EXHIBIT 10.8
Execution Copy
NORTH POINTE HOLDINGS CORPORATION
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF JANUARY 26, 2004
COMERICA BANK, AS AGENT
EXHIBITS
A FORM OF REQUEST FOR REVOLVING CREDIT ADVANCE
B FORM OF REVOLVING CREDIT NOTE
C NOTICE OF TERM RATE
D TERM NOTE
E PERCENTAGES
F FORM OF COVENANT COMPLIANCE REPORT
G FORM OF ASSIGNMENT AGREEMENT
H FORM OF GUARANTY
I FORM OF SWING LINE NOTE
J FORM OF SWING LINE REQUEST FOR ADVANCE
K FORM OF SWING LINE BANK PARTICIPATION CERTIFICATE
SCHEDULES
5.4 Exceptions to Litigation Covenant
5.6 Pension Plans
5.10 Subsidiaries
5.11 Exceptions Compliance with Laws Covenant
5.16 Existing Debt
5.18 Equity Interests
7.4 Additional Permitted Indebtedness
7.6 Existing Investments
7.7 Additional Permitted Encumbrances
7.10 Affiliate Transactions
12.6 Notice Addresses
CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("Agreement') is made as of the 26th day of January,
2004, by and among the lenders party hereto from time to time (individually, a
"Bank", and collectively the "Banks"), Comerica Bank, as agent for the Banks (in
such capacity, "Agent'), and North Pointe Holdings Corporation, a Michigan
corporation ("Company').
RECITALS
A. Company, Agent and Bank entered into a Credit Agreement dated June
14, 2002 which has been amended by two amendments (the "Existing Credit
Agreement').
B. Company, Agent and the Banks desire to amend and restate the
Existing Credit Agreement in its entirety and to add Bank One, N.A. as a Bank.
NOW, THEREFORE, Company, Agent and Banks agree that the Existing Credit
Agreement is amended and restated as follows:
1. DEFINITIONS
For the purposes of this Agreement the following terms will have the
following meanings:
"Acquisition" shall mean the acquisition by Company of all of the issued
and outstanding shares of stock of Queensway International Indemnity Corporation
("QIIC") pursuant to the terms of the Agreement of Purchase and Sale between
Ernst & Young, Inc., as Interim Receiver of Queensway Financial Holdings Limited
and Queensway Holdings, Inc. and not in its personal or corporate capacity, as
Seller and North Pointe Financial Services, Inc., a wholly owned subsidiary of
Company, as purchaser.
"Advance(s)" shall mean Revolving Credit Advance(s) and Swing Line
Advance(s).
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and executive officers of such Person), controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control a
corporation for the purposes of this definition if such Person possesses,
directly or indirectly, the power (i) to vote 10% or more of the securities
having ordinary voting power for the election of directors of such corporation
or (ii) to direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" shall mean Comerica Bank, in its capacity as agent hereunder, or
any successor agent appointed in accordance with Section 11.4 hereof.
"Agent's Fees" shall mean those agency and other fees and expenses
required to be paid by Company to Agent under Section 11.7 hereof.
"Alternate Base Rate" shall mean, for any day, an interest rate per annum
equal to the Federal Funds Effective Rate in effect on such day, plus one
percent (1%).
"Applicable Interest Rate" shall mean (i) in respect of Revolving Credit
Advances and the Term Loan, the Eurodollar-based Rate or the Prime-based Rate
applicable to such Advance or portion of the Term Loan (in the case of a
Eurodollar-based Advance or a portion of the Term Loan with respect to which the
interest rate is the Eurodollar-based Rate, for the relevant Interest Period),
and (ii) in respect of Swing Line Advances, the Prime-based Rate and the Quoted
Rate, in each case as selected by Company from time to time subject to the terms
and conditions of this Agreement.
"Applicable Eurodollar Margin" shall mean (i) two and one half percent
(2-1/2%) with respect to the Revolving Credit and (ii) two and three quarters
percent (2-3/4%) with respect to the Term Loan.
"Applicable Prime Margin" shall mean (i) one quarter of one percent (1/4%)
with respect to the Revolving Credit and (ii) zero percent (0%) with respect to
the Term Loan.
"Banks" shall mean Comerica Bank and such other lenders from time to time
parties hereto as lenders and shall include the Revolving Credit Banks, the Term
Loan Banks and any assignee which becomes a Bank pursuant to Section 12.8
hereof.
"Best" shall mean A.M. Best Company and its successors.
"BMP Limit" shall initially mean Four Hundred Thousand Dollars ($400,000)
until May 31, 2004. On the 31st day of each May (commencing May 31, 2004), the
BMP Limit shall increase by an amount equal to five percent (5%) of the BMP
Limit then in effect.
"Business Day" shall mean any day on which commercial banks are open for
domestic and international business in Detroit, London and New York.
"Capital Expenditure" shall mean, without duplication, any payment made
directly or indirectly for the purpose of acquiring or constructing fixed
assets, real property or equipment which in accordance with GAAP would be added
as a debit to the fixed asset account of the Person making such expenditure,
including, without limitation, amounts paid or payable under any conditional
sale or other title retention agreement or under any lease or other periodic
payment arrangement which is of such a nature that payment obligations of the
lessee or obligor thereunder would be required by GAAP to be capitalized and
shown as liabilities on the balance sheet of such lessee or obligor.
"Capital Lease" of any Person shall mean any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in conformity
with GAAP, is, or is required to be accounted for as a capital lease on the
balance sheet of that Person, together with any renewals of such leases (or
entry into new leases) on substantially similar terms.
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"Cash and Cash Equivalents" shall mean as of any date, (a) cash that is
then owned by Company and (b) any of the following then owned by Company: (i)
commercial paper of any United States issuer having a rating of P-1 (or the
equivalent thereof) or higher then given by Xxxxx'x Investors Service Inc. or
A-1 (or the equivalent thereof) or higher then given by Standard & Poor's
Ratings Group, (ii) direct obligations of, and obligations fully guaranteed by,
the United States of America, and (iii) certificates of deposit of any
commercial bank that is a member of the Federal Reserve System and that has
capital surplus and undivided profits (as shown on its most recently published
statement of condition) aggregating not less than $100,000,000 provided that
each of the foregoing has a maturity date not later than 180 days after the date
of acquisition thereof by Company.
"Claims Incurred" means the aggregate of all claims paid during an
accounting period adjusted by the change in claims reserved for that accounting
period together with the related loss adjustment expense and shall be determined
on a combined basis for Company's Insurance Subsidiaries.
"Claims Ratio" or "Loss Ratio" means Claims Incurred, net of reinsurance,
expressed as a percentage of net earned premiums and shall be determined on a
combined basis for Company's Insurance Subsidiaries.
"Collateral" shall mean all property or rights in which a security
interest, mortgage, lien or other encumbrance for the benefit of the Banks is or
has been granted or arises or has arisen, under or in connection with this
Agreement, the other Loan Documents, or otherwise.
"Collateral Documents" shall mean the Guaranties, the Pledge Agreements
and all of the other acknowledgments, certificates, stock powers, financing
statements, instruments and other security documents executed by Company, any
Subsidiary or any other Person in favor of the Agent for the benefit of the
Banks and delivered to the Agent, as security for the Indebtedness, in each case
as of the date of execution of this Agreement or, from time to time, subsequent
thereto, in connection with the Guaranties, the Pledge Agreements, this
Agreement and the other Loan Documents, in each case, as such collateral
documents may be amended or otherwise modified from time to time.
"Combined Ratio" means the sum of the Claims Ratio plus the Expense Ratio
and shall be determined on a combined basis for Company's Insurance
Subsidiaries. For greater certainty, the method of calculating the Combined
Ratio and its component elements shall be consistent with the normal basis of
Best or another accredited rating agency which is designated by the Company and
is acceptable to the Agent and the Banks. The Combined Ratio shall be measured
based on the four preceding fiscal quarters ending on the applicable date of
determination.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with Company within the meaning of
Section 4001 of ERISA or which is part of a group which includes Company and
which is treated as a single employer under Section 414 of the Internal Revenue
Code.
"Company" shall mean North Pointe Holdings Corporation, a Michigan
corporation.
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"Company Pledge Agreement" shall mean the Amended and Restated Pledge
Agreement (Holdings) dated as of the date hereof pursuant to which Company
grants to Agent and the Banks a first priority security interest in all of the
issued and outstanding Equity Interests of its Subsidiaries, as may be amended
from time to time.
"Consolidated" or "Consolidating" shall mean, when used with reference to
any financial term in this Agreement, the aggregate for two or more Persons of
the amounts signified by such term for all such Persons determined on a
consolidated basis in accordance with GAAP. Unless otherwise specified herein,
references to Consolidated financial statements or data of Company includes
consolidation with its Subsidiaries in accordance with GAAP.
"Consolidated Net Income" shall mean, for any period of determination, the
net income (but not loss) of Company and its consolidated Subsidiaries for such
period determined in accordance with GAAP.
"Consolidated Tangible Capital Funds" shall mean as of any date of
determination, the book net worth of Company and its Consolidated Subsidiaries
as of such date, less goodwill and other intangible assets as of such date, plus
the outstanding principal amount of the Subordinated Debt as of such date, all
as determined in accordance with GAAP.
"Contractual Obligation" shall mean as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Covenant Compliance Report" shall mean the report to be furnished by
Company to the Agent, in the form of attached Exhibit "F" and certified by a
Responsible Officer of Company and pursuant to Section 8.2, hereof, in which
report Company shall set forth, among other things, detailed calculations and
the resultant ratios or financial tests with respect to the financial covenants
contained in Sections 8.16 through 8.19 of this Agreement.
"Debt" shall mean, as of any applicable date of determination, all items
of indebtedness, obligation or liability of a Person, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, that should be classified as liabilities in
accordance with GAAP, including without limitation, any items so classified on a
balance sheet and any reimbursement obligations in respect of letters of credit,
obligations in respect of bankers acceptances, provided, however that for
purposes of calculating the aggregate Debt of such Person and its Subsidiaries
(if any), the direct and indirect and absolute and contingent obligations of
such Person (whether direct or contingent) shall be determined without
duplication.
"Default" shall mean any event which with the giving of notice or the
passage of time, or both, would constitute an Event of Default under this
Agreement.
"Dollars" and the sign "$" shall mean lawful money of the United States of
America.
"Equity Interests" means, with respect to any Person, any and all shares,
share capital, interests, participations, warrants, options or other equivalents
(however designated) of capital
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stock of a corporation and any and all equivalent ownership interests in a
Person (other than a corporation).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, or any successor act or code and the regulations in effect from time to
time thereunder.
"Eurodollar-based Advance" shall mean a Revolving Credit Advance which
bears interest at the Eurodollar-based Rate.
"Eurodollar-based Rate" shall mean a per annum interest rate which is the
equal to the sum of the Applicable Eurodollar Margin plus the quotient of:
(a) the per annum interest rate at which Bank's Eurodollar Lending
Office offers deposits to prime banks in the eurodollar market in an
amount comparable to the relevant Eurodollar-based Advance or portion of
the Term Loan with respect to which the Eurodollar-based Rate is the
Applicable Interest Rate, as applicable, and for a period equal to the
relevant Interest Period at approximately 11:00 A.M. Detroit time two (2)
Business Days prior to the first day of such Interest Period; divided by
(b) a percentage equal to 100% minus the maximum rate on such date
at which Bank is required to maintain reserves on "Euro-currency
Liabilities" as defined in and pursuant to Regulation D of the Board of
Governors of the Federal Reserve System or, if such regulation or
definition is modified, and as long as Bank is required to maintain
reserves against a category of liabilities which includes eurodollar
deposits or includes a category of assets which includes eurodollar loans,
the rate at which such reserves are required to be maintained on such
category,
all as conclusively determined by the Agent, such sum to be rounded upward, if
necessary, to the nearest whole multiple of 1/16th of 1%.
"Eurodollar-Interest Period" shall mean the Interest Period applicable to
a Eurodollar-based Advance or portion of the Term Loan with respect to which the
Eurodollar-based Rate is the Applicable Interest Rate.
"Eurodollar Lending Office" shall mean, (a) with respect to the Agent,
Agent's office located at Grand Cayman, British West Indies or such other branch
or branches of Agent, domestic or foreign, as it may hereafter designate as a
Eurodollar Lending Office by notice to Company and the Banks, and (b) as to each
of the Banks, its office, branch or affiliate located at its address set forth
on the signature pages hereof (or identified thereon as a Eurodollar Lending
Office), or at such other office, branch or affiliate of such Bank as it may
hereafter designate as its Eurodollar Lending Office by notice to Company and
Agent.
"Event of Default" shall mean each of the Events of Default specified in
Section 10.1 hereof.
"Excluded Taxes" shall have the meaning set forth in Section 9.1.
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"Expense Ratio" means underwriting expenses, including commission and
premium taxes (other than amounts included in underwriting expenses on account
of goodwill, interest expenses of the Insurance Subsidiaries and corporate head
office and non-insurance company Subsidiaries expenses all in accordance with
SAP) incurred in operating the business of the Insurance Subsidiaries during an
accounting period expressed as a percentage of net written premiums, determined
on a combined basis for the Insurance Subsidiaries.
"Federal Funds Effective Rate" shall mean, for any day, a fluctuating
interest rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by Agent from three Federal funds brokers of recognized standing
selected by it, all as conclusively determined by the Agent, such sum to be
rounded upward, if necessary, to the nearest whole multiple of 1/16th of 1%.
"Fees" shall mean the Revolving Credit Facility Fee, the Agent's Fees and
the other fees and charges payable by Company to the Banks or Agent hereunder.
"Financial" shall mean North Pointe Financial Services, Inc., a Michigan
corporation.
"Financial Pledge Agreement" shall mean the Pledge Agreement (Financial)
dated as of the date hereof pursuant to which Financial grants to Agent for the
benefit of the Banks a first priority security interest in all of the issued and
outstanding Equity Interests of its Subsidiaries (other than North Pointe), as
amended from time to time.
"Financial Statements" shall mean all those balance sheets, earnings
statements and other financial data (whether of the Company or otherwise) which
have been furnished to the Agent or the Banks for the purposes of, or in
connection with, this Agreement and the transactions contemplated hereby.
"Fixed Charge Coverage Ratio" shall mean, as of any date of determination,
a ratio, the numerator of which is Net Income less net income from Subsidiaries
(to the extent included in Net Income when applying the equity basis of
accounting, in accordance with GAAP) plus dividends received from Subsidiaries
for the four preceding fiscal quarters ending on such date, plus, to the extent
deducted in determining Net Income, depreciation and amortization expenses (only
to the extent directly recorded in Company) for such period less to the extent
added in determining Net Income extraordinary non-cash income in relation to the
Acquisition and the denominator of which is the sum of all scheduled principal
and interest payments with respect to any Funded Debt of Company and all
payments by Company with respect to Capital Leases during such period, and the
amount of all dividends paid by Company to its shareholders during such period.
"Funded Debt" shall mean as of any date of determination, the sum, without
duplication, of (a) all indebtedness of Company and its consolidated
Subsidiaries for borrowed money or for
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the deferred purchase price of property or services as of such date (other than
trade liabilities incurred in the ordinary course of business and payable in
accordance with customary practices) or which is evidenced by a note, bond,
debenture or similar instrument, (b) all obligations of Company and its
consolidated Subsidiaries under Capital Leases as of such date, (c) all
obligations of Company and its consolidated Subsidiaries in respect of letters
of credit, acceptances or similar obligations issued or created for the account
of Company or any of its consolidated Subsidiaries as of such date, (d) all
liabilities secured by any lien on any property owned by Company and its
consolidated Subsidiaries as of such date even though Company or its
Subsidiaries, as applicable, have not assumed or otherwise become liable for the
payment thereof, (e) all obligations of Company and its consolidated
Subsidiaries arising in connection with Hedging Transactions; (f) all
liabilities of Company or any Subsidiary under any securitization, any so-called
"synthetic lease" or "tax ownership operating lease" or any other off balance
sheet transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on a balance sheet of such
Person, based on the outstanding amount of such liability if it had been
structured as a financing on the balance sheet of such person, and (g) all
obligations of others similar in character to those described in clauses (a)
through (f) of this definition for which Company or any of its Subsidiaries is
contingently liable, as obligor, guarantor, surety or in any other capacity, or
in respect of which obligations Company or any of its Subsidiaries assures a
creditor against loss or agrees to take any action to prevent any such loss
(other than endorsements of negotiable instruments for collection in the
ordinary course of business), including without limitation all reimbursement
obligations of Company or any of its Subsidiaries in respect of letters of
credit, surety bonds or similar obligations and all obligations of Company or
any of its Subsidiaries to advance funds to, or to purchase assets, property or
services from, any other Person in order to maintain the financial condition of
such other Person, other than insurance contracts issued by the Company or any
of its Subsidiaries in the ordinary course of business.
"GAAP" shall mean generally accepted accounting principles in the United
States of America, as in effect from time to time, consistently applied.
"Governmental Obligations" means noncallable direct general obligations of
the United States of America or obligations the payment of principal of and
interest on which is unconditionally guaranteed by the United States of America.
"Gross Premiums Ratio" shall mean for any Person as of any date of
determination a ratio the numerator of which is gross premiums written of such
Person for the four preceding fiscal quarters ending on such date of
determination and the denominator of which is Statutory Surplus of such Person
as of such date.
"Guarantors" shall mean Xxxxx X. Xxxxxxx, B. Xxxxxxx Xxxxxxx, Financial
and N.P. Premium.
"Guaranties" shall mean the Guaranties, in the form attached hereto as
Exhibit "H", dated as of the date hereof by the Guarantors, as amended from time
to time.
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"Hazardous Material" shall mean and include any hazardous, toxic or
dangerous waste, substance or material defined as such in (or for purposes of)
the Hazardous Material Laws.
"Hazardous Material Law(s)" shall mean all laws, codes, ordinances, rules,
regulations, orders, decrees and directives issued by any federal, state,
provincial, local, foreign or other governmental authority or body (or any
agency, instrumentality or political subdivision thereof) pertaining to
pollution or protecting the environment, or any portion thereof including,
without limitation, those relating to soil, surface, subsurface ground water
conditions and the condition of the ambient air; and any so-called "superfund"
or "superlien" law; and any other federal, state, provincial, foreign or local
statute, law, ordinance, code, rule, regulation, order or decree regulating,
relating to, or imposing liability or standards of conduct concerning, any
hazardous, toxic or dangerous waste, substance or material, as now or at any
time hereafter in effect.
"Hedging Transaction" means each interest rate swap transaction, basis
swap transaction, forward rate transaction, commodity swap transaction, equity
transaction, equity index transaction, foreign exchange transaction, cap
transaction, floor transaction (including any option with respect to any of
these transactions and any combination of any of the foregoing) entered into by
Company from time to time pursuant to an Interest Rate Protection Agreement;
provided that such transaction is entered into for risk management purposes and
not for speculative purposes.
"Hereof", "hereto", "hereunder" and similar terms shall refer to this
Agreement and not to any particular paragraph or provision of this Agreement.
"Indebtedness" shall mean without duplication all indebtedness and
liabilities (including without limitation interest, fees and other charges)
arising under this Agreement or any of the Loan Documents, whether direct or
indirect, absolute or contingent, of Company to any of the Banks (or any
Affiliate of any Bank) or to the Agent, in any manner and at any time, whether
evidenced by the Notes or arising under any of the other Loan Documents, due or
hereafter to become due, now owing or that may be hereafter be incurred by
Company to, or acquired by, any of the Banks (or any Affiliate of any Bank) or
by Agent, and any judgments that may hereafter be rendered on such indebtedness
or any part thereof, with interest according to the rates and terms specified,
or as provided by law, and any and all consolidation, amendments, renewals,
replacements, substitutions or extensions of any of the foregoing.
"Insurance Regulatory Authority" shall mean, with respect to any Insurance
Subsidiary, the insurance department or similar governmental authority charged
with regulating insurance companies or insurance holding companies, in its state
of domicile and, to the extent that it has regulatory authority over such
Insurance Subsidiary, in each other jurisdiction in which such Insurance
Subsidiary conducts business or is licensed to conduct business.
"Insurance Subsidiary" shall mean any Subsidiary of the Company, the
ability of which to pay dividends is regulated by an Insurance Regulatory
Authority or that is otherwise required to be regulated thereby in accordance
with the applicable Requirement of Law of its state of domicile.
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"Interest Period" shall mean (a) with respect to a Eurodollar-based
Advance or any portion of the Term Loan with respect to which the
Eurodollar-based Rate is the Applicable Interest Rate, one (1), two (2), three
(3) or six (6) months as selected by Company pursuant to Section 2.7 or 3.5
hereof, and (b) with respect to a Swing Line Advance carried at the Quoted Rate,
an interest period of 30 days (or any lesser number of days agreed to in advance
by Company, Agent and the Swing Line Bank or required under the last sentence of
this definition); provided, however, that any Interest Period which commences on
the last Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Each Interest Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day or, if such next succeeding
Business Day falls in the next succeeding calendar month, on the next preceding
Business Day. No Interest Period which would end after the Revolving Credit
Maturity Date shall be permitted with respect to any Advance, and no Interest
Period which would end after the Term Loan Maturity Date shall be permitted with
respect to any portion of the Term Loan. No Interest Period with respect to a
portion of the Term Loan required to be paid on any principal installment date
shall end past such principal installment date. With respect to any Quoted Rate
Advance, the last day of the applicable Interest Period shall be on or before
the last Business Day of the week in which such Advance is made.
"Interest Rate Protection Agreement" means any interest rate swap, cap,
floor, collar, forward rate agreement foreign currency agreement or other rate
protection transaction, or any combination of such transaction or agreements or
any option with respect to any such transactions or agreements now existing or
hereafter entered into between Company and any Bank or an Affiliate of a Bank.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated thereunder.
"JGP Limit" shall initially mean Six Hundred Thousand Dollars ($600,000)
until May 31, 2004. On the 31st day of each May (commencing May 31, 2004), the
JGP Limit shall increase by an amount equal to five percent (5%) of the JGP
Limit then in effect.
"Lien" shall mean any pledge, assignment, hypothecation, mortgage,
security interest, deposit arrangement, option, trust receipt, conditional sale
or title retaining contract, financing statement or comparable notice or other
filing or recording, subordination or any claim or right, or any other type of
lien, charge, encumbrance, preferential or priority arrangement or other claim
or right, whether based on common law or statute.
"Loan Documents" shall mean, collectively, this Agreement, the Notes, the
Guaranties, the Pledge Agreements, the Security Agreement, any Interest Rate
Protection Agreements and any other documents, certificates, instruments or
agreements executed pursuant to or in connection with any such document or this
Agreement, as such documents may be amended from time to time.
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"Majority Banks" shall mean (a) so long as the Revolving Credit Aggregate
Commitment is outstanding hereunder, at any time Banks holding not less than 51%
of the sum of (i) the aggregate principal amount of the Revolving Credit
Aggregate Commitment plus (ii) the aggregate principal amount of Indebtedness
then outstanding under the Term Loan and (b) if the Revolving Credit Aggregate
Commitment has been terminated, at any time Banks holding not less than 51% of
the aggregate principal amount of Indebtedness then outstanding hereunder;
provided that for purposes of determining Majority Banks, Indebtedness
outstanding under the Swing Line shall be allocated among the Banks based on
their respective Percentages; and provided, further that, unless there is only
one (1) Bank, Majority Banks must include at least two (2) Banks which are not
Affiliates of each other.
"Majority Revolving Credit Banks" shall mean (a) so long as the Revolving
Credit Aggregate Commitment is outstanding hereunder, at any time Revolving
Credit Banks holding not less than 51% of the aggregate principal amount of the
Revolving Credit Aggregate Commitment and (b) if the Revolving Credit Aggregate
Commitment has been terminated at any time Revolving Credit Banks holding not
less than 51% of the aggregate principal amount of the Indebtedness then
outstanding under the Revolving Credit; provided that for purposes of
determining Majority Banks, Indebtedness outstanding under the Swing Line shall
be allocated among the Banks based on their respective Percentages; and
provided, further that, unless there is only one (1) Bank, Majority Revolving
Credit Banks must include at least two (2) Banks which are not Affiliates of
each other.
"Majority Term Loan Banks" shall mean at any time with respect to the Term
Loan, Term Loan Banks holding not less than 51% of the aggregate principal
amount of the Indebtedness then outstanding under the Term Loan; provided that
unless there is only one (1) Bank, Majority Term Loan Banks must include at
least two (2) Banks which are not Affiliates of each other.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business or financial condition of the Company and its Subsidiaries taken as a
whole, (b) the ability of the Company to perform its obligations under this
Agreement, the Notes or any other Loan Document to which it is a party, or (c)
the validity or enforceability of this Agreement, any of the Notes or any of the
other Loan Documents or the rights or remedies of the Agent or the Banks
hereunder or thereunder.
"Multiemployer Plan" shall mean any Pension Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"NAIC" shall mean the National Association of Insurance Commissioners.
"Net Income" shall mean, for any period of determination, the net income
(but not loss) of Company for such period determined in accordance with GAAP.
"N.P. Premium" shall mean N.P. Premium Finance Company, a Michigan
corporation.
"Net Premium Ratio" shall mean for any Person as of any date of
determination a ratio the numerator of which is Net Written Premiums of such
Person for the four preceding fiscal
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quarters ending on such date of determination and the denominator of which is
Statutory Surplus of such Person as of such date.
"Net Written Premiums" shall mean with respect to any Subsidiary of the
Company, such Subsidiary's gross written premiums, plus reinsurance assumed
premiums less reinsurance ceded premiums.
"North Pointe" shall mean North Pointe Insurance Company, a Michigan
insurance company.
"Notes" shall mean the Revolving Credit Notes, the Swing Line Notes and
the Term Notes and "Note" shall mean any of them.
"Notice of Term Rate" shall mean a Notice of Term Rate issued by Company
under this Agreement in the form annexed to this Agreement as Exhibit "C".
"Pension Plan(s)" shall mean all employee pension benefit plans of Company
or its Subsidiaries, as defined in Section 3(2) of ERISA.
"Percentage" shall mean, as applicable, the Revolving Credit Percentage,
the Term Loan Percentage, or the Weighted Percentage.
"Permitted Encumbrances" shall mean with respect to any Person:
(a) the Liens granted under or established by this Agreement or
the Loan Documents;
(b) Liens for taxes not yet delinquent or which are being
contested in good faith by appropriate proceedings diligently pursued,
provided that provision for the payment of all such taxes has been made on
the books of such Person as may be required by GAAP;
(c) mechanics', materialmen's, banker's, carriers', landlord's,
warehousemen's and similar Liens arising in the ordinary course of
business and securing obligations of such Person that are not overdue for
a period of more than 60 days or are being contested in good faith by
appropriate proceedings diligently pursued, provided that in the case of
any such contest (i) any proceedings commenced for the enforcement of such
Liens shall have been duly suspended; and (ii) provision for the payment
of such Liens has been made on the books of such Person as may be required
by GAAP;
(d) Liens arising in connection with worker's compensation,
unemployment insurance, old age pensions and social security benefits and
similar statutory obligations which are not overdue or are being contested
in good faith by appropriate proceedings diligently pursued, provided that
in the case of any such contest (i) any proceedings commenced for the
enforcement of such Liens shall have been duly suspended; and (ii)
provision for the payment of such Liens has been made on the books of such
Person as may be required by GAAP;
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(e) (i) Liens incurred in the ordinary course of business to
secure the performance of statutory obligations arising in connection with
progress payments or advance payments due under contracts with the United
States government or any agency thereof entered into in the ordinary
course of business and (ii) Liens incurred or deposits made in the
ordinary course of business to secure the performance of statutory
obligations, bids, leases, fee and expense arrangements with trustees and
fiscal agents and other similar obligations (exclusive of obligations
incurred in connection with the borrowing of money, any lease-purchase
arrangements or the payment of the deferred purchase price of property),
provided that full provision for the payment of all such obligations set
forth in clauses (i) and (ii) has been made on the books of such Person as
may be required by GAAP; and
(f) survey or title exceptions or encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which do not materially interfere with the business of such
Person.
"Permitted Investments" shall mean with respect to any Person:
(a) Governmental Obligations;
(b) Obligations of a state of the United States, the District of
Columbia or any possession of the United States, or any political
subdivision thereof, which are described in Section 103(a) of the Internal
Revenue Code and are graded in any of the highest three (3) major grades
as determined by at least one Rating Agency; or secured, as to payments of
principal and interest, by a letter of credit provided by a financial
institution or insurance provided by a bond insurance company which in
each case is itself or its debt is rated in one of the highest three (3)
major grades as determined by at least one Rating Agency;
(c) Banker's acceptances, commercial accounts, demand deposit
accounts, certificates of deposit, or depository receipts issued by or
maintained with any Bank or a bank, trust company, savings and loan
association, savings bank or other financial institution whose deposits
are insured by the Federal Deposit Insurance Corporation and whose
reported capital and surplus equal at least $100,000,000, provided that
such minimum capital and surplus requirement shall not apply to demand
deposit accounts maintained by the Company or any of its Subsidiaries in
the ordinary course of business;
(d) Commercial paper rated at the time of purchase within the two
highest classifications established by not less than two Rating Agencies,
and which matures within 270 days after the date of issue;
(e) Secured repurchase agreements against obligations itemized in
paragraph (a) above, and executed by a bank or trust company or by members
of the association of primary dealers or other recognized dealers in
United States government securities, the
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market value of which must be maintained at levels at least equal to the
amounts advanced;
(f) Any fund or other pooling arrangement which exclusively
purchases and holds the investments itemized in (a) through (e) above;
(g) Securities and other investments held in its investment
portfolio which are permitted under Company's and the Insurance
Subsidiaries' then current investment policies and which are permitted
under applicable law.
"Person" shall mean an individual, corporation, limited liability company,
partnership, trust, incorporated or unincorporated organization, joint venture,
joint stock company, or a government or any agency or political subdivision
thereof or other entity of any kind.
"Pledge Agreements" shall mean the Financial Pledge Agreement and the
Company Pledge Agreement.
"Preferred Shares" shall mean the shares of stock of the Company
identified as Preferred Shares in the Restated Articles of Incorporation of the
Company, as amended or modified from time to time.
"Preferred Shares Subordination Agreement" shall mean the Subordination
Agreement dated June 14, 2002 from Strength Capital Partners, L.P., a Delaware
limited partnership, in its capacity as holder of the Preferred Shares in favor
of the Agent, for the benefit of the Banks, as the same maybe amended or
modified from time to time.
"Prime Rate" shall mean the per annum rate of interest announced by the
Agent, at its main office from time to time as its "prime rate" (it being
acknowledged that such announced rate may not necessarily be the lowest rate
charged by the Agent, to any of its customers), which Prime Rate shall change
simultaneously with any change in such announced rate.
"Prime-based Advance" shall mean an Advance which bears interest at the
Prime-based Rate.
"Prime-based Rate" shall mean, for any day, that per annum rate of
interest which is equal to the greater of (i) the Prime Rate less the Applicable
Prime Margin, or (ii) the Alternate Base Rate.
"Quoted Rate" shall mean the rate of interest per annum offered by the
Swing Line Bank in its sole discretion with respect to a Swing Line Advance.
"Quoted Rate Advance" means any Swing Line Advance which bears interest at
the Quoted Rate.
"Rating Agency" shall mean the NAIC Securities Valuation Office.
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"Regulatory Agency" shall mean any state board, commission, department or
other regulatory body which regulates insurance companies or insurance holding
companies.
"Request for Revolving Credit Advance" shall mean a Request for Revolving
Credit Advance issued by Company under Section 2.7 of this Agreement in the form
annexed hereto as Exhibit "A".
"Request for Swing Line Advance" shall mean a request for a Swing Line
Advance issued by Company under Section 2.5 of this Agreement in the form
annexed as Exhibit "J".
"Required Rating" shall mean "B+".
"Requirement of Law" shall mean as to any Person, the certificate of
incorporation and bylaws, the partnership agreement or other organizational or
governing documents of such Person and any law, treaty, rule or regulation or
determination of an arbitration or a court or other governmental authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer" shall mean the chief executive officer, chief
financial officer or the president or vice president of Company, or any other
officer having substantially the same authority and responsibility; or with
respect to the Covenant Compliance Certificate, the chief financial officer or
the treasurer of Company, or any other officer having substantially the same
authority and responsibility.
"Revolving Credit" shall mean the revolving credit loan to be advanced to
the Company by the Revolving Credit Banks pursuant to Article 2 hereof, in an
aggregate amount (subject to the terms hereof), not to exceed, at any one time
outstanding, the Revolving Credit Aggregate Commitment.
"Revolving Credit Advance" shall mean a borrowing requested by Company and
made by the Banks under Section 2.1 of this Agreement, including without
limitation any readvance, refunding or conversion of such borrowing pursuant to
Section 2.7, and shall include, as applicable, a Eurodollar-based Advance and/or
Prime-based Advance.
"Revolving Credit Aggregate Commitment" shall mean Six Million Dollars
($6,000,000) subject to reduction or termination under Section 2.13, 3.8 or 8.2
hereof.
"Revolving Credit Banks" shall mean the financial institutions from time
to time parties hereto as lenders of the Revolving Credit.
"Revolving Credit Facility Fee" shall mean the fees payable to Agent for
distribution to the Revolving Credit Banks pursuant to Section 2.11 hereof.
"Revolving Credit Maturity Date" shall mean the earlier to occur of (i)
February 1, 2006, and (ii) the date on which the Revolving Credit Aggregate
Commitment shall be terminated pursuant to Section 2.13 or Section 8.2 hereof.
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"Revolving Credit Notes" shall mean the revolving credit notes described
in Section 2.1 hereof, made by Company to each of the Revolving Credit Banks in
the form annexed to this agreement as Exhibit "B", as such notes may be amended
or supplemented from time to time in accordance with the terms of this
Agreement, and any other notes issued in substitution, replacement or renewal
thereof from time to time.
"Revolving Credit Percentage" shall mean with respect to each Revolving
Credit Bank, its percentage share, as set forth on Exhibit "E" under column 1,
of the Revolving Credit as such Schedule may be revised from time to time by
Agent in accordance with Section 12.8.
"SAP" or "Statutory Accounting Principles" shall mean, with respect to any
Insurance Subsidiary, the statutory accounting practices or practices prescribed
or permitted by the relevant Insurance Regulatory Authority of its state of
domicile, consistently applied and maintained and in conformity with those used
in the preparation of the most recent historical financial statements after
giving effect to any changes in such principles and practices from time to time.
"Security Agreement" shall mean the Security Agreement dated January 26,
2004 from certain of the Guarantors in favor of the Agent for the benefit of the
Banks, as amended from time to time.
"Statutory Surplus" of any Person shall mean the statutory surplus of such
Person computed in the manner required for page 3, column 1, line 25 of its
annual statement of condition and affairs prepared in accordance with SAP.
"Subsidiary Pledge Agreement" shall mean the Pledge Agreement (Subsidiary)
dated as of the date hereof pursuant to which Financial grants to Agent and the
Banks a first priority security interest in all of the issued and outstanding
Equity Interests of its Subsidiaries (except North Pointe), as the same may be
amended from time to time.
"Subordinated Debt" shall mean Debt of Company or a Subsidiary which has
been subordinated in right of payment and priority to the Indebtedness, all on
terms and conditions satisfactory to the Agent and the Banks.
"Subordinated Debt Documents" shall mean any documents evidencing
Subordinated Debt, in each case, as the same may be amended, modified or
supplemented from time to time in compliance with the terms of this Agreement.
"Subsidiary(ies)" shall mean any other corporation, limited liability
company, association, joint stock company, or business trust of which more than
fifty percent (50%) of the outstanding voting stock or share capital is owned
either directly or indirectly by any Person or one or more of its Subsidiaries,
or the management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by any Person and/or its
Subsidiaries. Unless otherwise specified to the contrary herein, Subsidiary(ies)
shall refer to the Company's Subsidiary(ies).
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"Swing Line" shall mean the revolving credit loans to be advanced to the
Company by the Swing Line Bank pursuant to Section 2.15 hereof, in an aggregate
amount (subject to the terms hereof), not to exceed, at any one time
outstanding, the Swing Line Maximum Amount.
"Swing Line Advance" shall mean a borrowing made by Swing Line Bank to the
Company pursuant to Section 2.15 hereof.
"Swing Line Bank" shall mean Comerica Bank in its capacity as lender under
Section 2.15 of this Agreement or its successor as lender of the Swing Line.
"Swing Line Maximum Amount" shall mean One Million Two Hundred Fifty
Thousand Dollars ($1,250,000).
"Swing Line Notes" shall mean the Swing Line notes which may be issued by
the Company at the request of Swing Line Bank pursuant to Section 2.15(a) hereof
in the form annexed hereto as Exhibit 1, as the case may be, as such Notes may
be amended or supplemented from time to time, and any notes issued in
substitution, replacement or renewal thereof from time to time.
"Term Loan" shall mean the term loans extended by the Term Loan Banks to
Company in the aggregate principal amount of Twelve Million Dollars
($12,000,000) pursuant to Section 3 of this Agreement.
"Term Loan Banks" shall mean the financial institutions from time to time
parties hereto as lenders of the Term Loan.
"Term Loan Maturity Date" shall mean February 1, 2009.
"Term Notes" shall mean the term notes described in Section 3.1 of this
Agreement made by Company to each of the Term Loan Banks in the form annexed to
this Agreement as Exhibit "D", as such notes may be amended or supplemented from
time to time in accordance with the terms of this Agreement, and any other notes
issued in substitution, replacement or renewal thereof from time to time.
"Term Loan Percentage" shall mean with respect to any Term Loan Bank, its
percentage share of the Term Loan as set forth on Exhibit "E" under column 2, as
such Schedule may be revised from time to time by Agent accordance with Section
12.8.
"Transaction" shall mean the transactions relating to the Acquisition, as
described by the Transaction Documents.
"Transaction Documents" shall mean all documents and instruments executed
and delivered in connection with the Acquisition.
"UCC" shall mean the Uniform Commercial Code, as in effect from time to
time in the State of Michigan.
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"Universal" shall mean Universal Fire and Casualty Insurance Company, an
Indiana insurance company.
"Weighted Percentage" shall mean with respect to any Bank, its Percentage
share as set forth in Exhibit "E" under column 3, as such Schedule may be
revised by the Agent from time to time, which Percentage shall be calculated as
follows:
(a) as to such Bank, so long as the Revolving Credit Aggregate
Commitment is outstanding hereunder, a percentage calculated by taking as
the numerator the sum of its Revolving Credit Percentage of the Revolving
Credit Aggregate Commitment plus its Term Loan Percentage of the
Indebtedness outstanding under the Term Loan, and taking as the
denominator the sum of the Revolving Credit Aggregate Commitment plus the
aggregate principal amount of Indebtedness outstanding under the Term
Loan; and
(b) as to such Bank, if the Revolving Credit Aggregate Commitment
has been terminated, its weighted percentage calculated by taking as the
numerator the sum of its Revolving Credit Percentage of the aggregate
principal amount outstanding under the Revolving Credit (expressed in
Dollars) plus its Term Loan Percentage of the Indebtedness outstanding
under the Term Loan and taking as the denominator the sum of the aggregate
principal amount outstanding under the Revolving Credit and the Term Loan.
2. REVOLVING CREDIT.
2.1 Revolving Credit Commitment. Subject to the terms and conditions of
this Agreement, each Revolving Credit Bank severally and for itself alone agrees
to make Advances of the Revolving Credit to Company from time to time on any
Business Day during the period from the effective date hereof until (but
excluding) the Revolving Credit Maturity Date in an aggregate amount not to
exceed at any one time outstanding each such Revolving Credit Bank's Percentage
of the Revolving Credit Aggregate Commitment, less such Bank's Percentage of the
Swing Line Advances then outstanding. All of such Advances hereunder shall be
evidenced by the Revolving Credit Notes, under which advances, repayments and
readvances may be made, subject to the terms and conditions of this Agreement.
2.2 Accrual of Interest and Maturity. The Revolving Credit Notes, and
all principal and interest outstanding thereunder, shall mature and become due
and payable in full on the Revolving Credit Maturity Date, and each Advance
evidenced by the Revolving Credit Notes from time to time outstanding hereunder
shall, from and after the date of such Advance, bear interest at its Applicable
Interest Rate. The amount and date of each Revolving Credit Advance, its
Applicable Interest Rate, its Interest Period, and the amount and date of any
repayment shall be noted on Agent's records, which records will be conclusive
evidence thereof, absent manifest error; provided, however, that any failure by
the Agent to record any such information shall not relieve Company of its
obligation to repay the outstanding principal amount of such Advance, all
interest accrued thereon and any amount payable with respect thereto in
accordance with the terms of this Agreement and the Loan Documents.
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2.3 Prime-based Interest Payments. Interest on the unpaid balance of all
Prime-based Advances and all Swing Line Advances carried at the Prime-based Rate
from time to time outstanding shall accrue from the date of such Advances to the
Revolving Credit Maturity Date (and until paid), at a per annum interest rate
equal to the Prime-based Rate, and shall be payable in immediately available
funds quarterly commencing on the fifteenth day of the calendar quarter next
succeeding the calendar quarter during which the initial Advance of the
Revolving Credit or Swing Line Advance, as the case may be, is made and on the
fifteenth day of each calendar quarter thereafter. Interest accruing at the
Prime-based Rate shall be computed on the basis of a 360 day year and assessed
for the actual number of days elapsed, and in such computation effect shall be
given to any change in the interest rate resulting from a change in the
Prime-based Rate on the date of such change in the Prime-based Rate.
2.4 Eurodollar-based Interest Payments. (a) Interest on each
Eurodollar-based Advance having a related Interest Period of three (3) months or
less shall accrue at its Eurodollar-based Rate and shall be payable in
immediately available funds on the last day of the Interest Period applicable
thereto. Interest shall be payable in immediately available funds on each
Eurodollar-based Advance outstanding from time to time having an Interest Period
of more than three (3) months, at intervals of three (3) months after the first
day of the applicable Interest Period, and shall also be payable on the last day
of the Interest Period applicable thereto. Interest accruing at the
Eurodollar-based Rate shall be computed on the basis of a 360 day year and
assessed for the actual number of days elapsed from the first day of the
Interest Period applicable thereto to, but not including, the last day thereof.
(b) Interest on each Quoted Rate Advance of the Swing Line shall
accrue at its Quoted Rate and shall be payable in immediately available
funds on the last day of the Interest Period applicable thereto. Interest
accruing at the Quoted Rate shall be computed on the basis of a 360 day
year and assessed for the actual number of days elapsed from the first day
of the Interest Period applicable thereto to, but not including the last
day thereof.
2.5 Interest Payments on Conversions. Notwithstanding anything to the
contrary in Sections 2.2, 2.3 and 2.4, all accrued and unpaid interest on any
Revolving Credit Advance refunded or converted pursuant to Section 2.7 hereof
shall be due and payable in full on the date such Advance is refunded or
converted.
2.6 Interest on Default. Notwithstanding anything to the contrary set
forth in Sections 2.3 and 2.4, in the event and so long as any Event of Default
shall exist under this Agreement, interest shall be payable monthly (or daily if
required by the Majority Revolving Credit Banks) on the principal amount of all
Advances from time to time outstanding (and on all other monetary obligations of
Company hereunder and under the other Loan Documents) at a per annum rate equal
to the Applicable Interest Rate then in effect in respect of each such Advance,
plus, in the case of Eurodollar-based Advances and Quoted Rate Advances, three
percent (3%) per annum for the remainder of the then existing Interest Period,
if any, and at all other such times and for all Prime-based Advances, at a per
annum rate equal to the Prime-based Rate then in effect, plus three percent (3%)
per annum.
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2.7 Requests for Advances and Requests for Refundings and Conversions of
Revolving Credit Advances. Company may request a Revolving Credit Advance,
refund any Revolving Credit Advance in the same type of Revolving Credit Advance
or convert any Revolving Credit Advance to any other type of Revolving Credit
Advance only after delivery to Agent of a Request for Revolving Credit Advance
executed by an authorized officer of Company subject to the following and to the
remaining provisions hereof:
(a) each such Request for Revolving Credit Advance shall set forth
the information required on the Request for Revolving Credit Advance form
annexed hereto as Exhibit "A", including without limitation:
(i) the proposed date of Revolving Credit Advance, which
must be a Business Day;
(ii) whether the Revolving Credit Advance is a refunding or
conversion of an outstanding Revolving Credit Advance;
and
(iii) whether such Revolving Credit Advance is to be a
Prime-based Advance or a Eurodollar-based Advance, and,
except in the case of a Prime-based Advance, the first
Interest Period applicable thereto;
(b) each such Request for Revolving Credit Advance shall be
delivered to Agent by 11:00 a.m. (Detroit time) three (3) Business Days
prior to the proposed date of Revolving Credit Advance, except in the case
of a Prime-based Advance, for which the Request for Revolving Credit
Advance must be delivered by 12:00 noon (Detroit time) on such proposed
date;
(c) the principal amount of such requested Revolving Credit
Advance, plus the principal amount of all other Advances of the Revolving
Credit or the Swing Line then outstanding hereunder, plus the principal
amount of all Advances of the Revolving Credit or the Swing Line requested
hereunder but not yet funded, less the principal amount of any outstanding
Advance to be refunded by the requested Revolving Credit Advance, shall
not exceed the Revolving Credit Aggregate Commitment;
(d) the principal amount of such Revolving Credit Advance, plus
the amount of any other outstanding Indebtedness under this Agreement to
be then combined therewith having the same Applicable Interest Rate and
Interest Period, if any, shall be (i) in the case of a Prime-based
Advance, at least Four Hundred Thousand Dollars ($400,000) and (ii) in the
case of a Eurodollar-based Advance, at least Five Hundred Thousand Dollars
($500,000), or any larger amount in One Hundred Thousand Dollar ($100,000)
increments, and at any one time there shall not be in effect more than
three (3) Interest Periods;
(e) each Request for Revolving Credit Advance, once delivered to
Agent, shall not be revocable by Company, and shall constitute and include
a certification by the Company as of the date thereof that:
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(i) both before and after the Revolving Credit Advance, the
obligations of the Company set forth in this Agreement
and the parties to the Loan Documents, as applicable,
are valid, binding and enforceable obligations of
Company and such parties, respectively;
(ii) to the best knowledge of Company all conditions to
Advances of the Revolving Credit have been satisfied;
(iii) both before and after the Advance, there is no Default
or Event of Default in existence; and
(iv) both before and after the Advance, the representations
and warranties contained in this Agreement and the Loan
Documents are true and correct in all material respects
(unless such representation and warranty expressly
indicates that it is being made as of a specific date in
which case such representation and warranty shall be
true and correct in all material respects as of such
specific date).
Agent, acting on behalf of the Revolving Credit Banks, may, at its option,
lend under this Section 2 upon the telephone request of an authorized officer of
a Company and, in the event Agent, acting on behalf of the Revolving Credit
Banks, makes any such Advance upon a telephone request, the requesting officer
shall, if so requested by Agent, fax to Agent, on the same day as such telephone
request, a Request for Revolving Credit Advance. Company hereby authorizes Agent
to disburse Advances under this Section 2.3 pursuant to the telephone
instructions of any person purporting to be a person identified by name on a
written list of persons authorized by the Company to make Requests for Revolving
Credit Advance on behalf of the Company. Notwithstanding the foregoing, the
Company acknowledges that Company shall bear all risk of loss resulting from
disbursements made upon any telephone request, unless the Agent disburses
Advances on the instructions of a person not purporting to be a person in the
aforementioned list or the Agent otherwise acts with gross negligence or acts in
a manner which constitutes willful misconduct. Each telephone request for an
Advance shall constitute a certification of the matters set forth in the Request
for Advance form as of the date of such requested Advance.
2.8 Disbursement of Revolving Credit Advances. (a) Upon receiving any
Request for Revolving Credit Advance from Company under Section 2.7 hereof,
Agent shall promptly notify each Revolving Credit Bank by wire, telecopy or by
telephone (confirmed by wire or telecopy) of the amount of such Revolving Credit
Advance to be made and the date such Advance is to be made by said Revolving
Credit Bank pursuant to its Percentage of the Revolving Credit Advance. Unless
such Revolving Credit Bank's commitment to make Revolving Credit Advances
hereunder shall have been suspended or terminated in accordance with this
Agreement, each Revolving Credit Bank shall send the amount of its Revolving
Credit Percentage of the Advance in same day funds in Dollars to Agent at the
office of Agent located
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at Xxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 not later than 2:00 p.m. (Detroit
time) on the date of such Advance.
(b) Subject to submission of an executed Request for Revolving
Credit Advance by Company without exceptions noted in the compliance
certification therein and to the other terms and conditions hereof, Agent
shall make available to Company the aggregate of the amounts so received
by it from the Revolving Credit Banks under this Section 2.8, in like
funds, not later than 4:00 p.m. (Detroit time) on the date of such
Revolving Credit Advance by credit to an account of Company maintained
with Agent or to such other account or third party as Company may
reasonably direct.
(c) Unless Agent shall have been notified by any Revolving Credit
Bank prior to the date of any proposed Revolving Credit Advance that such
Bank does not intend to make available to Agent such Bank's Percentage of
the Revolving Credit Advance, Agent may assume that such Revolving Credit
Bank has made such amount available to Agent on such date, as aforesaid
and may, in its sole discretion and without obligation to do so, in
reliance upon such assumption, make available to Company a corresponding
amount. If such amount is not in fact made available to Agent by such
Revolving Credit Bank in accordance with Section 2.8(a), as aforesaid,
Agent shall be entitled to recover such amount on demand from such
Revolving Credit Bank. If such Revolving Credit Bank does not pay such
amount forthwith upon Agent's demand therefor, the Agent shall promptly
notify Company, and Company shall pay such amount to Agent. Agent shall
also be entitled to recover from such Revolving Credit Bank or from
Company, as the case may be, interest on such amount in respect of each
day from the date such amount was made available by Agent to Company to
the date such amount is recovered by Agent, at a rate per annum equal to:
(i) in the case of such Revolving Credit Bank, the Federal
Funds Effective Rate for the first two (2) Business Days
such amount remains unpaid and at the rate of interest
applicable to the Revolving Credit Advances thereafter;
or
(ii) in the case of Company, the rate of interest then
applicable to the Revolving Credit Advance.
The obligation of any Revolving Credit Bank to make any Revolving Credit
Advance hereunder shall not be affected by the failure of any other Revolving
Credit Bank to make any Revolving Credit Advance hereunder, and no Revolving
Credit Bank shall have any liability to the Company, the Agent, any other Bank,
or any other party for another Revolving Credit Bank's failure to make any loan
or Revolving Credit Advance hereunder.
2.9 Prime-based Advance in Absence of Election or Upon Default. If, as
to any outstanding Eurodollar-based Advance, Agent has not received payment on
the last day of the Interest Period applicable thereto, or does not receive a
timely Request for Revolving Credit Advance meeting the requirements of Section
2.7 hereof with respect to the refunding or conversion of such Advance, or,
subject to Section 2.6 hereof, if on such day a Default or Event
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of Default shall exist, the principal amount thereof which is not then prepaid
shall be converted automatically to a Prime-based Advance and the Agent shall
thereafter promptly notify Company of said action.
2.10 Prepayment. (a) Company may prepay all or part of the outstanding
balance of any Prime-based Advance(s) at any time, provided that the amount of
any partial prepayment shall be at least One Hundred Thousand Dollars ($100,000)
and the aggregate balance of Prime-based Advance(s) remaining outstanding under
the Revolving Credit Notes shall be at least Two Hundred Fifty Thousand Dollars
($250,000). Subject to the provisions of Section 10.1, Company may prepay all or
part of any Eurodollar-based Advance (subject to not less than three (3)
Business Days' notice to Agent) provided that the amount of any such partial
prepayment shall be at least One Hundred Thousand Dollars ($100,000), and the
unpaid portion of such Advance which is refunded or converted under Section 2.7
shall be at least One Million Dollars ($1,000,000). Any prepayment made in
accordance with this Section shall be without premium, penalty or prejudice to
the right to reborrow under the terms of this Agreement.
(b) The Company may prepay all or part of the outstanding
principal of any Swing Line Advance carried at the Prime-based Rate at any
time.
(c) The Company may prepay at any time all or part of the
outstanding principal of any Swing Line Advance carried at the Quoted Rate
(subject to not less than one (1) day's notice to the Swing Line Bank)
provided that the amount of such prepayment shall be at least Ten Thousand
Dollars ($10,000) and, after giving effect to any such partial prepayment,
the aggregate unpaid portion of such Swing Line Advance shall be at least
Fifty Thousand Dollars ($50,000).
(d) Any other prepayment of all or any portion of the Revolving
Credit, whether by acceleration, mandatory or required prepayment or
otherwise, shall be subject to Section 10.1 hereof, but otherwise without
premium, penalty or prejudice.
2.11 Revolving Credit Facility Fee. From the date hereof to (but
excluding) the Revolving Credit Maturity Date, the Company shall pay to each of
the Revolving Credit Banks, a Revolving Credit Facility Fee determined by
multiplying one quarter of one percent (1/4%) per annum times the average daily
amount of the Revolving Credit Aggregate Commitment. The Revolving Credit
Facility Fee shall be payable quarterly in arrears commencing April 15, 2004,
and on the fifteenth day of each October, January, April and July thereafter and
at the Revolving Credit Maturity Date, and shall be computed on the basis of a
year of three hundred sixty (360) days and assessed for the actual number of
days elapsed. Whenever any payment of the Revolving Credit Facility Fee shall be
due on a day which is not a Business Day, the date for payment thereof shall be
extended to the next Business Day. Such Revolving Credit Facility Fee shall be
paid by Company to the Agent. Upon receipt of such payment, Agent shall make
prompt payment to each Revolving Credit Bank of its share of the Revolving
Credit Facility Fee. The Revolving Credit Facility Fee shall not be refundable
under any circumstance. The portion of the Revolving Credit Facility Fee accrued
under the Existing Credit Agreement shall be deemed to have accrued up to the
date of the execution of this Agreement and its related documents and be payable
under this Agreement.
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2.12 Reduction of Indebtedness; Revolving Credit Aggregate Commitment. If
at any time and for any reason the aggregate principal amount of Advances to
Company under the Revolving Credit and the Swing Line, which shall be
outstanding at such time, shall exceed the then applicable Revolving Credit
Aggregate Commitment, Company shall immediately reduce any pending request for
an Advance on such day by the amount of such excess and, to the extent any
excess remains thereafter, immediately repay an amount of the Advances equal to
such excess. Company acknowledges that, in connection with any repayment
required hereunder, it shall also be responsible for the reimbursement of any
prepayment or other costs required under Section 10.1 hereof; provided, however,
that Company shall, in order to reduce any such prepayment costs and expenses,
first prepay such portion of the Advances then carried as a Prime-based Advance,
if any. To the extent that, on the date any mandatory prepayment of the Advances
under this Section 2.12 is due, the Advances under the Revolving Credit Notes
are being carried, in whole or in part, at the Eurodollar-based Rate and no
Default or Event of Default has occurred and is continuing, the Company may
deposit the amount of such mandatory prepayment in a cash collateral account to
be held by the Agent, for and on behalf of the Revolving Credit Banks (which
shall be an interest-bearing account), on such terms and conditions as are
reasonably acceptable to Agent and the Majority Banks. Subject to the terms and
conditions of said cash collateral account, sums on deposit in said cash
collateral account shall be applied (until exhausted) to reduce the principal
balance of the Advances on the last day of each Interest Period attributable to
the Eurodollar-based Advances.
2.13 Optional Reduction or Termination of Revolving Credit Aggregate
Commitment. The Company may, upon at least five (5) Business Days' prior written
notice to Agent, permanently reduce the Revolving Credit Aggregate Commitment in
whole at any time, or in part from time to time, without premium or penalty,
provided that: (i) each partial reduction of the Revolving Credit Aggregate
Commitment shall be in an aggregate amount equal to at least One Million Dollars
($1,000,000) or a larger integral multiple of One Million Dollars ($1,000,000);
(ii) each reduction shall be accompanied by the payment of the Revolving Credit
Facility Fee, if any, accrued to the date of such reduction attributable to the
amount of such reduction; (iii) the Company shall prepay in accordance with the
terms hereof the amount, if any, by which the aggregate unpaid principal amount
of Revolving Credit Advances exceeds the amount of the Revolving Credit
Aggregate Commitment, taking into account the aforesaid reductions thereof,
together with accrued but unpaid interest on the principal amount of such
prepaid Advances to the date of prepayment; (iv) if the termination or reduction
of the Revolving Credit Aggregate Commitment requires the prepayment of a
Eurodollar-based Advance or Quoted Rate Advance, the termination or reduction
may be made only on the last Business Day of the then current Interest Period
applicable to such Advance; and (v) no such reduction shall reduce the Swing
Line unless Company so elects. Reductions of the Revolving Credit Aggregate
Commitment and any accompanying prepayments of the Revolving Credit Notes shall
be distributed by Agent to each Revolving Credit Bank in accordance with such
Revolving Credit Bank's Percentage thereof, and will not be available for
reinstatement by or readvance to the Company, and any accompanying payments of
Advances of the Swing Line shall be distributed by Agent to the Swing Line Bank
and will not be available for reinstatement any or readvance to Company. Any
reductions of the Revolving Credit Aggregate Commitment hereunder shall reduce
each Revolving Credit Bank's portion thereof proportionately (based upon the
applicable Revolving Credit Percentages), and shall be permanent and
irrevocable.
23
2.14 Use of Revolving Credit Proceeds. Proceeds of the Revolving Credit
(including Swing Line Advances) shall be used, subject to the terms hereof, to
finance the Transaction and to fund working capital needs of the Company.
2.15 Swing Line Advances. The Swing Line Bank shall, on the terms and
subject to the conditions hereinafter set forth (including without limitation
Section 2.15(c) hereof), make one or more advances (each such advance being a
"Swing Line Advance") to the Company, from time to time on any Business Day
during the period from the date hereof to (but excluding) the Revolving Credit
Maturity Date in an amount not to exceed in the aggregate at any time
outstanding the Swing Line Maximum Amount. The Swing Line Bank shall not make
any Swing Line Advance if it shall have received written notice from a Bank that
the conditions to the making of the Advance set forth in Section 4 have not been
satisfied. Swing Line Bank shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Company to Swing Line Bank
resulting from each Swing Line Advance of such Bank from time to time, including
the amounts of principal and interest payable thereon and paid to such Bank from
time to time. The entries made in such account or accounts of Swing Line Bank
shall, to the extent permitted by applicable law, be conclusive evidence, absent
manifest error, of the existence and amounts of the obligations of the Company
therein recorded; provided, however, that the failure of Swing Line Bank to
maintain such account, as applicable, or any error therein, shall not in any
manner affect the obligation of the Company to repay the Swing Line Advances
(and all other amounts owing with respect thereto) made to Company by Swing Line
Bank in accordance with the terms of this Agreement. Advances, repayments and
readvances under the Swing Line may be made, subject to the terms and conditions
of this Agreement. Each Swing Line Advance shall mature and the principal amount
thereof shall be due and payable by the Company in the case of any Quoted Rate
Advance, on the last day of the Interest Period applicable thereto (if any) and,
in the case of any Prime-based Advance, on the Revolving Credit Maturity Date.
The Company agrees that, upon the written request of Swing Line Bank, the
Company will execute and deliver to Swing Line Bank a Swing Line Note; provided,
that the delivery of such Swing Line Note shall not be a condition precedent to
the Effective Date.
(a) Accrual of Interest. Each Swing Line Advance shall, from time
to time after the date of such Advance, bear interest at its Applicable
Interest Rate. The amount and date of each Swing Line Advance, its
Applicable Interest Rate, its Interest Period, if any, and the amount and
date of any repayment shall be noted on Swing Line Bank's account
maintained pursuant to Section 2.15(a), which records will be conclusive
evidence thereof, absent manifest error; provided, however, that any
failure by the Swing Line Bank to record any such information shall not
relieve the Company of its obligation to repay the outstanding principal
amount of such Advance, all interest accrued thereon and any amount
payable with respect thereto in accordance with the terms of this
Agreement and the other Loan Documents.
(b) Requests for Swing Line Advances. The Company may request a
Swing Line Advance only after the delivery to Swing Line Bank of a Request
for Swing Line Advance executed by a person authorized (in a writing a
copy of which has been
24
previously delivered to the Agent) by the Company to make such requests,
subject to the following:
(i) each such Request for Swing Line Advance shall set forth
the information required on the Request for Advance form
annexed hereto as Exhibit J, including without
limitation:
(A) the proposed date of such Swing Line Advance,
which must be a Business Day;
(B) whether such Swing Line Advance is to be a
Prime-based Advance or a Quoted Rate Advance; and
(C) in the case of a Quoted Rate Advance, the duration
of the Interest Period applicable thereto.
(ii) on the proposed date of such Swing Line Advance, after
giving effect to all Swing Line Advances requested by
the Company on such date of determination, the aggregate
principal amount of all Swing Line Advances outstanding
on such date shall not exceed the Swing Line Maximum
Amount.
(iii) on the proposed date of such Swing Line Advance, after
giving effect to all Advances and Letters of Credit
requested by the Company on such date of determination,
the aggregate principal amount of all Advances of the
Revolving Credit and of the Swing Line requested or
outstanding on such date shall not exceed the then
applicable Revolving Credit Aggregate Commitment;
(iv) in the case of a Swing Line Advance that is a
Prime-based Advance, the principal amount of the initial
funding of such Advance, as opposed to any refunding or
conversion thereof, shall be at least One Hundred
Thousand Dollars ($100,000) or such lesser amount as
agreed to by Agent from time to time (unless the "Sweep
to Loan" system referred to in subsection (c) below is
in effect in which case no minimum shall apply).
(v) in the case of a Swing Line Advance that is a Quoted
Rate Advance, the principal amount of such Advance plus
any other outstanding Advances of the Swing Line to be
then combined therewith having the same Applicable
Interest Rate and Interest Period, if any, shall be at
least One Hundred Thousand Dollars ($100,000) (or a
larger integral multiple of Ten Thousand Dollars
($10,000) or such lesser amount as agreed to by Agent
from time to time, and at any one time there shall not
be in effect more than two (2) Applicable Interest Rates
and Interest Periods;
25
(vi) each such Request for Swing Line Advance shall be
delivered to the Swing Line Bank by 1:00 p.m. (Detroit
time) on the proposed date of the Advance;
(vii) each Request for Swing Line Advance, once delivered to
Swing Line Bank, shall be irrevocable by the Company,
and shall constitute and include a certification by the
Company as of the date thereof that:
(A) both before and after making such Swing Line
Advance, the obligations of the Loan Parties set
forth in this Agreement and the other Loan
Documents, are valid, binding and enforceable
obligations of such Loan Parties;
(B) all conditions to the making of Swing Line
Advances have been satisfied (both before and
after giving effect to such Advance);
(C) both before and after giving effect to such Swing
Line Advance, there is no Default or Event of
Default in existence; and
(D) both before and after giving effect to such Swing
Line Advance, the representations and warranties
contained in this Agreement and the other Loan
Documents are true and correct in all material
respects, other than any representation or
warranty that expressly speaks only as of a
different date.
(c) At the option of the Agent, subject to revocation by Agent at
any time and from time to time and only for so long as Comerica Bank is
the only Swing Line Credit Bank under this Agreement, the Company may
utilize the Agent's "Sweep to Loan" automated system for obtaining Swing
Line Advances and making periodic repayments, subject to the terms hereof.
Each time a Swing Line Advance is made using the "Sweep to Loan" system,
the Company shall be deemed to have certified to the Agent and the Swing
Line Banks each of the matters set forth in clause (b) of this Section.
Agent may revoke the Company's privilege to use the "Sweep to Loan" system
at any time and from time to time for any reason and, immediately upon any
such revocation, the "Sweep to Loan" system shall no longer be available
to the Company for the funding of Swing Line Advances hereunder (or
otherwise) and the regular procedures set forth for the making of Swing
Line Advances shall be deemed immediately to apply.
Swing Line Bank, may, at its option, lend under this Section 2.15(c) upon
the telephone request of an authorized officer of Company and, in the event
Swing Line Bank makes any such Advance upon a telephone request, the requesting
officer shall, if so requested by Swing Line Bank, fax to Swing Line Bank, on
the same day as such telephone request, a Request for Swing
26
Line Advance. Company hereby authorizes Swing Line Bank to disburse
Advances under this Section 2.15(c) pursuant to the telephone instructions
of any person purporting to be a person identified by name on a written
list of persons authorized by the Company to make Requests for Advance on
behalf of the Company. Notwithstanding the foregoing, the Company
acknowledges that Company shall bear all risk of loss resulting from
disbursements made upon any telephone request. Each telephone request for
an Advance shall constitute a certification of the matters set forth in
the Request for Swing Line Advance form as of the date of such requested
Advance. Swing Line Bank shall promptly deliver to Agent by telecopy a
copy of any Request for Advance received hereunder.
(d) Disbursement of Swing Line Advances. Subject to submission of
an executed Request for Swing Line Advance by the Company without
exceptions noted in the compliance certification therein, Swing Line Bank
shall make available to the Company the amount so requested, in like funds
and currencies, not later than 4:00 p.m. (Detroit time) on the date of
such Advance by credit to an account of the Company maintained with Agent
or to such other account or third party as the Company may reasonably
direct in writing.
Swing Line Bank shall promptly notify Agent of any Swing Line Advance by
telephone, telex or telecopier.
(e) Refunding of or Participation Interest in Swing Line Advances.
(i) The Agent, at any time in its sole and absolute
discretion, may, in each case on behalf of the Company
(which hereby irrevocably directs the Agent to act on
its behalf) request each of the Banks (including the
Swing Line Bank in its capacity as a Bank) to make an
Advance of the Revolving Credit to the Company, in an
amount equal to such Bank's Percentage of the principal
amount of the aggregate Swing Line Advances made in
accordance with the terms of this Agreement which are
outstanding on the date such notice is given (the
"Refunded Swing Line Advances"); provided however that
Swing Line Advances which are carried at the Quoted Rate
which are converted to Revolving Credit Advances at the
request of the Agent at a time when no Default or Event
of Default has occurred and is continuing, shall not be
subject to Section 10.1 and no losses, costs or expenses
may be assessed by the Swing Line Bank against the
Company or the Banks as a consequence of such
conversion. In the case of each Refunded Swing Line
Advance the applicable Advance of the Revolving Credit
used to refund such Swing Line Advance shall be a
Prime-based Advance. In connection with the making of
any such Refunded Swing Line Advances or the purchase of
a participation interest in Swing Line Advances under
Section 2.15(e)(ii) hereof, the Swing Line Bank shall
retain its claim against the Company for any unpaid
interest or fees in respect thereof accrued to the date
of
27
such refunding. Unless any of the events described in
Section 8.1(1) hereof shall have occurred (in which
event the procedures of subparagraph (ii) of this
Section 2.15(e) shall apply) and regardless of whether
the conditions precedent set forth in this Agreement to
the making of an Advance of the Revolving Credit are
then satisfied but subject to Section 2.15(e)(iii), each
Bank shall make the proceeds of its Advance of the
Revolving Credit available to the Agent for the benefit
of the Swing Line Bank at the office of the Agent
specified in Section 2.8 hereof prior to 11:00 a.m.
Detroit time (for Domestic Advances) on the Business Day
next succeeding the date such notice is given, in
immediately available funds. The proceeds of such
Advances of the Revolving Credit shall be immediately
applied to repay the Refunded Swing Line Advances in
accordance with the provisions of Section 9.1 hereof.
(ii) If, prior to the making of an Advance of the Revolving
Credit pursuant to subparagraph (i) of this Section
2.15(e), one of the events described in Section 8.1(1)
hereof shall have occurred, each Bank will, on the date
such Advance of the Revolving Credit was to have been
made, purchase from the Swing Line Bank an undivided
participating interest in each Swing Line Advance made
in accordance with the provisions of this Agreement that
was to have been refunded in an amount equal to its
Percentage of such Swing Line Advance. Upon the purchase
of any such participation the Applicable Interest Rate
for the Swing Line Advances shall equal the greater of
the then applicable Quoted Rate or the Prime-based Rate.
Each Bank within the time periods specified in Section
2.15(e)(i) hereof, as applicable, shall immediately
transfer to the Agent, in immediately available funds,
the amount of its participation and upon receipt thereof
the Agent will deliver to such Bank a Swing Line
Participation Certificate in the form of Exhibit E
evidencing such participation.
(iii) Each Bank's obligation to make Advances of the Revolving
Credit and to purchase participation interests in
accordance with clauses (i) and (ii) of this Section
2.15(e) shall be absolute and unconditional and shall
not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment,
defense or other right which such Bank may have against
Swing Line Bank, the Company or any other Person for any
reason whatsoever; (ii) the occurrence or continuance of
any Default or Event of Default; (iii) any adverse
change in the condition (financial or otherwise) of the
Company or any other Person; (iv) any breach of this
Agreement by the Company or any other Person; (v) any
inability of the Company to satisfy the conditions
precedent to borrowing set forth in this Agreement on
28
the date upon which such Advance is to be made or such
participating interest is to be purchased; (vi) the
termination of the Revolving Credit Aggregate Commitment
hereunder; or (vii) any other circumstance, happening or
event whatsoever, whether or not similar to any of the
foregoing. If any Bank does not make available to the
Agent the amount required pursuant to clause (i) or (ii)
above, as the case may be, the Agent shall be entitled
to recover such amount on demand from such Bank,
together with interest thereon for each day from the
date of non-payment until such amount is paid in full
(x) for the first two (2) Business Days such amount
remains unpaid, at the Federal Funds Effective Rate and
(y) thereafter, at the rate of interest then applicable
to such Swing Line Advances. The obligation of any Bank
to make available its pro rata portion of the amounts
required pursuant to clause (i) or (ii) above shall not
be affected by the failure of any other Bank to make
such amounts available, and no Bank shall have any
liability to the Company and its Subsidiaries, the
Agent, the Swing Line Bank, or any other Bank or any
other party for another Bank's failure to make the
amounts required under clause (i) or (ii) available.
3. TERM CREDIT
3.1 Term Loan. Subject to the terms and conditions of this Agreement,
each Term Loan Bank, severally and for itself alone, agrees to loan to Company
on the date of execution of this Agreement, an amount equal to its Term Loan
Percentage of the Term Loan. At the time of the borrowing under this Section,
Company agrees to execute a separate Term Note for each Term Loan Bank with
appropriate insertions (acceptable to the Term Loan Banks in form and substance)
as evidence of the Indebtedness under this Section 5.1.
3.2 Repayment. The Indebtedness represented by the Term Notes shall be
repaid in equal quarterly principal installments each in the amount of Six
Hundred Thousand Dollars (5600,000), plus accrued interest as provided in
Section 3.4. Such payments shall commence on May 15, 2004, and shall continue on
the fifteenth day of each August, November, February and May thereafter, until
the Term Loan Maturity Date, when the entire unpaid principal balance of such
Indebtedness and accrued interest thereon, shall be due and payable in full.
3.3 Disbursement of Term Loan. Subject to the satisfaction of the
conditions of the making of the Term Loan, each Term Loan Bank shall, not later
than 2:00 p.m. (Detroit time) on the date of execution of this Agreement, make
available the amount of its Percentage of the Term Loan in immediately available
funds to Agent, at the office of Agent located at 000 Xxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000. Agent shall make available to Company not later than 4:00 p.m.
(Detroit time) on such date the aggregate of the amounts so received by it in
like funds by credit to an account of Company maintained with Agent or to such
other account or third party as Company may direct. Unless Agent shall have been
notified by any Term Loan Bank that such Term Loan Bank does not intend to make
available to Agent such Term Loan Bank's pro rata
29
share of the Term Loan, Agent may assume that such Term Loan Bank has made such
amount available to Agent on such date and may, in reliance upon such
assumption, make available to Company a corresponding amount. If such amount is
not in fact made available to Agent by such Term Loan Bank, Agent shall be
entitled to recover such amount on demand from such Term Loan Bank. If such Term
Loan Bank does not pay such amount forthwith upon Agent's demand therefor, the
Agent shall promptly notify Company and Company shall pay such amount to Agent.
Agent shall also be entitled to recover from such Term Loan Bank or Company, as
the case may be, interest on such amount in respect of each day from the date
such amount was made available by Agent to Company to the date such amount is
recovered by Agent, at a rate per annum equal to the Applicable Interest Rate
then applicable to the Term Loan. The obligation of any Term Loan Bank to fund
its Percentage of the Term Loan shall not be affected by the failure of any
other Term Loan Bank to fund its Percentage of the Term Loan and no Term Loan
Bank shall have any liability to the Company, the Agent, or any other Term Loan
Bank for another Term Loan Bank's failure to fund its Percentage of the Term
Loan hereunder.
3.4 Interest. (a) Each Term Loan Bank's Term Note and the Term Loan
hereunder shall bear interest from the date thereof on the unpaid principal
balance thereof from time to time outstanding, at a rate per annum equal to the
Prime-based Rate or the Eurodollar-based Rate as the Company may elect subject
to the provisions of this Agreement. With respect to any portion of the Term
Loan with respect to which the Applicable Interest Rate is the Prime-based Rate,
interest shall be payable quarterly on the fifteenth day of each September,
December, March and June, commencing on September 15, 2002, and at maturity
(whether by acceleration or otherwise). Interest on any portion of the Term Loan
with respect to which the Applicable Interest Rate is the Eurodollar-based Rate
shall be payable on the last day of each Interest Period applicable thereto
unless the applicable Interest Period is more than three (3) months, in which
case interest shall be payable quarterly commencing on the date which is three
(3) months from the first day of such Interest Period and shall also be payable
on the last day of such Interest Period. Notwithstanding the foregoing, and
unless waived in accordance with the provisions of Section 12.11 hereof, from
and after the occurrence of an Event of Default and during the continuation
thereof, the principal outstanding under the Term Notes shall bear interest
payable on demand, at a rate per annum equal to: (i) in the case of any portion
of the Term Loan with respect to which the Applicable Interest Rate is the
Prime-based Rate, three percent (3%) above the rate which would otherwise be
applicable under this Section 3.4(a); and (ii) in the case of any portion of the
Term Loan with respect to which the Applicable Interest Rate is the
Eurodollar-based Rate, three percent (3%) above the rate which would otherwise
be applicable under this Section 3.4(a) until the end of the then current
Interest Period, and thereafter at the rate provided for in clause (i) of this
Section 3.4(a). Interest on the Term Loan shall be calculated on the basis of a
360 day year for the actual number of days elapsed. The interest rate with
respect to any portion of the Term Loan with respect to which the Applicable
Interest Rate is the Prime-based Rate shall change on the effective date of any
change in the Prime-based Rate. Upon receipt by the Agent of each interest
payment made by the Company under this Section 3.4, the Agent shall promptly
remit to each Term Loan Bank such Term Loan Bank's pro rata share thereof.
(b) At the time the Term Loan is made, Company shall designate the
initial Applicable Interest Rate(s) with respect thereto.
30
3.5 Interest Periods. (a) Each Interest Period for a portion of the Term
Loan with respect to which the Applicable Interest Rate is the Eurodollar-based
Rate shall commence on the date such rate is selected pursuant to Section 3.4(b)
or 3.6 hereof or on the last day of the immediately preceding Interest Period
and shall end on the date one (1), two (2), three (3) or six (6) months
thereafter as the Company may elect as set forth below, subject to the
provisions of the definition of Interest Period.
(b) The Company shall elect the initial Interest Period applicable
to any portion of the Term Loan with respect to which the Applicable
Interest Rate is the Eurodollar-based Rate by its Notice of Term Loan
given to the Agent pursuant to Section 3.4 and subsequent Interest Periods
by its Notice of Term Rate given to the Agent pursuant to Section 3.6, as
the case may be. Provided that no Event of Default shall have occurred and
be continuing, the Company may elect to continue a portion of the Term
Loan with respect to which the Applicable Interest Rate is the
Eurodollar-based Rate by giving irrevocable written notice thereof to the
Agent by its Notice of Term Rate, not less than three Business Days prior
to the last day of the then current Interest Period applicable to such
portion of the Term Loan, specifying the duration of the succeeding
Interest Period therefor. The Agent shall give at least two Business Days'
prior written, telephonic or telegraphic notice to each Term Loan Bank
specifying the Applicable Interest Rate and the duration of the succeeding
Interest Period therefor. If the Agent does not receive timely notice of
the election and the Interest Period elected by the Company, the Company
shall be deemed to have elected to convert such Applicable Interest Rate
to the Prime-based Rate at the end of the then current Interest Period.
(c) The principal amount of that portion of the Term Loan which
bears interest at the Eurodollar-based Rate having the same Interest
Period shall be at least Three Million Dollars ($3,000,000) or any larger
amount in Two Hundred Fifty Thousand Dollars ($250,000) increments and at
any time there shall not be in effect more than three (3) Interest Periods
applicable to the Term Loan.
3.6 Conversion of Loans. Provided that no Event of Default shall have
occurred and be continuing, the Company may, on any Business Day, convert the
Applicable Interest Rate with respect to a portion of the Term Loan to another
Applicable Interest Rate, provided that any conversion of a Term Loan with
respect to which the Applicable Interest Rate is the Eurodollar-based Rate shall
be made only on the last Business Day of the then current Interest Period
applicable to such portion of the Term Loan. If the Company desires to convert
an Applicable Interest Rate, it shall give the Agent irrevocable written notice
thereof not less than three Business Days' prior to the effective date of any
such change specifying the date of such conversion, the Applicable Interest Rate
elected and, if the conversion is into a portion of Term Loan with respect to
which the Applicable Interest Rate is the Eurodollar-based Rate, the duration of
the first Interest Period therefor. The Agent shall give at least three Business
Days' prior written, telephonic or telegraphic notice to each Term Loan Bank
specifying the date of such conversion, the Applicable Interest Rate elected,
and, if applicable, the duration of the first Interest Period therefor.
31
3.7 Optional Prepayments. (a) At its option and upon three (3) Business
Days' prior written, telephonic or telegraphic notice to the Agent, the Company
may prepay the Term Loan in whole or in part from time to time, without premium
or penalty but with accrued interest on the principal being prepaid to the date
of such prepayment, provided that: (i) in the case of a portion of the Term Loan
bearing interest at the Prime-based Rate each partial prepayment shall be in an
amount not less than Two Hundred Fifty Thousand Dollars ($250,000) or an
integral multiple thereof; (ii) in the case of a portion of the Term Loan
bearing interest at the Eurodollar-based Rate, each partial prepayment shall be
in an amount not less than Two Hundred Fifty Thousand Dollars ($250,000), and
shall be subject to the provisions of Section 10.1. The aggregate amount
remaining outstanding under that portion of the Term Loan which bears interest
at the Eurodollar-based Rate having the same Interest Period shall be at least
Three Million Dollars ($3,000,000).
(b) Each prepayment under this Section 3.7 shall be made to the
Agent, and promptly upon receipt thereof, the Agent shall remit to each
Term Loan Bank its pro rata share thereof. In its notice of prepayment,
the Company shall specify the date of prepayment and the amount of the
prepayment. Each partial prepayment of the Term Loan shall be applied to
the principal payments due thereunder in the direct order of their
maturities; provided, however, unless an Event of Default or Default shall
have occurred and is continuing any prepayment in excess of One Million
Dollars ($1,000,000) received on or before December 31, 2002 shall be
applied pro-rata to the remaining principal payments due with respect to
the Term Loan.
3.8 [Intentionally Left Blank.]
3.9 Use of Term Loan Proceeds. The proceeds of the Term Notes shall be
used to pay the amounts payable by Company in connection with the consummation
of the Transaction and to repay (by renewal) indebtedness of Company to the
Banks under the Existing Credit Agreement.
4. CONDITIONS.
The obligations of Revolving Credit Banks to make Advances and the Term
Loan Banks to make the Term Loan pursuant to this Agreement are subject to the
following conditions:
4.1 Execution of Loan Documents. Company shall have executed and
delivered to Agent for the account of each Bank, the Revolving Credit Notes, the
Swing Line Note, the Term Notes and this Agreement (including all schedules,
exhibits, certificates, opinions, financial statements and other documents to be
delivered pursuant hereto), and, as applicable, the Loan Documents, and such
Revolving Credit Notes, Term Notes, the Loan Documents and this Agreement shall
be in full force and effect.
4.2 Corporate Authority. Agent shall have received, with a counterpart
thereof for each Bank: (i) certified copies of resolutions of the Boards of
Directors of Company and Financial evidencing approval of the Loan Documents and
authorizing the execution and delivery thereof and the borrowing hereunder, as
applicable; and (ii) (A) certified copies of
32
Company's, Financial's and N.P. Premium's articles of incorporation and bylaws
or other constituent documents certified as true and complete as of a recent
date by the appropriate official of the jurisdiction of incorporation or
formation of Company, Financial or N.P. Premium, as applicable; and (B)
certificates of good standing from the state or other jurisdictions of
Company's, Financial's and N.P. Premium's incorporation or formation, and from
every state or other jurisdiction in which Company, Financial or N.P. Premium's,
as applicable, is qualified to do business.
4.3 Collateral Documents. As security for all Indebtedness of Company to
the Banks hereunder, Company shall have furnished, executed and delivered to
Agent, or caused to be furnished, executed and delivered to Agent, prior to or
simultaneously with the initial borrowing hereunder, in form to be satisfactory
to Agent and the Banks and supported by appropriate resolution in certified form
authorizing same, the following:
(a) The Guaranties;
(b) The Pledge Agreements;
(c) The Security Agreement;
(d) The Preferred Shares Subordination Agreement;
(e) Financing Statements required or requested by Agent and the
Banks to perfect all security interests to be conferred upon Agent and the
Banks under this Agreement and to accord Agent and the Banks a perfected
first priority security position under the Uniform Commercial Code
(subject only to the encumbrances permitted hereunder); and
(f) Such other documents or agreements of security and appropriate
assurances of validity and perfected first priority of lien or security
interest as Agent and the Banks may reasonably request at any time;
provided, that such request is not inconsistent with the terms of the
documents listed in (a) through (c) above.
4.4 Licenses, Permits, Etc. The Agent shall have received, with a copy
for each Bank, copies of each material authorization, license, permit, consent,
order or approval of, or registration, declaration or filing with, any
governmental authority or any securities exchange or other person (including
without limitation any securities holder) obtained or made by the Company, any
of its Subsidiaries, or any other Person (as of the relevant date of Advance or
loan hereunder) in connection with the transactions contemplated by this
Agreement or the Loan Documents.
4.5 Representations and Warranties. The representations and warranties
made by Company or any other party to any of the Loan Documents (excluding the
Agent and Banks) under this Agreement or any of the Loan Documents, and the
representations and warranties of any of the foregoing which are contained in
any certificate, document or financial or other statement furnished at any time
hereunder or thereunder or in connection herewith or therewith shall have been
true and correct in all material respects when made and shall be true and
correct
33
in all material respects on and as of the date of the making of any Advance
hereunder (unless such representation and warranty expressly indicates that it
is being made as of a specific date in which case such representation and
warranty shall be true and correct in all material respects as of such specific
date).
4.6 Compliance with Certain Documents and Agreements. The Company shall
have performed and complied with all agreements and conditions contained in this
Agreement, the Loan Documents, or any agreement or other document executed
thereunder and required to be performed or complied with by Company (as of the
applicable date) and Company shall not be in default in the performance or
compliance with any of the terms or provisions hereof or thereof.
4.7 Opinion of Counsel. Company shall furnish Agent with signed copies
for each Bank, with an opinion of counsel to the Company, the Guarantors and
each other Person party to the Parent Pledge Agreement, dated the date hereof,
and covering such matters as required by and otherwise satisfactory in form and
substance to the Agent and each of the Banks.
4.8 No Default. No Default or Event of Default shall have occurred and
be continuing, and since October 31, 2003 there shall have been no change which
could have a Material Adverse Effect, except as identified in Section 12.23.
4.9 Transaction Documents. (a) The Agent and the Banks shall have
received executed copies of those Transaction Documents executed prior to or
contemporaneously with the closing of the Acquisition, certified by a
Responsible Officer of Financial. The Transaction Documents shall be in form and
substance reasonably satisfactory to the Agent and the Banks and each of the
Transaction Documents shall have been duly authorized, executed and delivered by
each of the parties thereto and shall be in full force and effect. No term or
provision of the Transaction Documents shall have been modified, and no
condition to consummation of the transaction shall have been waived, in either
case in a manner materially detrimental to Financial, by any of the parties
thereto. Financial shall have in all material respects done and performed such
acts and observed such covenants which it is required to do or perform under the
Transaction Documents and in order to consummate the Transaction on or prior to
the date of the funding of the first extension of credit under this Agreement.
(b) Financial shall have provided evidence satisfactory to the
Agent and the Banks that the Transaction has been consummated.
4.10 Insurance. The Agent and the Banks shall have received evidence
satisfactory to them that the Company has obtained the insurance policies
required by Section 6.12 hereof and that such insurance policies are in full
force and effect.
4.11 Pro Forma Balance Sheet and Projections. The Company shall have
delivered to the Agent and the Banks (a) a pro forma consolidated balance sheet
of Company and its Subsidiaries (the "Pro Forma Balance Sheet") certified by the
chief financial officer of Company that it fairly presents the pro forma
adjustments reflecting the consummation of the transactions contemplated in this
Agreement, including all material fees and expenses in connection therewith and
(b) annual projections through the 2007 fiscal year.
34
4.12 Due Diligence Material. The Agent and Bank shall have received and
approved (a) evidence of review and approval by the Florida Office of Insurance
Regulation of the Acquisition Statement filed by Financial in connection with
the Transaction, (b) the guidelines of each applicable Regulatory Agency for the
dividend policies of the Insurance Subsidiaries, (e) the December 31, 2001
accrual report for the Insurance Subsidiaries, (d) evidence of renewal of
Insurance Subsidiaries' reinsurance contracts, and (e) information from Best as
to the rating to be assigned to North Pointe after giving effect to the
Transaction (which must be at least B+).
4.13 Company's Certificate. The Agent shall have received, with a signed
counterpart for each Bank, a certificate of a Responsible Officer of Company
dated the date of the making of Advances hereunder, stating that to the best of
his or her knowledge after due inquiry, the conditions of Sections 4.1, 4.5,
4.6, 4.8, 4.9 and 4.11 hereof have been fully satisfied.
4.14 Payment of Fees. Company shall have paid to the Agent all fees,
costs and expenses required hereunder to be paid to Agent upon execution of this
Agreement.
4.15 Other Documents and Instruments. The Agent shall have received, with
a photocopy for each Bank, such other instruments and documents as each of the
Banks may reasonably request in connection with the making of loans hereunder,
and all such instruments and documents shall be satisfactory in form and
substance to the Banks.
4.16 Continuing Conditions. The obligations of the Banks to make Advances
(including the initial Advance) under this Agreement shall be subject to the
continuing conditions that:
(a) No Default or Event of Default shall exist as of the date of
the Advance; and
(b) Each of the representations and warranties contained in this
Agreement and in each of the other Loan Documents shall be true and
correct in all material respects as of the date of the Advance (unless
such representation and warranty expressly indicates that it is being made
as of a specific date in which case such representation and warranty shall
be true and correct in all material respects as of such specific date).
5. REPRESENTATIONS AND WARRANTIES
Company represents and warrants and such representations and warranties
shall be deemed to be continuing representations and warranties (unless such
representation and warranty expressly indicates that it is being made as of a
specific date in which case such representation and warranty shall be true and
correct in all material respects as of such specific date) until the later to
occur of the Revolving Credit Maturity Date and the Term Loan Maturity Date and
thereafter until final payment in full of the Indebtedness, and performance by
Company of all other obligations under this Agreement and the other Loan
Documents:
5.1 Due Authorization--Company. Company and each of its Subsidiaries is
a corporation duly organized and existing in good standing under the laws of the
jurisdiction of its incorporation; Company and each of its Subsidiaries is in
good standing in each jurisdiction in
35
which it is required to be qualified to do business; execution, delivery and
performance of this Agreement and other documents and instruments required under
this Agreement, and the issuance of the Notes by Company are within its
corporate powers, have been duly authorized, are not in contravention of law or
the terms of Company's Articles of Incorporation or Bylaws, and do not require
the consent or approval of any governmental body, agency or authority; and this
Agreement and other documents and instruments required under this Agreement and
Notes, when issued and delivered, will be valid and binding on the Company in
accordance with their terms.
5.2 Due Authorization--Guarantors. Execution, delivery and performance
of the documents executed and delivered by the Guarantors in connection with
this Agreement are within their powers, are not in contravention of law or any
unwaived terms of any indenture, agreement or undertaking to which any Guarantor
is a party or by which it is bound, do not require the consent or approval of
any governmental body, agency or authority, and when issued and delivered, will
be valid and binding on the Guarantors in accordance with their terms.
5.3 Non-Contravention. The execution, delivery and performance of this
Agreement and any other documents and instruments required under this Agreement,
and the issuance of the Notes by Company are not in contravention of the
material unwaived terms of any indenture, agreement or undertaking to which
Company is a party or by which it is bound.
5.4 No Litigation. Except as set forth in Schedule 5.4 annexed hereto,
no litigation or other proceeding before any court or administrative agency is
pending, or to the knowledge of the officers of Company is threatened against
Company or any Subsidiary, the outcome of which would reasonably be expected to
have a Material Adverse Effect.
5.5 Encumbrances. There are no Liens on any of Company's or any
Subsidiary's assets, except Permitted Encumbrances.
5.6 ERISA. Neither Company nor any Subsidiary maintains or contributes
to any employee pension benefit plan subject to Title IV of ERISA, except those
set forth in attached Schedule 5.6. There was no unfunded past service liability
of any pension plan maintained by the Company or any Subsidiary as of September
30, 2003, and there is no accumulated funding deficiency within the meaning of
ERISA, or any existing material liability with respect to any pension plan owed
to the Pension Benefit Guaranty Corporation ("PBGC") or any successor thereto,
except any funding deficiency for which an application to the PBGC for waiver is
pending or for which a waiver has been granted by the PBGC.
5.7 Financial Statements. The financial statements of the Company and
the Guarantors dated December 31, 2002 and September 30, 2003, previously
furnished Agent and the Banks, fairly present in all material respects the
financial condition of the Company and the Guarantors as of such dates; since
said date there has been no material adverse change in the financial condition
of Company or any Guarantor; to the best of the knowledge of Company's officers,
Company does not have any material contingent obligations (including any
liability for taxes) not disclosed by or reserved against in said balance sheet,
and at the present time there are
36
no material unrealized or anticipated losses from any present commitment of
Company or any of its Subsidiaries.
5.8 Financial Projections. The financial projections previously
furnished by Company to Agent and the Banks, the receipt of which Agent and the
Banks acknowledge, were as of the date thereof and are as of the date of
execution of this Agreement, based upon the good faith belief of the management
of Company, reasonable in all material respects taking into account all facts
and information known to or reasonably available to Company.
5.9 Tax Returns. All tax returns and tax reports of Company and each
Subsidiary required by law to have been filed have been duly filed or extensions
obtained, and all taxes, assessments and other governmental charges or levies
(other than those presently payable without penalty and those currently being
contested in good faith for which adequate reserves have been established) upon
Company or any Subsidiary (or any of its properties) which are due and payable
have been paid for which the failure to pay would materially adversely affect
its business or the value of its property or assets (taken as a whole). The
charges, accruals and reserves on the books of Company and its Subsidiaries in
respect of the Federal income tax for all periods are adequate in the opinion of
Company.
5.10 Subsidiaries. There are no Subsidiaries of Company, except as set
forth in Schedule 5.10.
5.11 Compliance with Laws. Except as set forth in Schedule 5.11:
(a) Company and its Subsidiaries are, in the conduct of their
business, in compliance in all material respects with all federal, state
or local laws, statutes, ordinances and regulations applicable to any of
them, the enforcement of which, if Company or any Subsidiary were not in
compliance, would reasonably be expected to have a Material Adverse
Effect, Company and its Subsidiaries have all material approvals,
authorizations, consents, licenses, orders and other permits of all
governmental agencies and authorities, whether federal, state or local,
required to permit the operation of their business as presently conducted,
except such approvals, authorizations, consents, licenses, orders and
other permits with respect to which the failure to have would reasonably
be expected to have a Material Adverse Effect.
(b) Neither Company nor any Subsidiary is a party to any
litigation or administrative proceeding, nor so far as is known by Company
is any litigation or administrative proceeding threatened against Company
or any Subsidiary, the outcome of which would reasonably be expected to
have a Material Adverse Effect which in either case (i) asserts or alleges
that Company or any Subsidiary violated Hazardous Material Laws, (ii)
asserts or alleges that Company or any Subsidiary is required to clean up,
remove, or take remedial or other response action due to the disposal,
depositing, discharge, leaking or other release of any hazardous
substances or materials, (iii) asserts or alleges that Company or any
Subsidiary is required to pay all or a portion of the cost of any past,
present, or future cleanup, removal or remedial or other response action
which
37
arises out of or is related to the disposal, depositing, discharge,
leaking or other release of any hazardous substances or materials by
Company or any Subsidiary.
(c) Neither Company nor any Subsidiary is subject to any judgment,
decree, order or citation related to or arising out of applicable
Hazardous Material Laws which would reasonably be expected to have a
Material Adverse Effect and to the best knowledge of the Company, neither
Company nor any Subsidiary has been named or listed as a potentially
responsible party by any governmental body or agency in a matter arising
under any applicable Hazardous Material Laws which would reasonably be
expected to have a Material Adverse Effect.
(d) To the best of Company's knowledge, Company and its
Subsidiaries have all permits, licenses and approvals required under
applicable Hazardous Material Laws, the failure of which to have would
have a Material Adverse Effect
5.12 No Defaults. There exists no material default under the provisions
of any instrument evidencing any indebtedness for borrowed money of Company
which is permitted hereunder or of any agreement relating thereto which would
reasonably be expected to have a Material Adverse Effect.
5.13 Consents, Approvals and Filings, Etc. Except as have been previously
obtained, no authorization, consent, approval, license, qualification or formal
exemption from, nor any filing, declaration or registration with, any court,
governmental agency or regulatory authority or any securities exchange or any
other person or party (whether or not governmental) is required in connection
with the execution, delivery and performance: (i) by Company of this Agreement,
any of the other Loan Documents to which it is a party, or any other documents
or instruments to be executed and or delivered by Company in connection
therewith or herewith, or (ii) by Company of the Liens granted, conveyed or
otherwise established (or to be granted, conveyed or otherwise established) by
or under this Agreement or the other Loan Documents, except for such filings to
be made as are required by the Loan Documents to perfect Liens in favor of the
Agent. All such authorizations, consents, approvals, licenses, qualifications,
exemptions, filings, declarations and registrations which have previously been
obtained or made, as the case may be, are in full force and effect and are not
the subject of any attack, or to the knowledge of Company threatened attack (in
any material respect) by appeal or direct proceeding or otherwise.
5.14 Agreements Affecting Financial Condition. Neither Company, nor any
of its Subsidiaries is party to any agreement or instrument or subject to any
charter or other corporate restriction which has a Material Adverse Effect.
5.15 Labor Relations. Neither the Company nor any Subsidiary is engaged
in any unfair labor practice that could reasonably be expected to have a
Material Adverse Effect. There is (i) no unfair labor practice complaint pending
against the Company or any Subsidiary or to the knowledge of Company, threatened
against any of them, before the National Labor Relations Board, and no grievance
or arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against Company or, to the knowledge of Company,
threatened against any of it, (ii) no strike, labor dispute, slowdown or
stoppage pending against
38
the Company or any Subsidiary or to the knowledge of Company, threatened against
any of them and (iii) to the best knowledge of Company, no union representation
question existing with respect to the employees of Company or any Subsidiary.
5.16 Existing Debt. Schedule 5.16 hereto sets forth a true and complete
list of all Funded Debt (other than Indebtedness) of Company and its
Subsidiaries as of the date hereof that is in excess of $25,000 for any one
issue and is to remain outstanding after giving effect to this transaction, in
each case showing the aggregate principal amount thereof and the name of the
respective borrower (or issuer) and any other entity which directly or
indirectly guaranteed such debt.
5.17 Solvency. After giving effect to the consummation of the
transactions contemplated by this Agreement, Company and its Subsidiaries will
each be solvent, able to pay its indebtedness as it matures and will have
capital sufficient to carry on its business and all business in which it is
about to engage. This Agreement is being executed and delivered by the Company
to Agent and the Banks in good faith and in exchange for fair, equivalent
consideration. Neither Company nor any Subsidiary is insolvent, nor will Company
or any Subsidiary be rendered insolvent by its execution and delivery to Agent
and the Banks of this Agreement or by the consummation of the transactions
contemplated by this Agreement, and the capital and monies remaining in the
Company and its Subsidiaries are not now and will not become so unreasonably
small as to preclude the Company or its Subsidiaries from carrying on their
businesses. Neither the Company nor any Subsidiary intends to nor does
management of Company or any Subsidiary believe it will incur debts beyond its
ability to pay as they mature. Neither Company nor any Subsidiary contemplates
filing a petition in bankruptcy or for an arrangement or reorganization under
the Bankruptcy Code, nor does Company or any Subsidiary have any knowledge of
any threatened bankruptcy or insolvency proceedings against Company or any
Subsidiary.
5.18 Capitalization. The authorized Equity Interests of Company and each
Subsidiary is as set forth in Schedule 5.18. All issued and outstanding shares
of Equity Interests of Company are duly authorized and validly issued, fully
paid, nonassessable, free and clear of all Liens and such Equity Interests were
issued in compliance with all applicable state and federal laws concerning the
issuance of securities. The Equity Interests of Company and each Subsidiary are
owned by the stockholders and members and in the amounts set forth on Schedule
5.18. No Equity Interests of Company or any Subsidiary, other than those
described above, are issued and outstanding. Except for the Transaction
Documents, there are no preemptive or other outstanding rights, options,
warrants, conversion rights or similar agreements or understandings for the
purchase or acquisition from Company or any Subsidiary, of any Equity Interests
or other securities of Company or any Subsidiary.
5.19 No Investment Company or Margin Stock. Neither Company nor any of
its Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended. Neither Company nor any of its Subsidiaries is
engaged principally, or as one of its important activities, directly or
indirectly, in the business of extending credit for the purpose of purchasing or
carrying margin stock, and none of the proceeds of any of the loans hereunder
will be used, directly or indirectly, for any purpose which would violate the
provisions
39
of Regulation U or X of the Board of Governors of the Federal Reserve
System. Terms for which meanings are provided in Regulation U of the Board of
Governors of the Federal Reserve System or any regulations substituted therefor,
as from time to time in effect, are used in this paragraph with such meanings.
5.20 Good Title--Company. Company has good and valid title to the
property pledged, mortgaged or otherwise encumbered or to be encumbered by it
under the Pledge Agreements to which Company is a party, subject to the
Permitted Encumbrances.
5.21 Good Title-Financial. Financial has good and valid title to the
property pledged, mortgaged or otherwise encumbered or to be encumbered by it
under the Pledge Agreement to which Financial is a party, subject to the
Permitted Encumbrances.
5.22 Reportable Transaction. The Company does not intend to treat the
Advances and related transactions as being a "reportable transaction" (within
the meaning of Treasury Regulation Section 1.6011-4). In the event the Company
determines to take any action inconsistent with such intention, it will promptly
notify the Agent thereof.
6. AFFIRMATIVE COVENANTS
Company covenants and agrees that it will, and, as applicable, it will
cause each of its Subsidiaries, until the later of the Revolving Credit Maturity
Date and the Term Loan Maturity Date and thereafter until final payment in full
of the Indebtedness and the performance by Company of all other obligations
under this Agreement and the other Loan Documents:
6.1 Financial Statements. Furnish to the Agent and each Bank:
(a) as soon as available, but in any event not later than June 1
of each year a copy of the audited Consolidated financial statements of
Company as at the end of the preceding fiscal year and the related audited
statements of income, accumulated earnings, and cash flows for such year,
setting forth in each case in comparative form the figures for the
previous year, certified as being fairly stated in all material respects
by one of the "Big Four" certified public accounting firms or by another
nationally recognized certified public accountant reasonably satisfactory
to the Agent and the Banks;
(b) as soon as available, but in any event not later than sixty
(60) days after the end of each fiscal quarter, the unaudited Consolidated
financial statements of Company as at the end of such fiscal quarter and
the related unaudited statements of income, accumulated earnings and cash
flows of Company for the portion of the fiscal year through the end of
such fiscal quarter, setting forth in each case in comparative form the
figures for the previous year, and certified by a Responsible Officer as
being fairly stated in all material respects; and
(c) as soon as available and in any event within sixty (60) days
after the end of each fiscal quarter (excluding the fourth fiscal quarter
of each fiscal year), a copy of each Insurance Subsidiary's financial
statements for such fiscal quarter, including a balance sheet as of the
end of such fiscal quarter and the related statements of income and
40
retained earnings for such fiscal quarter, each prepared in accordance
with SAP and certified by an officer of the applicable Insurance
Subsidiary;
(d) as soon as available and in any event not later than June 1 of
each year, a copy of each Insurance Subsidiary, a copy of such Insurance
Subsidiary's financial statements for the preceding fiscal year, including
a balance sheet as of the end of such fiscal year and the related
statements of income and retained earnings for such fiscal year, each
prepared in accordance with SAP and certified by an officer of the
applicable Insurance Subsidiary;
(e) as soon as available, copies of all financial statements
related to Company and/or any of its Subsidiaries filed with any
Regulatory Agency;
(f) as soon as available and to the extent not previously
furnished to Agent, copies of all reports with respect to Company and/or
any of its Subsidiaries prepared by any Regulatory Agency or rating
agency;
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with
GAAP or SAP, as applicable, throughout the periods reflected therein and
with prior periods.
6.2 Certificates; Other Information. Furnish to the Agent and each Bank:
(a) Within sixty (60) days after and as the end of each fiscal
quarter, a Covenant Compliance Certificate substantially in form attached
hereto as Exhibit F;
(b) On or before April 1 of each year, a personal financial
statement for each Guarantor (other than Financial and N.P. Premium) in
form satisfactory to Agent and certified by the applicable Guarantor as to
accuracy and completeness.
(c) Together with the financial statements delivered pursuant to
Section 6.1 (a) annual projections for the forthcoming fiscal year for the
Company and its Subsidiaries in form reasonably acceptable to the Agent
and the Banks;
(d) promptly and in form to be reasonably satisfactory to Majority
Banks, such additional financial and/or other information, or other
reports as any Bank may from time to time reasonably request.
(e) within five (5) days after the occurrence thereof, written
notice from Company of any change in the Best rating of an Insurance
Subsidiary or in any other change in any rating of any Insurance
Subsidiary by any other rating agency.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all of its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Company.
41
6.4 Conduct of Business and Maintenance of Existence.
(a) Continue to engage solely in the businesses as now conducted
by Company and its Subsidiaries and businesses similar or related thereto
(or logical extensions thereof, as determined by Company in its reasonable
discretion) and preserve, renew and keep in full force and effect its
existence.
(b) Take all reasonable action to maintain all rights, privileges
and franchises necessary or desirable in the normal conduct of its
business, except for such rights, privileges and franchises the failure of
which to have would not reasonably be likely to have a Material Adverse
Effect.
6.5 Inspection of Property; Books and Records, Discussions.
Permit Agent and each Bank, through their authorized attorneys,
accountants and representatives (a) to examine Company's and each Subsidiary's
books, accounts, records, ledgers and assets and properties of every kind and
description wherever located at all reasonable times during normal business
hours, upon oral or written request of Agent or such Bank; and (b) at reasonable
times and intervals, to visit all of their respective offices, discuss their
respective financial matters with their respective officers and independent
certified public accountants, and, by this provision, Company authorizes such
accountants to discuss the finances and affairs of Company and its Subsidiaries
(provided that Company is given an opportunity to participate in such
discussions) and examine any of its or their books and other corporate records.
Notwithstanding the foregoing, all information furnished to the Agent or the
Banks hereunder shall be subject to the undertaking of the Banks set forth in
Section 12.13 hereof.
6.6 Notices. Promptly give notice to the Agent and the Banks of:
(a) the occurrence of any Default or Event of Default of which
Company or any Subsidiary has knowledge;
(b) any (i) default or event of default under any Contractual
Obligation of Company or any Subsidiary or (ii) litigation, investigation
or proceeding which may exist at any time between Company or any
Subsidiary and any Regulatory Agency, which in either case, if not cured
or if it is reasonably likely to be adversely determined, as the case may
be, would have a Material Adverse Effect;
(c) the following events, as soon as possible and in any event
within thirty (30) days after the Company knows thereof and to the extent
the same would have a Material Adverse Effect: (i) the occurrence of any
"reportable event" as defined in ERISA with respect to any Pension Plan,
or any withdrawal from or the termination, reorganization or insolvency of
any Multiemployer Plan or (ii) the institution of proceedings or the
taking of any other action by the Pension Benefit Guaranty Corporation or
the Company or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from or the terminating, reorganization or
insolvency of any Pension Plan;
42
(d) any event which is reasonably likely to have a Material
Adverse Effect and is reasonably likely to result in an Event of Default;
(e) promptly after becoming aware of the taking by the Internal
Revenue Service or any foreign taxing jurisdiction of a written tax
position which could reasonably be expected to have a Material Adverse
Effect setting forth the details of such position and the financial impact
thereof; and
(f) subject to the provisions of Section 7.14, copies of any
proposed material amendments, restatements or other modification to the
Transaction Documents.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Company proposes to take with respect thereto.
6.7 Governmental and Other Approvals. Apply for, obtain and/or maintain
in effect, as applicable, all authorizations, consents, approvals, licenses,
qualifications, exemptions, filings, declarations and registrations (whether
with any court, governmental agency, regulatory authority, securities exchange
or otherwise) which are necessary in connection with the execution, delivery and
performance: (i) by Company, of this Agreement, the other Loan Documents, or any
other documents or instruments to be executed and/or delivered by Company in
connection therewith or herewith; and (ii) by each of the Subsidiaries, of the
Loan Documents to which it is a party.
6.8 Security. Take such actions as the Agent or the Majority Banks may
from time to time reasonably request to establish and maintain first perfected
security interests in and Liens on all of its Collateral, subject only to
Permitted Encumbrances and other liens permitted under Section 7.7 hereof.
6.9 Defense of Collateral. Defend the Collateral from any Liens other
than Liens permitted by Section 7.7.
6.10 Further Assurances. Execute and deliver or cause to be executed and
delivered to Agent within a reasonable time following Agent's request, and at
the Company's expense, such other documents or instruments as Agent may
reasonably require to effectuate more fully the purposes of this Agreement or
the other Loan Documents.
6.11 Taxes. Pay and discharge, and cause each of its Subsidiaries to pay
and discharge, all taxes and other governmental charges, and all Contractual
Obligations calling for the payment of money, before the same shall become
overdue, unless and to the extent only that such payment is being contested in
good faith.
6.12 Insurance. Maintain, and cause each of its Subsidiaries to maintain,
insurance coverage on their physical assets and against other business risks in
such amounts and of such types as are customarily carried by companies similar
in size and nature, and in the event of acquisition of additional property, real
or personal, or of incurrence of additional risks of any
43
nature, increase such insurance coverage in such manner and to such extent as
prudent business judgment and present practice would dictate.
6.13 Compliance with ERISA. Comply, and cause each of its Subsidiaries to
comply, with all material requirements imposed by ERISA as presently in effect
or hereafter promulgated, including but not limited to, the minimum funding
requirements of any Pension Plan.
6.14 ERISA Notices. Promptly notify Agent and the Banks after the
occurrence thereof in writing of any of the following events:
(a) the termination of a Pension Plan pursuant to Subtitle C of
Title IV of ERISA or otherwise;
(b) the appointment of a trustee by a United States District Court
to administer a Pension Plan;
(c) the commencement by the Pension Benefit Guaranty Corporation,
or any successor thereto of any proceeding to terminate a Pension Plan;
(d) the failure of a Pension Plan to satisfy the minimum funding
requirements for any plan year as established in Section 412 of the
Internal Revenue Code;
(e) the withdrawal of Company or any Subsidiary from a Pension
Plan; or
(f) a reportable event, within the meaning of Title IV of ERISA.
6.15 Maintain Consolidated Tangible Capital Funds. Maintain as of the end
of each fiscal quarter of Company a Consolidated Tangible Capital Funds of not
less than the following amounts during the periods specified below:
December 31, 2003 through December 30, 2004.............. $ 23,250,000
December 31, 2004 through December 30, 2005.............. $ 25,000,000
December 31, 2005 through December 30, 2006.............. $ 28,000,000
December 31, 2006 through December 30, 2007.............. $ 32,000,000
December 31, 2007 and thereafter......................... $ 36,000,000
6.16 Maintain Risk-Based Capital. Beginning December 31, 2004 not permit
"total adjusted capital" (within the meaning of the Risk-Based Capital for
Insurers Model Act as promulgated by the NAIC as of the Closing Date (the "Model
Act')) of any of its Insurance Subsidiaries as of the last day of each fiscal
year to be less than 215% of the applicable "Authorized Control Level RBC"
(within the meaning of the Model Act) for such Insurance Subsidiary.
6.17 Maintain Fixed Charge Coverage Ratio. Beginning December 31, 2003,
maintain as of the end of each fiscal year of Company a Fixed Charge Coverage
Ratio of not less than 1.35 to 1.0.
44
6.18 Net Premium and Gross Premium Ratio. Cause the Insurance
Subsidiaries on a combined basis to maintain as of the end of each fiscal year a
Net Premium Ratio of not more than 2.5 to 1.0 and a Gross Premium Ratio of not
more than 3.0 to 1.0.
6.19 Combined Ratio. Cause the Insurance Subsidiaries to maintain as of
the end of each fiscal quarter a Combined Ratio of not greater than 107%.
6.20 Environmental Compliance.
(a) Company shall comply, and cause its Subsidiaries to comply,
with all applicable Hazardous Material Laws except for such non-compliance
which would reasonably not be expected to have a Material Adverse Effect.
(b) Company shall provide to Agent, promptly upon receipt, copies
of any correspondence, notice, pleading, citation, indictment, complaint,
order, decree, or other document from any source asserting or alleging a
circumstance or condition which requires or may require a financial
contribution by Company or any Subsidiary to a cleanup, removal, remedial
action, or other response by or on the part of Company or any Subsidiary
under applicable Hazardous Material Laws or which seeks damages or civil,
criminal or punitive penalties from Company or any Subsidiary for an
alleged violation of Hazardous Material Laws, where such contribution,
response or damages would reasonably be expected to have a Material
Adverse Effect.
(c) Company shall promptly notify Agent and the Banks in writing
as soon as Company becomes aware of the occurrence or existence of any
condition or circumstance which makes the environmental warranties
contained in this Agreement incomplete or inaccurate in any material
respect as of any date.
(d) In the event of any condition or circumstance that makes any
environmental warranty, representation and/or agreement incomplete or
inaccurate in any material respect as of any date, Company shall, at the
reasonable request of Agent, at its sole expense, retain an environmental
consultant, reasonably acceptable to Agent and the Banks, to conduct an
appropriate investigation regarding the changed condition and/or
circumstance. A copy of the environmental consultant's report will be
promptly delivered to Agent upon completion.
(e) At any time Company or any Subsidiary, directly or indirectly
through any environmental consultant or other representative, undertakes
an environmental audit, assessment or investigation relating to any fact,
event or condition which would reasonably be expected to have a Material
Adverse Effect. Company shall promptly provide Agent with written notice
of the initiation of the environmental audit, fully describing the purpose
and intended scope of the environmental audit. Upon receipt, Company will
promptly provide to Agent copies of all final findings and conclusions of
any such environmental investigation.
(f) Company hereby indemnifies, saves and holds Agent and each of
the Banks and any of their respective past, present and future officers,
directors,
45
shareholders, employees, representatives and consultants harmless from any
and all loss, damages, suits, penalties, costs, liabilities and expenses
(including but not limited to reasonable investigation, environmental
audit(s), and legal expenses) arising out of any claim, loss or damage of
any property, injuries to or death of persons, contamination of or adverse
affects on the environment, or any violation of any applicable Hazardous
Material Laws, caused by or in any way related to any property owned or
operated by Company or any Subsidiary, or due to any acts of Company or
any Subsidiary or such person's, officers, directors, shareholders,
employees, consultants and/or representatives; provided, however, that the
foregoing indemnification shall not be applicable when arising from events
or conditions occurring while Agent is in sole possession (subject to the
rights of any creditors of Company) of such property. In no event shall
Company be liable hereunder for any loss, damages, suits, penalties,
costs, liabilities or expenses arising from any act of willful misconduct
or gross negligence of Agent or any of the Banks, or any such Person's
agents or employees.
It is expressly understood and agreed that the indemnifications granted
herein are intended to protect Agent and each of the Banks, their respective
past, present and future officers, directors, shareholders, employees,
consultants and representatives from any claims that may arise by reason of the
Liens granted to Agent and each of the Banks, or under any other document or
agreement given to secure repayment of any indebtedness from Company, whether or
not such claims arise before or after Agent has foreclosed upon and/or otherwise
become the owner of any such property. All obligations of indemnity as provided
hereunder shall be secured by the Collateral Documents until payment in full of
all indebtedness of Company to the Banks, unless there is a then known violation
of the Hazardous Material Laws and Agent or any of the Banks has asserted in
writing a claim for indemnification from Company, in which event the same shall
continue until the violation is remediated.
It is expressly agreed and understood that the provisions hereof shall and
are intended to be continuing and shall survive the repayment of the
Indebtedness.
(g) Company and its Subsidiaries shall maintain all permits,
licenses and approvals required under applicable Hazardous Material Laws
except such permits, licenses and approvals the failure of which to have
would reasonably not be expected to have a Material Adverse Effect.
7. NEGATIVE COVENANTS
Company covenants and agrees that, until the later to occur of the
Revolving Credit Maturity Date and the Term Loan Maturity Date and thereafter
until final payment in full of the Indebtedness and the performance by Company
of all other obligations under this Agreement and the other Loan Documents
(other than contingent indemnification obligations not due and payable), it will
not, and will not permit its Subsidiaries to, without the prior written consent
of the Majority Banks (or, with respect to Sections 7.3 and 7.4, all of the
Banks):
7.1 Capital Structure and Redemptions. Purchase, acquire, issue or
redeem any of its Equity Interests (including without limitation any redemption
of any of the Preferred Shares),
46
except issuances of stock by a Subsidiary provided that such stock is pledged to
the Agent for the benefit of the Banks as provided hereunder.
7.2 Mergers or Dispositions. Enter into any merger or consolidation or
sell, lease, transfer, or dispose of any part of its assets, except:
(a) the sale of damaged, obsolete or worn out property, property
no longer useful in the conduct of Company's or any Subsidiary's business
or property from closed offices; and
(b) asset sales in which the sale price is at least the fair
market value of the assets sold and the aggregate amount of such asset
sales is less than Fifty Thousand Dollars ($50,000) in any fiscal year;
(c) the merger of a Subsidiary into the Company provided that the
Company is the surviving corporation;
(d) the merger of an Insurance Subsidiary into another Insurance
Subsidiary;
(e) the sales of investments held in the Company's or a
Subsidiary's investment portfolio in the ordinary course of business.
7.3 Guaranties. Guarantee, endorse, or otherwise become secondarily
liable for or upon the obligations of others, except (a) by endorsement for
deposit in the ordinary course of business, (b) guaranties in favor of Agent and
the Banks for the Indebtedness and in favor of Agent and Bank and their
Affiliates for Hedging Transactions, (c) indemnification and insurance
obligations incurred in the ordinary course of business, (d) the existing
guaranties described in attached Schedule 7.3, and (e) contingent obligations
with respect to surety, appeal and performance bonds obtained in the ordinary
course of business.
7.4 Indebtedness. Become or remain obligated for any indebtedness for
borrowed money, or for any indebtedness incurred in connection with the
acquisition of any property, real or personal, tangible or intangible, except:
(a) the Indebtedness;
(b) current unsecured trade payables and accrued liabilities
arising in the ordinary course of Company's or any Subsidiary's business
and deferred income tax reserves;
(c) indebtedness described in attached Schedule 7.4, but no
increase in the amount thereof;
(d) unsecured indebtedness of (i) a Subsidiary to Company, (ii)
Company to a Subsidiary or (iii) a Subsidiary to another Subsidiary;
47
(e) indebtedness of the Company or a Subsidiary, other than
pursuant to this Agreement incurred to finance the acquisition of fixed or
capital assets (whether pursuant to a loan or a Capitalized Lease) in an
aggregate amount not exceeding Two Hundred Thousand Dollars ($200,000) at
any time outstanding, and any renewals or refinancing of such indebtedness
in amounts not exceeding the original principal amounts (less any required
amortization according to the terms thereof), on substantially the same
terms and otherwise in compliance with this Agreement;
(f) indebtedness under any Interest Rate Protection Agreements;
provided that Company and its Subsidiaries shall not enter into any
Interest Rate Protection Agreements for speculative purposes;
(g) other unsecured indebtedness not exceeding Fifty Thousand
Dollars ($50,000) in the aggregate at any time outstanding; and
(h) Subordinated Debt.
7.5 Acquisitions. Purchase or otherwise acquire or become obligated for
the purchase of all or substantially all of the assets or business interests of
any Person or any shares of stock of any Person or in any other manner
effectuate or attempt to effectuate an expansion of present business by
acquisition.
7.6 Investments. Make or allow to remain outstanding any investment
(whether such investment shall be of the character of investment in shares of
stock, evidences of indebtedness or other securities or otherwise) in, or any
loans or advances or extensions of credit to, any Person except:
(a) Company's investment in its existing wholly owned Subsidiaries
(including, after the giving effect to the Acquisition, QIIC);
(b) loans and advances permitted under Section 7.4(d) hereof;
(c) Permitted Investments;
(d) existing investments described in attached Schedule 7.6;
(e) extensions of trade credit in the ordinary course of business;
(f) loans and advances to employees of Company or a Subsidiary for
travel, moving or other business expenses not to exceed Twenty Five
Thousand Dollars ($25,000) in the aggregate at any time;
(g) investments of surplus cash in Cash and Cash Equivalents;
(h) other loans, advances and investments not exceeding Two
Hundred Thousand Dollars ($200,000) in the aggregate at any time
outstanding;
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(i) deposits made in the ordinary course of business in order to
obtain goods and services;
(j) loans made in the ordinary course of N.P. Premium Finance
Company's business.
7.7 Liens. Affirmatively pledge or mortgage any of its assets, whether
now owned or hereafter acquired, or create, suffer or permit to exist any Lien
thereon, except:
(a) the Permitted Encumbrances;
(b) Liens described in attached Schedule 7.7; and
(c) Liens upon fixed assets acquired by Company or a Subsidiary
after the date of this Agreement (including by virtue of a Capital Lease)
provided that (i) any such Lien is created solely for the purpose of
securing indebtedness representing, or incurred to finance, the cost of
the item of property subject thereto, (ii) the principal amount of the
indebtedness secured by such Lien does not exceed 100% of the fair value
of the property at the time it was acquired, (iii) the Lien does not cover
any other property other than such item of property, and (iv) the
incurrence of the indebtedness secured by such Lien is permitted by
Section 7.4 hereof.
7.8 Dividends. Declare or pay any dividends or make any other
distribution upon its Equity Interests, except dividends by Subsidiaries to
Company and dividends to holders of the Preferred Shares (at a dividend rate not
exceeding 8% per annum) provided that no such dividends to holders of the
Preferred Shares may be made at any time following the occurrence and during the
continuance of a Default or Event of Default.
7.9 Capital Expenditures. Make any Capital Expenditure during any single
fiscal year the aggregate amount of all Capital Expenditures made by Company and
its Subsidiaries during such period would exceed Two Hundred Thousand Dollars
($200,000).
7.10 Transactions with Affiliates. Except for the transactions described
in Schedule 7.10, enter into any transaction or series of transactions with any
Affiliate other than on terms and conditions as favorable to Company or the
Subsidiary (as applicable) as would be obtainable in a comparable arm's-length
transaction with a Person other than an Affiliate.
7.11 Limitation on Negative Pledge Clauses. Except for agreements,
documents or instruments pursuant to which Liens not prohibited by the terms of
this Agreement are created, entered into, or allowed to exist, any agreement,
document or instrument which would restrict or prevent Company and its
Subsidiaries from granting Agent on behalf of Banks liens upon, security
interests in and pledges of their respective assets which are senior in priority
to all other Liens.
7.12 Prepayment of Debts. Prepay, purchase, redeem or defease any Funded
Debt for money borrowed or any Capital Leases prior to the stated maturity
excluding, subject to the terms hereof, the Indebtedness and excluding the
indebtedness of Company to Comerica Bank
49
relating to letter of credit no. 72451-03 issued for the account of North Pointe
Insurance Company.
7.13 Subordinated Debt. Amend or modify any document evidencing any
Subordinated Debt or make any payment with respect to the Subordinated Debt
except in accordance with the provisions of the Subordinated Debt Documents.
7.14 Modification of Certain Agreements. Make, permit or consent to any
amendment or other modification to the constitutional documents of Company or
the Transaction Documents, except to the extent that any such amendment (i) does
not violate the terms and conditions of this Agreement or any of the other Loan
Documents, (ii) does not materially adversely affect the interest of the Banks
as creditor under this Agreement, the other Loan Documents or any other document
or instrument in any respect and (iii) could not reasonably be expected to have
a Material Adverse Effect.
7.15 Compensation. Pay or accrue (a) compensation consisting of salary to
Xxxxx X. Xxxxxxx in excess of the JGP Limit during any single fiscal year or any
bonus to Xxxxx X. Xxxxxxx in excess of 100% of the JGP Limit during any single
fiscal year, (b) compensation consisting of salary to B. Xxxxxxx Xxxxxxx in
excess of the BMP Limit during any single fiscal year or any bonus to B. Xxxxxxx
Xxxxxxx in excess of 100% of the BMP Limit during any single fiscal year, (c) a
bonus to Xxxxx X. Xxxxxxx or B. Xxxxxxx Xxxxxxx during any single fiscal year in
excess of his applicable base salary for such year or (d) any bonus to Xxxxx X.
Xxxxxxx or B. Xxxxxxx Xxxxxxx if an Event of Default has occurred and is
continuing.
7.16 Reinsurance Contracts. Enter into any reinsurance contract with any
Person for an amount that exceeds 10% of the aggregate dollar value of such
reinsurance contract unless such Person (i) has a rating of at least A- as
determined by Best, or (ii) is secured through the Michigan Catastrophic Claims
Association.
7.17 Investment Portfolio. Permit or suffer any material adverse change
in either the quality of its investments or its investment policies.
7.18 IRIS Ratios. Permit or suffer the Insurance Subsidiaries of the
Company to at any time be outside the recommended range for more than four (4)
of the Insurance Regulatory Information System ratio tests, determined on a
combined basis for the Insurance Subsidiaries.
8. DEFAULTS
8.1 Events of Default. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) non-payment when due of (i) the principal or interest under
any of the Notes issued hereunder in accordance with the terms thereof, or
(ii) any Fees and, in the case of interest and fees, continuance thereof
for five (5) days; or
50
(b) default in the observance or performance of any of the
conditions, covenants or agreements of Company set forth in Section
6.6(a), 6.15, 6.16, 6.17, 6.18, 6.19 or Section 7; or
(c) default in the observance or performance of any of the
conditions, covenants, or agreements set forth in Sections 6.1, 6.2 or
6.6(b), (c), (d), (e) or (f) and continuance thereof for fifteen (15)
days; or
(d) default in the observance or performance of any of the other
conditions, covenants or agreements set forth in this Agreement by Company
and continuance thereof for a period of thirty (30) consecutive days; or
(e) any representation or warranty made by Company herein or by
Company or any Guarantor in any instrument submitted pursuant hereto or by
any other party to the Loan Documents proves untrue or misleading in any
material adverse respect when made; or
(f) default in the observance or performance of or failure to
comply with any of the conditions, covenants or agreements of Company or
any Guarantor set forth in any of the other Loan Documents, and the
continuance thereof beyond any period of grace or cure specified in any
such document; or
(g) default in the payment of any other obligation of Company or
any Guarantor for borrowed money in an aggregate amount in excess of Fifty
Thousand Dollars ($50,000), or in the observance or performance of any
conditions, covenants or agreements related or given with respect to any
obligations for borrowed money in an aggregate amount in excess of Fifty
Thousand Dollars ($50,000) sufficient to permit the holder thereof to
accelerate the maturity of such obligation; or
(h) the rendering of any judgment(s) for the payment of money in
excess of the sum of Fifty Thousand Dollars ($50,000) individually or in
the aggregate against Company or any of its Subsidiaries, and such
judgments shall remain unpaid, unvacated, unbonded or unstayed by appeal
or otherwise for a period of thirty (30) consecutive days, except as
covered by adequate insurance with a reputable carrier and an action is
pending in which an active defense is being made with respect thereto; or
(i) the occurrence of a "reportable event", as defined in ERISA,
which is determined to constitute grounds for termination by the Pension
Benefit Guaranty Corporation of any Pension Plan maintained or contributed
to by or on behalf of the Company or any of its Subsidiaries for the
benefit of any of its employees or for the appointment by the appropriate
United States District Court of a trustee to administer such Pension Plan
and such reportable event is not corrected and such determination is not
revoked within thirty (30) days after notice thereof has been given to the
plan administrator of such Pension Plan (without limiting any of Agent's
or any Bank's other rights or remedies hereunder), or the institution of
proceedings by the Pension Benefit
51
Guaranty Corporation to terminate any such Pension Plan or to appoint a
trustee by the appropriate United States District Court to administer any
such Pension Plan; or
(j) if (i) Xxxxx X. Xxxxxxx shall cease to own in the aggregate at
least fifty one percent (51%) of the economic common equity interest of
Company and to control in the aggregate at least fifty one percent (51%)
of the equity interest of Company having voting power for the election of
a majority of the directors of Company, or (ii) Company shall cease to own
one hundred percent (100%) of the economic common equity interest of its
Subsidiaries; or
(k) any revocation of any of the Guaranties or the Preferred
Shares Subordination Agreement; or
(l) if a creditors' committee shall have been appointed for the
business of Company, any Subsidiary or any Guarantor in connection with
any bankruptcy or insolvency; or if Company, any Subsidiary or any
Guarantor shall have made a general assignment for the benefit of
creditors or shall have been adjudicated bankrupt, or shall have filed a
voluntary petition in bankruptcy or for reorganization or to effect a plan
or arrangement with creditors; or shall file an answer to a creditor's
petition or other petition filed against it, admitting the material
allegations thereof for an adjudication in bankruptcy or for
reorganization; or shall have applied for or permitted the appointment of
a receiver, or trustee or custodian for any of its property or assets; or
such receiver, trustee or custodian shall have been appointed for any
material part of its property or assets (otherwise than upon application
or consent of Company, a Subsidiary or any Guarantor, as applicable) and
such receiver, trustee or custodian so appointed shall not have been
discharged within sixty (60) days after the date of his appointment or if
an order shall be entered and shall not be dismissed or stayed within
sixty (60) days from its entry, approving any petition for reorganization
of Company, any Subsidiary or any Guarantor; or
(m) if at any time after May l, 2004 (i) the Best rating for any
Insurance Subsidiary is below the Required Rating or (ii) Best shall
withdraw its rating for any Insurance Subsidiary;
(n) any of the Insurance Subsidiaries shall be prohibited by any
Regulatory Agency from issuing new insurance policies in any jurisdiction
and such prohibition shall have a Material Adverse Effect on such
Insurance Subsidiary's business;
(o) any of the Insurance Subsidiaries shall fail to maintain such
catastrophe reinsurance as a prudent insurance company would deem
necessary, as reasonably determined by Bank;
(p) if the operation of Company or any of its Subsidiaries shall
become subject to the control of any Regulatory Agency, other than in the
normal course of business.
52
8.2 Exercise of Remedies. If an Event of Default has occurred and is
continuing hereunder: (v) the Agent shall, upon being directed to do so by the
Majority Revolving Credit Banks, declare the Revolving Credit Aggregate
Commitment terminated; (w) the Agent shall, upon being directed to do so by the
Majority Banks, declare the entire unpaid principal Indebtedness, including the
Notes, immediately due and payable, without presentment, notice or demand, all
of which are hereby expressly waived by Company; (x) upon the occurrence of any
Event of Default specified in subsection 8.1(1), above, and notwithstanding the
lack of any declaration by Agent under preceding clause (w), the entire unpaid
principal Indebtedness, including the Notes, shall become automatically and
immediately due and payable, and the Revolving Credit Aggregate Commitment shall
be automatically and immediately terminated; and (y) the Agent shall, if
directed to do so by the Majority Banks or the Banks, as applicable (subject to
the terms hereof), exercise any remedy permitted by this Agreement, the Loan
Documents or law. The Agent shall (i) provide each Bank with copies of all the
notices delivered under this Section and (ii) notify each Bank in the event it
accelerates any of Company's obligations hereunder.
8.3 Rights Cumulative. No delay or failure of Agent and/or Banks in
exercising any right, power or privilege hereunder shall affect such right,
power or privilege, nor shall any single or partial exercise thereof preclude
any further exercise thereof, or the exercise of any other power, right or
privilege. The rights of Agent and Banks under this Agreement are cumulative and
not exclusive of any right or remedies which Banks would otherwise have.
8.4 Waiver by Company of Certain Laws. To the extent permitted by
applicable law, Company hereby agrees to waive, and does hereby absolutely and
irrevocably waive and relinquish the benefit and advantage of any valuation,
stay, appraisement, extension or redemption laws now existing or which may
hereafter exist, which, but for this provision, might be applicable to any sale
made under the judgment, order or decree of any court, on any claim for interest
on the Notes, or any Lien contemplated by or granted under or in connection with
this Agreement. These waivers have been voluntarily given, with full knowledge
of the consequences thereof.
8.5 Waiver of Defaults. No Event of Default shall be waived by the Banks
except in a writing signed by an officer of the Agent in accordance with Section
12.11 hereof. No single or partial exercise of any right, power or privilege
hereunder, nor any delay in the exercise thereof, shall preclude other or
further exercise of their rights by Agent or the Banks. No waiver of any Event
of Default shall extend to any other or further Event of Default. No forbearance
on the part of the Agent or the Banks in enforcing any of their rights shall
constitute a waiver of any of their rights. Company expressly agrees that this
Section may not be waived or modified by the Banks or Agent by course of
performance, estoppel or otherwise.
8.6 Deposits and Accounts. Upon the occurrence and during the
continuance of any Event of Default, each Bank may at any time and from time to
time, without prior notice to the Company (any requirement for such notice being
expressly waived by the Company) set off and apply against any and all of the
obligations of the Company now or hereafter existing under this Agreement,
whether owing to such Bank or any other Bank or the Agent, any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness
53
at any time owing by such Bank to or for the credit or the
account of the Company and any property of the Company from time to time in
possession of such Bank, irrespective of whether or not such deposits held or
indebtedness owing by such Bank may be contingent and unmatured and regardless
of whether any Collateral then held by Agent or any Bank is adequate to cover
the Indebtedness. Promptly following any such setoff, such Bank shall give
written notice to Agent and to Company of the occurrence thereof. The Company
hereby grants to the Banks and the Agent a Lien on all such deposits,
indebtedness and property as collateral security for the payment and performance
of all of the obligations of the Company under this Agreement. The rights of
each Bank under this Section 8.6 are in addition to the other rights and
remedies which such Bank may have.
9. PAYMENTS, RECOVERIES AND COLLECTIONS.
9.1 Payment Procedure. (a) All payments by Company of principal of, or
interest on, the Notes, or of Fees, shall be made without setoff or counterclaim
on the date specified for payment under this Agreement not later than 11:00 a.m.
(Detroit time) in immediately available funds to Agent, for the ratable account
of the Revolving Credit Banks in the case of payments with respect to the
Revolving Credit and for the ratable account of the Term Loan Banks with respect
of the Term Loan, at Agent's office located at Xxx Xxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000 (care of Agent's Eurodollar Lending Office, for Eurodollar-based
Advances and portions of the Term Loan bearing interest at the Eurodollar-based
Rate). Upon receipt by the Agent of each such payment, the Agent shall make
prompt payment in like funds received to each Bank as appropriate, or, in
respect of Eurodollar-based Advances and portions of the Term Loan bearing
interest at the Eurodollar-based Rate, to such Bank's Eurodollar Lending Office.
(b) Unless the Agent shall have been notified by Company prior to
the date on which any payment to be made by Company is due that Company
does not intend to remit such payment, the Agent may, in its sole
discretion and without obligation to do so, assume that the Company has
remitted such payment when so due and the Agent may, in reliance upon such
assumption, make available to each Revolving Credit Bank or Term Loan Bank
as the case may be, on such payment date an amount equal to such Bank's
share of such assumed payment. If Company has not in fact remitted such
payment to the Agent each Bank shall forthwith on demand repay to the
Agent the amount of such assumed payment made available or transferred to
such Bank, together with the interest thereon, in respect of each day from
and including the date such amount was made available by the Agent to such
Bank to the date such amount is repaid to the Agent at a rate per annum
equal to (i) for Prime-based Advances or any portion of the Term Loan
which bears interest at the Prime-based Rate, the Federal Funds Effective
Rate (daily average), as the same may vary from time to time, and (ii)
with respect to Eurodollar-based Advances, Quoted Rate Advances or any
portion of the Term Loan which bears interest at the Eurodollar-based
Rate, Agent's aggregate marginal cost (including the cost of maintaining
any required reserves or deposit insurance and of any fees, penalties,
overdraft charges or other costs or expenses incurred by Agent) of
carrying such amount.
(c) Subject to the definition of Interest Period, whenever any
payment to be made hereunder shall otherwise be due on a day which is not
a Business Day, such
54
payment shall be made on the next succeeding Business Day and such
extension of time shall be included in computing interest, if any, in
connection with such payment.
(d) All payments to be made by the Company under this Agreement or
any of the Notes shall be made without set-off or counterclaim, as
aforesaid, and without deduction, except for Excluded Taxes, for or on
account of any present or future withholding or other taxes of any nature
imposed by any governmental authority or of any political subdivision
thereof or any federation or organization of which such governmental
authority may at the time of payment be a member, unless Company is
compelled by law to make payment subject to such tax. In such event,
Company shall:
(i) pay to the Agent for Agent's own account and/or, as the
case may be, for the account of the Banks (or, in the
case of Advances of the Swing Line, pay to the Swing
Line Bank which funded such Advances) such additional
amounts as may be necessary to ensure that the Agent
and/or such Bank or Banks receive a net amount equal to
the full amount which would have been receivable had
payment not been made subject to such tax; and
(ii) remit such tax to the relevant taxing authorities
according to applicable law, and send to the Agent or
the applicable Bank (including the Swing Line Bank) or
Banks, as the case may be, such certificates or
certified copy receipts as the Agent or such Bank or
Banks shall reasonably require as proof of the payment
by the Company, of any such taxes payable by the
Company.
If any tax of the United States of America or any other governmental
authority shall be or become applicable (y) after the date of this Agreement, to
such payments by Company made to a Bank's principal lending office or any other
office that such Bank may claim as its applicable lending office, or (z) after
such Bank's selection and designation of any other lending office, to such
payments made to such other lending office, such Bank shall use reasonable
efforts to make, fund and maintain its Advances and other extensions of credit
through another lending office of such Bank in another jurisdiction so as to
reduce Company's liability hereunder, if the making, funding or maintenance of
such Advances and other extensions of credit through such other lending office
of such Bank does not, in the reasonable judgment of such Bank, otherwise
adversely and materially affect such Advances and other extensions of credit, or
such Bank's applicable obligations under the Revolving Credit Aggregate
Commitment or such Bank.
As used herein, the terms "tax", "taxes" and "taxation" include all
existing taxes, levies, imposts, duties, charges, fees, deductions and
withholdings and any restrictions or conditions resulting in a charge together
with interest thereon and fines and penalties with respect thereto which may be
imposed by reason of any violation or default with respect to the law regarding
such tax, assessed as a result of or in connection with the transactions
hereunder, or the payment and or receipt of funds hereunder, or the payment or
delivery of funds into or out of any jurisdiction other than the United States
(whether assessed against Company, Agent or any of the Banks); however, the
terms "tax", "taxes" and "taxation" shall not include in the case of each
55
Bank and the Agent, (i) taxes measured by its net income, franchise and similar
taxes imposed on it, by the jurisdiction under the laws of which such Bank or
the Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Bank, taxes imposed on it, by the jurisdiction of such
Bank's applicable lending office or any political subdivision thereof and (ii)
if such Bank or the Agent is entitled at such time to an exemption from
withholding that is required to be evidenced by a United States Internal Revenue
Service Form 1001 or 4224 or other successor form or, in each case, any
successor or additional form, taxes imposed by reason of any failure of such
Bank or the Agent to deliver to the Agent or Company, from time to time as
required by the Agent or Company, such Form 1001 or 4224 or other successor form
(as applicable) or, in each case, any successor or additional form, completed in
a manner reasonably satisfactory to the Agent and Company (collectively,
"Excluded Taxes").
9.2 Withholding Taxes. If any Bank is not incorporated under the laws of
the United States or a state thereof, such Bank shall promptly deliver to the
Agent two executed copies of (i) Internal Revenue Service Form W-8BEN (or any
successor form) specifying the applicable tax treaty between the United States
and the jurisdiction of such Bank's domicile which provides for the exemption
from withholding on interest payments to such Bank, (ii) Internal Revenue
Service Form W-8ECI (or any successor form) evidencing that the income to be
received by such Bank hereunder is effectively connected with the conduct of a
trade or business in the United States or (iii) other evidence satisfactory to
the Agent that such Bank is exempt from United States income tax withholding
with respect to such income. Such Bank shall amend or supplement any such form
or evidence as required to insure that it is accurate, complete and
nonmisleading at all times. Promptly upon notice from the Agent of any
determination by the Internal Revenue Service that any payments previously made
to such Bank hereunder were subject to United States income tax withholding when
made, such Bank shall pay to the Agent the excess of the aggregate amount
required to be withheld from such payments over the aggregate amount actually
withheld by the Agent.
9.3 Application of Proceeds. Notwithstanding anything to the contrary in
this Agreement, after an Event of Default, the proceeds of any offsets or
voluntary payments by Company or any Guarantor or others and any other sums
received or collected in respect of the Indebtedness, shall be applied, first,
to the Notes on a pro rata basis (in proportion to the applicable Percentages of
the Advances and the Term Loan held by each of the Banks), next, to any other
Indebtedness on a pro rata basis, and then, if there is any excess, to Company.
The application of such proceeds and other sums to the Revolving Credit Notes,
the Swing Line Notes and the Term Notes shall be based on each Bank's Weighted
Percentage of the aggregate of the Advances and the Term Loan.
9.4 Pro-rata Recovery. If any Bank shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of offset or otherwise)
on account of principal of, or interest on, any of the Revolving Credit Notes or
Term Notes in excess of its pro rata share of payments then or thereafter
obtained by all Banks upon principal of and interest on all Revolving Credit
Notes and Term Notes, such Bank shall purchase from the other Banks such
participations in the Revolving Credit Notes and Term Notes held by them as
shall be necessary to cause such purchasing Bank to share the excess payment or
other recovery ratably in accordance with the Percentage with each of them;
provided, however, that if all or any portion of the excess payment
56
or other recovery is thereafter recovered from such purchasing holder, the
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
9.5 Deposits and Accounts. In addition to and not in limitation of any
tights of any Bank or other holder of any of the Notes under applicable law,
each Bank and each other such holder shall, upon acceleration of the
Indebtedness under the Notes and without notice or demand of any kind, have the
right to appropriate and apply to the payment of the Notes owing to it any and
all balances, credits, deposits, accounts or moneys of Company then or
thereafter with such Bank or other holder; provided, however, that any such
amount so applied by any Bank or other holder on any of the Notes owing to it
shall be subject to the provisions of Section 9.3, hereof.
10. CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS; MARGIN
ADJUSTMENTS.
10.1 Reimbursement of Prepayment Costs. If Company makes any payment of
principal with respect to any Eurodollar-based Advance Quoted Rate Advance or
any portion of the Term Loan with respect to which the Applicable Interest Rate
is the Eurodollar-based Rate on any day other than the last day of the Interest
Period applicable thereto (whether voluntarily, by acceleration, or otherwise),
or if Company fails to borrow any Eurodollar-based Advance or Quoted Rate
Advance after notice has been given by Company to Agent in accordance with the
terms hereof requesting such Advance, or if Company fails to make any payment of
principal or interest in respect of a Eurodollar-based Advance or Quoted Rate
Advance, any portion of the Term Loan with respect to which the Applicable
Interest Rate is the Eurodollar-based Rate when due, Company shall reimburse
Agent and Banks, as the case may be on demand for any resulting loss, cost or
expense actually incurred by Agent and Banks, as the case may be, as a result
thereof, including, without limitation, any such loss, cost or expense incurred
in obtaining, liquidating, employing or redeploying deposits from third parties,
whether or not Agent and Banks, as the case may be, shall have funded or
committed to fund such Advance or portion of the Term Loan. Such amount payable
by Company to Agent and Banks, as the case may be may include, without
limitation, an amount equal to the excess, if any, of (a) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed, refunded
or converted, for the period from the date of such prepayment or of such failure
to borrow, refund or convert, through the last day of the relevant Interest
Period, at the applicable rate of interest for said Advance(s) or portion of the
Term Loan provided under this Agreement, over (b) the amount of interest (as
reasonably determined by Agent and Banks, as the case may be) which would have
accrued to Agent and Banks, as the case may be on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
eurodollar market. Calculation of any amounts payable to any Bank under this
paragraph shall be made as though such Bank shall have actually funded or
committed to fund the relevant Advance or portion of the Term Loan through the
purchase of an underlying deposit in an amount equal to the amount of such
Advance or portion of the Term Loan and having a maturity comparable to the
relevant Interest Period; provided, however, that any Bank may fund any
Eurodollar-based Advance, Quoted Rate Advance or, any portion of the Term Loan
with respect to which the Applicable Interest Rate is the Eurodollar-based Rate,
in any manner it deems fit and the foregoing assumptions shall be utilized only
for the purpose of the calculation of amounts payable under
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this paragraph. Upon the written request of Company, Agent and Banks shall
deliver to Company a certificate setting forth the basis for determining such
losses, costs and expenses, which certificate shall be conclusively presumed
correct, absent manifest error.
10.2 Agent's Eurodollar Lending Office. For any Advance or portion of the
Term Loan to which the Eurodollar-based Rate is applicable, if Agent shall
designate a Eurodollar Lending Office which maintains books separate from those
of the rest of Agent, Agent shall have the option of maintaining and carrying
the relevant Advance or Term Note on the books of such Eurodollar Lending
Office.
10.3 Circumstances Affecting Eurodollar-based Rate Availability. If with
respect to any Interest Period, Agent or the Banks (after consultation with
Agent) shall determine that, by reason of circumstances affecting the interbank
markets generally, deposits in eurodollars in the applicable amounts are not
being offered to the Agent for such Interest Period, then Agent shall forthwith
give notice thereof to the Company. Thereafter, until Agent notifies Company
that such circumstances no longer exist, the obligation of Banks to make
Eurodollar-based Advances and the right of Company to convert an Advance to or
refund an Advance as a Eurodollar-based Advance or to have the Applicable
Interest Rate for a portion of the Term Loan be the Eurodollar-based Rate shall
be suspended, and the Company shall repay in full the then outstanding principal
amount of each such Eurodollar-based Advance or portion of the Term Loan with
respect to which the Eurodollar-based Rate is the Applicable Interest Rate
covered hereby together with accrued interest thereon, any amounts payable under
Section 10.1, hereof, and all other amounts payable hereunder on the last day of
the then current Interest Period applicable to such Advance or portion of the
Term Loan which bears interest at the Eurodollar-based Rate. Upon the date for
repayment as aforesaid and unless Company notifies Agent to the contrary within
two (2) Business Days after receiving a notice from Agent pursuant to this
Section, such outstanding principal amount shall be converted to a Prime-based
Advance or if a portion of the Term Loan, be carved at the Prime-based Rate as
of the last day of such Interest Period.
10.4 Laws Affecting Eurodollar-based Rate Availability. In the event that
any applicable law, rule or regulation (whether domestic or foreign) now or
hereafter in effect and whether or not currently applicable to any Bank or the
Agent or any interpretation or administration thereof by any governmental
authority charged with the interpretation or administration thereof, or
compliance by the Agent or any of the Banks (or any of their respective
Eurodollar Lending Offices) with any request or directive (whether or not having
the force of law) of any such authority, shall make it unlawful or impossible
for any of the Banks (or any of their respective Eurodollar Lending Offices) to
honor its obligations hereunder to make or maintain any Advance or portion of
the Term Loan with interest at the Eurodollar-based Rate, Agent shall so notify
Company and the right of Company to convert an Advance or refund an Advance as a
Eurodollar-based Advance or to have the Eurodollar-based Rate be the Applicable
Interest Rate for a portion of the Term Loan, shall be suspended and thereafter
Company may select as Applicable Interest Rates only those which remain
available and which are permitted to be selected hereunder, and if any of the
Banks may not lawfully continue to maintain an Advance or portion of the Term
Loan to the end of the then current Interest Period applicable thereto at the
Eurodollar-based Rate, Company shall immediately prepay such Advance or
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portion of the Term Loan, together with interest to the date of payment, and any
amounts payable under Sections 10.1 with respect to such prepayment and the
Applicable Interest Rate shall immediately be converted to the Prime-based Rate.
10.5 Increased Costs. In the event that any applicable law, rule or
regulation (whether domestic or foreign) now or hereafter in effect and whether
or not currently applicable to any Bank or the Agent or any interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Agent or any of the Banks with any request or directive (whether or not
having the force of law) made by any such authority, central bank or comparable
agency after the date hereof:
(a) shall subject the Agent or any of the Banks to any tax (other
than Excluded Taxes), duty or other charge with respect to any Advance,
the Term Loan or any Note or shall change the basis of taxation of
payments to the Agent or any of the Banks of the principal of or interest
on any Advance, the Term Loan or any Note or any other amounts due under
this Agreement in respect thereof (except for changes in the rate of tax
on the overall net income or revenues, for changes in the rates of
franchise taxes or for changes in the rates of similar taxes of the Agent
or of any of the Banks imposed by the United States of America or the
jurisdiction in which such Bank's principal executive office or applicable
lending office is located); or
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended
by the Agent or any of the Banks or shall impose on the Agent or any of
the Banks or the interbank markets any other condition affecting any
Advance, the Term Loan or any of the Notes;
and the result of any of the foregoing is to increase the costs to the Agent or
any of the Banks of making, funding or maintaining any part of the Indebtedness
hereunder with interest at the Eurodollar-based Rate or to reduce the amount of
any sum received or receivable by the Agent or any of the Banks under this
Agreement or under the Notes then Agent or Bank, as the case may be, shall
promptly notify the Company of such fact and demand compensation therefor and,
within fifteen (15) days after such notice, Company agrees to pay to Agent or
such Bank such additional amount or amounts as will compensate Agent or such
Bank or Banks for such increased cost or reduction. A certificate of Agent or
such Bank setting forth the basis for determining such additional amount or
amounts necessary to compensate Agent or such Bank or Banks shall be
conclusively presumed to be correct save for manifest error.
10.6 Substitution of Banks. If (i) the obligation of any Revolving Credit
Bank to make Eurodollar-based Advances has been suspended pursuant to Section
10.3 or Section 10.4, (ii) any Bank has demanded compensation under Section 10.5
or 10.7 or (iii) has wrongfully failed to fund its percentage of any requested
Advance under Section 2.4(c) (in each case, an "Affected Lender"), Company shall
have the right, with the assistance of the Agent, to seek a substitute lender or
lenders (which may be one or more of the Banks (the "Purchasing Lender" or
59
"Purchasing Lenders") to purchase the Notes and assume the commitment under this
Agreement of such Affected Lender. The Affected Lender shall be obligated to
sell its Notes and assign its commitment to such Purchasing Lender or Purchasing
Lenders within fifteen days after receiving notice from Company requiring it to
do so, at an aggregate price equal to the outstanding principal amount thereof
plus unpaid interest accrued thereon up to but excluding the date of the sale.
In connection with any such sale, and as a condition thereof, Company shall pay
to the Affected Lender all fees accrued for its account hereunder to but
excluding the date of such sale, plus, if demanded by the Affected Lender at
least two Business Days prior to such sale, (i) the amount of any compensation
which would be due to the Affected Lender under Section 10.1 if Company has
prepaid the outstanding Eurodollar-based Advances of the Affected Lender on the
date of such sale and (ii) any additional compensation accrued for its account
under Section 10.5 or 10.7 to but excluding said date. Upon such sale, the
Purchasing Lender or Purchasing Lenders shall assume the Affected Lender's
commitment and the Affected Lender shall be released from its obligations
hereunder to a corresponding extent. The Affected Lender, as assignor, such
Purchasing Lender, as assignee, Company and the Agent, shall enter into an
Assignment Agreement pursuant to, and subject to the conditions of, Section 12.8
hereof. In connection with any assignment pursuant to this Section 10.6, Company
or the Purchasing Lender shall pay to the Agent the administrative fee for
processing such assignment referred to in Section 12.8.
10.7 Other Increased Costs. In the event that after the date hereof the
adoption of or any change in any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to any Bank or Agent, or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Bank or Agent
with any guideline, request or directive of any such authority (whether or not
having the force of law), including any risk based capital guidelines, affects
or would affect the amount of capital required or expected to be maintained by
such Bank or Agent (or any corporation controlling such Bank or Agent) and such
Bank or Agent, as the case may be, determines that the amount of such capital is
increased by or based upon the existence of such Bank's or Agent's obligations,
Advances or the Term Loan hereunder and such increase has the effect of reducing
the rate of return on such Bank's or Agent's (or such controlling corporation's)
capital as a consequence of such obligations, Advances or the Term Loan
hereunder to a level below that which such Bank or Agent (or such controlling
corporation) could have achieved but for such circumstances (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank or Agent to be material, then the Company shall pay to such Bank or
Agent, as the case may be, from time to time, upon request by such Bank or
Agent, additional amounts sufficient to compensate such Bank or Agent (or such
controlling corporation) for any increase in the amount of capital and reduced
rate of return which such Bank or Agent reasonably determines to be allocable to
the existence of such Bank's or Agent's obligations, Advances or the Term Loan
hereunder. A statement as to the amount of such compensation, prepared in good
faith and in reasonable detail by such Bank or Agent, as the case may be, shall
be submitted by such Bank or by Agent to the Company, reasonably promptly after
becoming aware of any event described in this Section 10.7 and shall be
conclusive, absent manifest error in computation.
11. AGENT
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11.1 Appointment of Agent. Each Bank and the holder of each Note
irrevocably appoints and authorizes the Agent to act on behalf of such Bank or
holder under this Agreement and the Loan Documents and to exercise such powers
hereunder and thereunder as are specifically delegated to Agent by the terms
hereof and thereof, together with such powers as may be reasonably incidental
thereto, including without limitation the power to execute or authorize the
execution of financing or similar statements or notices, and other documents. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation towards or relationship of agency or trust with or for
Company. Each Bank agrees (which agreement shall survive any termination of this
Agreement) to reimburse Agent for all reasonable out-of-pocket expenses
(including house and outside attorneys' fees and disbursements) incurred by
Agent hereunder or in connection herewith or with an Event of Default or in
enforcing the obligations of Company under this Agreement or the Loan Documents
or any other instrument executed pursuant hereto, and for which Agent is not
reimbursed by Company, pro rata according to such Bank's Weighted Percentage.
Agent shall not be required to take any action requested by any Bank under the
Loan Documents, or to prosecute or defend any suit in respect of the Loan
Documents, unless indemnified to its satisfaction by the Banks against loss,
costs, liability and expense. If any indemnity furnished to Agent shall become
impaired, it may call for additional indemnity and cease to do the acts
indemnified against until such additional indemnity is given.
11.2 Deposit Account with Agent. Company hereby authorizes Agent, in
Agent's sole discretion, to charge its general deposit account(s), if any,
maintained with Agent for the amount of any principal, interest, or other
amounts or costs due under this Agreement when the same become due and payable
under the terms of this Agreement or the Notes.
11.3 Scope of Agent's Duties. The Agent shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of this Agreement or otherwise, have a fiduciary relationship with any
Bank (and no implied covenants or other obligations shall be read into this
Agreement against the Agent). Neither Agent nor any of its directors, officers,
employees or agents shall be liable to any Bank for any action taken or omitted
to be taken by it under this Agreement or any document executed pursuant hereto,
or in connection herewith or therewith with the consent or at the request of the
Majority Banks or in the absence of their own gross negligence or willful
misconduct, nor be responsible for or have any duties to ascertain, inquire into
or verify (a) any recitals or warranties herein or therein, (b) the
effectiveness, enforceability, validity or due execution of this Agreement or
any document executed pursuant hereto or any security thereunder, (c) the
performance by Company of its obligations hereunder or thereunder, or (d) the
satisfaction of any condition hereunder or thereunder, including without
limitation the making of any Advance or the issuance of any Letter of Credit.
Agent shall be entitled to rely upon any certificate, notice, document or other
communication (including any cable, telegraph, telex, facsimile transmission or
oral communication) believed by it to be genuine and correct and to have been
sent or given by or on behalf of a proper person. Agent may treat the payee of
any Note as the holder thereof. Agent may employ agents and may consult with
legal counsel (who may be counsel for Company), independent public accountants
and other experts selected by it and shall not be liable to the Banks (except as
to money or property received by them or their authorized agents), for the
negligence or misconduct of any such agent
61
selected by it with reasonable care or for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
11.4 Successor Agent. Agent may resign as such at any time upon at least
thirty (30) days prior notice to Company and all Banks. If Agent at any time
shall resign or if the office of Agent shall become vacant for any other reason,
Majority Banks shall, by written instrument, appoint successor agent(s)
satisfactory to such Majority Banks, and, so long as no Default or Event of
Default has occurred and is continuing, to Company. Such successor agent shall
thereupon become the Agent hereunder, as applicable, and shall be entitled to
receive from the prior Agent such documents of transfer and assignment as such
successor Agent may reasonably request. Any such successor Agent shall be a
commercial bank organized under the laws of the United States or any state
thereof and shall have a combined capital and surplus of at least $500,000,000.
If a successor is not so appointed or does not accept such appointment before
the resigning Agent's resignation becomes effective, the resigning Agent may
appoint a temporary successor to act until such appointment by the Majority
Banks is made and accepted or if no such temporary successor is appointed as
provided above by the resigning Agent, the Majority Banks shall thereafter
perform all of the duties of the resigning Agent hereunder until such
appointment by the Majority Banks is made and accepted. Such successor Agent
shall succeed to all of the rights and obligations of the resigning Agent as if
originally named. The resigning Agent shall duly assign, transfer and deliver to
such successor Agent all moneys at the time held by the resigning Agent
hereunder after deducting therefrom its expenses for which it is entitled to be
reimbursed. Upon such succession of any such successor Agent, the provisions of
this Article 11 shall continue in effect for the benefit of the resigning Agent
in respect of any actions taken or omitted to be taken by it while it was acting
as Agent.
11.5 Loans by Agent. Comerica Bank and its successors and assigns, in its
capacity as a Bank hereunder, shall have the same rights and powers hereunder as
any other Bank and may exercise or refrain from exercising the same as though it
were not the Agent. Comerica Bank and its affiliates may (without having to
account therefor to any Bank) accept deposits from, lend money to, and generally
engage in any kind of banking, trust, financial advisory or other business with
Company (or the shareholders of Company) as if it were not acting as Agent
hereunder, and may accept fees and other consideration therefor without having
to account for the same to the Banks.
11.6 Credit Decisions. Each Bank acknowledges that it has, independently
of Agent and each other Bank and based on the financial statements of Company
and such other documents, information and investigations as it has deemed
appropriate, made its own credit decision to extend credit hereunder from time
to time. Each Bank also acknowledges that it will, independently of Agent and
each other Bank and based on such other documents, information and
investigations as it shall deem appropriate at any time, continue to make its
own credit decisions as to exercising or not exercising from time to time any
rights and privileges available to it under this Agreement or any document
executed pursuant hereto.
11.7 Agent's Fees. Company shall pay to Agent the annual agency fee and
such other fees and charges in the amounts and at the times set forth in the
letter agreement between
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Company and Agent dated February 19, 2002. The Agent's Fees described in this
Section 11.7 shall not be refundable under any circumstances.
11.8 Authority of Agent to Enforce Notes, This Agreement and other Loan
Documents. Each Bank, subject to the terms and conditions of this Agreement,
authorizes the Agent with full power and authority as attorney-in-fact to
institute and maintain actions, suits or proceedings for the collection and
enforcement of the Notes and to file such proofs of debt or other documents as
may be necessary to have the claims of the Banks allowed in any proceeding
relative to Company, or any of its Subsidiaries, or their respective creditors
or affecting their respective properties, and to take such other actions which
Agent considers to be necessary or desirable for the protection, collection and
enforcement of the Notes, this Agreement or the other Loan Documents.
11.9 Indemnification. The Banks agree to indemnify the Agent (to the
extent not reimbursed by Company, but without limiting any obligation of Company
to make such reimbursement), ratably according to their respective Weighted
Percentages of the aggregate of the Revolving Credit Aggregate Commitment and
the Term Loan, from and against any and all claims, damages, losses,
liabilities, costs or expenses of any kind or nature whatsoever (including,
without limitation, fees and disbursements of counsel) which may be imposed on,
incurred by, or asserted against the Agent in any way relating to or arising out
of this Agreement, any of the other Loan Documents or the transactions
contemplated hereby or any action taken or omitted by the Agent under this
Agreement or any of the other Loan Documents; provided, however, that no Bank
shall be liable for any portion of such claims, damages, losses, liabilities,
costs or expenses resulting from the Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, each Bank agrees to reimburse
the Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including, without limitation, reasonable fees and expenses of
counsel) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement or any of the other
Loan Documents, to the extent that the Agent is not reimbursed for such expenses
by Company, but without limiting the obligation of Company to make such
reimbursement. Each Bank agrees to reimburse the Agent promptly upon demand for
its ratable share of any amounts owing to the Agent by the Banks pursuant to
this Section. If the indemnity furnished to the Agent under this Section shall,
in the judgment of the Agent, be insufficient or become impaired, the Agent may
call for additional indemnity from the Banks and cease, or not commence, to take
any action until such additional indemnity is furnished.
11.10 Knowledge of Default. It is expressly understood and agreed that the
Agent shall be entitled to assume that no Event of Default has occurred and is
continuing, unless the officers of the Agent immediately responsible for matters
concerning this Agreement shall have been notified in a writing specifying such
Event of Default and stating that such notice is a "notice of default" by a Bank
or by Company. Upon receiving such a notice, the Agent shall promptly notify
each Bank of such Event of Default and provide each Bank with a copy of such
notice. Agent shall also furnish the Banks, promptly upon receipt, with copies
of all other notices, reports or other information required to be provided by
Company hereunder.
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11.11 Agent's Authorization; Action by Banks. Except as otherwise
expressly provided herein, whenever the Agent is authorized and empowered
hereunder on behalf of the Banks to give any approval or consent, or to make any
request, or to take any other action on behalf of the Banks (including without
limitation the exercise of any right or remedy hereunder or under the other Loan
Documents), the Agent shall be required to give such approval or consent, or to
make such request or to take such other action only when so requested in writing
by the Majority Banks or the Banks, as applicable hereunder. Action that may be
taken by Majority Banks or all of the Banks, as the case may be (as provided for
hereunder) may be taken (i) pursuant to a vote at a meeting (which may be held
by telephone conference call) as to which all of the Banks have been given
reasonable advance notice, or (ii) pursuant to the written consent of the
requisite Percentages of the Banks as required hereunder, provided that all of
the Banks are given reasonable advance notice of the requests for such consent.
11.12 Enforcement Actions by the Agent. Except as otherwise expressly
provided under this Agreement or in any of the other Loan Documents and subject
to the terms hereof, Agent will take such action, assert such rights and pursue
such remedies under this Agreement and the other Loan Documents as the Majority
Banks or all of the Banks, as the case may be (as provided for hereunder), shall
direct; provided, however, that the Agent shall not be required to act or omit
to act if, in the judgment of the Agent, such action or omission may expose the
Agent to personal liability or is contrary to this Agreement, any of the other
Loan Documents or applicable law. Except as expressly provided above or
elsewhere in this Agreement or the other Loan Documents, no Bank (other than the
Agent, acting in its capacity as agent) shall be entitled to take any
enforcement action of any kind under any of the Loan Documents.
12. MISCELLANEOUS
12.1 Accounting Principles. Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, it shall be done, unless otherwise specified herein,
in accordance with GAAP or SAP, as applicable. Furthermore, all financial
statements required to be delivered hereunder shall be prepared in accordance
with GAAP or SAP, as applicable; provided, further, that (i) no change in
accounting principles shall be made from those used in preparing the financial
statements referred to in Section 6.1 hereof, including, without limitation,
with respect to the nature or classification of accounts, closing proceedings,
levels of reserves, or levels of accruals other than as a result of objective
changes in the underlying business and (ii) for purposes of the preceding clause
(i), "changes in accounting principles" includes all changes in accounting
principles, policies, practices procedures, or methodologies with respect to
financial statements, their classification, or their display, as well as all
changes in practices, methods, conventions, or assumptions used in making
accounting estimates.
12.2 Consent to Jurisdiction. Company and Banks hereby irrevocably submit
to the non-exclusive jurisdiction of any United States Federal or Michigan state
court sitting in Detroit in any action or proceeding arising out of or relating
to this Agreement or any of the other Loan Documents and Company and Banks
hereby irrevocably agree that all claims in respect of such action or proceeding
may be heard and determined in any such United States Federal or
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Michigan state court. Company irrevocably consents to the service of any and all
process in any such action or proceeding brought in any court in or of the State
of Michigan by the delivery of copies of such process to Company at its address
specified on the signature page hereto or by certified mail directed to such
address or such other address as may be designated by Company in a notice to the
other parties that complies as to delivery with the terms of Section 12.6.
Nothing in this Section shall affect the right of the Banks and the Agent to
serve process in any other manner permitted by law or limit the right of the
Banks or the Agent (or any of them) to bring any such action or proceeding
against Company or any Guarantor or any of its or their property in the courts
of any other jurisdiction. Company hereby irrevocably waives any objection to
the laying of venue of any such suit or proceeding in the above described
courts.
12.3 Law of Michigan. This Agreement and the Notes have been delivered at
Detroit, Michigan, and shall be governed by and construed and enforced in
accordance with the laws of the State of Michigan. Whenever possible each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
12.4 Interest. In the event the obligation of Company to pay interest on
the principal balance of the Notes is or becomes in excess of the maximum
interest rate which Company is permitted by law to contract or agree to pay,
giving due consideration to the execution date of this Agreement, then, in that
event, the rate of interest applicable with respect to such Bank's Percentage
shall be deemed to be immediately reduced to such maximum rate and all previous
payments in excess of the maximum rate shall be deemed to have been payments in
reduction of principal and not of interest.
12.5 Closing Costs and Other Costs. Company agrees to pay, or reimburse
the Agent for payment of, on demand (a) all reasonable closing costs and
expenses, including, by way of description and not limitation, house and outside
reasonable attorney fees (without duplication for services) and advances,
appraisal and accounting fees, and lien search fees incurred by Agent in
connection with the commitment, consummation and closing of the loans
contemplated hereby or in connection with the administration of this Agreement
or any amendment, refinancing or restructuring of the credit arrangements
provided under this Agreement, (b) all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing or
recording of this Agreement and the Loan Documents and the consummation of the
transactions contemplated hereby, and any and all liabilities with respect to or
resulting from any delay in paying or omitting to pay such taxes or fees, (c)
all reasonable costs and expenses of the Agent or any of the Banks (including
reasonable fees and expenses of house and outside counsel and whether incurred
through negotiations, legal proceedings or otherwise) in connection with any
Default or Event of Default or the amendment, waiver or enforcement of this
Agreement, or the Loan Documents or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement and (d)
all reasonable costs and expenses of the Agent or any of the Banks (including
reasonable fees and expenses of house and outside counsel) in connection with
any action or proceeding relating to a court order, injunction or other process
or decree restraining or seeking to restrain the Agent or any of the Banks from
paying any
65
amount under, or otherwise relating in any way to, any Letter of Credit and any
and all costs and expenses which any of them may incur relative to any payment
under any Letter of Credit. All of said amounts required to be paid by Company,
may, at Agent's option, be charged by Agent as a Prime-based Advance against the
Indebtedness.
12.6 Notices. Except as expressly provided otherwise in this Agreement,
all notices and other communications provided to any party hereto under this
Agreement or any other Loan Document shall be in writing and shall be given by
personal delivery, by mail, by reputable overnight courier, by telex or by
facsimile and addressed or delivered to it at its address set forth on attached
Schedule 12.6 or at such other address as may be designated by such party in a
notice to the other parties that complies as to delivery with the terms of this
Section 12.6. Any notice, if personally delivered or if mailed and properly
addressed with postage prepaid and sent by registered or certified mail, shall
be deemed given when received or when delivery is refused; any notice, if given
to a reputable overnight courier and properly addressed, shall be deemed given
two (2) Business Days after the date on which it was sent, unless it is actually
received sooner by the named addressee; and any notice, if transmitted by telex
or facsimile, shall be deemed given when received (answerback confirmed in the
case of telexes and receipt confirmed in the case of telecopies). Agent may, but
shall not be required to, take any action on the basis of any notice given to it
by telephone, but the giver of any such notice shall promptly confirm such
notice in writing or by telex or facsimile, and such notice will not be deemed
to have been received until such confirmation is deemed received in accordance
with the provisions of this Section set forth above. If such telephonic notice
conflicts with any such confirmation, the terms of such telephonic notice shall
control.
12.7 Further Action. Company, from time to time, upon written request of
Agent will make, execute, acknowledge and deliver or cause to be made, executed,
acknowledged and delivered, all such further and additional instruments, and
take all such further action as may reasonably be required to carry out the
intent and purpose of this Agreement or the Loan Documents, and to provide for
Advances under and payment of the Notes, according to the intent and purpose
herein and therein expressed.
12.8 Successors and Assigns; Participations; Assignments.
(a) This Agreement shall be binding upon and shall inure to the
benefit of Company, the Agent and the Banks, and their respective
successors and assigns.
(b) The foregoing shall not authorize any assignment by Company of
its rights or duties hereunder, and no such assignment shall be made (or
effective) without the prior written approval of all of the Banks.
(c) (i) Each of the Banks may at any time and from time to time,
subject to the terms and conditions hereof, grant participations (but not
assignments, except as expressly permitted hereunder) in such Bank's
rights and obligations hereunder and under the other Loan Documents to any
Person; provided, however, that anything herein to the contrary
notwithstanding, the Company shall not, at any time, be obligated to pay
under Section 9.1 to any participant any sum in excess of the sum which
Company would
66
have been obligated to pay to the Bank that was the grantor had such grant
not been effect. In the event of any such sale by a Bank of participating
interests to a participant, such Bank's obligations under the Loan
Documents shall remain unchanged, such Bank shall remain solely
responsible to the other parties hereto for the performance of such
obligations and the Agent shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under the
Loan Documents. Each Bank shall retain the sole right to approve, without
the consent of any participant, any amendment, modification or waiver of
any provision of the Loan Documents other than any amendment, modification
or waiver which would require consent of all of the Banks.
(ii) Each of the Banks may at any time and from time to time,
subject to the terms and conditions hereof, grant
assignments in such Bank's rights and obligations
hereunder and under the other Loan Documents to any
Person; provided, however, that (A) the consent of the
Company shall be required prior to an assignment
becoming effective unless the assignee is a Bank or an
Affiliate of a Bank, and (B) the consent of the Agent
shall be required prior to an assignment becoming
effective unless the assignee is a Bank or an Affiliate
of a Bank; provided that the consent of the Company
shall not be required if an Event of Default has
occurred and is continuing. Any consent required under
this Section 12.8 shall not be unreasonably withheld or
delayed.
(iii) The Company authorizes each Bank to disclose to any
prospective participant or assignee, once such assignee
is approved by Company and Agent (if such approval is
required), any and all financial information in such
Bank's possession concerning the Company which has been
delivered to such Bank pursuant to this Agreement;
provided that each such prospective participant shall
execute a confidentiality agreement consistent with the
terms of Section 12.13, hereof.
(d) Each assignment by a Bank of any portion of its rights and
obligations hereunder and under the other Loan Documents shall be made
pursuant to an Assignment Agreement substantially (as determined by Agent)
in the form attached hereto as Exhibit "G" (with appropriate insertions
acceptable to Agent) and shall be subject to the terms and conditions
hereof, and to the following restrictions:
(i) each assignment shall cover all of the Notes issued by
Company hereunder, and shall be for a fixed and not
varying percentage thereof, with the same percentage
applicable to each such Note;
(ii) each assignment shall be in a minimum amount of Five
Million Dollars ($5,000,000);
67
(iii) no assignment shall violate any "blue sky" or other
securities law of any jurisdiction or shall require the
Company or any other Person to file a registration
statement or similar application with the United States
Securities and Exchange Commission (or similar state
regulatory body) or to qualify under the "blue sky" or
other securities laws of any jurisdiction; and
(iv) no assignment shall be effective unless Agent has
received from the assignee (or from the assigning Bank)
an assignment fee of $3,500 for each such assignment.
In connection with any assignment, Company and Agent shall be entitled to
continue to deal solely and directly with the assigning Bank in connection with
the interest so assigned until (x) the Agent shall have received a notice of
assignment duly executed by the assigning Bank and an Assignment Agreement (with
respect thereto) duly executed by the assigning Bank and each assignee; (y) the
assigning Bank shall have delivered to the Agent the original of each Note held
by the assigning Bank under the Loan Agreements; and (z) the conditions in
Section 12.8(e) have been satisfied. From and after the date on which the Agent
shall notify Company and the assigning Bank that the foregoing conditions shall
have been satisfied and all consents (if any) required shall have been given,
the assignee thereunder shall be deemed to be a party to this Agreement. To the
extent that rights and obligations hereunder shall have been assigned to such
assignee as provided in such notice of assignment (and Assignment Agreement),
such assignee shall have the rights and obligations of the assigning Bank under
this Agreement (including without limitation the right to receive fees payable
hereunder in respect of the period following such assignment); provided,
however, that anything herein to the contrary notwithstanding, Company shall
not, at any time, be obligated to pay under Section 9.1 to any Bank that is an
assignee or a transferee any sum in excess of the sum which Company would have
been obligated to pay to the Bank that was the assignor or transferor had such
assignment or transfer not been effected. In addition, the assigning Bank, to
the extent that rights and obligations hereunder shall have been assigned by it
as provided in such notice of assignment (and Assignment Agreement), but not
otherwise, shall relinquish its rights and be released from its obligations
under this Agreement.
Within five (5) Business Days following Company's receipt of notice from the
Agent that Agent has accepted and executed a notice of assignment and the duly
executed Assignment Agreement, Company shall, to the extent applicable, execute
and deliver to the Agent in exchange for any surrendered Note, new Note(s)
payable to the order of the assignee in an amount equal to the amount assigned
to it pursuant to such notice of assignment (and Assignment Agreement), and with
respect to the portion of the Indebtedness retained by the assigning Bank, to
the extent applicable, a new Note payable to the order of the assigning Bank in
an amount equal to the amount retained by such Bank hereunder shall be executed
and delivered by the Company. Agent, the Banks and the Company acknowledge and
agree that any such new Note(s) shall be given in renewal and replacement of the
surrendered Notes and shall not effect or constitute a novation or discharge of
the Indebtedness evidenced by any surrendered Note, and each such new Note shall
contain a provision confirming such agreement.
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(e) Agent shall prepare and distribute to Company and each of the
Banks a revised Exhibit F to this Agreement setting forth the applicable
new Percentages of the Banks (including the assignee Bank), taking into
account such assignment. In addition, Agent shall maintain Exhibit I to
this Agreement as a register and shall update it from time to time.
(f) Each Bank agrees that any participation agreement permitted
hereunder shall comply with all applicable laws and shall be subject to
the following restrictions (which shall be set forth in the applicable
Participation Agreement):
(i) such Bank shall remain the holder of its Notes
hereunder, notwithstanding any such participation;
(ii) except as expressly set forth in this Section 12.8(f)
with respect to rights of setoff and the benefits of
Article 10 hereof, a participant shall have no direct
rights or remedies hereunder;
(iii) a participant shall not reassign or transfer, or grant
any subparticipations in its participation interest
hereunder or any part thereof; and
(iv) such Bank shall retain the sole right and responsibility
to enforce the obligations of the Company relating to
the Notes and Loan Documents, including, without
limitation, the right to proceed against any Guaranties,
or cause Agent to do so (subject to the terms and
conditions hereof), and the right to approve any
amendment, modification or waiver of any provision of
this Agreement without the consent of the participant,
except for those matters covered by Section 12.11(a)
through (d) and (g) hereof (provided that a participant
may exercise approval rights over such matters only on
an indirect basis, acting through such Bank, and
Company, Agent and the other Banks may continue to deal
directly with such Bank in connection with such Bank's
rights and duties hereunder), and shall otherwise be in
form satisfactory to Agent.
Company agrees that each participant shall be deemed to have the right of setoff
under Section 9.4 hereof, in respect of its participation interest in amounts
owing under this Agreement and the Loan Documents to the same extent as if the
Indebtedness were owing directly to it as a Bank under this Agreement, shall be
subject to the pro rata recovery provisions of Section 9.3 hereof, and that each
participant shall be entitled to the benefits of Article 9 hereof. The amount,
terms and conditions of any participation shall be as set forth in the
participation agreement between the issuing Bank and the Person purchasing such
participation, and none of the Company, the Agent and the other Banks shall have
any responsibility or obligation with respect thereto, or to any Person to whom
any such participation may be issued. No such participation shall relieve any
issuing Bank of any of its obligations under this Agreement or any of the other
Loan
69
Documents, and all actions hereunder shall be conducted as if no such
participation had been granted.
(g) Nothing in this Agreement, the Loan Documents or the Notes,
expressed or implied, is intended to or shall confer on any Person other
than the respective parties hereto and thereto and their successors and
assignees permitted hereunder and thereunder any benefit or any legal or
equitable right, remedy or other claim under this Agreement, the Notes or
the other Loan Documents.
12.9 Indulgence. No delay or failure of Agent and the Banks in exercising
any right, power or privilege hereunder shall affect such right, power or
privilege nor shall any single or partial exercise thereof preclude any further
exercise thereof, nor the exercise of any other right, power or privilege. The
rights of Agent and the Banks hereunder are cumulative and are not exclusive of
any rights or remedies which Agent and the Banks would otherwise have.
12.10 Counterparts. This Agreement may be executed in several
counterparts, and each executed copy shall constitute an original instrument,
but such counterparts shall together constitute but one and the same instrument.
12.11 Amendment and Waiver. No amendment or waiver of any provision of
this Agreement or any Loan Document, nor consent to any departure by Company
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Majority Banks or, if this Agreement expressly so requires
with respect to the subject matter thereof, by all Banks (and, with respect to
any amendments to this Agreement or the other Loan Documents, by Company), and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all the Banks, do any
of the following: (a) subject the Banks to any additional obligations, (b)
reduce the principal of, or the rate or amount of interest on, the Revolving
Credit Notes, the Term Notes or any Fees or other amounts payable hereunder, (c)
postpone any date fixed for any payment of principal of, or interest on, the
Revolving Credit Notes, the Term Notes or any Fees or other amounts payable
hereunder, (d) waive any Event of Default specified in Sections 8.1(a) hereof,
(e) release any Guarantor or terminate or modify any indemnity provided to the
Banks hereunder or under the Loan Documents, except as shall be otherwise
expressly provided in this Agreement or any Loan Document, (f) release all,
substantially all or any material part of the Collateral from the Liens granted
to Agent for the benefit of the Banks pursuant to the Loan Documents; (g)
modify, amend or waive any of the provisions of Sections 6.15 through 6.19,
Section 7.3 or Section 7.4 hereof, (h) take any action which requires the
signing of all Banks pursuant to the terms of this Agreement or any Loan
Document, (i) change the aggregate unpaid principal amount of the Notes which
shall be required for the Banks or any of them to take any action under this
Agreement or any Loan Document or (j) change the definition of "Majority Banks",
"Majority Revolving Credit Banks", "Majority Term Loan Banks", "Revolving Credit
Percentage", "Tenor Loan Percentage" or "Weighted Percentage" or this Section
12.11; provided further, that no amendment, waiver, or consent shall, unless in
writing and signed by the Agent in addition to all the Banks, affect the rights
or duties of the Agent under this Agreement or any Loan Document.
70
All references in this Agreement to "Banks" or "the Banks" shall refer to all
Banks, unless expressly stated to refer to Majority Banks.
12.12 Taxes and Fees. Should any documentary, stamp or similar tax (other
than an Excluded Tax of any Bank or Agent imposed by the jurisdiction in which
such Bank or Agent have their respective principal executive offices), or
recording or filing fee become payable in respect of this Agreement or any of
the Loan Documents (or the execution, filing or recording thereof) or any
amendment, modification or supplement hereof or thereof, Company agrees to pay
the same together with any interest or penalties thereon and agrees to hold the
Agent and the Banks harmless with respect thereto.
12.13 Confidentiality. The Agent and each Bank agree that it will not
disclose without the prior consent of Company (other than to its employees, its
Affiliates, to Agent or another Bank or to its auditors or counsel) any
information with respect to Company, which is furnished pursuant to this
Agreement or any of the Loan Documents; provided that Agent and any Bank may
disclose any such information (a) as has become generally available to the
public or has been lawfully obtained by Agent or such Bank from any third party
under no duty of confidentiality to Company, (b) as may be required in any
report, statement or testimony submitted to, or in respect to any inquiry, by,
any municipal, state or federal regulatory body having or claiming to have
jurisdiction over such Bank, including the Board of Governors of the Federal
Reserve System of the United States, the Office of the Comptroller of the
Currency or the Federal Deposit Insurance Corporation or similar organizations
(whether in the United States or elsewhere) or their successors, (c) as may be
required in respect to any summons or subpoena or in connection with any
litigation, (d) in order to comply with any law, order, regulation or ruling
applicable to such Bank, and (e) to any permitted transferee or assignee or to
any approved participant of, or with respect to, the Notes, as aforesaid.
Notwithstanding anything herein to the contrary, confidential information shall
not include, and each Bank (and each employee, representative or other agent of
any Bank) may disclose to any and all Persons, without limitation of any kind,
the "tax treatment" and "tax structure" (in each case, within the meaning of
Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby
and all materials of any kind (including opinions or other tax analyses) that
are or have been provided to such Bank relating to such tax treatment or tax
structure; provided that, with respect to any document or similar item that in
either case contains information concerning such tax treatments or tax structure
of the transactions contemplated hereby as well as other information, this
sentence shall only apply to such portions of the document or similar item that
relate to such tax treatment or tax structure.
12.14 USA PATRIOT ACT NOTIFICATION. The following notification is provided
to Company pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C.
Section 5318; IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT.
To help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify,
and record information that identifies each person or entity that opens an
account, including any deposit account, treasury management account, loan, other
extension of credit, or other financial services product. What this means for
Company: When Company opens an account, Agent and the Banks will ask for
Company's name, tax identification number, business address, and other
information that will
71
allow Agent and the Banks to identify Company. Agent and the Banks may also ask
to see Company's legal organizational documents or other identifying documents.
12.15 WAIVER OF JURY TRIAL. THE BANKS, THE AGENT AND THE COMPANY AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY
JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTION OF ANY OF THEM. NEITHER THE BANKS, THE AGENT, NOR COMPANY
SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN
WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE
BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE BANKS AND THE AGENT OR
COMPANY EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL OF THEM.
12.16 Complete Agreement Conflicts. This Agreement, the Notes, any
Requests for Revolving Credit Advance, and the Loan Documents contain the entire
agreement of the parties hereto, superseding all prior agreements, discussions
and understandings relating to the subject matter hereof, and none of the
parties shall be bound by anything not expressed in writing. In the event of any
conflict between the terms of this Agreement and the other Loan Documents, this
Agreement shall govern.
12.17 Severability. In case any one or more of the obligations of Company
under this Agreement, the Notes or any of the other Loan Documents shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining obligations of Company shall not in any way
be affected or impaired thereby, and such invalidity, illegality or
unenforceability in one jurisdiction shall not affect the validity, legality or
enforceability of the obligations of Company under this Agreement, the Notes or
any of the other Loan Documents in any other jurisdiction.
12.18 Table of Contents and Headings. The table of contents and the
headings of the various subdivisions hereof are for convenience of reference
only and shall in no way modify or affect any of the terms or provisions hereof.
12.19 Construction of Certain Provisions. If any provision of this
Agreement or any of the Loan Documents refers to any action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person,
whether or not expressly specified in such provision.
12.20 Independence of Covenants. Each covenant hereunder shall be given
independent effect (subject to any exceptions stated in such covenant) so that
if a particular action or
72
condition is not permitted by any such covenant (taking into account any such
stated exception), the fact that it would be permitted by an exception to, or
would be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or an Event of Default.
12.21 Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, representations and warranties of Company or any party to
any of the Loan Documents made herein or in any of the Loan Documents or in any
certificate, report, financial statement or other document furnished by or on
behalf of Company or any Guarantor in connection with this Agreement or any of
the Loan Documents shall be deemed to have been relied upon by the Banks,
notwithstanding any investigation heretofore or hereafter made by any Bank or on
such Bank's behalf, and those covenants and agreements of Company set forth in
Sections 10.1, 10.3, 10.4, 10.5, 10.7 and 12.5 hereof (together with any other
indemnities of Company contained elsewhere in this Agreement or in any of the
Loan Documents) and of Banks set forth in Section 11.9 hereof shall survive the
repayment in full of the Indebtedness and the termination of the Revolving
Credit Aggregate Commitment.
12.22 Effective Upon Execution. This Agreement shall become effective upon
the execution hereof by Banks, Agent and Company and the issuance by Company of
the Revolving Credit Notes and the Term Notes hereunder, and shall remain
effective until the Indebtedness has been repaid and discharged in full and no
commitment to extend any credit hereunder or under any of the other Loan
Documents, whether optional or obligatory, remains outstanding.
12.23 Waiver. Under the terms of Section 6.18 of the Existing Credit
Agreement, Company was required to maintain a Net Premium Ratio of not more than
2.50 to 1.0. Company has informed the Agent and the Banks that it violated the
provisions of Section 6.18 for the period ended December 31, 2003. The Banks
party to the Existing Credit Agreement waive the violation of the provisions of
Section 6.18 for the period ended December 31, 2003 provided that such waiver is
contingent on the Net Premium Ratio not exceeding 2.75 to 1.0 as of such date.
If such condition is not satisfied, the waiver contained in this Section 12.23
shall be null and void.
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WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK, as Agent NORTH POINTE HOLDINGS
CORPORATION, a Michigan corporation
By: /s/ Xxxxxx X. Xxx By: /s/ B. Xxxxxxx Xxxxxxx
--------------------------------- ------------------------------
Xxxxxx X. Xxx X. Xxxxxxx Xxxxxxx
Its: Vice President Its: Secretary
BANKS: COMERICA BANK
By: /s/ Xxxxxx X. Xxx
------------------------------
Xxxxxx X. Xxx
Its: Vice President
FIFTH THIRD BANK
By:
------------------------------
Its:
BANK ONE, N.A.
By:
------------------------------
Its:
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WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK, as Agent NORTH POINTE HOLDINGS
CORPORATION, a Michigan corporation
By: By:
---------------------------------- ---------------------------------
Xxxxxx X. Xxx X. Xxxxxxx Xxxxxxx
Its: Secretary
Its: Vice President
BANKS: COMERICA BANK
By:
---------------------------------
Xxxxxx X. Xxx
Its: Vice President
FIFTH THIRD BANK
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxx
Its: Vice President
BANK ONE, N.A.
By:
---------------------------------
Its:
--------------------------------
75
WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK, as Agent NORTH POINTE HOLDINGS
CORPORATION, a Michigan corporation
By: By:
---------------------------------- ---------------------------------
Its: Vice President Its: Secretary
BANKS: COMERICA BANK
By:
---------------------------------
Its: Vice President
FIFTH THIRD BANK
By:
---------------------------------
Its:
--------------------------------
BANK ONE, N.A.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Its: First Vice President
76
