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EXHIBIT 4(d)
(1)
COMMERCIAL CREDIT AGREEMENT
THIS IS A COMMERCIAL CREDIT AGREEMENT made this 9th day of December, 1998
by and among
BANKBOSTON, N.A.
a national banking association
with a place of business at
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000 ("Lender")
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")
The liability of the Borrower and of the Guarantor hereunder shall be joint
and several.
THE PARTIES AGREE AS FOLLOWS (reference being hereby made to Appendix I
appended hereto for the definition of certain capitalized terms used herein):
SECTION 1. LOANS; INTEREST; GUARANTY.
1.1 The Loans. Subject to all of the terms and conditions of this
Agreement:
(A) Revolving Credit.
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(i) Lender shall 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, 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 1.5 provided that the aggregate amount of all outstanding Advances shall
not (except in the sole and absolute discretion of Lender) at any time exceed
the amount of $10,000,000.00. The Revolving Credit shall be evidenced by the
Revolving Credit Note delivered to Lender in form and substance set forth as
Exhibit A attached (together with any note which from time to time extends,
amends, supplements, modifies, renews or substitutes such note, the "Revolving
Note").
(ii) On and before the Termination Date, Lender shall
determine in its sole and absolute discretion whether it is willing to extend
the Termination Date. On and after the Termination Date, as extended, if at all,
any obligation of Lender 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.
(B) Term Loan. Lender is lending to Borrower and Borrower is
borrowing from Lender the sum of $5,000,000.00 as a Term Loan (the "Term Loan"),
which Term Loan 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 after the date hereof, each to be accompanied by a payment of
interest at the rate set forth in Section 1.5 hereof until the Maturity Date,
when the entire unpaid balance of the Term Loan, together with all accrued and
unpaid interest, shall be due and payable, all as more particularly set forth in
the Term Loan Note delivered to Lender in form and substance as set forth in
Exhibit B attached hereto, (together with any note which from time to time
extends, amends, supplements, modifies, renews or substitutes for such note, the
"Term Note"); and
1.2 Conditions Precedent to Advances. Lender's obligation to make any
Advance shall be subject to the conditions precedent ("Conditions Precedent")
that on the date on which Lender makes the Advance:
(A) Borrower must have received and provided to Lender such
approvals, opinions, consents or documents evidencing compliance with this
Agreement as Lender may reasonably request; and
(B) Borrower must have submitted all financial statements
required hereunder to Lender showing an availability for Advances under the
Revolving Credit, and such Advance when added to all outstanding Advances must
be within such availability; and
(C) 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:
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(i) the representations and warranties contained in Section
2 are true and correct on and as of the date of such request as though made on
and as of such date; and
(ii) no Default nor Event of Default has occurred and/or is
continuing or would result from the Advance.
1.3 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, each of which request must be for an amount in excess of $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 Base 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 Base Rate Advances and on the third (3rd)
London Business Day following such request as to LIBOR Advances. Any and all
Advances to be made by Lender under this Agreement shall be deposited in Account
#00000000 maintained by Borrower with Lender. Borrower specifically agrees that
Lender 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
Lender such documentation respecting each request for Advance, including,
without limitation, the form of Request for Advance attached hereto as Exhibit
C, as Lender shall require.
1.4 Loans. It is specifically contemplated by the parties to this
Agreement that the banking relationship evidenced hereby may, in Lender's
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 like, in addition to any and all loans and/or Advances previously made by
Lender to Borrower and in addition to the Revolving Note and the Term Note.
Consequently, the parties intend that this Agreement shall govern any and all
financial accommodations now or hereafter extended by Lender to Borrower and all
other liabilities of the Borrower to the Lender 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 Lender 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 Lender (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 Lender, 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".
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1.5 Interest.
(A) Revolving Credit.
(i) All amounts outstanding from time to time under the
Revolving Credit shall bear interest at a per annum variable rate which at all
times is equal to the Base Rate, said rate to change when and as said Base Rate
changes; provided however, that
(ii) At the election of Borrower made pursuant to a Notice
of Interest Rate Election (in form and substance as set forth in Exhibit D,
attached hereto), outstanding amounts under the Revolving Credit shall bear
interest at the LIBOR Rate plus one and sixtenths (1.6) percentage 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; and
(iii) 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.
(B) Term Loan.
(i) All amounts outstanding from time to time under the Term
Loan shall bear interest at a fixed rate equal to seven and one quarter
(7 1/4%) percent per annum.
1.6 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) 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 the Term 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 1.5(A) or
(B) above 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 Lender or are made by other current funds (and each 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
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been made. Any interest not paid as aforesaid may, in Lender's sole discretion,
accrue and be added to the principal and continue to bear interest at the rate
being borne by such principal.
1.7 Prepayment. Any amounts outstanding bearing interest at the LIBOR
Rate may only be prepaid if any such prepayment is accompanied by the Prepayment
Premium.
1.8 Guaranty. Guarantor is simultaneously herewith executing and
delivering to Lender its Guaranty Agreement (the "Guaranty") unconditionally
guaranteeing to Lender the payment of all Indebtedness and obligations now or
hereafter owing by Borrower to Lender, including, without limitation, the Loans.
SECTION 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:
2.1 Borrower Incorporation and Qualification. Borrower is a corporation
duly organized and 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, wherein 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.
2.2 Guarantor Incorporation and Qualification. Guarantor is a corporation
duly organized and validly existing and in good standing under the laws 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, wherein 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.
2.3 Borrower Capitalization, Business and Subsidiaries. Borrower does not
own stock or other ownership interest of any other business entity, active or
inactive except as set forth on Schedule to 2.3. The information set forth on
Schedule to 2.3 attached with respect to the Borrower's authorized, issued and
outstanding capital stock, all of which stock has been duly authorized and
validly issued and is fully paid and non-assessable, the holders of such stock,
its principal and other places of business, the place where its inventories,
equipment and records of its accounts receivable are kept, and its present
business activities and status, is complete and accurate. It 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 to 2.3 attached.
2.4 Guarantor Capitalization, Business and Subsidiaries. Guarantor does not
own stock or other ownership interest of any other business entity, active or
inactive except as set forth on Schedule to 2.4. The information set forth on
Schedule to 2.4 attached with respect to the Guarantor's authorized, issued and
outstanding capital stock, all of which stock has been duly
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authorized and validly issued and is fully paid and non-assessable, the holders
of such stock, its principal and other places of business, the place where its
inventories, equipment and records of its accounts receivable are kept, and its
present business activities and status, is complete and accurate. It 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 to 2.4 attached.
2.5 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 Lender is
entitled to the benefits thereof in accordance with such terms.
2.6 Compliance with Instruments, Charter and Law. Each of 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 except for the coverage ratio set forth in the Fleet Agreements, (C)
any other material contract, agreement or instrument, (3) 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. (4) any licensing or governmental requirement, or
(5) any state or federal environmental act. The execution and delivery and
performance and compliance with this Agreement or any of 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.
2.7 Financial Statements.
(A) The consolidated balance sheet of the Borrower and its
consolidated subsidiaries as of December 31, 1997 and the related consolidated
statements of operations, cash flows and stockholders' equity for the Fiscal
Year then ended, reported on by KPMG Peat Marwick and set forth in the
Borrower's 1997 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.
(B) The unaudited consolidated balance sheet of the Borrower and
its consolidated subsidiaries as of September 30, 1998 and the related unaudited
consolidated statements of operations, cash flows and stockholders' equity for
the nine months then ended, set forth in the Borrower's latest Form 10-Q, fairly
present, on a basis consistent with the financial
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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 three month period
(subject to normal year-end adjustments).
2.8 Indebtedness. Borrower has no outstanding 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 Section 2.7 hereof except the coverage ratio set forth in the Fleet
Agreements, and 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.
2.9 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 to 2.9 attached and other than those permitted under Section 4.2 . 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 to 2.9 attached.
2.10 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 to 2.10
attached.
2.11 Litigation, Etc. Except as set forth in Schedule to 2.11 attached
and 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.
2.12 Changes in Condition. Since the date of the financial statements
referred to in Section 2.7, 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).
2.13 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
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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 to 2.13 attached.
2.14 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.
2.15 Solvency. Borrower, 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.
2.16 Names. Borrower currently conducts all business only under its
legal name as set forth above. During the preceding five years Borrower has not
(i) been known as or used any other corporate, fictitious or trade name, (ii)
been the surviving entity of a merger or consolidation or (iii) acquired all or
substantially all of the assets from any Person.
2.17 No Default nor Event of Default. No Default nor Event of Default
has occurred or exists except for the coverage ratio set forth in the Fleet
Agreements.
2.18 Shareholder Agreements. Borrower is not a party to any written
executive employment, management or shareholder agreement, except as described
in Schedule to 2.18 attached.
2.19 Place of Business; Records. Borrower's chief place of business is
the address shown above and Borrower shall give Lender at least sixty (60) days
prior written notice of any change.
2.20 Year 2000 Compliance. Borrower, Guarantor and each of their
Subsidiaries has taken all necessary action to assess, evaluate and correct all
hardware, software, embedded microchips and other processing capabilities it
uses, directly or indirectly, to ensure that it will be able to function
accurately and without interruption or ambiguity using date information, before,
during and after January 1, 2000.
2.21 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.
2.22 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
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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.
2.23 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.
2.24 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.
2.25 Environmental Matters. (A) Except as set forth in Schedule to
2.25 and to the extent that 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 (i)
through (vi) below, inclusive, would not reasonably be expected to exceed
$250,000.00 for any one occurrence or $500,000.00 in the aggregate.
(i) 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;
(ii) 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;
(iii) 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
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Environmental Laws is or has been present at any property now or previously
owned, operated or leased by the Borrower or any Subsidiary;
(iv) 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;
(v) 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
(vi) 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.
(B) 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 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.
(C) 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.
2.26 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 to 2.26.
2.27 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
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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.
2.28 Special Representations and Warranties re Insurance Subsidiaries.
(A) 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, 1994. Coastal has not currently applied for permission to grant
any extraordinary dividends and no such application has ever been denied.
(B) 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, 1995. ACSTAR has not currently applied for permission
to grant any extraordinary dividends and no such application has ever been
denied.
(C) 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 including, without limitation, the State of New
York.
(D) 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.
(E) Each Insurance Subsidiary has and will at all times maintain
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.
(F) Coastal has not incurred losses in excess of 15% of its
statutory surplus in any year.
(G) ACSTAR has not incurred losses in excess of 15% of its
statutory surplus in any year.
(H) None of Coastal's reinsurance recoverables are more than 90
days past due.
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(I) None of ACSTAR's reinsurance recoverables are more than 90
days past due.
(J) No Insurance Subsidiary has entered into transactions with
Affiliates during the last three years except as disclosed on Schedule to 2.28
attached hereto.
(K) 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.
(L) 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.
SECTION 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:
3.1 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 Revolving Note and the Term Note and also in accordance with the provisions
hereof and of the other Documents. If any Loan is not evidenced by a writing
specifying a due date, Borrower shall pay the same ON DEMAND. 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 lender in making loans of the type
herein or incurred by Lender in connection with the Loans.
3.2 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 Lender, are deposited with Lender), 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.
3.3 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,
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orders, statutes, rules and regulations, including, but not limited to, state
and federal environmental regulations and those of the Occupational Safety and
Health Administration.
3.4 Insurance.
(A) Borrower, Guarantor, and each of its or their Subsidiaries shall
maintain, with insurers satisfactory to Lender, 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:
(i) public and product liability insurance in such amounts and
covering such risks, as Lender may reasonably require,
(ii) all worker's compensation and other employees' liability
insurance as may be required by law,
(iii) 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 Lender may require, and
(iv) business interruption insurance in amounts sufficient to
cover the reasonable needs of the Borrower's business during periods of partial
or complete interruption of the Borrower's business.
(B) 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.
3.5 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 Lender:
(A) Financial Reports.
(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
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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 E.
(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 Lender, together with the unqualified opinion
of such accounting firm to Lender 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 all financial statements for the Insurance Subsidiaries required
by the laws of any jurisdiction in which the Insurance Subsidiary conducted
business.
(iii) 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 Lender from time to time may
reasonably request.
(B) Projections/Budgets. As soon as available and in any event within
thirty (30) days prior to the end of each Fiscal Year of Borrower, financial
projections prepared by Borrower on a consolidated and consolidating basis for
the next Fiscal Year of Borrower, profit and loss statements projected for each
Fiscal Quarter and for the end of the next Fiscal Year, including without
limitation a projection of all drawings under, paydowns of and anticipated
quarterly availability under, the Revolving Credit and a capital expenditure
budget for the next Fiscal Year.
3.6 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 3.5;
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(A) a ratio of Borrower's consolidated total Indebtedness to
Borrower's (i) cash on hand and cash equivalents on hand plus (ii) marketable
securities (including amounts owing to Borrower in connection therewith but not
yet paid) plus (iii) accrued interest receivable of not more than 1.05 to 1.0
measured at the end of each Fiscal Quarter; and
(B) an Interest Coverage Ratio (being the ratio of Adjusted Cash Flow
to consolidated Interest Expense) of at least 2.25 to 1.0 measured: (i) on a
calendar year basis at the end of each Fiscal Quarter commencing with the Fiscal
Quarter ending March 31, 1999 and continuing through the Fiscal Quarter ending
September 30, 1999, and (ii) at the end of each Fiscal Quarter over the
immediate preceding four (4) Fiscal Quarters commencing with the Fiscal Quarter
ending December 31, 1999 and for each Fiscal Quarter thereafter.
(C) a Debt Service Coverage Ratio (being the ratio of Adjusted Cash
Flow to Debt Service) of not less than 1.25 to 1.0 measured: (i)on a calendar
year basis at the end of each Fiscal Quarter commencing with the Fiscal Quarter
ending March 31, 1999 and continuing through the Fiscal Quarter ending September
30, 1999, and (ii) at the end of each Fiscal Quarter over the immediate
preceding four (4) Fiscal Quarters commencing with the Fiscal Quarter ending
December 31, 1999 and for each Fiscal Quarter thereafter.
(D) a ratio of Borrower's total Funded Debt to Statutory Operating
Earnings of not more than 5.0 to 1.0 measured: (i) on a calendar year basis at
the end of each Fiscal Quarter commencing with the Fiscal Quarter ending March
31, 1999 and continuing through the Fiscal Quarter ending September 30, 1999,
and (ii) at the end of each Fiscal Quarter over the immediate preceding four (4)
Fiscal Quarters commencing with the Fiscal Quarter ending December 31, 1999 and
for each Fiscal Quarter thereafter.
(E) a ratio of Borrower's total Funded Debt to Statutory Capital of
not more than 0.70 to 1.0 measured at the end of each Fiscal Quarter.
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.
3.7 Notice of Certain Events and Changes; Governmental Notices.
(A) 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 Lender specifying the nature and period of existence thereof.
Borrower shall give Lender 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 Lender at least sixty (60) days' prior written
notice of
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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.
(B) As soon as reasonably practicable, after the issuance thereof,
Borrower shall send to Lender 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 Lender 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.
3.8 Unused Fee. Borrower shall pay Lender, in current funds, quarterly in
arrears, a fee equal to 3/8 per cent per annum (but calculated based on the
actual number of days elapsed) of the average daily unused amount of the
Revolving Credit.
3.9 Environmental Compliance.
(A) 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.
(B) In addition to any and all other liability of Borrower to Lender
hereunder, Borrower shall indemnify the Lender 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.
(C) The Lender and/or its authorized representatives has 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.
(D) 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.
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3.10 Intentionally left blank.
3.11 Use of Proceeds. Borrower shall use the proceeds of the Loans to repay
indebtedness owing by Borrower to Fleet National Bank and for general working
capital purposes. 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 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.
3.12 Deposit Accounts. Borrower shall maintain its primary disbursement
account with Lender.
3.13 Pension Plans.
(A) As soon as reasonably practicable, upon the filing, issuance or
receipt thereof, Borrower will send to Lender 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.
(B) 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.
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3.14 Special Covenants re Insurance Subsidiaries. The Borrower shall:
(A) Notify the Lender annually of the allowable dividend which may be
paid by each Insurance Subsidiary to the Borrower.
(B) Notify the Lender promptly if any Insurance Subsidiary has applied
for permission to grant any special dividends.
(C) Notify the Lender 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.
(D) Furnish to the Lender annually all reports issued by its outside
auditors which analyze the adequacy of the level of each Insurance Subsidiary's
reserves.
(E) Notify the Lender of any material change in any Insurance
Subsidiary's risk based capital ratio.
(F) Maintain in each Insurance Subsidiary actual capital equal to or
in excess of its required risk based capital.
(G) Notify the Lender, 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.
(H) Notify the Lender, 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.
(I) Notify the Lender 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.
(J) Notify the Lender of any reduction in the rating by A.M. Best and
Company of any Insurance Subsidiary.
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3.15 Upstream Dividends. Borrower shall, among other things, cause its
Subsidiaries to pay to Borrower such profits, excess capital and other sums as
may be necessary to comply with the financial covenants set forth in Section
3.6. In extension of the foregoing, Borrower shall diligently apply for and
pursue any approvals from any state or regulatory authority having jurisdiction
over each such Subsidiary if such approvals are necessary to comply with the
financial covenants set forth in Section 3.6
3.16 Rating. The Insurance Subsidiaries shall at all times maintain a
rating by A.M. Best and Company of at least B+.
SECTION 4. NEGATIVE COVENANTS.
Borrower covenants and agrees 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:
4.1 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:
(A) liens for taxes, assessments or governmental charges or
levies the payment of which is not at the time required by Section 3.2;
(B) 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);
(C) 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;
(D) statutory or common law possessory liens for charges incurred
in the ordinary course of business the payment of which is not yet due;
(E) the mortgages, liens and encumbrances referred to or
described in Schedules to 4.1 attached and/or the replacement thereof;
(F) liens in favor of Lender.
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4.2 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:
(A) Indebtedness to Lender;
(B) 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;
(C) Indebtedness arising under leases permitted hereby;
(D) 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
(E) Indebtedness described in the financial statements described
in Section 2.8 or refinancing of such Indebtedness in amounts not to exceed such
refinanced Indebtedness.
(F) 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 4.3 (F) below.
Borrower shall not guarantee or otherwise assure any obligation of any
other party including, without limitation, that of any Guarantor.
4.3 Restrictions on Investments, Loans, Etc. Make or permit to be
outstanding any loan or advance or capital contribution to any other Person,
other than:
(A) presently outstanding loans, advances and investments
incurred in the ordinary course of Borrower's business;
(B) Indebtedness of customers for merchandise sold or services
rendered in the ordinary course of business; and
(C) 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
(D) loans to employees of Borrower for travel and entertainment
advances not to exceed $250,000.00 in the aggregate outstanding at any one time.
(E) the portfolios of the Insurance Subsidiaries maintained
pursuant to Borrower's guidelines attached hereto as Schedule to 4.3.
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(F) 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.
4.4 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 in an aggregate amount
exceeding $10,000,000 and/or the purchase of shares in the Borrower held by
Xxxxx Xxxxx, Xx., with the proceeds of insurance policies held by Borrower on
the life of such person.
4.5 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.
4.6 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. and Xxxxx Xxxxx, Xx.
4.7 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 on a non-cumulative basis. The following are deemed to be
expenditures for capital assets and subject to the limitations of this section:
(A) Expenditures for major repairs and maintenance which, in
accordance with GAAP, are or should be capitalized; and
(B) 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.
4.8 Management. Suffer any material change in executive management,
including without limitation the day to day involvement of Xxxxx Xxxxx, Xx. and
Xxxxx Xxxxx, Xx. nor suffer a change in day to day management;
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4.9 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. And
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.
4.10 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 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.
4.11 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.
4.12 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).
4.13 Fiscal Year. Change the fiscal year of Borrower.
4.14 No Sale, Leaseback. Enter into any sale-and-leaseback or similar
transaction.
4.15 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.
SECTION 5. EVENTS OF DEFAULT.
If any of the following events (each an "Event of Default") occurs:
5.1 If Borrower defaults in the payment of any part of the Loans,
including, without limitation, payments due under the Revolving Credit or the
Term Loan, owing by it when the same becomes due and payable, whether at any
stated maturity, or by declaration, acceleration or otherwise;
5.2 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;
5.3 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;
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5.4 If any representation or warranty made by or on behalf of
Borrower, 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;
5.5 If a draw is made under any payment or performance bond issued for
the account of Borrower;
5.6 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;
5.7 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;
5.8 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;
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 Term Loans and/or
the Loans or any portion thereof 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.
SECTION 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
Lender is hereby authorized by Borrower and the 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
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Borrower held at, or in transit to, any of its offices for the account of
Borrower and/or 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)
Lender or any holder may exercise its 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.
SECTION 7. REMEDIES ON DEFAULT, ETC.
7.1 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.
7.2 Upon the occurrence of a Default or Event of Default the Borrower
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 Lender pursuant to this Agreement.
SECTION 8. CUMULATIVE REMEDIES; NO WAIVERS, ETC.
No right, power or remedy granted to Lender 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 Lender of any one or more of such
rights, powers or remedies, shall not preclude the simultaneous or later
exercise by Lender of any or all of such other rights, powers or remedies. No
waiver by, nor any failure or delay on the part of Lender 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 Lender's rights to later require the strict performance or observance of
such covenants or conditions, or otherwise prejudice Lender's rights, powers or
remedies.
SECTION 9. PARTIAL INVALIDITY; WAIVERS.
9.1 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
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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.
9.2 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.
9.3 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.
9.4 BORROWER ACKNOWLEDGES 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.
NOTWITHSTANDING, BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE, JUDICIAL HEARING
OR PRIOR COURT ORDER TO WHICH IT 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 LENDER OF ANY
PREJUDGMENT REMEDY BY REASON OF THIS COMMERCIAL REVOLVING CREDIT AND SECURITY
AGREEMENT, OR BY REASON OF BORROWER'S OBLIGATIONS OR ANY RENEWALS OR EXTENSIONS
OF THE SAME. BORROWER ALSO WAIVES ANY AND ALL OBJECTION WHICH IT MIGHT OTHERWISE
ASSERT, NOW OR IN THE FUTURE, TO THE EXERCISE OR USE BY LENDER OF ANY RIGHT OF
SETOFF, REPOSSESSION OR SELF HELP AS MAY PRESENTLY EXIST UNDER STATUTE OR COMMON
LAW.
9.5 BORROWER SPECIFICALLY WAIVES AND RELINQUISHES ANY CLAIM TO
INCIDENTAL AND/OR CONSEQUENTIAL DAMAGES ARISING IN ANY WAY OUT OF AN ALLEGED
BREACH HEREOF BY LENDER AND AGREES THAT DAMAGES FOR WHICH LENDER MAY BE LIABLE,
IF ANY, SHALL BE LIMITED TO THOSE DIRECT DAMAGES PROVEN TO HAVE BEEN SUFFERED BY
BORROWER ARISING DIRECTLY FROM SUCH BREACH.
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SECTION 10. EXPENSES/INDEMNITY.
Borrower agrees that it shall:
10.1 pay or reimburse Lender 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 Lender's special counsel 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;
10.2 indemnify and save Lender harmless from, and pay or reimburse
Lender for, all charges, costs, damages, liabilities and expenses, including
reasonable attorneys' fees, if any, incurred by Lender relating to:
(A) the Notes or any of the other Documents;
(B) the exercise by the Lender of any of its rights, remedies or
powers hereunder, the Notes or any of the other Documents;
(C) 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;
(D) the performance of any obligation of Borrower or Guarantor in
connection herewith;
(E) 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;
(F) the prosecution or defense of any action or proceeding
concerning any matter growing out of or connected with this Agreement or the
other Documents;
(G) 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
any environmental condition within, on, from, related to, or attaching to any
such property;
(H) any Release or threatened Release of any Hazardous Substance
from any 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;
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(I) any violation or claim of violation of any Environmental Law
by the Borrower or their operations or other activities;
(J) 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;
(K) 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 Lender's discretion, Borrower shall defend (with
counsel satisfactory to the Lender) Lender against those Indemnified Liabilities
which the Lender shall choose Borrower to defend Lender against (provided, that,
it is understood and agreed that all reasonable costs and expenses of counsel
incurred by Lender 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 Lender.
10.3 allow Lender, in Lender's discretion, after ten (10) days prior
written notice and Borrowers 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 Lender.
SECTION 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.
SECTION 12. FAILURE TO PERFORM.
If Borrower fails to observe or perform any of the covenants hereof, Lender
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 Lender's option, by the
making of additional advances, including without limitation, Revolving
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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 Lender. The provisions of this Section and
any such action by Lender shall not prevent any default in the observance or
performance of any covenant hereof from constituting an Event of Default
hereunder.
SECTION 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:
(A) if to Lender:
BankBoston, N.A.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx, Director
with a copy to:
Xxxxxx & Sable
000 Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
or at such other address as may have been furnished in writing by Lender to
Borrowers; or
(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.
SECTION 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.
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SECTION 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(s) to the jurisdiction of the Courts of the State of Connecticut and
agree(s) to be personally bound by the decisions of the Court of the State of
Connecticut.
SECTION 16. SUPERCEDURE. To the extent there is any inconsistency between
the terms of this Agreement and any other Document, this Agreement shall
control.
SECTION 17. 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.
SECTION 18. 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.
SECTION 19. 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 Loan Documents
and that no rule of strict construction shall be used against the Lender with
respect to any of the Loan Documents.
SECTION 20. 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 which together shall
constitute one and the same instrument.
SECTION 21. THIRD PARTIES. This Agreement is between each Lender and
Borrower and Guarantor only and shall not be relied upon by any third party.
Without limiting the foregoing, Lender 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 Lender, 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.
SECTION 22. TIME OF THE ESSENCE. Time is of the essence for the performance
by the Borrower of any of Borrower's obligations set forth in this Agreement.
SECTION 23. 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.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
on the day first above mentioned.
BANKBOSTON, N.A.
By /s/ Xxxxx Xxxxxxx
-----------------------------------
Xxxxx Xxxxxxx
Its Director
ACMAT CORPORATION
By /s/ Xxxxx Xxxxx Xx.
-----------------------------------
Its COO
ACSTAR HOLDINGS, INC.
By /s/ Xxxxx Xxxxx Xx.
-----------------------------------
Its Pres.
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SCHEDULE OF EXHIBITS
Section
Reference Exhibit Subject
1.1(A) A Revolving Note
1.1(B) B Term Note
1.3 C Request for Advance
1.5(A) D Notice of Interest Rate Election
3.5 E Covenant Compliance Certificate
SCHEDULE OF SCHEDULES
2.3 Borrower Capitalization, Business and Subsidiaries
2.4 Guarantor Capitalization, Business and Subsidiaries
2.9 Title to Properties and Assets, Liens, etc.
2.10 Patents, Trademarks
2.11 Litigation
2.13 Tax Returns and Payments
2.18 Shareholder Agreements
2.25 Environmental
2.26 Subsidiaries
2.28 Special Representations and Warranties re insurance subsidiaries
2.30 Environmental
4.1 Restrictions on Liens
4.3 Restrictions on Investments, Loans, etc.
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APPENDIX I
As used herein, the following terms have the following meanings:
ADVANCE: an advance under the Revolving Credit.
ADJUSTED CASH FLOW: Cash Flow plus allowable dividends permitted to be paid
to Borrower by its Subsidiaries plus management and underwriting fees paid to
Borrower by its Subsidiaries plus rent paid to Borrower by its Subsidiaries plus
tax sharing payments paid to Borrower by its Subsidiaries (in all cases, not
requiring regulatory approval).
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.
AGREEMENT: this Commercial Credit Agreement, as it may be amended from time
to time.
BASE RATE: an Index Lender uses to set interest rates on certain types of
loans and is not necessarily the lowest rate Lender charges its customers.
Lender's Base 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 Base Rate changes.
BASE RATE ADVANCE: any Loan or portion thereof bearing interest at the Base
Rate.
BORROWER(S): 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.
CASH FLOW: Borrower's unconsolidated net income for an accounting period
before provision for payment of Interest Expense and all income taxes plus
depreciation and amortization to the extent deducted from such net income during
such accounting period, all as determined by GAAP less capital expenditures less
income taxes paid in cash less dividends paid.
CONDITIONS PRECEDENT: the meaning specified in Section 1.2.
DEBT SERVICE: for any period, the sum of (i) Interest Expense, (ii)
Principal Amortization and (iii) scheduled payments by Borrower on its
capitalized leases.
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.
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DOCUMENTS: this Agreement, the Revolving Note, Term Note, 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 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.
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EVENT OF DEFAULT: the meaning specified in Section 5.
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.
FLEET AGREEMENTS: various documents evidencing present indebtedness of
Borrower to Fleet National Bank, all of which shall be fully discharged with the
proceeds of the Loans.
FUNDED DEBT: aggregate consolidated Indebtedness of Borrower for borrowed
money but excluding Indebtedness owing to the Sheetmetal Workers National
Pension Fund or any refinance of the same.
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 1.8.
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, 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
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Section 3.2, 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, 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.
provided, however, that:
(i) 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;
(ii) 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;
(iii) any Interest Period that would otherwise end after the
Termination Date or the Maturity Date shall end on the Termination Date or the
Maturity Date as the case may be; and
(iv) 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.
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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:
(i) 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
Base 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.
(ii) 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 Base 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.
(iii) 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.
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LOANS: the meaning specified in Section 1.4.
LONDON 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.
MATURITY DATE: December 31, 2003.
NAIC: National Association of Insurance Commissioners.
NOTE(S): the Revolving Note and/or the Term 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 Lender 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.
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 Base Rate as of the applicable
date.
LIBOR Advances may be converted into advances bearing interest relating to
the Base 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.
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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.
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 3.13(B).
REVOLVING CREDIT: the credit facility described in Section 1.1(A).
REVOLVING NOTE: the meaning specified in Section 1.1(A)
SPILL: the meaning specified in Section 3.9(A).
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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: the meaning specified in Section 1.1(B)
TERM NOTE: the meaning specified in Section 1.1(B)
TERMINATION DATE: December 31, 2000.
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