000000 at Xxxxxxx. Borrower
specifically agrees that Agent shall not be required to but shall be entitled to
rely on such telephone instructions and that Borrower shall be bound thereby.
Borrower shall provide to Agent such documentation respecting each request for
Advance, including, without limitation, the form of Request for Advance attached
hereto as SCHEDULE H , as Lenders shall require.
d. LOANS. It is specifically contemplated by the parties to this
Agreement that the banking relationship evidenced hereby may, in Lenders'
discretion, involve financial accommodations of various types to Borrower,
including, but not limited to, letters of credit, term loans, coverage of
overdrafts, time loans, demand loans, over loans under the Revolving Credit and
the Term Loans and the like, in addition to any and all other loans and/or
Advances previously made by Lenders to Borrower in addition to the Revolving
Notes and Term Note I, Term Note II, Term Note IIIs and the Mortgage Note.
Consequently, the parties intend that this Agreement shall govern any and all
financial accommodations now or hereafter extended by Lenders to Borrower and
all other liabilities of the Borrower to the Lenders of any kind or nature
including, without limitation, fees, charges, indemnities and penalties. In
extension of the foregoing, all loans and advances now or hereafter made by
Lenders to or on behalf of Borrower pursuant to this Agreement and/or any of the
documents executed in connection herewith, or otherwise, whether or not
evidenced by notes, and all liabilities of the Borrower to the Lenders (primary,
secondary, direct, indirect, absolute, contingent, sole, joint or several,
whether similar or dissimilar or related or unrelated) whether previously
incurred, now existing or hereafter arising, including, without limitation under
guarantees or other form of surety now or hereafter provided by Borrower in
favor of Lenders, whether pursuant to this Agreement or any of the Documents or
otherwise, any renewals or extensions thereof, to the extent the same are
outstanding from time to time, are herein collectively called the "LOANS".
e. INTEREST.
i. REVOLVING CREDIT. All amounts outstanding from time to
time under the Revolving Credit shall bear interest
(1) At a per annum variable rate which at all times is equal
to the Prime Rate, said
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rate to change when and as said Prime Rate changes.
(2) At the election of Borrower made pursuant to a Notice of
Interest Rate Election (in form and substance as set forth in EXHIBIT I,
attached hereto), outstanding amounts under the Revolving Credit shall bear
interest at the LIBOR Rate plus one hundred sixty (160) basis points. Such
amounts must be in increments of $50,000.00 and remain outstanding for the
Interest Period selected by Borrower at the time such election is made, which
period of time shall be in increments of one month but not to exceed three
months.
(3) Notwithstanding the foregoing, not more than three (3)
separate interest rate tranches shall be outstanding at any time under the
Revolving Credit at any time.
ii. TERM LOAN I. All amounts outstanding from time to time
under Term Loan I shall bear interest at a fixed rate equal to seven and one
quarter (7 1/4 %) percent per annum.
iii. TERM LOAN II. All amounts outstanding from time to time
under Term Loan II shall bear interest
(1) at a per annum variable rate which at all times is equal
to the Prime Rate, said rate to change when and as said Prime Rate changes.
(2) At the election of Borrower made pursuant to a Notice of
Interest Rate Election (in form and substance as set forth in EXHIBIT J,
attached hereto), outstanding amounts under the Term Loan II shall bear interest
at the LIBOR Rate plus one hundred ninety (190) basis points. Such election
shall apply to the entire outstanding amount of Term Loan II and must remain
outstanding for an Interest Period equal to three months.
iv. TERM LOAN III. All amounts outstanding from time to time
under the Term Loan III shall bear interest
(1) at a per annum variable rate which at all times is equal
to the Prime Rate, said rate to change when and as said Prime Rate changes.
(2) At the election of Borrower made pursuant to a Notice of
Interest Rate Election (in form and substance as set forth in EXHIBIT J,
attached hereto), outstanding amounts under the Term Loan III shall bear
interest at the LIBOR Rate plus 200 basis points. Such election shall apply to
the entire outstanding amount of Term Loan III and must remain outstanding for
an Interest Period equal to one month.
v. MORTGAGE LOAN. All amounts outstanding from time to time
under the Mortgage Loan shall bear interest at a fixed rate equal to six and
95/100 (6.95 %) percent per annum as set forth therein.
f. PAYMENT. Except as otherwise provided in any note now or hereafter
executed which evidences any Loan, interest on all Loans shall be payable by
Borrower monthly on the first (1st)
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day of each calendar month for interest accrued during the preceding month on
the Loans at the rate or rates of interest applicable during said preceding
month. With respect to Term Loan I, Term Loan II, Term Loan III and the Mortgage
Loan, interest payments shall accompany payments of principal. Interest on all
Loans shall be computed using a per diem rate which shall be a fraction, the
numerator of which shall be the rate of interest calculated in accordance with
Section 1e with respect to each Loan as set forth therein and the denominator of
which shall be three hundred sixty (360), multiplied by the actual number of
days elapsed. For the purposes of computing interest earned on the Loans,
including without limitation interest payments which are paid by an Advance (in
which case such advance shall constitute a Loan) or interest payments which are
withdrawn directly from Borrowers' accounts maintained with Lenders or are made
by other current funds (AND BORROWER HEREBY CONSENTS TO ANY AND ALL SUCH
ADVANCES AND/OR WITHDRAWALS, AND/OR PAYMENTS BY ANY OTHER MEANS AVAILED OF BY
LENDER, AND FURTHER CONSENTS TO PAYMENTS OF PRINCIPAL AND/OR INTEREST ON ANY OF
THE LOANS AND/OR OTHER SUM OWING TO LENDER BY SUCH ADVANCES AND/OR WITHDRAWALS),
credit for checks deposited, wire transfers received or payment by any other
means shall be given on the third (3rd) business day following the receipt of
such check, wire transfer or other form of payment. In the event any payment of
principal and/or interest shall be returned unpaid for any reason, any credit
given on account of such payment shall be deleted, interest shall accrue
retroactively to the date such credit was given and such payment shall be deemed
for all purposes under this Agreement, never to have been made. Any interest not
paid as aforesaid may, in Lenders' discretion, accrue and be added to the
principal and continue to bear interest at the rate being borne by such
principal. All payments by Borrower with respect to the Revolving Credit and
Term Loan III shall be made to the Agent and the Agent shall pay over such
payments to the Lenders in accordance with the Agency Agreement. Agent shall
directly debit Borrower's account at Xxxxxxx for all payments due on Term Loan
III.
g. PREPAYMENT. Any amounts outstanding bearing interest at the LIBOR
Rate may only be prepaid if any such prepayment is accompanied by the Prepayment
Premium.
h. GUARANTY. Guarantor is simultaneously herewith executing and
delivering to Lenders a Guaranty Agreement (the "GUARANTY") unconditionally
guaranteeing to Lenders the payment of all Indebtedness and obligations now or
hereafter owing by Borrower to Lender, including, without limitation, the Loans.
i. CERTAIN RIGHTS OF XXXXXXX. Xxxxxxx may deal with Term Loan I, Term
Loan II and the Mortgage Loan as it, in its sole discretion, shall determine,
including, but not limited to, modifications to any of the terms and conditions
of the Term Loan I, Term Loan II and the Mortgage Loan; provided however,
Xxxxxxx may not increase the amount on Term Loan I, Term Loan II or the Mortgage
Loan without Fleet's prior written consent, which consent shall not be
unreasonably withheld
2. REPRESENTATIONS, WARRANTIES AND COVENANTS. Borrower and Guarantor each
jointly and severally represent and warrant to Lender as of the date hereof, and
as of the date of each Advance that:
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a. BORROWER INCORPORATION AND QUALIFICATION. Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Connecticut, has the corporate power to own its properties and
conduct its business as presently conducted, and is duly qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the property owned or held under lease by it makes such qualification
necessary in order to avoid any limitation, penalty, forfeiture or restriction
under the laws of such jurisdiction.
b. GUARANTOR INCORPORATION AND QUALIFICATION. Guarantor is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has the corporate power to own its properties and
conduct its business as presently conducted, and is duly qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the property owned or held under lease by it makes such qualification
necessary in order to avoid any limitation, penalty, forfeiture or restriction
under the laws of such jurisdiction.
c. BORROWER CAPITALIZATION, BUSINESS AND SUBSIDIARIES. Borrower does
not own stock or other ownership interests of any other business entity, active
or inactive except as set forth on SCHEDULE 2c attached hereto. The information
set forth on SCHEDULE 2c attached is complete and accurate. All of Borrower's
stock has been duly authorized and validly issued and is fully paid and
non-assessable. Borrower has no place of business and does not maintain or store
any of its assets at any location, including without limitation inventory at a
vender or subcontractor, other than those set forth in SCHEDULE 2c.
d. GUARANTOR CAPITALIZATION, BUSINESS AND SUBSIDIARIES. Guarantor
does not own stock or other ownership interests of any other business entity,
active or inactive except as set forth on SCHEDULE 2d attached hereto. The
information set forth on SCHEDULE 2d attached is complete and accurate. All of
Guarantor's stock has been duly authorized and validly issued and is fully paid
and non-assessable. Guarantor has no place of business and does not maintain or
store any of its assets at any location, including without limitation inventory
at a vender or subcontractor, other than those set forth in SCHEDULE 2d.
e. AUTHORITY. Each of Borrower and Guarantor has the corporate power
to execute, deliver and carry out the terms and provisions of this Agreement and
the other Documents to which it is a party and has taken all necessary corporate
and legal action with respect thereto (including, without limitation, obtaining
any consent of stockholders required by the law of any applicable jurisdiction
or its Certificate of Incorporation or By-Laws) and this Agreement and such
other Documents to which it is a party have been duly authorized, executed and
delivered by it and constitute its valid, legal and binding agreement and
obligation enforceable in accordance with the terms thereof) and Lenders are
entitled to the benefits thereof in accordance with such terms.
f. COMPLIANCE WITH INSTRUMENTS, CHARTER AND LAW. Borrower and
Guarantor and each of their Subsidiaries is in full compliance with and is not
in violation or default of any term or provision of (1) its Certificate of
Incorporation or by-laws, (2) any loan agreement, debt instrument, mortgage or
indenture, (3) any other material contract, agreement or instrument, (4)
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any judgment, decree or order or statute, rule or regulation, law, or ordinance,
including without limitation ERISA, OSHA, all state and federal environmental
laws and those of the Internal Revenue Service, (5) any licensing or
governmental requirement, or (6) any state or federal environmental act. The
execution, delivery and performance and compliance with this Agreement and the
other Documents will not result in any such violation or default by Borrower or
Guarantor or be in conflict with any such term or provision or result in the
creation of any mortgage, lien, encumbrance or charge upon any of its properties
or assets and there is no such term or provision which materially adversely
affects or in the future may (so far as it can now foresee) materially adversely
affect its business, prospects, profits, properties, liabilities, operations or
condition (financial or otherwise) or its ability to perform this Agreement or
any of the other Documents executed by it.
g. FINANCIAL STATEMENTS.
i. The consolidated balance sheet of the Borrower and its
consolidated subsidiaries as of December 31, 2001 and the related consolidated
statements of operations, cash flows and stockholders' equity for the Fiscal
Year then ended, reported on by KPMG LLC and set forth in the Borrower's 2001
Form 10-K, fairly present, in conformity with GAAP, the consolidated financial
position of the Borrower and its consolidated subsidiaries as of such date and
their consolidated results of operations and cash flows for such Fiscal Year.
ii. The unaudited consolidated balance sheet of the Borrower
and its consolidated subsidiaries as of June 30, 2002 and the related unaudited
consolidated statements of operations, cash flows and stockholders' equity for
the six months then ended, set forth in the Borrower's latest Form 10-Q, fairly
present, on a basis consistent with the financial statements referred to in
subsection (A), the consolidated financial position of the Borrower and its
consolidated subsidiaries as of such date and their consolidated results of
operations and cash flows for such six month period (subject to normal year-end
adjustments).
h. INDEBTEDNESS. Except for liabilities to trade creditors incurred
in the ordinary course of business and/or except as described or set forth in
the financial statements referred to in SCHEDULE 2H hereof Borrower has no
outstanding Indebtedness. Borrower has performed and complied with all of the
terms of such Indebtedness and all instruments and agreements relating thereto
and no default exists as of the date hereof or would after notice or lapse of
time, or both, exist with respect to any such Indebtedness, instruments or
agreements.
i. TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Borrower has good and
marketable title to its properties and assets free and clear of any mortgage,
pledge, lien, lease, encumbrance or charge, other than those set forth on
SCHEDULE 2i attached hereto and other than those permitted under Section 4b . No
financing statement under the Uniform Commercial Code which names Borrower as a
debtor has been filed in any state or other jurisdiction which has not been
terminated and it has not signed any such financing statement or any security
agreement authorizing any secured party thereunder to file any such financing
statement, other than as set forth on SCHEDULE 2i.
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j. PATENTS, TRADEMARKS, ETC. Borrower, Guarantor and each of its
Subsidiaries owns or holds licenses for the use of or has the right to use all
patents, trademarks, service marks, trade names, copyrights and other
intellectual property rights necessary for the conduct of its business as now
conducted and as contemplated, including those identified in SCHEDULE 2j
attached hereto.
k. LITIGATION, ETC. Except as set forth in SCHEDULE 2k attached
hereto and incurred in the ordinary course of business of the Insurance
Subsidiaries respecting claims which in the aggregate do not materially
adversely affect their business, there are no equitable, legal, arbitration or
administrative proceedings, suits, actions or investigations pending against
Borrower or Guarantor or any Subsidiary thereof or in any other way relating to
the Borrower's or Guarantor's or any such Subsidiary's business, assets or other
properties or to its knowledge threatened (or any basis therefor known to it)
which, either in any case or in the aggregate, might result in any material
adverse change in its business, prospects, profits, properties, liabilities,
operations or conditions (financial or otherwise), or which might materially
adversely affect its ability to perform this Agreement or any other Documents
executed by it.
l. CHANGES IN CONDITION. Since the date of the financial statements
referred to in Section 2g there has been no material adverse change, by reason
of any matter or cause whatsoever, in Borrower's , Guarantor's or any of their
Subsidiaries, business, prospects, profits, properties, liabilities, operations
or condition (financial or otherwise).
m. TAX RETURNS AND PAYMENTS. All tax returns and reports required by
law to be filed by Borrower, Guarantor and each of their Subsidiaries have been
duly filed and all taxes, assessments, fees and other governmental charges
(U.S., foreign, state or local or other) upon it or upon any of its properties,
assets, income or franchises, which are due and payable, have been paid. The
reserves on the Borrower's, Guarantor's or any of their Subsidiaries books, in
respect of taxes, reserves, risk based capital and the like for all fiscal
periods to date, are adequate. Its Federal and State income and payroll tax
returns have been examined and reported on by the taxing authorities or closed
by applicable statutes and satisfied for all fiscal years prior to and including
the fiscal years set forth in SCHEDULE 2m attached hereto.
n. GOVERNMENTAL CONSENTS, ETC. No consent, approval or authorization
of or designation, declaration or filing with any governmental authority,
federal, foreign or other, is required in connection with the execution and
delivery of this Agreement or the Documents or the consummation of any
transaction contemplated hereby or thereby.
o. SOLVENCY. Each of Borrower, Guarantor and all subsidiaries, after
giving effect to the transactions described herein, is solvent, having assets of
a value which exceeds the amount of its liabilities, and is able to and
anticipates that it will be able to meet its debts as they mature and has
adequate capital to conduct the business in which it is engaged and is about to
engage.
p. NAMES. Borrower and Guarantor and all subsidiaries currently
conduct all business only under their legal names as set forth above. During the
preceding five years neither Borrower nor Guarantor has (i) been known as or
used any other corporate, fictitious or trade name, (ii)
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been the surviving entity of a merger or consolidation or (iii) acquired all or
substantially all of the assets from any Person.
q. NO DEFAULT NOR EVENT OF DEFAULT. No Default nor Event of Default
has occurred or exists.
r. SHAREHOLDER AGREEMENTS. Borrower is not a party to any written
executive employment, management or shareholder agreement, except as described
in SCHEDULE 2r attached hereto
s. PLACE OF BUSINESS; RECORDS. The chief place of business of
Borrower and Guarantor is the address shown above and Borrower and Guarantor
shall give Lender at least sixty (60) days prior written notice of any change.
t. JUDGMENTS. Neither Borrower nor Guarantor nor any of their
Subsidiaries, nor any of the assets of any such party is subject to any unpaid
judgment (whether or not stayed) or any judgment lien in any jurisdiction.
u. NO REGULATORY RESTRICTIONS ON BORROWING. Neither Borrower nor
Guarantor nor any of their Subsidiaries is (i) an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, (ii) a "holding
company" or a "subsidiary company" of a holding company within the meaning of
the Public Utility Holding Company Act of 1935, as amended, or (iii) otherwise
subject to any regulatory scheme which restricts its ability to incur or
guarantee debt.
v. INSIDER. Borrower is not, and no Person having "control" (as
defined in 12 U.S.C. 375(b)(5) or in regulations promulgated thereto) of
Borrower is an "executive officer", "director" or "principal shareholder" (as
those terms are defined in 12 U.S.C. 375(b)(5) or in regulations promulgated
thereto) of Lender, of a bank holding company (or Subsidiary thereof) of which
Lender is a Subsidiary.
w. COMPLIANCE WITH ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan, or made any amendment
to any Plan, which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security under ERISA or the Internal Revenue Code
or (iii) incurred any liability under Title IV of ERISA other than a liability
to the PBGC for premiums under Section 4007 of ERISA.
x. ENVIRONMENTAL MATTERS.
i. Except as set forth in SCHEDULE 2x attached hereto and
to the extent that
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the liabilities of the Borrower and its Subsidiaries, taken as a whole (and
after considering any applicable third party indemnification which has been
provided and remains in full force and effect and/or to the extent a solvent
insurer has agreed in writing to provide coverage), relating to or resulting
from the matters referred to in clauses (1) through (4) below, inclusive, would
not reasonably be expected to exceed $250,000.00 for any one occurrence or
$500,000.00 in the aggregate:
(1) no notice, notification, demand, request for information,
citation, summons, complaint or order has been received, no penalty has been
assessed and no investigation or review is pending, or to the Borrower's
knowledge, threatened by any governmental or other entity relating to the
Borrower or any Subsidiary and relating to or arising out of any applicable
Environmental Law;
(2) there are no liabilities of the Borrower or any Subsidiary
of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, arising under or relating to any Environmental Law;
(3) no polychlorinated biphenyls, radioactive material, lead,
lead paint, asbestos-containing material, incinerator, sump, surface
impoundment, lagoon, landfill, septic, wastewater treatment or other disposal
system or underground storage tank (active or inactive) that requires
remediation, or could reasonably be expected to lead to liability under,
applicable Environmental Laws is or has been present at any property now or
previously owned, operated or leased by the Borrower or any Subsidiary;
(4) no Hazardous Substance has been discharged, disposed of,
dumped, injected, pumped, deposited, spilled, leaked, emitted or released at, on
or under any property now or previously owned, operated or leased by the
Borrower or any Subsidiary other than in compliance in all material respects
with, and in a manner that could not reasonably be expected to lead to liability
under, applicable Environmental Laws;
ii. No property now or previously owned, leased or operated
by the Borrower or any Subsidiary nor any property to which the Borrower or any
Subsidiary has, directly or indirectly, transported or arranged for the
transportation of any Hazardous Substances, is listed or, to the Borrower's
knowledge, proposed for listing, on the National Priorities List promulgated
pursuant to CERCLA, or CERCLIS (as defined in CERECLA) or on any similar
federal, state or foreign list of sites requiring investigation or clean-up; and
iii. The Borrower and its Subsidiaries are in compliance
with all Environmental Laws and have obtained and are in compliance with all
permits, licenses, authorizations, certificates and approvals of governmental
authorities relating to or required by applicable Environmental Laws and
necessary or property for the business of the Borrower or any Subsidiary as
currently conducted.
iv. There has been no material environmental investigation,
study, audit, test, review or other analysis conducted of which the Borrower or
any Subsidiary has control or
11
possession in relation to the current or prior business of the Borrower or any
Subsidiary or any property or facility now or previously owned, leased or
operated by the Borrower or any Subsidiary, which has not been delivered to the
Lenders at least five days prior to the date hereof.
v. For purposes of this Section, the terms "Borrower" and
"Subsidiary" shall include any business or business entity (including a
corporation) which is, in whole or in part, a predecessor of the Borrower or any
Subsidiary.
y. SUBSIDIARIES. Each of the Borrower's Subsidiaries is duly
organized, validly existing and, where applicable, in good standing under the
laws of its jurisdiction of organization, and has all powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. The Borrower has no Subsidiaries other than
those listed on SCHEDULE 2y.
z. FULL DISCLOSURE. All information (excluding projections)
heretofore furnished by the Borrower to Lender for purposes of or in connection
with the Loan Documents or any transaction contemplated thereby is, and all such
information hereafter furnished by the Borrower to Lender will be, true and
accurate in all material respects on the date as of which such information is
stated or certified. The Borrower and Guarantor have disclosed to Lender any and
all facts (other than general economic or political conditions) which materially
and adversely affect, or may affect (to the extent the Borrower and Guarantor
can now reasonably foresee), the business, operations or financial condition of
the Borrower and its Subsidiaries, taken as a whole, or the ability of any
Borrower of Guarantor to perform its obligations under the Loan Documents. All
projections heretofore furnished by the Borrower to Lender for purposes of or in
connection with the Loan Documents or any transaction contemplated thereby were,
and all projections hereafter furnished by the Borrower to Lender will be, based
on reasonable assumptions and as of their date represented the Borrower's best
estimate of future performance of the Borrower and its Subsidiaries.
aa. SPECIAL REPRESENTATIONS AND WARRANTIES RE INSURANCE SUBSIDIARIES.
i. United Coastal Insurance Company ("COASTAL") is and will
continue to be duly licensed in the State of Arizona and is qualified to do
business in all states other than Maine, New Hampshire, Vermont and Tennessee .
Coastal was last audited by the Department of Insurance of the State of Arizona
on December 31, 2001. Coastal has not currently applied for permission to grant
any extraordinary dividends and no such application has ever been denied.
ii. ACSTAR INSURANCE COMPANY ("ACSTAR") is and will continue
to be duly licensed in the State of Illinois and is qualified to do business in
all states. ACSTAR was last audited by the Department of Insurance of the State
of Illinois on December 31, 1998. ACSTAR has not currently applied for
permission to grant any extraordinary dividends and no such application has ever
been denied.
iii. Each Insurance Subsidiary is and will continue to be in
compliance with the laws and regulations of each state in which it is approved
to sell insurance, specifically
12
including, without limitation, the State of New York. Each Insurance Subsidiary
shall maintain all licenses and certifications with the United States Department
of the Treasury and all applicable states.
iv. Each Insurance Subsidiary maintains and will continue to
maintain adequate reserves as determined by its outside auditors and is at or
above state regulatory requirements and those determined by NAIC.
v. Each Insurance Subsidiary has and will at all times
maintain a risk based capital ratio which complies with the guidelines of NAIC
and complies with all applicable state regulatory guidelines including, without
limitation, the State of New York. Each Insurance Subsidiary has and will
continue to have actual capital equal to or in excess of its required risk based
capital.
vi. Coastal has not incurred losses, net of reinsurance, in
excess of 15% of its statutory surplus in any year.
vii. ACSTAR has not incurred losses, net of reinsurance, in
excess of 15% of its statutory surplus in any year.
viii. None of Coastal's reinsurance recoverables are more
than 90 days past due.
ix. None of ACSTAR's reinsurance recoverables are more than
90 days past due.
x. No Insurance Subsidiary has entered into transactions
with Affiliates during the last three years except as disclosed on SCHEDULE 2aa
attached hereto.
xi. On and as of the date hereof the rating of Coastal by
A.M. Best is A-. Borrower knows of no basis for any reduction of such rating nor
any action to evidence such rating.
xii. On and as of the date hereof the rating of ACSTAR by
A.M. Best is A-. Borrower knows of no basis for any reduction of such rating nor
any action to evidence such rating.
3. AFFIRMATIVE COVENANTS. Borrower covenants and agrees that so long as there
is outstanding any portion of the Loans, Borrower will comply or cause
compliance with the following:
a. PUNCTUAL PAYMENT. Borrower shall duly and punctually pay all
principal, interest and charges which are owing by it in accordance with the
provisions of the Notes and also in accordance with the provisions of this
Agreement and of the other Documents. All Loans shall be paid in U.S. Dollars at
the address of Lender shown above. Borrower shall pay on demand all charges
customarily levied by Lenders in making loans of the type herein or incurred by
Lender in connection with the Loans.
13
b. PROMPT PAYMENT OF TAXES, MORTGAGES, LEASES AND INDEBTEDNESS.
Borrower shall promptly pay and discharge, or cause to be paid and discharged,
prior to the date when due (unless contested in good faith and reserves against
the payment of which, satisfactory to Lenders, are deposited with Agent), all
lawful taxes, assessments and governmental charges or levies imposed upon assets
owned by it or in which it has an interest or upon the Borrower's business
premises or upon the income, profits, property or business of itself or
Guarantor or any of its or their Subsidiaries, or upon any of its or their other
assets. Borrower shall promptly pay or cause to be paid when due (or in
conformity with customary trade terms) all other Indebtedness of itself incident
to its operations and will promptly pay and perform all obligations under leases
of real and personal property and under material contracts and shall notify
Lender promptly of any default or notice of alleged default received with
respect to any such Indebtedness, lease or contract.
c. CONDUCT OF BUSINESS. Borrower shall do all things necessary to
preserve, renew and keep in full force and effect in good standing the
Borrower's, Guarantor's and each of its or their Subsidiaries' corporate
existence, qualification and any franchises, licenses, patents, trademarks and
items necessary to continue its business. Borrower shall maintain its properties
and assets and those of the Guarantor and those of Borrower's and/or Guarantor's
Subsidiaries in good order and repair, all in compliance with applicable
federal, state, and local judgments, decrees, orders, statutes, rules and
regulations, including, but not limited to, state and federal environmental
regulations and those of the Occupational Safety and Health Administration.
d. INSURANCE.
i. Borrower, Guarantor, and each of its or their
Subsidiaries shall maintain, with insurers satisfactory to Lenders, insurance
with respect to the assets owned by it or in which it has an interest and its
other properties and business against loss or damage to the extent that is
currently in force. Such insurance shall include:
(1) public and product liability insurance in such amounts and
covering such risks, as Lenders may reasonably require,
(2) all worker's compensation and other employees' liability
insurance as may be required by law,
(3) insurance with respect to its assets constituting tangible
personal property and fixtures, and with respect to its other properties both
real and personal, including, without limitation, the Borrower's business
premises, to the full extent of the insurable value thereof, and including All
Risk coverage (so-called) covering such other risks, as Lenders may require, and
(4) business interruption insurance in amounts sufficient to
cover the reasonable needs of the their businesses during periods of partial or
complete interruption of the their businesses.
14
ii. Borrower shall furnish evidence satisfactory to Lender
confirming to Lender the insurance at the time in force pursuant to this Section
specifying the amount and character of coverage, identifying the insurers and
certifying as to no default in the payment of current premiums thereon and will
furnish Lender with original or duplicate original copies of all policies.
e. ACCOUNTING; FINANCIAL STATEMENTS AND OTHER INFORMATION. Borrower
shall maintain a system of accounts established and administered in accordance
with GAAP and practices consistently applied. Borrower shall deliver or cause to
be delivered to Lenders:
i. As soon as available and in any event within forty-five
(45) days after the end of each Fiscal Quarter after the date hereof, a balance
sheet of the Borrower, in consolidating and consolidated form, as of the end of
such period, and a statement of income and retained earnings of the Borrower, in
consolidated form, for the period commencing at the end of the previous Fiscal
Year and ending with the end of such quarter, all in reasonable detail, and duly
certified by the chief financial officer of the Borrower as having been prepared
in accordance with GAAP and fairly presenting the financial position and results
of operations of the Borrower for such period, together with a statement of such
individual preparing such statements to the effect that in the course of the
preparation of such statements said individual has gained no knowledge that a
Default or Event of Default has occurred and is continuing or, if, in the
opinion of said individual, a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action which the
Borrower proposes to take with respect thereto (the provision for such a
statement herein shall in no way be construed as a consent to the existence of
such an Event nor the granting of time to cure). In addition, said preparer
shall complete and forward to Lender together with such financial statements the
completed Covenant Compliance Certificate in the form attached hereto as EXHIBIT
K attached hereto.
ii. As soon as available and in any event within ninety (90)
days after the end of each Fiscal Year of the Borrower, a copy of the annual
audited report for such year for the Borrower, including therein, a balance
sheet of the Borrower as of the end of such Fiscal Year and a statement of
income, retained earnings and statement of changes in financial position of the
Borrower for such Fiscal Year, in each case on a consolidated basis, and in each
case "Certified" by a firm of independent certified public accountants selected
by the Borrower but acceptable to Lenders, together with the unqualified opinion
of such accounting firm to Lenders stating that the financial statements audited
by such firm present fairly, in all material respects, the financial position of
Borrower as of the date of such financial statements and the results of its
operations and its cash flow for the Fiscal Year then ended, all in conformity
with GAAP, together with the certificate of such accounting firm that, in the
course of its audit of Borrower, it has obtained no knowledge that a Default or
Event of Default has occurred and is continuing or if, in the opinion of such
accounting firm, a Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof (the provision for such a statement herein
shall in no way be construed as a consent to the existence of such an Event nor
the granting of time to cure) and together with the Management Letter (so
called) of such firm and Borrower's written response thereto detailing actions
to be taken relating to matters discussed in said Management Letter, and
together with a completed Covenant Compliance Certificate. In addition, Borrower
shall provide
15
all financial statements for the Insurance Subsidiaries required by the laws of
any jurisdiction in which the Insurance Subsidiary conducted business.
iii. As soon as available and in any event within forty-five
(45) days after the end of each Fiscal Quarter after the date hereof copies of
the statutory statements and contract status reports for Borrower, Guarantor and
all Subsidiaries.
iv. Annually, an actuarial opinion of reserves by a firm of
independent certified public accountants selected by the Borrower but acceptable
to Lenders.
v. Such other data and information (financial and
otherwise) bearing upon or related to the Borrower's or the Guarantor's
financial condition, results of operations or assets, as Lenders from time to
time may reasonably request.
f. FINANCIAL COVENANTS. Borrower shall maintain the following,
calculated in accordance with GAAP, as shown on the financial statements
required to be provided pursuant to Section 3e;
i. Borrower shall not permit the ratio of its Adjusted Cash
Flow to the sum of consolidated interest expense plus upcoming current
maturities of long term debt to be less than 1.25 to 1.00. "Adjusted Cash Flow"
means (A) the sum of Borrower's unconsolidated (includes only ACMAT
Construction) net income (before extraordinary items*) plus income taxes plus
interest expense plus depreciation plus amortization plus 100% of the greater
of: (1) the Allowable Dividends of ACSTAR or (2) the Approved Dividends of
ACSTAR actually paid to Borrower, plus 66% of the greater of: (1) the Allowable
Dividends of Coastal or (2) the Approved Dividends of Coastal actually paid to
Borrower plus AMINS commission fees plus tax sharing payments less (B) the sum
of capital expenditures plus income taxes paid plus dividends paid. This
covenant shall be tested on a quarterly year to date basis commencing with the
first fiscal period ending December 31, 2002. Note: * Extraordinary items will
be included in this calculation beginning with the Fiscal Quarter ending March
31, 2003. Approved Dividends and Allowable Dividends will be utilized in this
calculation on a pro rata quarterly basis, that is, one-fourth will be used as
of the end of the first Fiscal Quarter, one-half as of the end of the Second
Fiscal Quarter, three-fourths as of the end of the third Fiscal Quarter and the
full amount as of the end of the Fiscal Year.
ii. Borrower shall not permit the ratio of its Adjusted Cash
Flow (as defined above) to Consolidated Interest Expense to be less than 2.25 to
1.00, This covenant shall be tested on a quarterly year to date basis.
iii. Borrower shall not permit the ratio of its Funded Debt
to Statutory Operating Earnings to exceed 16.00 to 1.00 as of December 31, 2002,
8.00 to 1.00 as of March 31, 2003, 6.00 to 1.00 as of June 30, 2003 and 5.50 to
1.00 as of the end of each Fiscal Quarter thereafter. This covenant shall be
tested quarterly on a rolling four quarter basis.
iv. Borrower shall not permit the ratio of its Funded Debt
to Statutory Capital
16
to be more than .70 to 1.00. This covenant shall be tested on a quarterly year
to date basis.
v. Borrower shall not permit the ratio of its total
liabilities to the sum of cash plus marketable securities plus accrued interest
receivable to exceed 1.05 to 1.00. This covenant shall be tested on a quarterly
year to date basis.
vi. Borrower shall not expend more that $2,000,000 for the
redemption of Borrower's stock in any fiscal year. Provided that Borrower is
otherwise in compliance with all of the terms and conditions of this Agreement,
Borrower may purchase stock in the Borrower held by the Estate of Xxxxx X.
Xxxxx, Xx., Xxxxxxxx Xxxxx and Xxxxxx Xxxxx Xxxxxx in an aggregate amount not to
exceed $1,800,000 and such amount shall be excluded from the $2,000,000 set
forth above. This covenant shall be tested as of the end of each Fiscal Year of
Borrower.
vii. ACSTAR shall a maintain minimum policyholder's surplus
of at least $25,000,000 on a statutory accounting basis. This covenant shall be
tested on a quarterly basis.
viii. Coastal shall maintain a minimum policyholder's
surplus of at least $15,000,000 on a statutory accounting basis. This covenant
shall be tested on a quarterly basis.
Borrower acknowledges that it has assisted Lender in the formation of each of
the foregoing financial performance criteria and fully understands each of said
criteria.
g. NOTICE OF CERTAIN EVENTS AND CHANGES; GOVERNMENTAL NOTICES
i. Promptly after becoming aware of any condition, event or
state of facts which constitutes a Default or Event of Default, Borrower shall
give written notice to Lenders specifying the nature and period of existence
thereof. Borrower shall give Lenders prompt written notice of any condition,
event or state of facts which causes or may cause material loss or depreciation
in the value of the assets or Borrower's business premises and of the
commencement or threat of any action, proceeding or investigation or the
occurrence or existence of any other event, matter or cause whatsoever, which,
either in any case or in the aggregate results or might result in any material
adverse change in its business, prospects, profits, properties, operations or
condition (financial or otherwise). Borrower shall give Lenders at least sixty
(60) days' prior written notice of any proposed change in its place or places of
business, any proposed change of location of any of the assets and any proposed
changes in its name.
ii. As soon as reasonably practicable, after the issuance
thereof, Borrower shall send to Lenders a copy of all notices of investigation,
claims of violation or possible violation and/or orders issued by any federal,
state or municipal regulatory authority under any laws or regulations adopted
thereby which are directed to and received by Borrower. Further, as soon as
reasonably practicable, Borrower shall send to Lenders copies of all reports or
other materials filed by it with or issued or sent to it by the Securities and
Exchange Commission and all reports, notices or statements sent by it to its
stockholders.
17
h. Borrower shall pay Agent, in current funds, quarterly in arrears,
within ten (10) days after the commencement of each calendar quarter, a fee
equal to one quarter of one (.25) percentage point per annum (but calculated
based on the actual number of days elapsed) of the average daily unused amount
of the Revolving Credit. In the event Borrower fails to make such payment within
such time, Agent may (but shall not be obligated to) either charge such amount
to the Revolving Credit or withdraw such amount from any account maintained by
Borrower with Xxxxxxx.
i. ENVIRONMENTAL COMPLIANCE.
i. Borrower shall comply with all applicable Environmental
Laws, regulations, rules, standards, orders and agreements. Whenever, pursuant
to any such legal requirement, Borrower is obligated to report to any party the
existence of a Spill (as such term is defined in Section 1 of Public Act
85-443), "Release" (as defined in 42 U.S. Code 9601 et seq.), "Hazardous Waste"
(as defined in Section 22a-115 of Connecticut General Statutes), "Hazardous
Substance" (as defined in 42 U.S. Code 9601 et seq.) or other environmental
contamination on or emanating from Borrower's business premises, Borrower shall,
simultaneously and in writing, report the existence of such conditions to Lender
at the address set forth in Section 13 hereof.
ii. In addition to any and all other liability of Borrower
to Agent and Lenders hereunder, Borrower shall indemnify the Agent and Lenders
against any loss or damage that shall occur to Lender as a result of the
application of the Super Lien Act (Section 22a-452a of the Connecticut General
Statutes) or any other federal, state, local or quasi-governmental law, rule,
regulation, ordinance or the like.
iii. The Lenders and/or their authorized representatives
have the right, at reasonable times and upon reasonable notice to Borrower, to
enter upon Borrower's business premises for the purpose of conducting
inspections and/or audits of Borrower's environmental compliance and/or of
Borrower's methods and/or procedures for disposal of waste products used in the
course of Borrower's business. Borrower shall correct any discrepancies found
during such inspections or audits promptly.
iv. In the event that any lien is filed against any of
Borrower's properties or any claim is made against Borrower by any governmental
entity in connection with the discharge of hazardous substances or wastes then
Borrower shall either (i) pay the claim and remove any lien from the applicable
property or (ii) furnish to such governmental entity that imposed the xxxx x
xxxx, cash deposit or other security reasonably satisfactory to such
governmental entity in an amount sufficient to discharge the lien.
j. USE OF PROCEEDS. Borrower shall use the proceeds of the Loans for
general working capital purposes and (A) the proceeds of Term Loan II were used
to pay a note due to the Sheet Metal Workers National Pension Fund and (B) the
proceeds of Term Loan III will be used to reduce Borrower's indebtedness to the
Sheet Metal Workers National Pension Fund. Borrower shall not, directly or
indirectly, apply any part of any proceeds or advance from any loan to the
purchasing or carrying of any "margin stock" within the meaning of Regulation U
or Regulation
18
G of the Board of Governors of the Federal Reserve System, or for any use which
will cause a violation of any other regulation of the Board of Governors of the
Federal Reserve System or of any regulations, interpretations or rulings
thereunder, including without limitation Regulations G, U, T and X.
k. DEPOSIT ACCOUNTS. Borrower shall maintain its primary disbursement
account with Xxxxxxx.
l. PENSION PLANS.
i. As soon as reasonably practicable, upon the filing,
issuance or receipt thereof, Borrower will send to Lenders copies of (i) all
annual reports filed by it or on its behalf with respect to all pension or other
employee benefit plans, subject to ERISA, (hereinafter collectively referred to
as the "PLANS" and individually as the "PLAN"), with the Secretary of Labor, the
Internal Revenue Service, or the Pension Benefit Guaranty Corporation ("PBGC"),
(ii) all notices, reports, determinations or statements to or from the PBGC with
respect to the occurrence of a reportable event, as defined in Subsections (1),
(2), (3), (4), (5), (6), (7), (8) or (9) of Section 4043(b) of ERISA and
regulations issued thereunder, (iii) all reports submitted to it and/or the
Internal Revenue Service by any actuary with respect to any of the Plans, (iv)
all notices of Plan termination or requests for determination letters in
connection therewith filed by Borrower, any Plan Administrator (as such term is
defined in ERISA,) or trustee or custodian of any accounts of any Plan with the
PBGC and/or Internal Revenue Service, and (v) all requests to waive the minimum
funding standard or extension of amortization periods submitted to the Secretary
of the Treasury.
ii. Borrower (to the extent applicable to it) shall be and
remain in compliance with the provisions of ERISA or the applicable provisions
of the Internal Revenue Code of 1986, as amended, (hereinafter referred to as
the "REVENUE CODE"), including, without limitation, (i) the payment of all
premiums to the PBGC when and as the same shall be due and payable, pursuant to
Section 4007 of ERISA, and (ii) the taking of such action as may be necessary
from time to time to meet all minimum funding standards for each of the Plans
under Section 412 of the Revenue Code. In furtherance of the foregoing, it
shall, on or before the date in each year required by ERISA and/or the Revenue
Code for any Plan, (hereinafter referred to as "PLAN YEAR"), cause the actuary
for such Plan to deliver to Lender a true and correct copy of its report to the
Internal Revenue Service relating to (a) the actuary's methods and assumptions
for determining all costs, accrued liabilities, past service liabilities and
experience gains and losses, and (b) the amount to be contributed by it to the
funding standard account on account of such Plan for such Plan Year.
m. SPECIAL COVENANTS RE INSURANCE SUBSIDIARIES. The Borrower shall:
i. Notify the Lenders annually of the allowable dividend
which may be paid by each Insurance Subsidiary to the Borrower.
ii. Notify the Lenders promptly if any Insurance Subsidiary
has applied for
19
permission to grant any special dividends.
iii. Notify the Lenders of any allegation of non-compliance
by any Insurance Subsidiary with the laws and regulations of each state in which
it is approved to sell insurance, specifically including, without limitation,
the State of New York, except this notification does not apply to any
non-compliance matter if such non-compliance matter does not have a material
effect.
iv. Furnish to the Lenders annually all reports issued by
its outside auditors which analyze the adequacy of the level of each Insurance
Subsidiary's reserves.
v. Notify the Lenders of any material change in any
Insurance Subsidiary's risk based capital ratio.
vi. Maintain in each Insurance Subsidiary actual capital
equal to or in excess of its required risk based capital.
vii. Notify the Lenders, promptly upon becoming aware, of
the following: (i) any material increase in the levels of primary liability of
each Insurance Subsidiary which is ceded to reinsurers, (ii) the occurrence of
any default in any such contract of reinsurance and (iii) the occurrence of any
insolvency of any reinsurer or any non-compliance by any reinsurer with the NAIC
risk based capital guidelines.
viii. Notify the Lenders, promptly upon becoming aware, of
the following: (i) any material increase in the levels of primary liability of
each Insurance Subsidiary which is co-insured with others, (ii) the occurrence
of any default in any such contract of co-insurance and (iii) the occurrence of
any insolvency of any co-insurer or any non-compliance by any co-insurer with
the NAIC risk based capital guidelines.
ix. Notify the Lenders within 90 days of the fiscal year end
each Insurance Subsidiary's (i) net investment income for the year then ended,
(ii) the statutory surplus for the year then ended, (iii) the "Combined Ratio"
for each such Insurance Subsidiary for the year then ended, (iv) the loss, if
any, of any Insurance Subsidiary in excess of 15% of its statutory surplus for
the year then ended, (v) a listing of each Insurance Subsidiary's reinsurance
recoverables which are more than 90 days past due as at the end of any year and
(vi) a listing of all transactions with Affiliates entered into by any Insurance
Subsidiary during the year then ended.
x. Notify the Lenders of any reduction in the rating by
A.M. Best and Company of any Insurance Subsidiary.
n. UPSTREAM DIVIDENDS. Borrower and Guarantor shall, among other
things, cause its Subsidiaries to pay to Borrower such profits, excess capital,
policyholders' surplus, Approved Dividends, Allowable Dividends and other sums
as may be necessary to comply with the financial covenants set forth in Section
3f. In extension of the foregoing, Borrower shall diligently apply for and
pursue any approvals from any state or regulatory authority having
20
jurisdiction over each such Subsidiary if such approvals are necessary to comply
with the financial covenants set forth in Section 3f.
o. RATINGS. The Insurance Subsidiaries shall at all times maintain a
rating by A.M. Best and Company of at least B+.
p. MAINTENANCE OF LICENSES. Each Insurance Subsidiary shall maintain
all licenses and certifications with the United States Department of the
Treasury and all applicable states.
4. NEGATIVE COVENANTS. Borrower and Guarantor each covenant and agree that, so
long as there is outstanding any portion of the Loans, or so long as this
Agreement has not been mutually terminated after all amounts owing under the
Loans have been paid, Borrower shall not, and Guarantor shall not, to the extent
set forth in each of the following Sections:
a. RESTRICTIONS ON LIENS. Directly or indirectly, create, incur,
assume or permit to exist any mortgage, lien, charge or encumbrance on or pledge
or deposit of or conditional sale, lease or other title retention agreement with
respect to any property or asset, whether now owned or hereafter acquired, or be
bound by or subject to any agreement or option to do so, provided that the
foregoing restrictions do not apply to:
i. liens for taxes, assessments or governmental charges or
levies the payment of which is not at the time required by Section 3b;
ii. liens incurred or deposits made in the ordinary course
of business in connection with worker's compensation or unemployment insurance
or to secure the performance of tenders, statutory obligations, surety and
appeal bonds, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
iii. zoning restrictions, easements, rights-of-way,
restrictions and/or minor irregularities in title and other liens, charges and
encumbrances incidental to the conduct of its business or the ownership of its
properties or assets which are not incurred in connection with the borrowing of
money and which in the aggregate are not material;
iv. statutory or common law possessory liens for charges
incurred in the ordinary course of business the payment of which is not yet due;
v. the mortgages, liens and encumbrances referred to or
described in SCHEDULES 4a attached and/or the replacement thereof;
b. RESTRICTIONS ON INDEBTEDNESS. Directly or indirectly, create,
incur, assume, guarantee, agree to purchase or repurchase, pay or provide funds
in respect of, or otherwise become or be or remain liable, contingently,
directly or indirectly, with respect to, any Indebtedness other than:
21
i. Indebtedness to Lenders as described in this Agreement;
ii. Current liabilities for trade and other obligations
incurred in the ordinary course of its business not yet past due and not as a
result of borrowing;
iii. Indebtedness arising under leases permitted hereby;
iv. Indebtedness in respect of endorsements made in
connection with the deposit of items for credit or collection in the normal and
ordinary course of business; and
v. Indebtedness described in the financial statements
described in Section 2h or refinancing of such Indebtedness in amounts not to
exceed such refinanced Indebtedness.
vi. Indebtedness otherwise in conformity with all of the
other terms hereof incurred in order to fund the loan, advance or capital
contribution described in Section 4cvi below.
Borrower shall not guarantee or otherwise assure any obligation of any other
party including, without limitation, that of any Guarantor.
c. RESTRICTIONS ON INVESTMENTS, LOANS, ETC. Make or permit to be
outstanding any loan or advance or capital contribution to any other Person,
other than:
i. presently outstanding loans, advances and investments
incurred in the ordinary course of Borrower's business;
ii. Indebtedness of customers for merchandise sold or
services rendered in the ordinary course of business; and
iii. investments in bills or bonds issued or guaranteed by
the government of the United States of America and/or Certificates of Deposit
issued by Lender or any other bank having a net worth of at least
$50,000,000.00; and
iv. loans to employees of Borrower for travel and
entertainment advances not to exceed $250,000.00 in the aggregate outstanding at
any one time.
v. the portfolios of the Insurance Subsidiaries maintained
pursuant to Borrower's guidelines attached hereto as SCHEDULE 4c.
vi. any other loan, advance or capital contribution to any
other business entity not set forth herein for Borrower's or the Insurance
Subsidiaries' legitimate business purposes in an amount not to exceed
$10,000,000 outstanding in the aggregate provided that (i) no proceeds of any
Loan shall be used for such purpose and (ii) no Default or Event of Default
shall exist or be created thereby.
22
d. DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS. Directly or indirectly,
declare, order, pay, make or set apart any sum or property for the redemption,
retirement, purchase or other acquisition, direct or indirect, of any shares of
its stock of any class now or hereafter outstanding, except as permitted by
Section 3fvi.
e. SALE OF ASSETS, CONSOLIDATION, MERGER, ACQUISITION OF ASSETS.
Directly or indirectly, sell, abandon or otherwise dispose of any material asset
or any part thereof (except for the sale of Inventory in the ordinary course of
Borrower's business) or of all or any portion of its properties or assets, or
consolidate with or merge into any other corporation, or permit any other
corporation to consolidate with or merge into it, or acquire all or a
substantial portion of the assets of another Person, or form any Subsidiary, or,
directly or indirectly, suffer any change in ownership.
f. MANAGEMENT AGREEMENTS. Enter into any executive employment,
management or consulting agreement or renew, extend or amend any presently
existing executive employment, management or consulting agreement, except
agreements with Xxxxx Xxxxx, Xx.
g. EXPENDITURES FOR CAPITAL ASSETS. Make any expenditure for capital
assets (other than for routine repairs and maintenance which are not required to
be capitalized, as hereinafter set forth) unless, immediately after giving
effect thereto, the aggregate amount expended or to be expended on account of
all such expenditures by Borrower in any Fiscal Year would not exceed
$1,500,000.00. The following are deemed to be expenditures for capital assets
and subject to the limitations of this section:
i. Expenditures for major repairs and maintenance which, in
accordance with GAAP, are or should be capitalized; and
ii. All lease rentals and other amounts payable under leases
entered into after the date hereof, whether "true" leases or finance leases
(other than renewals and extensions of leases existing on the date hereof), and
all amounts payable under contracts or arrangements for the purchase of property
wherein payment of the purchase price for such property is deferred in whole or
in part.
h. MANAGEMENT. Suffer any material change in executive management,
including without limitation the day to day involvement of Xxxxx Xxxxx, Xx. nor
suffer a change in day to day management;
i. OWNERSHIP. Suffer a change in ownership of Borrower's capital
stock except for trades in the ordinary course, of Borrower's stock on
nationally recognized markets, nor issue additional shares thereof except for
stock options or equity financing provided that in any case Xxxxx Xxxxx, Xx.
shall always own or control at least 51% of the combined voting power of all
issued and outstanding shares of all classes of stock.
j. E.R.I.S.A. Engage in any "Prohibited Transaction", so-called,
incur any so-called "Accumulated Funding Deficiency", or create or terminate any
pension or profit sharing plan or
23
suffer the existence of any Reportable Event or the appointment by any United
States District Court of a trustee to administer any Plan or if the PBGC shall
institute proceedings to terminate any plan or to administer any Plan, or
otherwise not be in full compliance.
k. JUDGMENTS. Suffer any final judgment (exclusive of judgments
insured against by adequate liability insurance policies) against it which is
not discharged or execution thereof stayed pending appeal, within ninety (90)
days after the entry of such judgment, or if, within ninety (90) days after the
expiration of any such stay, such judgment shall not have been discharged.
l. UNINSURED LOSSES, ETC. Suffer, during any consecutive twelve (12)
month period, one or more material uninsured losses, thefts, damage or
destruction of any material portion of its assets (other than bad debts incurred
in the ordinary course of business).
m. FISCAL YEAR. Change the fiscal year of Borrower.
n. NO SALE, LEASEBACK. Enter into any sale-and-leaseback or similar
transaction.
o. NEGATIVE/NEGATIVE PLEDGES. Agree with any party other than Lender
that it will not pledge and/or xxxxx x xxxx or security interest in any of its
assets.
5. EVENTS OF DEFAULT.
a. The occurrence of any of the following events with respect to
Borrower will constitute an Event of Default by Borrower under this Agreement:
i. If Borrower defaults in the payment of any part of the
Loans, including, without limitation, payments due under the Revolving Credit,
Term Loan, I Term Loan II , Term Loan III or the Mortgage Loan, owing by it when
the same becomes due and payable, whether at any stated maturity, or by
declaration, acceleration or otherwise.
ii. If the Guarantor or any Subsidiary of the Borrower or
Guarantor defaults in the payment of any Indebtedness owing by it when the same
becomes due and payable, at any stated maturity, by declaration, acceleration or
otherwise.
iii. If Borrower fails to perform or comply with any term or
covenant applicable to it contained in this Agreement, or contained in any other
Documents.
iv. If any representation or warranty made by or on behalf
of Borrower or Guarantor, in this Agreement or in the Schedules hereto, or in
any of the other Documents, or in connection with the transactions contemplated
hereby and thereby proves to be false or incorrect in any material respect.
v. If a draw is made under any payment or performance bond
issued for the account of Borrower.
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vi. If Borrower, Guarantor or any of their Subsidiaries
defaults in the payment of any Indebtedness for borrowed money or defaults with
respect to any of the terms of any evidence of such Indebtedness or of any
indenture or other agreement relating thereto, or if Borrower commits any breach
or defaults under any material contract to which it is or becomes a party or by
which it is or becomes bound.
vii. If Borrower , Guarantor or any of their Subsidiaries
makes an assignment for the benefit of creditors, or admits in writing an
inability to pay debts as they become due, or files a voluntary petition in
bankruptcy, or is adjudicated a bankruptcy or insolvent, or files any petition
or answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future statute, law or regulation, or files any answer admitting or fails to
deny the material allegations of a petition filed against it for any such
relief, or seeks or consents to or acquiesces in the appointment of any trustee,
receiver or liquidator of itself or of all or any substantial part of its
properties, or its directors or majority stockholders takes any action looking
to its dissolution or liquidation, or it ceases doing business as a going
concern.
viii. If, within thirty (30) days after the commencement of
any proceeding against Borrower, Guarantor or any of their Subsidiaries seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such proceeding has not been dismissed, or if, within thirty (30)
days after the appointment, without Borrower's, Guarantor's or such Subsidiary's
consent or the acquiescence of any trustee, receiver or liquidator of itself or
of all or any substantial part of its properties, such appointment has not been
vacated.
b. RIGHTS OF LENDER. In the event of the occurrence of an Event of
Default, then, and in any such event, in addition to its rights and remedies
under this Agreement, or the other Documents and any other instruments, but
after ten (10) days prior written notice and opportunity to cure, unless Lender
believes such prior notice and opportunity to cure will have a material adverse
effect on its rights and remedies, Lender may, at its option, declare all Loans
or any portion thereof, including without limitation, the Revolving Credit, the
Term Loan I, Term Loan II, Term Loan III and/or the Mortgage Loan, to be
immediately due and payable, whereupon the same shall forthwith mature and
become due and payable, together with interest accrued thereon and together with
any and all costs of collection, including, but not limited to, reasonable
attorneys fees, and without presentment, demand or protest, all of which are
hereby waived.
6. SET-OFF RIGHTS.
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, each Lender and any
affiliate of Lenders is hereby authorized by Borrower and Guarantor at any time
or from time to time, without notice to Borrower or to any other Person, any
such notice being hereby expressly waived by Borrower and Guarantor to set off
and to appropriate and to apply any and all balances, deposits, credits,
Collateral and property of Borrower held at, or in transit to, any of its
offices for the account of Borrower and/or
25
Guarantor (regardless of whether then due to Borrower and/or Guarantor) and any
other property at any time held or in transit or owing by that Lender or that
holder to or for the credit or for the account of Borrower or Guarantor against
and on account of any of the Loans which remain unpaid. Borrower and Guarantor
agree, to the fullest extent permitted by law, that (a) Lenders or any holder
may exercise their right to set off with respect to the Loans and may sell
participations in such set off to other lenders and holders and (b) any lender
or holder so purchasing a participation in the Loans made or held by other
lenders or holders may exercise all rights of set-off, bankers' lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender or holder were a direct holder of Loans in the amount of such
participation and (3) the rights contained in this paragraph exist regardless of
whether the Loan to which they are applied has matured. Borrower and Guarantor
acknowledge and agree that either Lender may apply the proceeds of any set-off
against any of the Loans as determined by Lenders, including, but not limited
to, Loans in which a particular Lender may not have an interest
7. REMEDIES ON DEFAULT, ETC.
a. If a Default or Event of Default occurs, Lender may withhold all
subsequent Advances and, in addition, may accelerate and declare to be
immediately due and payable all Loans and may proceed to protect and enforce its
rights by suit in equity, action at law or other appropriate proceedings,
whether for the specific performance of any agreement contained herein or in any
other Document, or for an injunction against a violation of any of the terms
hereof or thereof, or in aid of the exercise of any right, power or remedy
granted thereby or by law, equity or otherwise.
b. The Borrower hereby grants a royalty-free license to the Lender
for all patents, service marks, trademarks, tradenames, copyrights, computer
programs and other intellectual property rights sufficient to permit the Lender
to exercise all rights granted to the Lenders pursuant to this Agreement. The
rights granted to Lenders in this Section shall be exercised only after the
occurrence of an Event of Default.
8. CUMULATIVE REMEDIES; NO WAIVERS, ETC.
No right, power or remedy granted to Agent or Lenders in this
Agreement or in the other Documents is intended to be exclusive, but each shall
be cumulative and in addition to any other rights, powers or remedies referred
to in this Agreement, in the other Documents or otherwise available to Lender at
law or in equity; and the exercise or beginning of exercise by Agent or Lenders
of any one or more of such rights, powers or remedies, shall not preclude the
simultaneous or later exercise by Agent or Lenders of any or all of such other
rights, powers or remedies. No waiver by, nor any failure or delay on the part
of Agent or Lenders in any one or more instances to insist upon strict
performance or observance of one or more covenants or conditions hereof, or of
the other Documents shall in any way be, or be construed to be, a waiver of such
covenant in any other instance or to prevent Agent's or Lenders' rights to later
require the strict performance or observance of such covenants or conditions, or
otherwise prejudice Agent's or Lenders' rights, powers or remedies.
26
9. PARTIAL INVALIDITY; WAIVERS.
a. If any term or provision of this Agreement or any of the other
Documents or the application thereof to any Person or circumstance shall, to any
extent, be invalid or unenforceable by reason of any applicable law, the
remainder of this Agreement and the other Documents, or application of such term
or provision to Persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement and the other Documents shall be valid and be
enforced to the fullest extent permitted by law. To the full extent, however,
that the provisions of any such applicable law may be waived, they are hereby
waived by Borrower to the end that this Agreement and the other Documents shall
be deemed to be valid and binding obligations enforceable in accordance with
their terms.
b. To the extent permitted by applicable law, Borrower and Guarantor
hereby waives protest, prior notice of protest, or dishonor, notice of payments
and non-payments, or of any default.
c. WITH RESPECT TO ANY CONTROVERSY, ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THE TRANSACTIONS DESCRIBED
HEREIN OR CONTEMPLATED HEREBY, INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH
THE LOANS AND/OR ANY OF THE OTHER DOCUMENTS BORROWER, GUARANTOR AND LENDER EACH
VOLUNTARILY AND KNOWINGLY WAIVES ANY RIGHT TO OR CLAIM FOR A TRIAL BY JURY.
d. BORROWER AND GUARANTOR ACKNOWLEDGE THAT THE WITHIN AGREEMENT
EVIDENCES A COMMERCIAL TRANSACTION AND THAT IT COULD, UNDER CERTAIN
CIRCUMSTANCES HAVE THE RIGHT UNDER CHAPTER 903a, AS FROM TIME TO TIME AMENDED,
OF THE CONNECTICUT GENERAL STATUTES, SUBJECT TO CERTAIN LIMITATIONS, TO NOTICE
OF AND HEARING ON THE RIGHT OF THE LENDER TO OBTAIN A PREJUDGMENT REMEDY, SUCH
AS ATTACHMENT, GARNISHMENT AND/OR REPLEVIN, UPON COMMENCING ANY LITIGATION
AGAINST BORROWER AND/OR GUARANTOR. NOTWITHSTANDING, BORROWER AND GUARANTOR
HEREBY WAIVE ALL RIGHTS TO NOTICE, JUDICIAL HEARING OR PRIOR COURT ORDER TO
WHICH THEY MIGHT OTHERWISE HAVE THE RIGHT UNDER SAID CHAPTER 903a, AS FROM TIME
TO TIME AMENDED, OR UNDER ANY OTHER STATE OR FEDERAL STATUTE OR CONSTITUTION IN
CONNECTION WITH THE OBTAINING BY THE LENDERS OF ANY PREJUDGMENT REMEDY BY REASON
OF THIS COMMERCIAL REVOLVING CREDIT AND SECURITY AGREEMENT, OR BY REASON OF
BORROWER'S AND GUARANTOR'S OBLIGATIONS OR ANY RENEWALS OR EXTENSIONS OF THE
SAME. BORROWER ALSO WAIVES ANY AND ALL OBJECTION WHICH THEY MIGHT OTHERWISE
ASSERT, NOW OR IN THE FUTURE, TO THE EXERCISE OR USE BY LENDERS OF ANY RIGHT OF
SETOFF, REPOSSESSION OR SELF HELP AS MAY PRESENTLY EXIST UNDER STATUTE OR COMMON
LAW.
27
e. BORROWER AND GUARANTOR SPECIFICALLY WAIVE AND RELINQUISH ANY CLAIM
TO INCIDENTAL AND/OR CONSEQUENTIAL DAMAGES ARISING IN ANY WAY OUT OF AN ALLEGED
BREACH HEREOF BY LENDERS AND AGREE THAT DAMAGES FOR WHICH LENDERS MAY BE LIABLE,
IF ANY, SHALL BE LIMITED TO THOSE DIRECT DAMAGES PROVEN TO HAVE BEEN SUFFERED BY
BORROWER ARISING DIRECTLY FROM SUCH BREACH.
10. EXPENSES/INDEMNITY. Borrower and Guarantor agree that they shall:
a. Pay or reimburse Agent and Lenders on demand for any and all
reasonable charges, costs and taxes incurred in the preparation, documentation
and implementation of this Agreement, and all Documents, and any amendment
thereto, including, without limitation, all recording and filing fees, appraisal
fees and reasonable fees and disbursements of special counsel to Agent or
Lenders retained in connection therewith, including payment upon the Closing
hereof of any portion of such charges, costs and fees for which an invoice shall
be rendered.
b. Indemnify and save Agent and Lenders harmless from, and pay or
reimburse Agent and Lenders for, all charges, costs, damages, liabilities and
expenses, including reasonable attorneys' fees, if any, incurred by Agent and
Lenders relating to:
i. the Notes or any of the other Documents;
ii. the exercise by the Agent or Lenders of any of their
rights, remedies or powers hereunder, the Notes or any of the other Documents;
iii. any misrepresentation, inaccuracy, or breach of any
representation, warranty, covenant, or agreement contained or referred to herein
or any other Document, the security interests and liens granted pursuant to this
Agreement or the other Documents;
iv. the performance of any obligation of Borrower or
Guarantor in connection herewith;
v. the attempted enforcement or enforcement of this
Agreement or the other Documents, or the collection or attempted collection of
any of the obligations owing under any thereof, including, without limitation,
the Loans, or the realization or attempted realization of any right or remedy;
vi. the prosecution or defense of any action or proceeding
concerning any matter growing out of or connected with this Agreement or the
other Documents;
vii. any Hazardous Substance at, on, in, under, or about all
or any portion of any property owned, occupied and/or operated by the Borrower
or Guarantor or any environmental condition within, on, from, related to, or
attaching to any such property;
viii. any Release or threatened Release of any Hazardous
Substance from any
28
property owned, occupied or operated by the Borrower or from the Borrower's
operations or other activities, including without limitation any Release by any
prior owner, occupant or operator of any such property;
ix. any violation or claim of violation of any Environmental
Law by the Borrower or their operations or other activities;
x. any other environmental condition or matter within, on,
from or related to or affecting any property owned, leased or operated by the
Borrowers or Borrowers' operations or other activities;
xi. any other operations or activities of the Borrowers or
conditions or occurrences on the Borrowers' properties
(all the foregoing under this paragraph collectively, the "INDEMNIFIED
LIABILITIES")
In addition, at Agent and Lenders' discretion, Borrower shall
defend (with counsel satisfactory to the Lenders) Agent and Lenders against
those Indemnified Liabilities which the Agent and/or Lenders shall choose
Borrower to defend them against (provided, that, it is understood and agreed
that all reasonable costs and expenses of counsel incurred by Agent and/or
Lenders in defending itself against any Indemnified Liability shall be
Indemnified Liabilities for which Borrower is responsible for payment under this
subparagraph). The agreements in this section shall survive any payment of the
Loans or any other amounts payable hereunder or under any other Document and/or
any termination of this Agreement or any Document. All amounts payable under
this Section shall be payable by the Borrower on demand by the Agent and/or
Lenders.
c. Allow Lenders, in their discretion, after ten (10) days prior
written notice and Borrower's failure to pay the same, to receive payment of any
of the foregoing by a charge to the Revolving Credit (which charge shall
thereupon become a Loan) or by deduction from any account maintained by Borrower
or Guarantor with Lenders.
11. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND WARRANTIES, ETC.
All agreements, covenants, representations and warranties contained
herein or made in writing by or on behalf of Borrower, in connection with the
transactions contemplated hereby, shall survive the execution and delivery of
this Agreement and the related documents and, to the extent applicable, shall be
deemed to be made anew by each of them each time an Advance is made, pursuant
hereto or pursuant to the other Documents and shall continue until all Loans
have been paid in full and this Agreement has been terminated. All statements
contained in any certificate or other instrument delivered by or on behalf of
Borrower, pursuant hereto or in connection with the transactions contemplated
hereby, shall be deemed representations and warranties made hereunder.
12. FAILURE TO PERFORM.
29
If Borrower fails to observe or perform any of the covenants hereof,
Lenders may pay amounts or incur liabilities to remedy or attempt to remedy any
such failure (including, without limitation, any sums payable under any statute
relating to the environment) and all such payments made and liabilities incurred
shall be for the account of Borrower, may be paid, at Lenders' option, by the
making of additional advances, including without limitation, Revolving Credit
Advances, and, consequently, shall be included in the Loans and all such amounts
shall be repaid by Borrower on demand, together with interest thereon at the
rate of 18% per annum, or may be repaid by a withdrawal from any of Borrower's
accounts maintained with Lenders. The provisions of this Section and any such
action by Lenders shall not prevent any default in the observance or performance
of any covenant hereof from constituting an Event of Default hereunder.
13. NOTICES, ETC.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to be duly delivered if mailed, postage
prepaid, by first class registered mail, return receipt requested, or by any
nationally recognized receipted delivery or courier service:
If to Xxxxxxx:
Xxxxxxx Bank
Xxxxxxx Plaza
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Business Banking Group
Xxxxxxx X. X'Xxxxx, Senior
Vice President
with a copy to:
Xxxxxxx Bank
CityPlace II
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
If to Fleet:
Fleet National Bank
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Senior Vice
President
or at such other address as may have been furnished in writing by Lenders to
Borrowers; or
30
(B) if to Borrower or Guarantor:
ACMAT Corporation
000 Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Xx.
or at such other address as may have been furnished in writing by Borrower to
Lender.
14. AMENDMENTS AND WAIVERS. Neither this Agreement nor any other Document nor
any term hereof or thereof may be changed, waived, discharged or terminated,
except by a writing signed by all of the parties hereto.
15. GOVERNING LAW. This Agreement and the documents contemplated hereby
shall be construed and enforced in accordance with and governed by the laws of
the State of Connecticut. Borrower and Guarantor hereby specifically consent to
the jurisdiction of the Courts of the State of Connecticut and agree to be
personally bound by the decisions of the Court of the State of Connecticut.
16. SUPERCEDURE. To the extent there is any inconsistency between the terms
of this Agreement and any other Document, this Agreement shall control. This
Agreement replaces and is in substitution for the Original Restated Credit
Agreement.
17. JOINT AND SEVERAL OBLIGATIONS. The obligations of Borrower and Guarantor
under this Agreement shall be the joint and several obligations of each of them.
18. SUCCESSORS AND ASSIGNS. All of the terms of this Agreement and such other
documents shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto, whether so
expressed or not, and by any other holder or holders at the time of any of the
Loans or any part thereof.
19. HEADINGS. The headings in this Agreement are for the purposes of
reference only and shall not limit or otherwise affect any of the terms hereof.
20. GENDER AND NUMBER; NO RULE OF STRICT CONSTRUCTION. Whenever the context
herein so requires, the neuter gender includes the masculine and feminine, and
the singular number includes the plural and vice-versa. Borrower acknowledges
that Borrower and Borrower's counsel have had an opportunity to review and
negotiate the terms of this agreement and the other Documents and that no rule
of strict construction shall be used against the Lender with respect to any of
the Documents.
21. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, and by the several parties hereto in
separate counterparts, but all of
31
which together shall constitute one and the same instrument.
22. THIRD PARTIES. This Agreement is by and among Agent, each Lender and
Borrower and Guarantor only and shall not be relied upon by any third party.
Without limiting the foregoing, Lenders shall have no liability to any party
whatever (including, without limitation, Borrower or Guarantor, or anyone
conducting business with any of the foregoing) in the event Lenders, for any
reason and at any time, determines not to make Advances for any reason or
otherwise exercises its rights under this Agreement and/or the other documents
contemplated hereby.
23. TIME OF THE ESSENCE. Time is of the essence for the performance by the
Borrower and Guarantor of any of their obligations set forth in this Agreement.
24. NO FIDUCIARY RELATIONSHIP. Borrower acknowledges that Lender does not
have a fiduciary relationship to the Borrower and the relationship between
Lender and Borrower is solely that of creditor and debtor.
25. MISCELLANEOUS.
a. CROSS-DEFAULT. Borrower acknowledges and agrees that a default
under any one of the Documents shall constitute a default under each of the
other Documents and under all Obligations of Borrower and Guarantor to Lenders.
b. FURTHER DOCUMENTS. Borrower agrees that, at any time or from time
to time upon written request of Lenders, Borrower will execute and deliver such
further documents and do such other acts and things as Lenders may reasonably
request in order to fully effect the purposes of this Agreement and the other
Loan Documents.
c. PAYMENTS. The acceptance of any check, draft or money order
tendered in full or partial payment of any Obligation hereunder is conditioned
upon and subject to the receipt of final payment in cash.
d. EXHIBITS AND SCHEDULES. All exhibits and schedules referred to
herein and annexed hereto are hereby incorporated into this Agreement and made a
part hereof.
e. ACKNOWLEDGMENT OF COPY. Borrower and Guarantor acknowledge receipt
of copies of the Notes
f. DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not be
deemed to affect the meaning or construction of any of the provisions hereof.
g. PLEDGE TO THE FEDERAL RESERVE. Lenders may at any time pledge all
or any portion of its rights under the Loan Documents, including any portion of
the Note to any of the twelve (12) Federal Reserve Banks organized under Section
4 of the Federal Reserve Act, 12 U.S.C.
32
Section 341. No such pledge or enforcement thereof shall release Borrower or
Guarantor from their obligations under any of the Documents.
h. SALE OF PARTICIPATION INTERESTS. Lenders shall have the
unrestricted right at any time and from time to time, and without the consent of
or notice to Borrower or Guarantor, to grant to one or more banks or other
financial institutions (each, a "PARTICIPANT") participating interests in the
Loan. In the event of any such grant by Lenders of a participating interest to a
Participant, whether or not upon notice to Borrower or Guarantor, Lenders shall
remain responsible for the performance of their obligations hereunder and
Borrower shall continue to deal solely and directly with Lenders in connection
with Lenders' rights and obligations under this Agreement and the other Loan
Documents. Lenders may furnish any information concerning Borrower in its
possession from time to time to prospective assignees and Participants,
providing that Lenders shall require any such prospective assignee or
Participant to agree in writing to maintain the confidentiality of such
information.
i. REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an officer
of either of the Lenders as to the loss, theft, destruction or mutilation of any
Note or any of the other Documents which are not of public record, and, in the
case of any such loss, theft, destruction or mutilation, upon cancellation of
any Note or such other Documents, Borrower will issue (in the case of the Notes)
and execute (in the case of any other Document) in lieu thereof, replacement
notes or Documents in the same principal amount thereof and otherwise of like
tenor.
j. APPLICATION OF PAYMENTS. All payments made by Borrower shall be
applied first to the payment of all fees, expenses and other amounts due to the
Lenders (excluding principal and interest), then to accrued interest, and the
balance on account of outstanding principal; provided, however, that after
default, payments will be applied to the obligations of Borrower to Lenders as
Lenders determines in its sole discretion.
k. RIGHT TO SELL THE LOANS TO A THIRD PARTY. Lenders shall have the
unrestricted right at any time or from time to time, and without Borrower's and
Guarantor's consent, to assign all or any portion of their rights and
obligations hereunder to one or more banks or other financial institutions
(each, an "ASSIGNEE"), and Borrower and Guarantor agree that they shall execute,
or cause to be executed, such documents, including without limitation,
amendments to this Agreement and to any other documents, instruments and
agreements executed in connection herewith as Lenders shall deem necessary to
effect the foregoing. Upon the execution and delivery of appropriate assignment
documentation, amendments and any other documentation required by Lenders in
connection with such assignment, and the payment by Assignee of the purchase
price agreed to by Lenders, and such Assignee, such Assignee shall be a party to
this Agreement and shall have all of the rights and obligations of Lenders
hereunder (and under any and all other guaranties, documents, instruments and
agreements executed in connection herewith) to the extent that such rights and
obligations have been assigned by Lenders pursuant to the assignment
documentation between Lenders and such Assignee, and Lenders shall be released
from any future obligations hereunder and thereunder to a corresponding extent.
Borrower may furnish any information concerning Borrower in its possession from
time to time
33
to prospective Assignees, provided that Lenders shall require any such
prospective Assignees to agree in writing to maintain the confidentiality of
such information.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement on the day first above mentioned
Witnesses:
XXXXXXX BANK
__________________
Name:
By________________________
Xxxxxxx X. X'Xxxxx
__________________ Senior Vice President
Name:
FLEET NATIONAL BANK
__________________
Name:
By________________________
Xxxxxxx X. Xxxxxx
__________________ Senior Vice President
Name:
ACMAT CORPORATION
__________________
Name: By________________________
Xxxxx X. Xxxxx, Xx.
__________________ Title: President
Name:
ACSTAR HOLDINGS, INC.
__________________
Name:
By________________________
__________________ Xxxxx X. Xxxxx, Xx.
Name: Title: President
35
EXHIBITS
Exhibit A Xxxxxxx Revolving Credit Note
Exhibit B Fleet Revolving Credit Note
Exhibit C Term Loan I Note
Exhibit D Term Loan II Note
Exhibit E Xxxxxxx Term Loan III Note
Exhibit F Fleet Term Loan III Note
Exhibit G Mortgage Note
Exhibit H Request for Advance
Exhibit I Notice of Interest Rate Election for Revolving Credit
Exhibit J Notice of Interest Rate Election for Term Note II and Term
Note III
Exhibit K Covenant Compliance Certificate
SCHEDULES
Schedule 1c Wire Instructions
Schedule 2c Borrower's Capitalization, Business and Subsidiaries
Schedule 2d Guarantor's Capitalization, Business and Subsidiaries
Schedule 2h Indebtedness
Schedule 2i Title to Properties, Assets and Liens
Schedule 2j Patents, Trademarks and Other Intellectual Property
Schedule 2k Litigation
Schedule 2m Tax Returns
Schedule 2r Shareholder Agreements
Schedule 2x Environmental Matters
Schedule 2y Subsidiaries
Schedule 2aa Transactions with Affiliates
Schedule 4a Mortgages, Liens and Encumbrances
Schedule 4c Guidelines for Portfolios of Insurance Subsidiaries
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APPENDIX I
As used herein, the following terms have the following meanings:
ACSTAR: the meaning specified in Section 2aa.
ADVANCE: an advance under the Revolving Credit.
AFFILIATE: with reference to any Person, any director, officer or employee of
such Person, any corporation, association, firm or other entity in which such
Person has a direct or indirect controlling interest or by which such Person is
directly or indirectly controlled or is under direct or indirect common control
with such Person.
AGENCY AGREEMENT the Agency Agreement between the Lenders and the Agent dated
the same date as the Agreement.
AGREEMENT: this Amended and Restated Commercial Credit Agreement, as it may be
amended from time to time.
ALLOWABLE DIVIDENDS OF ACSTAR: within any twelve (12) month period, the greater
of 10% of ACSTAR's policyholders' surplus at the end of the prior year or its
net income for the twelve (12) month period ending on the 31st day of December
of the prior year as calculated in accordance with statutory accounting
statements.
ALLOWABLE DIVIDENDS OF COASTAL: within any twelve (12) month period, the lesser
of 10% of Coastal's policyholders' surplus at the end of the prior year or its
net investment income for the twelve (12) month period ending on the 31st day of
December of the prior year, as calculated in accordance with statutory
accounting statements.
APPROVED DIVIDENDS OF COASTAL: Allowable Dividends for Coastal plus
extraordinary dividends approved by the Arizona insurance department.
APPROVED DIVIDENDS OF ACSTAR: Allowable Dividends for ACSTAR plus extraordinary
dividends approved by the Illinois insurance department.
BORROWER: the meaning specified on page one of this Agreement.
BUSINESS DAY: any day other than a Saturday, Sunday or legal holiday on which
commercial banks are open for the normal transaction of business in the State of
Connecticut and in the State of Massachusetts.
COASTAL: the meaning specified in Section 2aa.
CONDITIONS PRECEDENT: the meaning specified in Section 1b.
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DEFAULT: the occurrence of any event which with the giving of notice or passage
of time (other than stated grace periods), or both, might become an Event of
Default.
DOCUMENTS: this Agreement, the Notes, the Guaranty, and all other instruments
heretofore, now or hereafter executed and delivered pursuant to this Agreement
or any of the aforesaid documents.
ENVIRONMENTAL LAWS: any and all applicable foreign, Federal, state and local
statutes, laws, regulations, rules, ordinances, orders, guidances, policies or
common law (whether now existing or hereafter enacted or promulgated) pertaining
to the environment, of any and all Federal, state or local governments and
governmental and quasi-governmental agencies, bureaus, subdivisions, commissions
or departments which may now or hereafter have jurisdiction over Debtor and all
applicable judicial and administrative and regulatory decrees, judgments and
orders, including common law rulings and determinations, relating to injury to,
or the protection of, real or personal property or human health or the
environment, including, without limitation, all requirements pertaining to
reporting, licensing, permitting, investigation, remediation and removal of
emissions, discharges, releases or threatened releases of Hazardous Substances,
chemicals substances, pollutants or contaminants whether solid liquid or gaseous
in nature, into the environmental or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of such
Hazardous Substances, chemical substances, pollutants or contaminants.
Without limiting the generality of the foregoing, the term "Environmental Laws"
shall encompass each of the following statutes, and regulations promulgated
thereunder, and amendments and successors to such statutes and regulations, as
may be enacted and promulgated from time to time: Federal Occupational Safety
and Health Act ("OSHA"); the Clean Air Act ("CAA"); the Toxic Substances Control
Act ("TSCA"); the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("XXXX"); the Clean Water Act ("CWA"); the Resource
Conservation and Recovery Act, as amended by the Hazardous and Solid Waste
Amendments of 1984 ("RCRA"); the Hazardous Materials Transportation Act; and all
applicable Environmental Laws of each state and municipality in which Debtor
conducts business or locates assets and all rules and regulations thereunder and
amendments thereto and all similar state and local laws, rules and regulations.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA GROUP: the Borrower, any Subsidiary and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any Subsidiary, are treated
as a single employer under Section 414 of the Internal Revenue Code.
EUROCURRENCY RESERVE REQUIREMENT: for any day, as applied to any Loan bearing
interest in relation to the LIBOR Rate, the aggregate (without duplication) of
the rates (expressed as a decimal fraction) of the maximum reserve percentages
in effect on such day (including, without
38
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto) dealing with
reserve requirements proscribed for eurocurrency funding (currently referred to
as "Eurocurrency liabilities" in Regulation D of such Board) and required to be
maintained by a member bank of such system.
EVENT OF DEFAULT: the meaning specified in Section 5.
FLEET SWAP AGREEMENT: that certain ISDA Master Agreement or any other swap
agreement, including the Schedules and all Confirmations related thereto (as
such terms are defined in the ISDA Master Agreement) entered into between
Borrower and Fleet, whether now existing or hereafter arising, related to
Fleet's portion of Term Loan III.
FISCAL QUARTER: the three (3) month periods ending each March, June, September
and December.
FISCAL YEAR: a twelve (12) month year ending on December 31.
FUNDED DEBT: aggregate consolidated Indebtedness of Borrower for borrowed money.
GAAP: generally accepted accounting principals and practices consistently
applied from accounting period to accounting period.
GOVERNMENTAL AUTHORITIES: any federal, state or local governmental authority or
any political subdivision of any of them and any court, agency, department,
commission, board, bureau or instrumentality of any of them which now or
hereafter has jurisdiction over the Borrower's business premises.
GUARANTOR: the meaning specified on Page 1.
GUARANTY: the meaning specified in Section 1h.
HAZARDOUS SUBSTANCE: any chemical, compound, material, mixture or substance: (i)
the presence of which requires or may hereafter require notification,
investigation, monitoring or remediation under any Environmental Law; (ii) which
is or becomes defined as a "HAZARDOUS WASTE", "HAZARDOUS MATERIAL" or "HAZARDOUS
SUBSTANCE" or "TOXIC SUBSTANCE" or "POLLUTANT" or "CONTAMINANT" under any
present or future applicable Federal, state or local law or under the rules and
regulations adopted or promulgated pursuant thereto, including, without
limitation, the Environmental Laws; (iii) which is toxic, explosive, corrosive,
reactive, ignitable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous and is or becomes regulated by any governmental authority,
agency, department, commission, board, agency or instrumentality of any foreign
country, the United States, any state of the United States, or any political
division thereof to the extent any of the foregoing has or had jurisdiction over
Debtor; (iv) without limitation, which contains gasoline, diesel fuel or other
petroleum products, asbestos or polychlorinated biphenyls ("PBCS"); or (v) any
other chemical, material or substance,
39
exposure to, or disposal of, which is now or hereafter prohibited, limited or
regulated by any federal, state or local governmental body, instrumentality or
agency.
INDEBTEDNESS: as applied to a Person, (a) all items, except items of capital
stock or of surplus or of general contingency reserves or of reserves for
deferred income taxes if in compliance with Section 3b, which in accordance with
generally accepted accounting principles and practices would be included in
determining total liabilities as shown on the liability side of a balance sheet
of such person as at the date of which indebtedness is to be determined, (b) all
indebtedness secured by any mortgage, pledge, lease, lien or conditional sale or
other title retention agreement existing on any property or asset owned or held
by such person subject thereto, whether or not such indebtedness shall have been
assumed, and (c) all indebtedness of others which such Person has directly or
indirectly guaranteed, endorsed, discounted or agreed (contingently or
otherwise) to purchase or repurchase or otherwise acquire, or in respect of
which such Person has agreed to supply or advance funds (whether by way of loan,
stock purchase, capital contribution or otherwise) or otherwise to become liable
directly or indirectly with respect thereto.
INTEREST EXPENSE: for any period, all amounts accrued by Borrower, whether as
interest, late charges, service fees or other charge for money borrowed on
account of or in connection with Borrower's indebtedness for money borrowed or
with respect to which Borrower or any of their respective properties are liable
by assumption, operation of law or otherwise, including, without limitation, any
leases which are required, in accordance with generally accepted accounting
principles, to be carried as a liability on Borrower's balance sheet.
INTEREST PERIOD: with respect to each LIBOR Advance under the Revolving Credit,
the period commencing on the date of the making or continuation of, or
conversion to, such LIBOR Advance and ending one (1), two (2) or three (3)
months thereafter, as Borrower may elect in the applicable Notice of Interest
Rate Election and with respect to Term Loan II and/or Term Loan III the period
commencing on the date of the making of the initial advance thereunder, or on
the date of a continuation of, or a conversion to, such LIBOR Advance and ending
three (3) months thereafter as set forth in the applicable Notice of Interest
Rate Election
provided, however, that:
a. any Interest Period (other than an Interest Period determined
pursuant to clause (iii) below) that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case such Interest
Period shall end on the immediately preceding Business Day;
b. any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall, subject to
clause (iii) below, end on the last Business Day of a calendar month;
c. any Interest Period that would otherwise end after the Termination
Date or the Term Loan II Maturity Date shall end on the Termination Date or the
Term Loan II Maturity Date, as
40
the case may be; and
d. notwithstanding clause (iii) above, no Interest Period shall have
a duration of less than one (1) month and if any Interest Period applicable to
such Loan would be for a shorter Interest Period, such Interest Period shall not
be available hereunder.
INSURANCE SUBSIDIARY: ACSTAR Insurance Company and/or United Coastal Insurance
Company.
LENDER: the meaning specified on page one of this Agreement.
LIBOR ADVANCES: Any Loan or part thereof bearing interest at a rate in relation
to the LIBOR.
LIBOR RATE: the rate per annum (rounded upward, if necessary, to the nearest
1/16 of 1%), determined by Lender to be equal to the quotient of (x) the London
Interbank Offered Rate (hereinafter defined) for such LIBOR Advance for such
Interest Period, divided by (y) 1 - Eurocurrency Reserve Requirements for such
Interest Period.
Provided, however:
a. If Borrower requests that all or any portion of the Loans with
respect to which a LIBOR option applies shall bear interest at the LIBOR Rate
and (a) Lender determines that, by reason of circumstances affecting the
interbank Eurodollar market generally, deposits in U.S. Dollars (in the
applicable amounts) are not being offered to banks in the interbank Eurodollar
market for the selected Interest Period, or (b) that the LIBOR Rate does not
accurately reflect the cost to Lender of making or maintaining LIBOR Advances
for the Interest Period or therefor, then Lender shall forthwith give notice
thereof to Borrower, whereupon, (1) the obligation of Lender to permit the LIBOR
Advances to bear interest at the LIBOR Rate shall be suspended so long as such
circumstances exist, and (2) Borrower shall convert the interest rates on the
applicable portions of the outstanding Advances to the rate in relation to the
Prime Rate set forth above for the current Interest Period. Such suspension
shall continue until Lender notifies Borrower that the circumstances giving rise
to such suspension no longer exist.
b. If, after the date of this Agreement, the adoption of or any
change in rules, or change in the interpretation or administration thereof, by a
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Lender with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for Lender to make or maintain or fund LIBOR Advances, the interest
rates on the applicable portions of the outstanding LIBOR Advances shall be
deemed to have been converted to the rate relating to the Prime Rate set forth
above, on either (a) the last day of the then current Interest Period if Lender
may lawfully continue to maintain loans at the LIBOR Interest Rate to such day,
or (b) immediately if Lender may not lawfully continue to maintain Advances at
the LIBOR Interest Rate.
41
c. Upon notice to Borrower, the Borrower shall pay to the Lender for
the account of Lender, such amount or amounts as shall be sufficient (in the
reasonable opinion of Lender) to compensate it for any loss, cost, liability or
expense incurred as a result of (x) any repayment of a LIBOR Advance on a date
other than the last day of the Interest Period for such LIBOR Advance,
including, but not limited to that resulting from acceleration of all amounts
outstanding under any Loan following the occurrence of any Default or Event of
Default and/or (y) any failure by Borrower to borrow or convert or prepay, as
the case may be, a LIBOR Advance on the date for borrowing or conversion or
prepayment, as the case may be, which is specified in the Notice of Interest
Rate Election.
LOANS: the meaning specified in Xxxxxxx 0x.
XXXXXX BUSINESS DAY: any day other than a Saturday or Sunday on which dealing in
dollar deposits are carried on in the London interbank market and on which banks
are open for business in London and which must be a Business Day.
LONDON INTERBANK OFFERED RATE: the arithmetic average of the rates per annum
quoted at approximately 11:00 A.M. London time by the principal branch of each
of the Reference Banks (hereinafter defined) two (2) London Business Days
(hereinafter defined) prior to the first day of such Interest Period for the
offering to leading banks in the London interbank market of dollar deposits for
a period and in an amount comparable to the Interest Period and principal amount
of the particular LIBOR Advance to which the LIBOR Rate is to apply. "Reference
Banks" means banks appearing in the display designated as page "LIBOR" on the
Reuters' Monitor Money Rates Service (or such other page as may replace the
LIBOR page on that service for the purpose of displaying London Interbank
Offered Rates of major banks); provided that if no such offered rate shall
appear on such display, "Reference Banks" shall mean one or more major banks in
the London interbank market as selected by the Lender in its sole discretion.
MORTGAGE LOAN: the meaning specified in Section 1av.
NAIC: National Association of Insurance Commissioners.
NOTE: the Revolving Note, Term Loan Note I, Term Loan Note II, Term Loan Note
III and the Mortgage Note.
NOTICE OF INTEREST RATE ELECTION: Whenever Borrower desires to elect, change or
continue the LIBOR Interest Rate on all or a portion of any Advance(s), Borrower
shall deliver to Lender a written Notice of Interest Rate Election in form
provided by Agent and substance as that attached hereto as Exhibit D (the
"NOTICE OF INTEREST RATE ELECTION") with respect to a Loan or Advance received
no later than 11:00 A.M. at least three (3) Business Days in advance of the
proposed date of election, change or continuation, which election, change or
continuation must be confirmed by telephone. The Notice of Interest Rate
Election shall be irrevocable and shall specify: (i) the proposed date of change
or continuation (which shall be a Business Day); (ii) the amount with respect to
which such election is being made; and (iii) the Interest Periods.
42
If an Advance shall be outstanding for which Borrower has not elected a
LIBOR Rate or if at the termination of any Interest Period, Borrower fails to
submit a Notice of Interest Rate Election to convert or to continue any
outstanding Advance, then such Advance, regardless of the dollar amount, shall
automatically accrue interest in relation to the Prime Rate as of the applicable
date.
LIBOR Advances may be converted into advances bearing interest relating
to the Prime Rate only on the expiration date of an Interest Period applicable
thereto. In addition, no outstanding Advances may be continued as, or converted
into LIBOR Advances and no change in Interest Rate may be exercised when any
Default or Event of Default has occurred.
PBGC: The Pension Benefit Guaranty Corporation.
PERSON: a corporation, an association, a partnership, an organization, a limited
liability company, a business, an individual or a government or political
subdivision thereof or any governmental agency.
PREPAYMENT PREMIUM: (i) on the prepayment date, the remaining payments of
principal and interest that would otherwise have become payable at the
expiration of the Interest Period pertaining to the principal being prepaid
shall be discounted to a present value at a rate per annum equal to the
"PREPAYMENT YIELD TO MATURITY", as hereinafter defined, plus any costs for
reserves or assessments or for reinvesting the amount being prepaid, and if such
discounted value shall exceed the unpaid principal amount being prepaid, then
the Prepayment Premium shall be an amount equal to such excess; otherwise no
Prepayment Premium shall be payable; (ii) the "PREPAYMENT YIELD TO MATURITY"
shall mean the yield to maturity of the debt obligation of the United States
Treasury (excluding those commonly known as "FLOWER BONDS") having a term
substantially equal to the term of the relevant Interest Period maturity date
nearest in expiration of the relevant Interest Period. The maturity date and
yield to maturity of such United States Treasury obligation shall be determined
by Lender on the basis of quotations appearing in the Xxxxxx Monitor Money Rates
Service or other repository service reasonably satisfactory to Lender on the
prepayment date. If there shall be more than one such debt obligation of the
United States Treasury maturing nearest in time to the expiration of the
relevant Interest Period, the Prepayment Yield to Maturity shall be the
arithmetic average of the yields to maturity of all such obligations. Said
prepayment shall be irrevocable once Borrower has notified Lender of such
prepayment and Borrower will reimburse Lender for any and all loss, cost,
liability and expense incurred by Lender in the event Borrower for any reason
does not make such prepayment.
A determination by Lender as to the amounts payable pursuant to this
Subsection shall be conclusive absent arithmetical error.
PRIME RATE: an index Xxxxxxx uses to set interest rates on certain types of
loans and is not necessarily the lowest rate Lender charges its customers.
Lender's Prime Rate is increased and decreased by Lender from time to time in
response to changes in conditions. Borrower's interest rate will be adjusted
automatically on each occasion on which the Lender's Prime Rate changes.
43
PRIME RATE ADVANCE: any Loan or portion thereof bearing interest at the Prime
Rate.
PRINCIPAL AMORTIZATION: for any period all amounts which Borrower is required to
pay whether regularly scheduled or as a result of a default excluding payments
of principal under the Revolving Credit and whether or not actually paid by
Borrower in reduction of Borrower's Indebtedness including without limitation
payments on capitalized leases.
RELEASE: any release, emission, disposal, leaching or migration into the
environment (including, without limitation, the abandonment or disposal of any
barrels, containers, or other closed receptacles containing any Hazardous
Substances) or into or out of any property owned, occupied or used by Debtor.
REVENUE CODE: the meaning specified in Section 3l.
REVOLVING CREDIT: the credit facility described in Section 1.1(A).
REVOLVING NOTE: the meaning specified in Section 1a
SPILL: the meaning specified in Section 3i.
STATUTORY CAPITAL: means Statutory Capital plus Statutory Surplus of the
Insurance Subsidiaries as shown on the statutory financial statements filed with
the states of Illinois and Arizona.
STATUTORY OPERATING EARNINGS: means the Statutory Operating Earnings of the
Insurance Subsidiaries as shown on the statutory financial statements filed with
the states of Illinois and Arizona.
SUBSIDIARY: with reference to any Person, a corporation, or similar association
or entity not less than a majority of the outstanding shares of the class or
classes of stock, having by the terms thereof ordinary voting power to elect a
majority of the directors, managers or trustees of such corporation, association
or entity, of which are at the time owned or controlled, directly or indirectly,
by such Person or by a Subsidiary of such Person.
TERM LOAN I: the meaning specified in Section 1aii
TERM LOAN II: the meaning specified in Section 1aiii.
TERM LOAN III: the meaning specified in Section 1aiv.
TERM LOAN I MATURITY DATE: March 31, 2004.
TERM LOAN II MATURITY DATE: December 1, 2008.
TERM LOAN III MATURITY DATE: November 22, 2009.
44
TERM LOAN I NOTE: the meaning specified in Section 1aii;
TERM LOAN II NOTE: the meaning specified in Section 1aiii.
TERM LOAN III NOTE: the meaning specified in Section 1aiv.
TERMINATION DATE: December 1, 2004.
XXXXXXX SWAP AGREEMENT: that certain ISDA Master Agreement or any other swap
agreement, including the Schedules and all Confirmations related thereto (as
such terms are defined in the ISDA Master Agreement) entered into between
Borrower and Xxxxxxx, whether now existing or hereafter arising, related to
Xxxxxxx'x portion of Term Loan III.
45
