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EXHIBIT 10.11
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MEADOWBROOK INSURANCE GROUP, INC.
REVOLVING CREDIT AGREEMENT
DATED AS OF AUGUST 3, 1999
COMERICA BANK, AS AGENT
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TABLE OF CONTENTS
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1. DEFINITIONS..............................................................................................1
2. REVOLVING CREDIT........................................................................................16
2.1 Revolving Credit Commitment...........................................................16
2.2 Accrual of Interest and Maturity......................................................16
2.3 Requests for Advances and Requests for Refundings and
Conversions of Revolving Credit Advances..............................................16
2.4 Disbursement of Revolving Credit Advances.............................................18
2.5 Prime-based Advance in Absence of Election or Upon Default............................19
2.6 Revolving Credit Facility Fee.........................................................19
2.7 Reduction of Indebtedness; Revolving Credit Aggregate Commitment......................20
2.8 Optional Reduction or Termination of Revolving Credit Aggregate
Commitment............................................................................20
2.9 Extension of Revolving Credit Maturity Date...........................................21
3. LETTERS OF CREDIT.......................................................................................21
3.1 Letters of Credit.....................................................................21
3.2 Conditions to Issuance................................................................22
3.3 Notice................................................................................23
3.4 Letter of Credit Fees.................................................................23
3.5 Other Letter of Credit Fees...........................................................24
3.6 Draws and Demands for Payment Under Letters of Credit.................................24
3.7 Obligations Irrevocable...............................................................25
3.8 Risk Under Letters of Credit..........................................................26
3.9 Indemnification.......................................................................27
3.10 Right of Reimbursement................................................................28
4. MARGIN ADJUSTMENTS; INTEREST PAYMENTS...................................................................29
4.1 Margin Adjustments....................................................................29
4.2 Prime-based Interest Payments.........................................................29
4.3 Eurocurrency-based Interest Payments..................................................29
4.4 Interest Payments on Conversions......................................................29
4.5 Interest on Default...................................................................30
4.6 Prepayment of Revolving Credit Advances...............................................30
5. CONDITIONS..............................................................................................30
5.1 Execution of Notes and this Agreement.................................................30
5.2 Corporate Authority...................................................................30
5.3 Collateral Documents and Guaranties...................................................31
5.4 Compliance with Certain Documents and Agreements......................................31
5.5 Opinion of Counsel....................................................................32
5.6 Company's Certificate.................................................................32
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5.7 Payment of Fees.......................................................................32
5.8 Existing Credit Facilities............................................................32
5.9 Other Documents and Instruments.......................................................32
5.10 Continuing Conditions.................................................................33
6. REPRESENTATIONS AND WARRANTIES..........................................................................33
6.1 Corporate Authority...................................................................33
6.2 Due Authorization - Company...........................................................33
6.3 Due Authorization - Guarantors........................................................33
6.4 Liens.................................................................................34
6.5 Taxes.................................................................................34
6.6 No Defaults...........................................................................34
6.7 Enforceability of Agreement and Loan Documents -- Company.............................34
6.8 Enforceability of Loan Documents -- Guarantors........................................34
6.9 Compliance with Laws..................................................................34
6.10 Non-contravention -- Company..........................................................35
6.11 Non-contravention -- Guarantors.......................................................35
6.12 No Litigation.........................................................................35
6.13 Consents, Approvals and Filings, Etc..................................................35
6.14 Agreements Affecting Financial Condition..............................................36
6.15 No Investment Company or Margin Stock.................................................36
6.16 ERISA.................................................................................36
6.17 Conditions Affecting Business or Properties...........................................36
6.18 Environmental and Safety Matters......................................................36
6.19 Subsidiaries..........................................................................37
6.20 Accuracy of Information...............................................................37
7. AFFIRMATIVE COVENANTS...................................................................................37
7.1 Financial Statements..................................................................37
7.2 Certificates; Other Information.......................................................39
7.3 Payment of Obligations................................................................39
7.4 Conduct of Business and Maintenance of Existence......................................39
7.5 Maintenance of Property; Insurance....................................................39
7.6 Inspection of Property; Books and Records, Discussions................................40
7.7 Notices...............................................................................40
7.8 Hazardous Material Laws...............................................................41
7.9 Maintain Base Net Worth...............................................................41
7.10 Fixed Charge Coverage Ratio...........................................................41
7.11 Risk-Based Capital....................................................................41
7.11A Minimum Statutory Surplus. ..........................................................41
7.12 Funded Debt to Total Capitalization Ratio.............................................42
7.13 Net Premium and Gross Premium Ratio...................................................42
7.14 Taxes.................................................................................42
7.15 Governmental and Other Approvals......................................................42
7.16 Compliance with ERISA.................................................................42
7.17 ERISA Notices.........................................................................42
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7.18 Use of Proceeds.......................................................................43
7.19 Future Subsidiaries. .................................................................43
8. NEGATIVE COVENANTS......................................................................................43
8.1 Limitation on Debt....................................................................43
8.2 Limitation on Liens...................................................................44
8.3 Limitation on Guarantee Obligations...................................................45
8.4 Acquisitions..........................................................................45
8.5 Limitation on Mergers, or Sale of Assets..............................................45
8.6 Restricted Payments...................................................................46
8.7 Limitation on Investments, Loans and Advances.........................................46
8.8 Transactions with Affiliates..........................................................47
8.9 Limitation on Negative Pledge Clauses.................................................47
8.10 Prepayment of Debts...................................................................47
8.11 Subordinated Debt.....................................................................47
8.12 Reinsurance Contracts.................................................................47
8.13 Investment Portfolio..................................................................47
9. DEFAULTS................................................................................................47
9.1 Events of Default.....................................................................47
9.2 Exercise of Remedies..................................................................50
9.3 Rights Cumulative.....................................................................50
9.4 Waiver by Company of Certain Laws.....................................................50
9.5 Waiver of Defaults....................................................................50
9.6 Set Off...............................................................................51
10. PAYMENTS, RECOVERIES AND COLLECTIONS....................................................................51
10.1 Payment Procedure.....................................................................51
10.2 Application of Proceeds of Collateral.................................................53
10.3 Pro-rata Recovery.....................................................................53
11. CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS........................................................53
11.1 Reimbursement of Prepayment Costs.....................................................53
11.2 Agent's Eurocurrency Lending Office...................................................54
11.3 Circumstances Affecting Eurocurrency-based Rate Availability..........................54
11.4 Laws Affecting Eurocurrency-based Advance Availability................................54
11.5 Increased Cost of Eurocurrency-based Advances.........................................55
11.6 Indemnity.............................................................................56
11.7 Other Increased Costs.................................................................56
11.8 Substitution of Banks.................................................................56
12. AGENT...................................................................................................57
12.1 Appointment of Agent..................................................................57
12.2 Deposit Account with Agent............................................................58
12.3 Scope of Agent's Duties...............................................................58
12.4 Successor Agent.......................................................................58
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12.5 Agent in its Individual Capacity......................................................59
12.6 Credit Decisions......................................................................59
12.7 Agent's Fees..........................................................................59
12.8 Authority of Agent to Enforce Notes and This Agreement................................59
12.9 Indemnification.......................................................................60
12.10 Knowledge of Default..................................................................60
12.11 Agent's Authorization; Action by Banks................................................60
12.12 Enforcement Actions by the Agent......................................................61
13. MISCELLANEOUS...........................................................................................61
13.1 Accounting Principles.................................................................61
13.2 Consent to Jurisdiction...............................................................61
13.3 Law of Michigan.......................................................................61
13.4 Interest..............................................................................62
13.5 Closing Costs and Other Costs; Indemnification........................................62
13.6 Notices...............................................................................63
13.7 Further Action........................................................................63
13.8 Successors and Assigns; Participations; Assignments...................................64
13.9 Indulgence............................................................................66
13.10 Counterparts..........................................................................67
13.11 Amendment and Waiver..................................................................67
13.12 Confidentiality.......................................................................67
13.13 Withholding Taxes.....................................................................68
13.14 Taxes and Fees........................................................................68
13.15 WAIVER OF JURY TRIAL..................................................................68
13.16 Complete Agreement; Conflicts.........................................................68
13.17 Severability..........................................................................69
13.18 Table of Contents and Headings........................................................69
13.19 Construction of Certain Provisions....................................................69
13.20 Independence of Covenants.............................................................69
13.21 Reliance on and Survival of Various Provisions........................................69
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TABLE OF CONTENTS
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TABLE OF CONTENTS
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TABLE OF CONTENTS
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SCHEDULES
Schedule 1.1 Pricing Matrix
Schedule 1.2 Percentages
Schedule 2 Existing Letters of Credit
Schedule 5.2 List of Jurisdictions in which Company
and/or Subsidiaries do business
Schedule 6.9 Compliance with Laws
Schedule 6.12 Litigation
Schedule 6.16 Employee Pension Benefit Plans
Schedule 6.18 Environmental Matters
Schedule 6.19 Subsidiaries
Schedule 6.20 Contingent Obligations
Schedule 8.1 Existing Debt
Schedule 8.2 Permitted Liens
Schedule 13.6 Notices
EXHIBITS
A FORM OF REQUEST FOR REVOLVING CREDIT ADVANCE
B FORM OF REVOLVING CREDIT NOTE
C FORM OF NOTICE OF LETTERS OF CREDIT
D FORM OF COVENANT COMPLIANCE REPORT
E FORM OF ASSIGNMENT AGREEMENT
F FORM OF GUARANTY (including Exhibit "A" - Joinder Agreement)
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REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement ("Agreement") is made as of the 3rd day
of August, 1999, by and among the financial institutions from time to time
signatory hereto (individually a "Bank," and any and all such financial
institutions collectively the "Banks"), Comerica Bank, as agent for the Banks
(in such capacity, "Agent"), and Meadowbrook Insurance Group, Inc., a Michigan
corporation (the "Company");
COMPANY, AGENT AND BANKS AGREE:
1. DEFINITIONS
For the purposes of this Agreement the following terms will have the
following meanings:
"Account Party(ies)" shall mean, with respect to any Letter of Credit,
the account party or parties (which shall be the Company, individually, or a
Subsidiary jointly and severally with Company) named in an application to the
Issuing Bank for the issuance of such Letter of Credit.
"Adjusted EBITDA" shall mean as of any date of determination, without
duplication, the sum of (a) net income of Company, Meadowbrook, Inc., ASI, Inc.,
any Subsidiary which is not an Insurance Subsidiary or a Subsidiary regulated by
any regulatory agency that regulates insurance companies and Crest Financial
Corporation (excluding in the calculation thereof the net income of Williamsburg
National Insurance Company) for the four preceding fiscal quarters ending on
such date of determination, plus, to the extent deducted in determining net
income, depreciation and amortization for such period, taxes on income for such
period and Interest Expense for such period, plus (b) an amount equal to fifty
percent (50%) of the sum of net income of American Indemnity Insurance Company
Ltd. for the four preceding fiscal quarters ending on such date of
determination, plus, to the extent deducted in determining such net income,
depreciation and amortization for such period, taxes on income for such period
and Interest Expense for such period, plus, (c) one hundred percent (100%) of
the amount available to be distributed by Star Insurance Company and any other
Insurance Subsidiary not owned by Star Insurance Company to Company as of such
date of determination, plus (e) dividends actually paid in cash by Star
Insurance Company and any other Insurance Subsidiary not owned by Star Insurance
Company to Company during such period.
"Advance(s)" shall mean, as the context may indicate, a borrowing
requested by Company, and made by the Banks under Section 2.1 hereof, including
without limitation any readvance, refunding or conversion of such borrowing
pursuant to Section 2.3 hereof, any advance in respect of a Letter of Credit
under Section 3.6 hereof (including without limitation the unreimbursed amount
of any draws under any Letters of Credit), and shall include, as applicable, a
Eurocurrency-based Advance and a Prime-based Advance.
"Affected Lender" shall have the meaning set forth in Section 11.8.
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"Affiliate" shall mean, with respect to any Person, any other Person or
group acting in concert in respect of the first Person that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with such first Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person or group of Persons, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of management and policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise. Unless otherwise specified to the contrary herein, or the context
requires otherwise, Affiliate shall refer to the Company's Affiliates.
"Agent" shall mean Comerica Bank, in its capacity as agent for the
Banks hereunder, or any successor agent appointed in accordance with Section
12.4 hereof.
"Agent's Fees" shall mean those agency, and other fees and expenses
required to be paid by Company to Agent under Section 12.7 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 the Eurocurrency-based Rate or
the Prime-based Rate, as selected by Company from time to time subject to the
terms and conditions of this Agreement.
"Applicable L/C Fee Percentage" shall mean, as of any date of
determination thereof, the applicable percentage used to calculate the Letter of
Credit Fees due and payable hereunder, determined by reference to the
appropriate columns in the pricing matrix attached to this Agreement as Schedule
1.1.
"Banks" shall mean Comerica Bank, The First National Bank of Chicago
and such other financial institutions from time to time parties hereto as
lenders and shall include any assignee which becomes a Bank pursuant to Section
13.8 hereof.
"Base Net Worth" shall mean (i) $105,000,000, plus (ii) (on a
cumulative basis) for each fiscal quarter ending on or after the Effective Date,
the sum of (A) seventy five percent (75%) of Net Income (if positive), earned in
each fiscal quarter commencing after June 30, 1999 and (B) one hundred percent
(100%) of the cash proceeds of the issuance of any Equity Interests of Company
(net of reasonable and customary costs and expenses of issuance) during such
fiscal quarter.
"Best" shall mean A.M. Best Company and its successors.
"Business Day" shall mean any day on which commercial banks are open
for domestic and international business in Detroit, London and New York.
"Capitalized Lease" shall mean, as applied to any Person, any lease of
any property (whether real, personal or mixed) with respect to which the
discounted present value of the rental obligations
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of such Person as lessee thereunder, in conformity with GAAP, is required to be
capitalized on the balance sheet of that Person.
"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.
"Comerica Bank" shall mean Comerica Bank, a Michigan banking
corporation, its successors or assigns.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Company within the meaning
of Section 4001 of ERISA or which is part of a group which includes the Company
and which is treated as a single employer under Section 414 of the Internal
Revenue Code.
"Company" is defined in the Preamble.
"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.
"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 pursuant to Section 7.2(a) hereof, in the form of attached
Exhibit D and certified by a Responsible Officer, 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
7.9 through 7.13 and 8.14 of this Agreement.
"De Minimis Matters" shall mean environmental or other matters, the
existence of which and any liability which may result therefrom, would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the financial condition or businesses of the Company and its
Subsidiaries (taken as a whole) or on the ability of the Company and
Subsidiaries (taken as a whole) to pay their debts, as such debts become due.
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"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.
"Dividends Paid or Payable" shall mean for any period the aggregate
amount of dividends and other payments and distributions in respect of the
capital stock of the Guarantor and/or New Subsidiaries that is or is available
to be paid to Company during such period.
"Dollars" and the sign "$" shall mean lawful money of the United States
of America.
"Effective Date" shall mean the date on which all the conditions
precedent set forth in Sections 5.1 through 5.10 have been satisfied.
"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 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.
"Eurocurrency-based Advance" shall mean an Advance which bears interest
at the Eurocurrency-based Rate.
"Eurocurrency-based Rate" shall mean, with respect to any
Eurocurrency-Interest Period, the per annum interest rate which is equal to the
sum of the Margin plus the quotient of:
(A) the per annum interest rate at which deposits in eurodollars are
offered to Agent's Eurocurrency Lending Office by other prime
banks in the eurodollar market in an amount comparable to the
relevant Eurocurrency-based Advance and for a period equal to the
relevant Eurocurrency-Interest Period at approximately 11:00 a.m.
Detroit time two (2) Business Days prior to the first day of such
Eurocurrency-Interest Period, divided by
(B) an amount equal to one minus the stated maximum rate (expressed as
a decimal) of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or
other reserves) that is specified on the first day of such
Eurocurrency-Interest Period by the Board of Governors of the
Federal Reserve
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System (or any successor agency thereto) for determining the
maximum reserve requirement with respect to eurodollar funding
(currently referred to as "eurocurrency liabilities" in Regulation
D of such Board) maintained by a member bank of such System, all
as conclusively determined (absent manifest error) by the Agent,
such sum to be rounded upward, if necessary, to the nearest whole
multiple of 1/16th of 1%.
"Eurocurrency-Interest Period" shall mean the Interest Period
applicable to a Eurocurrency-based Advance.
"Eurocurrency 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 Eurocurrency 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 in Agent's administrative questionnaire completed by such Bank (or
identified thereon as a Eurocurrency Lending Office), or at such other office,
branch or affiliate of such Bank as it may hereafter designate as its
Eurocurrency Lending Office by notice to Company and Agent.
"Event of Default" shall mean each of the Events of Default specified
in Section 9.1 hereof.
"Excluded Earn-Out Payments" shall mean any earn-out or other similar
payments made by an Insurance Subsidiary related to any acquisition which is
accounted for as an investment in capital in accordance with SAP and which does
not (a) reduce such Insurance Subsidiary's reported net income beyond an
incremental goodwill amortization expense or (b) reduce such Insurance
Subsidiary's capacity to pay dividends.
"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 Letter of
Credit Fees, the Agent's Fees, and the other fees and charges payable by Company
to the Banks or Agent hereunder.
"Financial Statements" shall mean all those balance sheets, earnings
statements and other financial data (whether of the Company or the Subsidiaries)
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" shall mean as of any date of determination, a
ratio, the numerator of which is Adjusted EBITDA for the four preceding fiscal
quarters ending on such date of determination, and the denominator of which is
Interest Expense of Company for such period, plus
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an amount equal to all principal payments payable during such period by Company
with respect to Funded Debt, plus all dividends paid or payable during such
period by Company or any of its Subsidiaries, plus to the extent occurring after
June 30, 1999, the aggregate amount of all purchases by Company or any of its
Subsidiaries of stock of Company during such period, plus all earn-out or other
similar contingent payments paid in cash by Company or any Subsidiary arising in
connection with the acquisition of any new business during such period,
excluding however, Excluded Earn-Out Payments.
"Funded Debt" shall mean for any Person as of any date of
determination, the sum, without duplication, of (a) all indebtedness of such
Person for borrowed money or for 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 such Person under Capitalized Leases as of such date, (c) all
obligations of such Person in respect of letters of credit, acceptances or
similar obligations issued or created for the account of such Person as of such
date, unless such obligations are secured in full by cash or marketable
securities, and (d) all liabilities secured by any lien on any property owned by
such Person as of such date even though such Person has not assumed or otherwise
become liable for the payment thereof, in each case determined in accordance
with GAAP.
"Funded Debt to Total Capital Ratio" shall mean as of any date of
determination thereof, a ratio the numerator of which is Funded Debt as of such
date and the denominator of which is Total Capitalization as of such date.
"GAAP" shall mean generally accepted accounting principles in the
United States of America, as in effect on the date hereof, 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.
"Guarantee Obligation" shall mean as to any Person (the "guaranteeing
person") any obligation of the guaranteeing person in respect of any obligation
of another Person (including, without limitation, any bank under any letter of
credit), the creation of which was induced by a reimbursement agreement, counter
indemnity or similar obligation issued by the guaranteeing person, in either
case guaranteeing or in effect guaranteeing any Debt, leases, dividends or other
obligations (the "primary obligations") of any other third Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or
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otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Company in good faith.
"Guarantor(s)" shall mean each Subsidiary of the Company (other than
the Insurance Subsidiaries) and each Person otherwise becoming a Subsidiary of
the Company (other than an Insurance Subsidiary) subsequent to the date hereof
or otherwise entering into a Guaranty (by joinder agreement or otherwise) from
time to time and shall as of the date of execution of this Agreement consist of
the Subsidiaries listed on Schedule 6.19 hereto.
"Guaranty" shall mean the Guaranty to be made by each of the Guarantors
(whether by execution thereof, or by execution of the Joinder Agreement attached
as "Exhibit A" to the form of such Guaranty) in favor of the Agent for the
ratable benefit of the Banks, substantially in the form of Exhibit F, as amended
or otherwise modified from time to time.
"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 or quasi-governmental authority
or body (or any agency, instrumentality or political subdivision thereof)
pertaining to any hazardous, toxic or dangerous waste, substance or material on
or about any facilities owned, leased or operated by Company or any of its
Subsidiaries, 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 state and local laws and regulations pertaining to
any hazardous, toxic or dangerous waste, substance or material and/or asbestos;
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
the
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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 all indebtedness and liabilities (including
without limitation interest, fees and other charges) arising under this
Agreement or any of the other Loan Documents, whether direct or indirect,
absolute or contingent, of Company or any Subsidiary to any of the Banks or to
the Agent, in any manner and at any time, whether evidenced by the Notes,
arising under any Guaranty or any of the other Loan Documents, due or hereafter
to become due, now owing or that may hereafter be incurred by Company or any
Subsidiary to, any of the Banks or the 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, any payment
obligations, if any, under Hedging Transactions evidenced by Interest Rate
Protection Agreements, and any and all consolidations, amendments, renewals,
replacements, substitutions or extensions of any of the foregoing; provided,
however that for purposes of calculating the Indebtedness outstanding under the
Notes or any of the other Loan Documents, the direct and indirect and absolute
and contingent obligations of the Company and the Subsidiaries (whether direct
or contingent) shall be determined without duplication.
"Insurance Subsidiaries" shall mean Savers Property and Casualty
Insurance Company, Star Insurance Company, American Indemnity Insurance Co.
Ltd., Williamsburg National Insurance Company and any other Subsidiary of
Company engaged in the issuance of insurance policies.
"Interest Expense" shall mean for any Person for any period (without
duplication with respect to any other Person), all interest paid, payable or
accrued during such period by such Person on indebtedness of the such Person
determined on a consolidated basis in accordance with GAAP.
"Interest Period" shall mean with respect to a Eurocurrency-based
Advance, one (1), two (2), three (3) or six (6) months (or any lesser or greater
number of days agreed to in advance by Company, Agent and the Banks) as selected
by Company pursuant to Section 2.3, provided, however, that any
Eurocurrency-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, and no
Interest Period which would end after the Revolving Credit Maturity Date shall
be permitted with respect to any Advance.
"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.
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"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and the regulations promulgated thereunder.
"Investment" shall mean, when used with respect to any Person, (a) any
loan, investment or advance made by such Person to any other Person (including,
without limitation, any contingent obligation) in respect of any capital stock,
Debt, obligation or liability of such other Person and (b) any other investment
made by such Person (however acquired) in stock or other ownership interests in
any other Person, including, without limitation, any investment made in exchange
for the issuance of shares of stock of such Person.
"Issuing Bank" shall mean Comerica Bank in its capacity as issuer of
one or more Letters of Credit hereunder.
"Issuing Office" shall mean Issuing Bank's office located at One
Detroit Center, 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000 or such other
office as Issuing Bank shall designate as its Issuing Office.
"Joinder Agreement (Guaranty)" shall mean a joinder agreement in the
form attached as "Exhibit A" to the form of the Guaranty (Exhibit F to this
Agreement), to be executed and delivered by any Person required to be a
Guarantor pursuant to Section 7.19 of this Agreement.
"Letter of Credit Agreement" shall mean, in respect of each Letter of
Credit, the application and related documentation satisfactory to the Issuing
Bank of an Account Party or Account Parties requesting Issuing Bank to issue
such Letter of Credit, as amended from time to time.
"Letter of Credit Fees" shall mean the fees payable to Agent for the
accounts of the Banks in connection with Letters of Credit pursuant to Section
3.4 hereof.
"Letter of Credit Obligations" shall mean at any date of determination,
the sum of (a) the aggregate undrawn amount of all Letters of Credit then
outstanding, (b) the aggregate face amount of all Letters of Credit requested
but not yet issued as of such date and (c) the aggregate amount of Reimbursement
Obligations which have not been reimbursed by the Company as of such date.
"Letter of Credit Payment" shall mean any amount paid or required to be
paid by the Issuing Bank in its capacity hereunder as issuer of a Letter of
Credit as a result of a draft or other demand for payment under any Letter of
Credit.
"Letter(s) of Credit" shall mean any standby or trade letters of credit
issued by Issuing Bank at the request of or for the account of an Account Party
or Account Parties pursuant to Article 3 hereof and those existing letters of
credit issued by Comerica Bank on behalf of Company (or Company and a
Subsidiary), as identified on Schedule 2 hereto ("Existing Letters of Credit").
"Lien" shall mean any pledge, assignment, hypothecation, mortgage,
security interest, deposit arrangement, option, trust receipt, conditional sale
or title retaining contract, sale and leaseback transaction, financing statement
or comparable notice or other filing or recording, Capitalized Lease,
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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 Letter of Credit Agreements, the Letters of Credit, the Guaranty(ies) any
Interest Rate Protection Agreement 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.
"Majority Banks" shall mean at any time Banks holding 66-2/3% of the
aggregate principal amount of the Indebtedness then outstanding under the Notes,
or, if no Indebtedness is then outstanding, Banks holding 66-2/3% of the
Percentages.
"Margin" shall mean, as of any date of determination thereof, the
applicable interest rate margin determined in accordance with the provisions of
Section 4.1 hereof by reference to the appropriate columns in the pricing matrix
attached to this Agreement as Schedule 1.1.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, operations, property, 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.
"Material Subsidiary" shall mean each Subsidiary (a) the purchase price
for which was equal to or greater than Two Million Five Hundred Thousand Dollars
($2,500,000) (including in purchase price Funded Debt assumed in connection with
the acquisition or formation of such Subsidiary) or (b) which has annual
revenues equal to or in excess of Four Million Dollars ($4,000,000).
"Multiemployer Plan" shall mean a 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
and any successor thereto.
"Net Income" shall mean the net income (or loss) of Company and its
Consolidated Subsidiaries for any period determined in accordance with GAAP.
"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 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.
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"Net Worth" shall mean, as of any applicable date of determination, the
excess of (i) the book value of all assets of Company and its Consolidated
Subsidiaries after all appropriate deductions in accordance with GAAP
(including, without limitation, reserves for doubtful receivables, obsolescence,
depreciation and amortization), over (ii) all Debt of Company and its
Consolidated Subsidiaries.
"New Subsidiaries" shall mean Subsidiaries acquired or established
after the date of execution of this Agreement which are not Insurance
Subsidiaries and are not regulated by any regulatory agency which regulates
insurance companies.
"Notes" shall mean the Revolving Credit Notes and the Term Notes.
"Pending Acquisition" shall mean the acquisition described in Company's
letter to Agent dated August 3, 1999.
"Percentage" shall mean, with respect to any Bank, its percentage
share, as set forth on Schedule 1.2 hereto, of the Revolving Credit Aggregate
Commitment and Letters of Credit, as the context indicates, as such Exhibit may
be revised from time to time by Agent in accordance with provisions of Section
13.8.
"Permitted Acquisition" shall mean (i) the Pending Acquisition, (ii)
any acquisition of a Person within the insurance business for which the purchase
price does not exceed Five Hundred Thousand Dollars ($500,000) or (iii) any
acquisition by the Company or any Subsidiary of all or substantially all of the
assets of another Person, or of a division or line of business of another
Person, or shares of stock or other ownership interests of another Person, which
in the case of this subclause (iii) satisfies and/or is conducted in accordance
with the following requirements:
(a) Such acquisition is of a business or Person engaged in a line of
business which is compatible with, or complementary to, the
business of the Company and its Subsidiaries;
(b) The Company shall have delivered to the Agent and the Banks not
less than thirty (30) nor more than ninety (90) days prior to the
date of such acquisition, notice of such acquisition together with
Pro Forma Projected Financial Information;
(c) Both immediately before and after such acquisition no Default or
Event of Default shall have occurred and be continuing;
(d) The board of directors (or other Person(s) exercising similar
functions) of the seller of the assets or issuer of the shares of
stock or other ownership interests being acquired shall not have
disapproved such transaction or recommended that such transaction
be disapproved; and
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(e) The purchase price for such acquisition (including the assumption
of Debt and payments under non-compete agreements) does not exceed
Fifteen Million ($15,000,000) for any single acquisition and the
aggregate purchase price (computed as aforesaid) for all
acquisitions during any three (3) year period which begins after
the date of execution of this Agreement (excluding the Pending
Acquisition) does not exceed Twenty Five Million Dollars
($25,000,000).
"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 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 held in its investment portfolio;
(h) Equity interests in entities which are not Subsidiaries to the
extent not exceeding $2,500,000 in the aggregate.
"Permitted Liens" shall mean with respect to any Person:
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(a) Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings, provided that adequate reserves
with respect thereto are maintained on the books of such Person in
conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlord's liens or other like Liens arising in the
ordinary course of business which are not overdue for a period of more
than 60 days or which are being contested in good faith by appropriate
proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and
deposits securing liability to insurance carriers under insurance or
self-insurance arrangements;
(d) deposits to secure (i) the performance of bids, trade
contracts (other than for borrowed money), statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a
like nature or (ii) the performance of leases permitted hereunder, in
each case given or incurred on terms, in amounts and otherwise in the
ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of such
Person; and
(f) Liens in favor of Comerica Bank, in its individual capacity
and not as Issuing Bank, to secure obligations with respect to letters
of credit issued by Comerica Bank for the benefit of such Person.
"Person" shall mean a natural person, corporation, limited liability
company, partnership, limited liability 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.
"Prime-based Advance" shall mean an Advance which bears interest at the
Prime-based Rate.
"Prime-based Rate" shall mean, for any day, that rate of interest which
is equal to the greater of (i) the Prime Rate less the Margin, and (ii) the
Alternate Base Rate.
"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.
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"Pro Forma Projected Financial Information" shall mean, as to any
proposed acquisition, a statement executed by a Responsible Officer of the
Company (supported by reasonable detail) setting forth the total consideration
to be paid or incurred in connection with the proposed acquisition and, pro
forma combined projected financial information for the Company and its
consolidated Subsidiaries and the acquisition target (if applicable), consisting
of projected balance sheets as of the proposed effective date of the acquisition
or the closing date and as of the end of at least the next succeeding three (3)
fiscal years of Company following the acquisition and projected statements of
income for each of those years, including sufficient detail to permit
calculation of the amounts and the ratios described in Sections 7.9 through 7.13
and 8.14 hereof, as projected as of the effective date of the acquisition and
for those fiscal years and accompanied by (i) a statement setting forth a
calculation of the ratios and amounts so described, (ii) a statement in
reasonable detail specifying all material assumptions underlying the projections
and (iii) such other information as any Bank shall reasonably request.
"Purchasing Lender" shall have the meaning set forth in Section 11.8.
"Rating Agency" shall mean Xxxxx'x Investor Services, Standard and
Poor's Ratings Group or any other nationally recognized statistical rating
organization which is acceptable to the Agent.
"Regulatory Agency" shall mean any state board, commission, department
or other regulatory body which regulates insurance companies or insurance
holding companies.
"Reimbursement Obligation(s)" shall mean the obligation of an Account
Party or Account Parties under each Letter of Credit Agreement to reimburse the
Issuing Bank for each payment made by the Issuing Bank under the Letter of
Credit issued pursuant to such Letter of Credit Agreement, together with all
other sums, fees, charges and amounts which may be owing to the Issuing Bank
under such Letter of Credit Agreement.
"Request for Revolving Credit Advance" shall mean a Request for
Revolving Credit Advance issued by Company under Section 2.3 of this Agreement
in the form annexed hereto as Exhibit A, as amended or otherwise modified.
"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 or the
president of the Company, or any other officer having substantially the same
authority and responsibility; or with respect to compliance with financial
covenants, the chief financial officer or the treasurer of the 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 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.
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"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 2.3 hereof and any advance in respect of a Letter of Credit under
Section 3.6 hereof, and shall include, as applicable, a Eurocurrency-based
Advance and/or a Prime-based Advance.
"Revolving Credit Aggregate Commitment" shall mean Sixty Million
Dollars ($60,000,000), subject to reduction or termination under Section 2.8 or
9.2 hereof.
"Revolving Credit Facility Fee" shall mean the fees payable to Agent
for distribution to the Banks pursuant to Section 2.6 hereof.
"Revolving Credit Maturity Date" shall mean the earlier to occur of (i)
August 1, 2002, as such date may be extended from time to time pursuant to
Section 2.9 hereof, and (ii) the date on which the Revolving Credit Aggregate
Commitment shall be terminated pursuant to Section 2.8 or Section 9.2 hereof.
"Revolving Credit Notes" shall mean the revolving credit notes
described in Section 2.1 hereof, made by Company to each of the Banks in the
form annexed to this agreement as Exhibit B, as such notes may be amended or
supplemented from time to time, and any other notes issued in substitution,
replacement or renewal thereof from time to time.
"SAP" shall mean statutory accounting principals formulated by the NAIC
and permitted under the laws of Michigan or with respect to any Insurance
Subsidiary not incorporated under the laws of Michigan under the laws of such
Subsidiary's place of incorporation.
"Senior Funded Debt" shall mean, as of any date of determination,
Funded Debt of Company and its Consolidated Subsidiaries other than Subordinated
Debt.
"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.
"Subordinated Debt" shall mean Debt of the Company which has been
subordinated in right of payment and priority to the Indebtedness, all on terms
and conditions satisfactory to the Agent and the Majority Banks.
"Subordinated Debt Documents" shall mean and include 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, association, joint
stock company, business trust, limited liability company or any other business
entity of which more than fifty percent (50%) of the outstanding voting stock,
share capital, membership or other interests, as the case may be, is owned
either directly or indirectly by any Person or one or more of its Subsidiaries,
or the
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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).
"Total Capitalization" shall mean, as of any date of determination
thereof, the sum of the outstanding principal amount of the Consolidated Senior
Funded Debt as of such date plus Net Worth as of such date, plus the outstanding
principal amount of Subordinated Debt as of such date.
2. REVOLVING CREDIT
2.1 Revolving Credit Commitment. Subject to the terms and conditions
of this Agreement (including Section 2.3 hereof), each 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 Bank's Percentage of
the Revolving Credit Aggregate Commitment. 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 may be kept
electronically and which 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.
2.3 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
substantially in the form of Exhibit "A" attached, executed by a person
authorized by the Company to make such requests on behalf 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 including without limitation:
(i) the proposed date of Revolving Credit Advance, which must be
a Business Day;
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(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 Eurocurrency-based Advance, and, except in the
case of a Prime-based Advance, the 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 1:00 p.m. (Detroit time) on such
proposed date;
(c) the principal amount of such requested Revolving Credit
Advance, plus the principal amount of all other Advances then
outstanding hereunder, plus the Letter of Credit Obligations, less the
principal amount of any outstanding Revolving Credit Advance to be
refunded by the requested Revolving Credit Advance shall not exceed the
then applicable Revolving Credit Aggregate Commitment;
(d) (x) in the case of 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 Two Hundred Fifty
Thousand Dollars ($250,000) and (y) in the case of a Eurocurrency-based
Advance, the principal amount of such Advance, plus the amount of any
other outstanding Indebtedness under this Agreement to be then combined
therewith having the same Interest Period shall be at least Five
Hundred Thousand Dollars ($500,000) and at any one time there shall not
be in effect more than four (4) Interest Periods with respect to the
Revolving Credit;
(e) each Request for Revolving Credit Advance shall constitute
and include a certification by the Company as of the date thereof that:
(i) both before and after the Revolving Credit Advance, the
obligations of the Company and the Guarantors set forth in
this Agreement and the other Loan Documents, as applicable,
are valid, binding and enforceable obligations of such
parties;
(ii) to the best knowledge of Company all conditions to Advances
of the Revolving Credit have been satisfied;
(iii) there is no Default or Event of Default in existence, and
none will exist upon the making of the Advance;
(iv) the representations and warranties contained in this
Agreement and the other Loan Documents are true and correct
in all material respects and shall be true
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and correct in all material respects as of and immediately
after the making of the Advance; and
(v) the execution of such Revolving Credit Advance will not
violate the material terms and conditions of any material
contract, agreement or other borrowing of Company or any of
its Subsidiaries.
Agent, acting on behalf of the Banks, may, at its option, lend under
this Section 2 upon the telephone request of an authorized officer of Company
and, in the event Agent, acting on behalf of the 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
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 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 Advance form as of the date of such requested Advance.
2.4 Disbursement of Revolving Credit Advances.
(a) Upon receiving any Request for a Revolving Credit Advance
from Company under Section 2.3 hereof, Agent shall promptly notify each
Bank by wire, telecopy, telex or by telephone (confirmed by wire,
telecopy or telex) of the amount of such Revolving Credit Advance to be
made and the date such Advance is to be made by said Bank pursuant to
its Percentage of the Revolving Credit Advance. Unless such Bank's
commitment to make Revolving Credit Advances hereunder shall have been
suspended or terminated in accordance with this Agreement, each Bank
shall send the amount of its Percentage of the Advance in same day
funds in Dollars to Agent at the office of Agent located at One Detroit
Center, 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000 not later
than 3:00 p.m. (Detroit time) on the date of such Advance.
(b) Subject to submission of a Request for Revolving Credit
Advance delivered in accordance with Section 2.3 hereof 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 Banks
under this Section 2.4, 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 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 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
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to Company a corresponding amount. Any such notice of intention not to
make an Advance shall be subject to the provisions of Section 2.1 of
this Agreement. If such amount is not in fact made available to Agent
by such Bank in accordance with Section 2.4(a), as aforesaid, Agent
shall be entitled to recover such amount on demand from such Bank. If
such 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 and such payment to Agent shall be without
waiver of Company's claims, if any, against such Bank. Agent shall also
be entitled to recover from such Bank or from Company, as the case may
be but without duplication, 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 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 Bank to make any Revolving Credit Advance
hereunder shall not be affected by the failure of any other Bank to
make any Revolving Credit Advance hereunder, and no Bank shall have any
liability to the Company, the Agent, any other Bank, or any other party
for another Bank's failure to make any loan or Revolving Credit Advance
hereunder.
2.5 Prime-based Advance in Absence of Election or Upon Default. If, as
to any outstanding Eurocurrency-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
2.3 hereof with respect to the refunding or conversion of such Advance, or,
subject to Section 5.6 hereof, if on such day a Default or Event 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.
2.6 Revolving Credit Facility Fee. From the Effective Date to the
Revolving Credit Maturity Date, the Company shall pay to the Agent on behalf of
Banks a Revolving Credit Facility Fee quarterly in arrears commencing October 1,
1999 (in respect of the prior fiscal quarter or portion thereof), and on the
first day of each fiscal quarter thereafter. The Revolving Credit Facility Fee
shall be the sum of the one quarter of one percent (3%) per annum multiplied by
Revolving Credit Aggregate Commitment (whether used or unused) then in effect
without giving effect to any reductions therein based on the amount of the
Environmental Reserve, computed on a daily basis. The Revolving Credit Facility
Fee 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. Upon
receipt of such payment, Agent shall make prompt payment to each Bank of its
share of the Revolving Credit Facility Fee based upon its
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respective Percentage. It is expressly understood that the Revolving Credit
Facility Fees described in this Section are not refundable under any
circumstances.
2.7 Reduction of Indebtedness; Revolving Credit Aggregate Commitment.
If at any time and for any reason the aggregate principal amount of Revolving
Credit Advances hereunder to Company, plus the Letter of Credit Obligations
which shall be outstanding at such time, shall exceed the Revolving Credit
Aggregate Commitment then in effect, the 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
Indebtedness equal to such excess and, to the extent such Indebtedness consists
of Letter of Credit Obligations, provide cash collateral on the basis set forth
in Section 10.2 hereof. 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 12.1 hereof; provided,
however, that Company shall, in order to reduce any such prepayment costs and
expenses, first prepay such portion of the Indebtedness then carried as a
Prime-based Advance, if any.
2.8 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 Two Million Dollars
($2,000,000) 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; (iii) the Company
shall prepay in accordance with the terms hereof the amount, if any, by which
the sum of the aggregate unpaid principal amount of Revolving Credit Advances,
plus the Letter of Credit Obligations, exceeds the then applicable 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 Eurocurrency-based 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 reduction shall reduce the amount of the Revolving Credit
Aggregate Commitment to an amount which is less than the Letter of Credit
Obligations at such time. Reductions of the Revolving Credit Aggregate
Commitment and any accompanying prepayments of the Revolving Credit Notes shall
be distributed by Agent to each Bank in accordance with such Bank's Percentage
thereof, and will not be available for reinstatement by or readvance to the
Company. Any reductions of the Revolving Credit Aggregate Commitment hereunder
shall reduce each Bank's portion thereof proportionately (based upon the
applicable Percentages), and shall be permanent and irrevocable. Any payments
made pursuant to this Section shall be applied first to outstanding Prime-based
Advances under the Revolving Credit and then to Eurocurrency-based Advances.
2.9 Extension of Revolving Credit Maturity Date. (a) Provided that no
Default or Event of Default has occurred and is continuing, Company may, by
written notice to Agent (with sufficient copies for each Bank) (which notice
shall be irrevocable and which shall not be deemed effective unless actually
received by Agent) prior to April 1st, but not before March 1st, of each fiscal
year,
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request that the Banks extend the then applicable Revolving Credit Maturity Date
to a date that is one year later than the Revolving Credit Maturity Date then in
effect (each such request, a "Request"). Each Bank shall, not later than May
31st of such fiscal year, give written notice to the Agent stating whether such
Bank is willing to extend the Revolving Credit Maturity Date as requested. If
Agent has received the aforesaid written approvals of such Request from each of
the Banks, then, effective upon the date of Agent's receipt of all such written
approvals from the Banks, as aforesaid, the Revolving Credit Maturity Date shall
be so extended for an additional one year period, the term Revolving Credit
Maturity Date shall mean such extended date and Agent shall promptly notify the
Company that such extension has occurred.
(b) If (i) any Bank gives the Agent written notice that it is
unwilling to extend the Revolving Credit Maturity Date as requested or (ii) any
Bank fails to provide written approval to Agent of such a Request on or before
May 31st of such fiscal year, then (w) the Banks shall be deemed to have
declined to extend the Revolving Credit Maturity Date, (x) the then-current
Revolving Credit Maturity Date shall remain in effect (with no further right on
the part of Company to request extensions thereof under this Section 2.9), and
(y) the commitments of the Banks to make Advances of the Revolving Credit
hereunder shall terminate on the Revolving Credit Maturity Date then in effect,
and Agent shall promptly notify Company thereof.
3. LETTERS OF CREDIT
3.1 Letters of Credit. Subject to the terms and conditions of this
Agreement, Issuing Bank shall through its Issuing Office, at any time and from
time to time from and after the date hereof until thirty (30) days prior to the
Revolving Credit Maturity Date, upon the written request of an Account Party
accompanied by a duly executed Letter of Credit Agreement, and such other
documentation related to the requested Letter of Credit as the Issuing Bank may
reasonably require, issue Letters of Credit for the account of such Account
Party, in an aggregate amount for all Letters of Credit issued hereunder at any
one time outstanding not to exceed an amount equal to the then applicable
Revolving Credit Aggregate Commitment minus the aggregate principal amount of
Revolving Credit Advances at such time outstanding. Each Letter of Credit shall
be in a minimum face amount of Five Thousand Dollars ($5,000) (or such lesser
amount as the Issuing Bank, in its sole discretion, may permit) and shall have
an expiration date not later than the earlier of (i) twenty four months from the
date of issuance thereof, and (ii) ten (10) Business Days prior to the Revolving
Credit Maturity Date. The submission of all applications and the issuance of
each Letter of Credit hereunder shall be subject in all respects to applicable
provisions of U.S. law and regulations, including without limitation, the
Trading With the Enemy Act, Export Administration Act, International Emergency
Economic Powers Act, and the Regulations of the Office of Foreign Assets Control
of the U.S. Department of the Treasury.
3.2 Conditions to Issuance. No Letter of Credit shall be issued at the
request and for the account of any Account Party unless, as of the date of
issuance of such Letter of Credit:
(a) the face amount of the Letter of Credit requested, plus the
Letter of Credit Obligations, does not exceed an amount equal to the
then applicable Revolving Credit Aggregate Commitment minus the
aggregate principal amount of Revolving Credit Advances at such time
outstanding;
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(b) the obligations of Company and the Subsidiaries set forth in
this Agreement and the Loan Documents are valid, binding and
enforceable obligations of Company and each of the Subsidiaries and the
valid, binding and enforceable nature of this Agreement and the other
Loan Documents has not been disputed by Company or any of the
Subsidiaries;
(c) both immediately before and immediately after issuance of the
Letter of Credit requested, no Default or Event of Default exists;
(d) the representations and warranties contained in this
Agreement and the other Loan Documents are true in all material
respects as if made on such date;
(e) the execution of the Letter of Credit Agreement with respect
to the Letter of Credit requested will not violate the terms and
conditions of any material contract, agreement or other borrowing of
Company or any Subsidiary;
(f) the Account Party requesting the Letter of Credit shall have
delivered to Issuing Bank at its Issuing Office (with a copy sent by
Account Party to the Agent), not less than three (3) Business Days
prior to the requested date for issuance (or such shorter time as the
Issuing Bank, in its sole discretion, may permit), the Letter of Credit
Agreement related thereto, together with such other documents and
materials as may be required pursuant to the terms thereof, and the
terms of the proposed Letter of Credit shall be satisfactory to Issuing
Bank and its Issuing Office;
(g) no order, judgment or decree of any court, arbitrator or
governmental authority shall purport by its terms to enjoin or restrain
Issuing Bank from issuing the requested Letter of Credit, or any Bank
from taking an assignment of its Percentage thereof pursuant to Section
3.6 hereof, and no law, rule, regulation, request or directive (whether
or not having the force of law) shall prohibit or request that Issuing
Bank refrain from issuing, or any Bank refrain from taking an
assignment of its Percentage of, the Letter of Credit requested or
letters of credit generally;
(h) there shall have been no introduction of or change in the
interpretation of any law or regulation that would make it unlawful or
unduly burdensome for the Issuing Bank to issue or for any Bank to take
an assignment of its Percentage of the requested Letter of Credit, no
declaration of a general banking moratorium by banking authorities in
the United States, Michigan or the respective jurisdictions in which
the Banks, the applicable Account Party and the beneficiary of the
requested Letter of Credit are located (each a "Banking Authority"),
and no establishment of any new material restrictions by any Banking
Authority on transactions involving letters of credit or on banks
materially affecting the issuance of letters of credit by banks; and
(i) Issuing Bank shall have received the facing fee required in
connection with the issuance of such Letter of Credit pursuant to
Section 3.4(b) hereof.
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Each Letter of Credit Agreement submitted to Issuing Bank pursuant hereto shall
constitute the certification by the Company and the Account Party of the matters
set forth in this Section 3.2 (a) through (f). The Issuing Bank shall be
entitled to rely on such certification without any duty of inquiry.
3.3 Notice. The Issuing Bank will deliver to the Agent, concurrently
or promptly following its delivery of any Letter of Credit, a true and complete
copy of each Letter of Credit. Promptly upon its receipt thereof, Agent shall
give notice, substantially in the form attached as Exhibit C, to each Bank of
the issuance of each Letter of Credit, specifying the amount thereof and the
amount of such Bank's Percentage thereof.
3.4 Letter of Credit Fees. Company shall pay to the Agent for
distribution to the Issuing Bank and the Banks in accordance with the
Percentages, Letter of Credit Fees as follows:
(a) A per annum Letter of Credit Fee with respect to the undrawn
amount of each Letter of Credit issued pursuant hereto in the amount of
the Applicable L/C Fee Percentage (determined with reference to
Schedule 1.1 of this Agreement), exclusive of the facing fee to be paid
to Issuing Bank under Section 3.4(b) hereof.
(b) A facing fee of the lesser of (i) one eighth percentage point
(1/8%) per annum on the undrawn amount of each Letter of Credit or (ii)
$500.00, to be paid by the Company to the Issuing Bank for its own
account.
(c) If any change in any law or regulation or in the
interpretation thereof by any court or administrative or governmental
authority charged with the administration thereof shall either (i)
impose, modify or cause to be deemed applicable any reserve, special
deposit, limitation or similar requirement against letters of credit
issued by or participated in, or assets held by, or deposits in or for
the account of, Issuing Bank or any Bank or (ii) impose on Issuing Bank
or any of the Banks any other condition regarding this Agreement or the
Letters of Credit, and the result of any event referred to in clause
(i) or (ii) above shall be to increase in an amount deemed material by
Issuing Bank or such Bank the cost or expense to Issuing Bank or the
Banks of issuing or maintaining or participating in any of the Letters
of Credit (which increase in cost or expense shall be determined by the
Issuing Bank's or such Bank's reasonable allocation of the aggregate of
such cost increases and expense resulting from such events), then, upon
demand by the Issuing Bank or such Bank, as the case may be, the
Company shall, within thirty days following demand for payment, pay to
Issuing Bank or such Bank, as the case may be, from time to time as
specified by the Issuing Bank or such Bank, additional amounts which
shall be sufficient to compensate the Issuing Bank or such Bank for
such increased cost and expense, together with interest on each such
amount from thirty days after the date demanded until payment in full
thereof at the Prime-based Rate. A certificate as to such increased
cost or expense incurred by the Issuing Bank or such Bank, as the case
may be, as a result of any event mentioned in clause (i) or (ii) above,
shall be promptly submitted to the Company and shall be deemed correct,
absent manifest error, as to the amount thereof.
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(d) All payments by the Company to the Agent for distribution to
the Issuing Bank or the Banks under this Section 3.4 shall be made in
Dollars and in immediately available funds at the principal office of
the Agent or such other office of the Agent as may be designated from
time to time by written notice to the Company by the Agent. The fees
described in clause (a) above shall be nonrefundable under all
circumstances and shall be payable quarterly in advance (or such lesser
period, if applicable, for Letters of Credit issued with stated
expiration dates of less than one year) upon the issuance of each such
Letter of Credit, and shall be calculated on the basis of a 360 day
year and assessed for the actual number of days from the date of the
issuance thereof to the stated expiration thereof.
3.5 Other Letter of Credit Fees. In connection with the Letters of
Credit, and in addition to the Letter of Credit Fees, the Company and the
applicable Account Party shall pay, for the sole account of the Issuing Bank,
standard documentation, administration, payment and cancellation charges
assessed by Issuing Bank or its Issuing Office, at the times, in the amounts and
on the terms set forth or to be set forth from time to time in the standard fee
schedule of Issuing Office in effect from time to time.
3.6 Draws and Demands for Payment Under Letters of Credit.
(a) The Company and each applicable Account Party agree to pay to
the Agent for the account of the Issuing Bank, on the day on which the
Issuing Bank shall honor a draft or other demand for payment presented
or made under any Letter of Credit, an amount equal to the amount paid
by the Issuing Bank in respect of such draft or other demand under such
Letter of Credit and all reasonable expenses paid or incurred by the
Issuing Bank relative thereto. Unless the Company or the applicable
Account Party shall have made such payment to the Agent for the account
of the Issuing Bank on such day, upon each such payment by the Issuing
Bank, the Agent shall be deemed to have disbursed to the Company, and
the Company shall be deemed to have elected to substitute for its
Reimbursement Obligation, a Prime-based Advance from the Banks in an
amount equal to the amount so paid by the Issuing Bank in respect of
such draft or other demand under such Letter of Credit. Such
Prime-based Advance shall be disbursed notwithstanding any failure to
satisfy any conditions for disbursement of any Advance set forth in
Article 2 hereof and, to the extent of the Prime-based Advance so
disbursed, the Reimbursement Obligation of the Company or the
applicable Account Party to the Agent under this Section 3.6 shall be
deemed satisfied.
(b) If the Issuing Bank shall honor a draft or other demand for
payment presented or made under any Letter of Credit, the Issuing Bank
shall provide notice thereof to the Company and the applicable Account
Party on the date such draft or demand is honored, and to each Bank on
such date unless the Company or applicable Account Party shall have
satisfied its Reimbursement Obligation under Section 3.6(a) by payment
to the Agent on such date. The Issuing Bank shall further use
reasonable efforts to provide notice to the Company or applicable
Account Party prior to honoring any such draft or other demand for
payment, but such notice, or the failure to provide such notice, shall
not affect the rights or obligations of the Issuing Bank with respect
to any Letter of Credit or the rights and obligations of the
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parties hereto, including without limitation the obligations of the
Company or applicable Account Party under Section 3.6(a) hereof.
(c) Upon issuance by the Issuing Bank of each Letter of Credit
hereunder and upon execution of this Agreement with respect to the
Existing Letters of Credit, each Bank shall automatically acquire a pro
rata risk participation interest in such Letter of Credit and related
Letter of Credit Payment based on its respective Percentage. Each Bank,
on the date a draft or demand under any Letter of Credit is honored,
shall make its Percentage share of the amount paid by the Issuing Bank,
and not reimbursed by the Company or applicable Account Party by
payment to the Agent on such day, available in immediately available
funds at the principal office of the Agent for the account of the
Issuing Bank. If and to the extent such Bank shall not have made such
pro rata portion available to the Agent, such Bank, the Company and the
applicable Account Party severally agree to pay to the Issuing Bank
forthwith on demand such amount together with interest thereon, for
each day from the date such amount was paid by the Issuing Bank until
such amount is so made available to the Agent for the account of the
Issuing Bank at a per annum rate equal to the interest rate applicable
during such period to the related Advance disbursed under Section
3.6(a) in respect of the Reimbursement Obligation of the Company and
the applicable Account Party. If such Bank shall pay such amount to the
Agent for the account of the Issuing Bank together with such interest,
such amount so paid shall constitute a Prime-based Advance by such Bank
disbursed in respect of the Reimbursement Obligation of the Company or
applicable Account Party under Section 3.6(a) for purposes of this
Agreement, effective as of the date such amount was paid by the Issuing
Bank. The failure of any Bank to make its pro rata portion of any such
amount paid by the Issuing Bank available to the Agent for the account
of the Issuing Bank shall not relieve any other Bank of its obligation
to make available its pro rata portion of such amount, but no Bank
shall be responsible for failure of any other Bank to make such pro
rata portion available to the Agent for the account Issuing Bank.
(d) Nothing in this Agreement shall be construed to require or
authorize any Bank other than the Issuing Bank to issue any Letter of
Credit hereunder, it being recognized that the Issuing Bank shall be
the sole issuer of Letters of Credit under this Agreement.
3.7 Obligations Irrevocable. The obligations of Company and any
Account Party to make payments to Agent for the account of the Issuing Bank or
of the Banks with respect to Reimbursement Obligations under Section 3.6 hereof,
shall be unconditional and irrevocable and not subject to any qualification or
exception whatsoever, including, without limitation:
(a) Any lack of validity or enforceability of any Letter of
Credit or any documentation relating to any Letter of Credit or to any
transaction related in any way to such Letter of Credit (the "Letter of
Credit Documents");
(b) Any amendment, modification, waiver, consent, or any
substitution, exchange or release of or failure to perfect any interest
in collateral or security, with respect to any of the Letter of Credit
Documents;
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(c) The existence of any claim, setoff, defense or other right
which the Company or any Account Party may have at any time against any
beneficiary or any transferee of any Letter of Credit (or any persons
or entities for whom any such beneficiary or any such transferee may be
acting), the Agent, the Issuing Bank or any other Bank or any other
person or entity, whether in connection with any of the Letter of
Credit Documents, the transactions contemplated herein or therein or
any unrelated transactions;
(d) Any draft or other statement or document presented under any
Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any
respect;
(e) Absent gross negligence or willful misconduct on the part of
the Issuing Bank or Banks, any failure, omission, delay or lack on the
part of the Agent, the Issuing Bank or any other Bank or any party to
any of the Letter of Credit Documents to enforce, assert or exercise
any right, power or remedy conferred upon the Agent, the Issuing Bank,
any other Bank or any such party under this Agreement, any of the Loan
Documents or any of the Letter of Credit Documents, or any other acts
or omissions on the part of the Agent, the Issuing Bank, any other Bank
or any such party; or
(f) Absent gross negligence or willful misconduct on the part of
the Issuing Bank or Banks, any other event or circumstance that would,
in the absence of this Section 3.7, result in the release or discharge
by operation of law or otherwise of Company or any Account Party from
the performance or observance of any obligation, covenant or agreement
contained in Section 3.6.
No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which Company or any Account Party has or may have
against the beneficiary of any Letter of Credit shall be available hereunder to
Company or any Account Party against the Agent, the Issuing Bank or any other
Bank. Nothing contained in this Section 3.7 shall be deemed to prevent Company
or the Account Parties, after satisfaction in full of the absolute and
unconditional obligations of Company and the Account Parties hereunder, from
asserting in a separate action any claim, defense, set off or other right which
they (or any of them) may have against Agent, the Issuing Bank or any Bank.
3.8 Risk Under Letters of Credit. (a) In the handling of Letters of
Credit and any security therefor, or any documents or instruments given in
connection therewith, and notwithstanding the granting of risk participation
hereunder, the Issuing Bank shall have the sole right to take or refrain from
taking any and all actions under or upon the Letters of Credit.
(b) Subject to other terms and conditions of this Agreement,
Issuing Bank shall issue the Letters of Credit and shall hold the
documents related thereto in its own name and shall make all
collections thereunder and otherwise administer the Letters of Credit
in accordance with Issuing Bank's regularly established practices and
procedures and, Issuing Bank will have no further obligation with
respect thereto. In the administration of Letters of Credit, Issuing
Bank shall not be liable for any action taken or omitted on the advice
of
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counsel, accountants, appraisers or other experts selected by Issuing
Bank with due care and Issuing Bank may rely upon any notice,
communication, certificate or other statement from Company, any Account
Party, beneficiaries of Letters of Credit, or any other Person which
Issuing Bank believes to be authentic. Issuing Bank, will, upon
request, furnish the Banks with copies of Letter of Credit Agreements,
Letters of Credit and documents related thereto.
(c) In connection with the issuance and administration of Letters
of Credit and the assignments hereunder, Issuing Bank makes no
representation and shall, subject to Section 3.7 hereof, have no
responsibility with respect to (i) the obligations of Company or any
Account Party or, the validity, sufficiency or enforceability of any
document or instrument given in connection therewith, (ii) the
financial condition of, any representations made by, or any act or
omission of Company, the applicable Account Party or any other Person,
or (iii) any failure or delay in exercising any rights or powers
possessed by Issuing Bank in its capacity as issuer of Letters of
Credit, in the absence of its gross negligence or willful misconduct.
Each of the Banks expressly acknowledge that they have made and will
continue to make their own evaluations of Company's creditworthiness
without reliance on any representation of Issuing Bank or Issuing
Bank's officers, agents and employees.
(d) If at any time Agent or the Issuing Bank shall recover any
part of any unreimbursed amount for any draw or other demand for
payment under a Letter of Credit, or any interest thereon, Agent or the
Issuing Bank, as the case may be, shall receive same for the pro rata
benefit of the Banks in accordance with their respective Percentage
interests therein and shall promptly deliver to each Bank its share
thereof, less such Bank's pro rata share of the costs of such recovery,
including court costs and attorney's fees. If at any time any Bank
shall receive from any source whatsoever any payment on any such
unreimbursed amount or interest thereon in excess of such Bank's
Percentage share of such payment, such Bank will promptly pay over such
excess to Agent, for redistribution in accordance with this Agreement.
3.9 Indemnification. (a) The Company and each Account Party hereby
indemnifies and agrees to hold harmless the Banks, the Issuing Bank and the
Agent, and their respective officers, directors, employees and agents, from and
against any and all claims, damages, losses, liabilities, costs or expenses of
any kind or nature whatsoever which the Banks, the Issuing Bank or the Agent or
any such Person may incur or which may be claimed against any of them by reason
of or in connection with any Letter of Credit, and none of the Issuing Bank, any
Bank or the Agent or any of their respective officers, directors, employees or
agents shall be liable or responsible for: (i) the use which may be made of any
Letter of Credit or for any acts or omissions of any beneficiary in connection
therewith; (ii) the validity, sufficiency or genuineness of documents or of any
endorsement thereon, even if such documents should in fact prove to be in any or
all respects invalid, insufficient, fraudulent or forged; (iii) payment by the
Issuing Bank to the beneficiary under any Letter of Credit against presentation
of documents which do not strictly comply with the terms of any Letter of Credit
(unless such payment resulted from the gross negligence or willful misconduct of
the Issuing Bank), including failure of any documents to bear any reference or
adequate reference to such Letter of Credit; (iv) any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit; or (v) any
other event or
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circumstance whatsoever arising in connection with any Letter of Credit;
provided, however, that with respect to subparagraphs (a)(i) through (a)(v)
hereof, Company and Account Parties shall not be required to indemnify the
Issuing Bank, the other Banks and the Agent and such other persons, and the
Issuing Bank shall be liable to the Company and the Account Parties to the
extent, but only to the extent, of any direct, as opposed to consequential or
incidental, damages suffered by Company and the Account Parties which were
caused by the Issuing Bank's gross negligence, willful misconduct or wrongful
dishonor of any Letter of Credit after the presentation to it by the beneficiary
thereunder of a draft or other demand for payment and other documentation
strictly complying with the terms and conditions of such Letter of Credit.
(b) It is understood that in making any payment under a Letter of
Credit the Issuing Bank will rely on documents presented to it under such Letter
of Credit as to any and all matters set forth therein without further
investigation and regardless of any notice or information to the contrary. It is
further acknowledged and agreed that Company or an Account Party may have rights
against the beneficiary or others in connection with any Letter of Credit with
respect to which the Banks are alleged to be liable and it shall be a condition
of the assertion of any liability of the Banks under this Section that Company
or applicable Account Party shall contemporaneously pursue all remedies in
respect of the alleged loss against such beneficiary and any other parties
obligated or liable in connection with such Letter of Credit and any related
transactions.
3.10 Right of Reimbursement. Each Bank agrees to reimburse the Issuing
Bank on demand (by payment to the Agent for the account of the Issuing Bank),
pro rata in accordance with their Percentages, for (i) the reasonable
out-of-pocket costs and expenses of the Issuing Bank to be reimbursed by Company
or any Account Party pursuant to any Letter of Credit Agreement or any Letter of
Credit, to the extent not reimbursed by Company or Account Party and (ii) any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, fees, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against Issuing Bank
(in its capacity as issuer of any Letter of Credit) in any way relating to or
arising out of this Agreement, any Letter of Credit, any documentation or any
transaction relating thereto, or any Letter of Credit Agreement, except to the
extent that such liabilities, losses, costs or expenses were incurred by Issuing
Bank as a result of Issuing Bank's gross negligence or willful misconduct or
wrongful dishonor of any Letter of Credit.
4. MARGIN ADJUSTMENTS; INTEREST PAYMENTS
4.1 Margin Adjustments. Adjustments in the Margin and the Applicable
L/C Fee Percentage, shall be implemented on a quarterly basis as follows:
(a) Such adjustments shall be given prospective effect only,
effective as to all Advances outstanding hereunder, and the Applicable
L/C Fee Percentage, upon the required date of delivery of the financial
statements under Sections 7.1(a) and 7.1(b) hereunder, in each case
establishing applicability of the appropriate adjustment, and in each
case with no retroactivity or claw-back. In the event Company fails
timely to deliver the financial statements required under Section
7.1(a) or 7.1(b), then from the date delivery of such financial
statements was required until such financial statements are delivered,
the margins and
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fee percentages shall be those set forth under the Level 1 Column of
the pricing matrix attached to this Agreement as Schedule 1.1.
(b) Such Margin adjustments under this Section 4.1 shall be made
irrespective of, and in addition to, any other interest rate
adjustments hereunder.
(c) From the date hereof until the required date of delivery
under Section 7.1(b) of the Company's financial statements for the
fiscal quarter ending June 30, 1999, the margins and fee percentages
shall be those set forth under the Level II column of the pricing
matrix attached to this Agreement as Schedule 1.1.
4.2 Prime-based Interest Payments. Interest on the unpaid balance of
all Prime-based Advances from time to time outstanding shall accrue 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 first day of the
fiscal quarter next succeeding the fiscal quarter during which the initial
Advance is made and on the first day of each fiscal 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.
4.3 Eurocurrency-based Interest Payments. Interest on each
Eurocurrency-based Advance having a related Eurocurrency-Interest Period of
three (3) months or less shall accrue at its Eurocurrency-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 Eurocurrency-based Advance outstanding from time to time having a
Eurocurrency-Interest Period of six (6) months or longer, 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 Eurocurrency-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.
4.4 Interest Payments on Conversions. Notwithstanding anything to the
contrary in Sections 4.2 and 4.3, all accrued and unpaid interest on any Advance
refunded or converted pursuant to Section 2.3 hereof shall be due and payable in
full on the date such Advance is refunded or converted.
4.5 Interest on Default. Notwithstanding anything to the contrary set
forth in Sections 4.2 and 4.3, in the event and so long as any Event of Default
shall exist under this Agreement, interest shall be payable daily on the
principal amount of all Advances from time to time outstanding (and, to the
extent delinquent, 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 (calculated on the basis of the maximum Margins) in respect of
each such Advance, plus, in the case of Eurocurrency-based Advances, two percent
(2%) 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, plus two percent (2%) per annum.
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4.6 Prepayment of Revolving Credit Advances. Company may prepay all or
part of the outstanding balance of any Prime-based Revolving Credit Advance(s)
at any time, provided that the amount of any partial prepayment shall be at
least Five Hundred Thousand Dollars ($500,000) and the aggregate balance of
Prime-based Revolving Credit Advance(s) remaining outstanding, if any, shall be
at least Two Hundred Fifty Thousand Dollars ($250,000). Company may prepay all
or part of any Eurocurrency-based Revolving Credit Advance (subject to not less
than three (3) Business Days' notice to Agent) only on the last day of the
Interest Period applicable thereto, provided that the amount of any such partial
prepayment shall be at least Fifty Thousand Dollars ($50,000), and the unpaid
portion, if any, of such Advance which is refunded or converted under Section
2.3 shall be at least Five Hundred Thousand Dollars ($500,000). 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. 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 11.1 hereof, but otherwise without premium, penalty or prejudice. All
prepayments of Revolving Credit Advances shall be made to the Agent for
distribution ratably to the Banks.
5. CONDITIONS
The obligations of Banks to make Advances or loans pursuant to this
Agreement and the obligation of the Issuing Bank to issue Letters of Credit are
subject to the following conditions:
5.1 Execution of Notes and this Agreement. Company shall have executed
and delivered to Agent for the account of each Bank, the Revolving Credit Notes
this Agreement and the other Loan Documents to which it is a party (including
all schedules, exhibits, certificates, opinions, financial statements and other
documents to be delivered pursuant hereto), and such Notes, and this Agreement
and the other Loan Documents shall be in full force and effect.
5.2 Corporate Authority. Agent shall have received, with a counterpart
thereof for each Bank:
(a) In connection with the Company, a certificate of Responsible
Officer as to:
(i) resolutions of the board of directors of the Company
evidencing approval of the transactions contemplated by this
Agreement and the Notes and authorizing the execution and delivery
thereof and the borrowing of Advances and the requesting of
Letters of Credit hereunder,
(ii) the incumbency and signature of the officers of the
Company executing any Loan Document,
(iii) a certificate of good standing or continued existence
(or the equivalent thereof) from the State of Michigan, and from
every state or other jurisdiction listed on Schedule 5.2 hereof if
issued by such jurisdiction, subject to the limitations (as to
qualification and authorization to do business) contained in
Section 6.1, and
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(iv) copies of Company's articles of incorporation and
bylaws or other constitutional documents, as in effect on the
Effective Date;
(b) in connection with each Guarantor, a certificate from an
authorized officer of such Guarantor as to:
(i) resolutions of the board of directors or members or
managers, as the case may be, of each such Guarantor evidencing
approval of the transactions contemplated by the Loan Documents to
which such Guarantor is a party and authorizing the execution and
delivery thereof,
(ii) the incumbency and signature of the officers or members
or managers, as the case may be, of such Guarantor executing any
Loan Document to which such Guarantor is a party,
(iii) a certificate of good standing from the state or other
jurisdiction of such Guarantor's incorporation, and from every
state or other jurisdiction in which such Guarantor is qualified
to do business, if issued by such jurisdiction, subject to the
limitations (as to qualification and authorization to do business)
contained in Section 7.1, hereof, and
(iv) copies of Guarantor's articles of incorporation and
bylaws or other constitutional documents, as in effect on the
Effective Date.
5.3 Collateral Documents and Guaranties. As security for all
Indebtedness of Company to the Banks hereunder the Agent shall have received the
Guaranty executed and delivered by each of the Guarantors.
5.4 Compliance with Certain Documents and Agreements. The Company and
each Guarantor (and any of their respective Subsidiaries or Affiliates) shall
have each performed and complied in all material respects with all agreements
and conditions contained in this Agreement, other Loan Documents, or any
agreement or other document executed thereunder and required to be performed or
complied with by each of them (as of the applicable date) and none of such
parties shall be in material default in the performance or compliance with any
of the terms or provisions hereof or thereof.
5.5 Opinion of Counsel. Company and each Guarantor shall furnish Agent
prior to the initial Advance under this Agreement, and with signed copies for
each Bank, opinions of counsel to the Company and such Guarantor, dated the date
hereof, and covering such matters as reasonably required by and otherwise
reasonably satisfactory in form and substance to the Agent and each of the
Banks.
5.6 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
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Advances hereunder, stating that to the best of his or her knowledge after due
inquiry, (a) the conditions of paragraphs 5.1 and 5.3 hereof have been fully
satisfied; (b) the representations and warranties made by Company, each
Guarantor or any other party to any of the Loan Documents (excluding the Agent
and Banks) in this Agreement or any of the other 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 in all material respects on and as of the Effective Date; and (c) no
Default or Event of Default shall have occurred and be continuing, and there
shall have been no material adverse change in the financial condition,
properties, business, results or operations of the Company and its Subsidiaries
taken as a whole from December 31, 1998 to the date of the making of the first
borrowing hereunder.
5.7 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.
5.8 Existing Credit Facilities. All existing Debt (including all Debt
outstanding under the Revolving Credit Agreement dated July 24, 1998 among
Company, Agent and Comerica Bank), other than Debt expressly permitted
hereunder, together with all interest, all prepayment premiums and other amounts
due and payable with respect thereto, shall have been paid in full and the
related commitments terminated or amounts necessary to pay and discharge such
Debt in full shall have been delivered into cash escrow arrangements
satisfactory to Banks in their sole discretion; and all Liens securing payment
of any such Debt have been released and the Agent shall have received all
Uniform Commercial Code Form UCC-3 terminations statements or other instruments
as may be suitable or appropriate in connection therewith.
5.9 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 Advances or
issuance of Letters of Credit hereunder, and all such instruments and documents
shall be satisfactory in form and substance to Agent and each Bank.
5.10 Continuing Conditions. The obligations of the Banks to make
Advances (including the initial Advance) under this Agreement and the obligation
of the Issuing Bank to issue any Letters of Credit shall be subject to the
continuing conditions that:
(1) All conditions of Sections 5.1 through 5.9 shall have been and
remain satisfied as of the date of the Advance or the request for the Letter of
Credit;
(2) No Default or Event of Default shall exist as of the date of the
Advance or the request for the Letter of Credit; and
(3) 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 or Letter of Credit.
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6. REPRESENTATIONS AND WARRANTIES
Company represents and warrants and such representations and warranties
shall be deemed to be continuing representations and warranties until the
Revolving Credit Maturity Date and thereafter until the expiration of all
Letters of Credit and the final payment in full of the Indebtedness and the
performance by Company of all other obligations under this Agreement:
6.1 Corporate Authority. Company is a corporation duly organized and
existing in good standing under the laws of the State of Michigan; each
Subsidiary is a corporation or other business entity duly organized and existing
in good standing under the laws of the jurisdiction of its incorporation; and
each of the Company and its Subsidiaries is duly qualified and authorized to do
business as a foreign corporation in each jurisdiction where the character of
its assets or the nature of its activities makes such qualification necessary
and where failure to be so qualified would have a material adverse effect on
their respective businesses.
6.2 Due Authorization - Company. Execution, delivery and performance
of this Agreement, the other Loan Documents and any other documents and
instruments required under or in connection with this Agreement or the other
Loan Documents (or to be so executed and delivered), 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 the Company's organizational
documents and, except as have been previously obtained or as referred to in
Section 6.13, below, do not require the consent or approval, material to the
transactions contemplated by this Agreement and the other Loan Documents, of any
governmental body, agency or authority.
6.3 Due Authorization - Guarantors. Execution, delivery and
performance of the Guaranty and all other documents and instruments required of
Guarantors under or in connection with this Agreement and the other Loan
Documents (or to be so executed and delivered), and to which each Guarantor is a
party, are within the corporate powers or limited liability company of each such
Guarantor, have been duly authorized, are not in contravention of law or the
terms of such Guarantor's organizational documents, and, except as have been
previously obtained (or as referred to in Section 6.13 below), do not require
the consent or approval, material to the transactions contemplated by this
Agreement and the other Loan Documents, of any governmental body, agency or
authority not previously obtained.
6.4 Liens. There are no security interests in, liens, mortgages, or
other encumbrances on and no financing statements on file with respect to any of
the property owned, pledged, mortgaged or otherwise encumbered (or to be
encumbered) by Company or any of its Subsidiaries except for Liens permitted
pursuant to Section 8.2.
6.5 Taxes. Company and each of its Subsidiaries has filed on or before
their respective due dates or within the applicable grace periods, all federal,
state and foreign tax returns which are required to be filed or has obtained
extensions for filing such tax returns and is not delinquent in filing such
returns in accordance with such extensions and has paid all taxes which have
become due pursuant to those returns or pursuant to any assessments received by
any such party, as the case may be, to the extent such taxes have become due,
except to the extent such tax payments are being
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actively contested in good faith by appropriate proceedings and with respect to
which adequate provision has been made on the books of Company or such
Subsidiary as may be required by GAAP.
6.6 No Defaults. There exists no material default under the provisions
of any instrument evidencing any indebtedness for borrowed money of the Company
or any Subsidiary which is permitted hereunder or of any agreement relating
thereto.
6.7 Enforceability of Agreement and Loan Documents -- Company. This
Agreement, each of the other Loan Documents to which Company is a party, and all
other certificates, agreements and documents executed and delivered by Company
under or in connection herewith or therewith have each been duly executed and
delivered by its duly authorized officers and constitute the valid and binding
obligations of Company, enforceable in accordance with their respective terms,
except as enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency, fraudulent conveyance, moratorium or similar laws
affecting the enforcement of creditor's rights, generally and by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in law or equity).
6.8 Enforceability of Loan Documents -- Guarantors. The Loan Documents
to which each of the Guarantors is a party, and all certificates, documents and
agreements executed in connection therewith by the Guarantors have each been
duly executed and delivered by the duly authorized officers or members or
managers, as the case may be, of the Guarantors and constitute the valid and
binding obligations of such Guarantors, enforceable in accordance with their
respective terms, except as enforcement thereof may be limited by applicable
bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or
similar laws affecting the enforcement of creditor's rights, generally and by
general principles of equity (regardless of whether enforcement is considered in
a proceeding in law or equity).
6.9 Compliance with Laws. Except as disclosed on Schedule 6.9, each of
the Company and each of its Subsidiaries has complied with all applicable
federal, state and local laws, ordinances, codes, rules, regulations and
guidelines (including consent decrees and administrative orders) except to the
extent that failure to comply therewith would not materially interfere with the
conduct of the business of Company and each of the Subsidiaries taken as a
whole, or would not have a Material Adverse Effect; except for such matters as
are not likely to have a Material Adverse Effect, and except as set forth in
Schedule 6.9 hereof, and without limiting the generality of Section 6.12, there
have been no past, and there is no pending or threatened, litigation, action,
proceeding or controversy affecting the Company or any of the Subsidiaries, and
no pending or threatened complaint, notice or inquiry to the Company or any of
the Subsidiaries, regarding potential liability of the Company or any of the
Subsidiaries, or any officer, director, agent or employee of the Company or any
of the Subsidiaries; and, to the knowledge of the Company, no facts or situation
exists that could form the basis for any such litigation, action, proceeding,
controversy, complaint, notice or inquiry.
6.10 Non-contravention -- Company. The execution, delivery and
performance of this Agreement and the other Loan Documents and any other
documents and instruments required under or in connection with this Agreement by
Company are not in contravention of the terms of any indenture, agreement or
undertaking to which Company or any of its Subsidiaries is a party or by
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which its or their properties are bound or affected where such violation would
reasonably be expected to have a Material Adverse Effect.
6.11 Non-contravention -- Guarantors. The execution, delivery and
performance of those Loan Documents signed by the Guarantors, and any other
documents and instruments required under or in connection with this Agreement or
any other Loan Document by the Guarantors are not in contravention of the terms
of any indenture, agreement or undertaking to which any Guarantor or Company is
a party or by which it or its properties are bound or affected where such
violation would reasonably be expected to have a Material Adverse Effect.
6.12 No Litigation. Except for De Minimis Matters or as set forth on
Schedule 6.12 hereof, there is no suit, action, proceeding, including, without
limitation, any bankruptcy proceeding, or governmental investigation pending
against or to the knowledge of Company, affecting Company or any Subsidiary
(other than any suit, action or proceeding in which Company or such Subsidiary
is the plaintiff and in which no counterclaim or cross-claim against Company or
such Subsidiary has been filed), nor has Company or any Subsidiary or any of its
or their officers, members, managers, or directors, as the case may be, been
subject to any suit, action, proceeding or governmental investigation as a
result of which any such officer, member, manager or director is or may be
entitled to indemnification by Company or a Subsidiary, as applicable, which
suits, if resolved adversely to Company, such Guarantor or such Subsidiary, are
reasonably likely to have a Material Adverse Effect. Except as set forth on
Schedule 6.12, there is not outstanding against Company or any Subsidiary any
judgment, decree, injunction, rule, or order of any court, government,
department, commission, agency, instrumentality or arbitrator nor is Company or
any Subsidiary in violation of any applicable law, regulation, ordinance, order,
injunction, decree or requirement of any governmental body or court where such
violation would reasonably be expected to have a Material Adverse Effect.
6.13 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; (ii) by any Guarantor, of any of the other
Loan Documents to which such Subsidiary is a party. 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.
6.14 Agreements Affecting Financial Condition. Neither the Company nor
any Subsidiary is party to any agreement or instrument or subject to any charter
or other corporate restriction which has a Material Adverse Effect.
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6.15 No Investment Company or Margin Stock. Neither the Company nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended. Neither the Company nor any Subsidiary 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. None of the proceeds of any of the Advances will be used
by the Company nor any Subsidiary to purchase or carry margin stock or will be
made available by the Company or any of its Subsidiaries in any manner to any
other Person to enable or assist such Person in purchasing or carrying margin
stock. 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.
6.16 ERISA. Neither Company nor any Subsidiary maintains or contributes
to any Pension Plan subject to Title IV of ERISA, except as set forth on
Schedule 6.16 hereto; and there is no accumulated funding deficiency within the
meaning of ERISA, or any existing liability with respect to any of the Pension
Plans owed to the Pension Benefit Guaranty Corporation or any successor thereto,
and no "reportable event" or "prohibited transaction", as defined in ERISA, has
occurred with respect to any Pension Plan, and all such Pension Plans are in
material compliance with the requirements of the Internal Revenue Code and
ERISA.
6.17 Conditions Affecting Business or Properties. Neither the
respective businesses nor the properties of Company nor any Subsidiary is
affected by any fire, explosion, accident, strike, lockout or other dispute,
drought, storm, hail, earthquake, embargo, Act of God or other casualty (whether
or not covered by insurance).
6.18 Environmental and Safety Matters. Except as set forth in Schedules
6.18 and 6.12 and except for such matters as are not likely to have a Material
Adverse Effect:
(a) all facilities and property (including underlying
groundwater) owned or leased by the Company or any of its Subsidiaries,
have been, and continue to be, owned or leased by the Company and the
Subsidiaries in material compliance with all Hazardous Material Laws;
(b) to the best knowledge of the Company, there have been no
past, and there are no pending or threatened
(i) claims, complaints, notices or requests for information
received by the Company or any of its Subsidiaries with respect to
any alleged violation of any Hazardous Material Law, or
(ii) complaints, notices or inquiries to the Company or any
of its Subsidiaries regarding potential liability under any
Hazardous Material Law; and
(c) no conditions exist at, on or under any property now or
previously owned or leased by the Company or any of its Subsidiaries
which, with the passage of time, or the giving of notice or both, would
give rise to liability under any Hazardous Material Law.
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6.19 Subsidiaries. As of the Effective Date, and except as disclosed on
Schedule 6.19 hereto, the Company has no Subsidiaries.
6.20 Accuracy of Information. (a) Each of the Company's financial
statements previously furnished to Agent and the Banks prior to the date of this
Agreement, has been prepared in accordance with GAAP and is complete and correct
in all material respects and fairly presents (subject to year-end audit
adjustments in the case of interim statements) the financial condition of
Company and the results of its operations for the periods covered thereby.
(b) Since December 31, 1998 there has been no material adverse
change in the financial condition of Company or its Subsidiaries taken as a
whole; to the best knowledge of Company, neither Company nor any of its
Subsidiaries has any contingent obligations (including any liability for taxes)
not disclosed by or reserved against in the December 31, 1998 balance sheets, as
applicable, except as set forth on Schedule 6.20 hereof, and at the present time
there are no unrealized or anticipated losses from any present commitment of
Company or any of its Subsidiaries which in the aggregate is likely to have a
Material Adverse Effect.
7. AFFIRMATIVE COVENANTS
Company covenants and agrees that it will, and, as applicable, it will
cause each of its Subsidiaries, until the Revolving Credit Maturity Date and
thereafter until expiration of all Letters of Credit and final payment in full
of the Indebtedness and the performance by the Company of all other obligations
under this Agreement and the other Loan Documents:
7.1 Financial Statements. Furnish to the Agent with sufficient copies
for each Bank:
(a) as soon as available and in any event within one hundred twenty
(120) days after the end of each of Company's fiscal years, (i) a
copy of Company's consolidated financial statements for each
fiscal year including consolidated balance sheets as of the end of
such fiscal year and related consolidated statements of income and
retained earnings for such fiscal year, each prepared in
accordance with GAAP and audited by independent certified public
accountants selected by Company and reasonably acceptable to Agent
and (ii) a copy of Company's consolidating financial statements
for each fiscal year including consolidating balance sheets as of
the end of such fiscal year and related consolidating statements
of income and retained earnings for such fiscal year, each
prepared in accordance with GAAP and certified by an officer of
Company;
(b) as soon as available and in any event within sixty (60) days after
the end of each fiscal quarter, a copy of Company's consolidated
and consolidating financial statements for such fiscal quarter,
including consolidated and consolidating balance sheets as of the
end of such fiscal quarter and the related statements of income
and retained earnings for such fiscal quarter, each prepared in
accordance with generally accepted
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accounting principles and practices consistently applied and
certified (subject to year-end audit adjustments) by an officer of
Company;
(c) as soon as available and in any event within forty five (45) 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 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 within one hundred twenty
(120) days after the end of each fiscal year of each Insurance
Subsidiary, a copy of such Insurance Subsidiary's financial
statements for such 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) copies of Company's reports on Form 8-K (as soon as available),
10-Q (within sixty days after the end of each fiscal quarter of
Company) and 10-K (within one hundred twenty days after the end of
each fiscal year of Company) filed with the federal Securities and
Exchange Commission;
(g) 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 (except as approved by such officer and disclosed therein).
7.2 Certificates; Other Information. Furnish to the Agent with
sufficient copies for each Bank (except in connection with clause (b)(ii) below,
which copies shall be provided to each Bank on request):
(a) within 60 days after and as the end of each quarter, a
Covenant Compliance Certificate substantially in form attached hereto
as Exhibit D;
(b) 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;
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(c) within five (5) days after the occurrence thereof, written
notice from Company of any change in the Best rating of any Insurance
Subsidiary or in any other change in any rating of any Insurance
Subsidiary by any other rating agency.
7.3 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.
7.4 Conduct of Business and Maintenance of Existence.
(a) Continue to engage solely in the business as now conducted by
it 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 as otherwise permitted pursuant to Section 8.4; and
(c) comply with all Contractual Obligations and Requirements of
Law, except to the extent that failure to comply therewith could not,
in the aggregate, reasonably be expected to have a Material Adverse
Effect.
7.5 Maintenance of Property; Insurance. Keep all property useful and
necessary in its business in good working order and maintain insurance coverage
on its 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
(including without limitation casualty and public liability and property damage
insurance), and in the event of acquisition of additional property, real or
personal, or of incurrence of additional risks of any nature, increase such
insurance coverage in such manner and to such extent as prudent business
judgment and present practice or any applicable Requirements of Law would
dictate.
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7.6 Inspection of Property; Books and Records, Discussions.
Permit Agent and each Bank, through their authorized attorneys,
accountants and representatives (a) after reasonable advance notice (which
notice shall not be required following the occurrence and during the continuance
of an Event of Default) 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) permit Agent
and each Bank or their authorized representatives, at reasonable times and
intervals after reasonable advance notice (which notice shall not be required
following the occurrence and during the continuance of an Event of Default), 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 13.12 hereof.
7.7 Notices. Promptly give notice to the Agent of:
(a) the occurrence of any Default or Event of Default of which
the Company or any Subsidiaries has knowledge;
(b) any (i) default or event of default under any Contractual
Obligation of the Company or any Subsidiary or (ii) litigation,
investigation or proceeding which may exist at any time between the
Company or any Subsidiary and any Governmental Authority, which in
either case, if not cured or if 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 30 days after the Company knows or has reason to know thereof:
(i) the occurrence or expected 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;
(d) a material adverse change in the business, operations,
property, or financial condition of the Company or any of its
Subsidiaries taken as a whole;
(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 upon the Company (or any such tax position taken by the Company)
setting forth the details of such position and the financial impact
thereof.
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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.
7.8 Hazardous Material Laws.
(a) Use and operate all of its facilities and properties in
material compliance with all material Hazardous Material Laws, keep all
necessary permits, approvals, certificates, licenses and other
authorizations relating to environmental matters in effect and remain
in material compliance therewith, and handle all Hazardous Materials in
material compliance with all applicable Hazardous Material Laws;
(b) Promptly notify Agent and provide copies upon receipt of all
written claims, complaints, notices or inquiries received by the
Company or any of its Subsidiaries of a material nature relating to its
facilities and properties or compliance with Hazardous Material Laws,
and shall promptly cure and have dismissed with prejudice to the
satisfaction of the Majority Banks any actions and proceedings relating
to compliance with Hazardous Material Laws to which the Company or any
of its Subsidiaries is named as a party;
(c) Provide such information and certifications which any Bank
may reasonably request from time to time to evidence compliance with
this Section 7.8.
7.9 Maintain Base Net Worth. Maintain at all times a Net Worth of not
less than the Base Net Worth.
7.10 Fixed Charge Coverage Ratio. Maintain, as of the end of each
fiscal quarter, a Fixed Charge Coverage Ratio of not less than the following
amounts during the periods specified below:
September 30, 1999 through December 30, 1999 1.50 to 1.0
December 31, 1999 through March 30, 2000 1.75 to 1.0
March 31, 2000 and thereafter 2.00 to 1.0
7.11 Risk-Based Capital. At all times after the date hereof, cause Star
Insurance Company and each Insurance Subsidiary not owned by Star Insurance
Company to maintain a ratio of (a) Total Adjusted Capital (as defined in the
Risk-Based Capital Act) to (b) the Company Action Level RBC (as defined in the
Risk-Based Capital Act) of at least 175%. Bank acknowledges that Total Adjusted
Capital and Company Action Level RBC are determined as of the end of each fiscal
year, and only as of the end of each fiscal year.
7.11A Minimum Statutory Surplus. At all times after the date
hereof, cause Star Insurance Company and each Insurance Subsidiary not owned by
Star Insurance Company to maintain a Statutory Surplus of at least the sum of
(a) 85% of its Statutory Surplus as of March 31, 1999 in respect of Star
Insurance Company and each Insurance Subsidiary not owned by Star Insurance
Company, or as of the date of purchase by the Company or any Subsidiary, in
respect of
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each other Insurance Subsidiary, plus (b) the aggregate capital contributions
made to such Insurance Subsidiary on the date of such purchase or thereafter,
plus (c) the proceeds received by such Insurance Subsidiary from the issuance of
any equity securities on the date of such purchase or thereafter (net of
reasonable and customary expenses of such issuance), less cash dividends paid by
such Insurance Subsidiary to the Company.
7.12 Funded Debt to Total Capitalization Ratio. Maintain, as of the end
of each quarter, a ratio of Funded Debt to Total Capitalization of not more than
the following amounts during the periods specified below:
September 30, 1999 through September 29, 2001 .40 to 1.0
September 30, 2001 and thereafter .35 to 1.0
7.13 Net Premium and Gross Premium Ratio. Cause each Insurance
Subsidiary to maintain at all times a Net Premium Ratio of not more than 2.5 to
1.0 and a Gross Premium Ratio of not more than 3.5 to 1.0.
7.14 Taxes. Pay and discharge all taxes and other governmental charges,
and all material 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 by appropriate proceedings and is
reserved for, as required by GAAP on its balance sheet, or where the failure to
pay any such matter could not have a Material Adverse Effect.
7.15 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.
7.16 Compliance with ERISA. Comply in all material respects with all
requirements imposed by ERISA as presently in effect or hereafter promulgated or
the Internal Revenue Code, including, but not limited to, the minimum funding
requirements of any Pension Plan.
7.17 ERISA Notices. Promptly notify Agent upon the occurrence of any of
the following events:
(a) the termination of any Pension Plan subject to Subtitle C of
Title IV of ERISA;
(b) the appointment of a trustee by a United States District
Court to administer any Pension Plan subject to Title IV of ERISA;
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(c) the commencement by the Pension Benefit Guaranty Corporation,
or any successor thereto, of any proceeding to terminate any Pension
Plan subject to Title IV of ERISA;
(d) the failure of the Company or any Subsidiary to make any
payment in respect of any Pension Plan required under Section 412 of
the Internal Revenue Code;
(e) the withdrawal of the Company or any Subsidiary from any
multiemployer plan (as defined in Section 3(37) of ERISA; or
(f) the occurrence of a "reportable event" which is required to
be reported by the Company under Section 4043 of ERISA or a "prohibited
transaction" as defined in Section 406 of ERISA or Section 4975 of the
Internal Revenue Code which is likely to have a Material Adverse
Effect.
7.18 Use of Proceeds. Use all Advances of the Revolving Credit for
working capital financing, to refinance existing debt and to finance Permitted
Acquisitions. Company shall not use any portion of the proceeds of any such
advances for the purpose of purchasing or carrying any "margin stock" (as
defined in Regulation G of the Board of Governors of the Federal Reserve System)
in any manner which violates the provisions of Regulation G, T, U or X of said
Board of Governors or for any other purpose in violation of (x) any applicable
statute or regulation or (y) the terms and conditions of this Agreement.
7.19 Future Subsidiaries.
With respect to each Person which becomes a Material Subsidiary
subsequent to the Effective Date (other than an Insurance Subsidiary), on the
date such new Material Subsidiary is created or acquired, cause such new
Material Subsidiary to execute and deliver to the Agent, a Joinder Agreement
whereby such Material Subsidiary becomes obligated as a Guarantor under the
Guaranty.
8. NEGATIVE COVENANTS.
Company covenants and agrees that, until the Revolving Credit Maturity
Date and thereafter until expiration of all Letters of Credit and final payment
in full of the Indebtedness and the performance by Company and the Subsidiaries
of all other obligations under this Agreement and the other Loan Documents, it
will not, and will not permit any of the Subsidiaries, to:
8.1 Limitation on Debt. Create, incur, assume or suffer to exist any
Debt, except:
(a) Indebtedness in respect of the Notes, the Letters of Credit
and other obligations of the Company or any Subsidiary under this
Agreement and the other Loan Documents to which it is a party;
(b) any Debt set forth in Schedule 8.1(b) attached hereto and any
renewals or refinancing of such Debt in amounts not exceeding the
scheduled amounts (less any required
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amortization according to the terms thereof), on substantially the
same terms and otherwise in compliance with this Agreement;
(c) Debt of the Company or a Subsidiary other than pursuant to
this Agreement and other than Debt set forth in Schedule 8.1(c)
attached hereto 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 $2,000,000 at any time outstanding, and
any renewals or refinancing of such Debt in amounts not exceeding the
scheduled amounts (less any required amortization according to the
terms thereof), on substantially the same terms and otherwise in
compliance with this Agreement;
(d) Debt in respect of taxes, assessments or governmental charges
to the extent that payment thereof shall not at the time be required to
be made in accordance with Section 7.14;
(e) Debt in respect to letters of credit issued by Comerica Bank
in its individual capacity and not as Issuing Bank in favor of Company
or any of its Subsidiaries;
(f) current unsecured trade, utility or nonextraordinary accounts
payable (including without limitation, short term Debt owed to vendors)
arising in the ordinary course of Company's or such Subsidiary's
businesses;
(g) Subordinated Debt;
(h) Indebtedness under any Interest Rate Protection Agreements;
(i) intercompany loans from the Company to wholly owned
Subsidiaries, but only to the extent permitted under the other
applicable terms and limitations of this Agreement, including but not
limited to Section 8.7 hereof;
(j) Funded Debt assumed pursuant to a Permitted Acquisition,
provided that such Debt was not entered into, extended or renewed in
contemplation of such acquisition (including Debt secured by Liens
permitted by 8.2(c)), provided that the aggregate amount of all such
Debt shall not exceed $6,000,000 (excluding in such calculation the
letter of credit assumed in connection with the Pending Acquisition) at
any one time outstanding;
(k) additional Debt not exceeding $600,000 in aggregate principal
amount at any one time outstanding.
8.2 Limitation on Liens. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Permitted Liens;
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(b) Liens securing Debt permitted by Section 8.1(c) incurred to
finance the acquisition of fixed or capital assets, provided that (i)
such Liens shall be created substantially simultaneously with the
acquisition of such fixed or capital assets, (ii) such Liens do not at
any time encumber any property other than the property financed by such
Debt, (iii) the amount of Debt secured thereby is not increased and
(iv) the principal amount of Debt secured by any such Lien shall at no
time exceed 100% of the original purchase price of such property;
(c) any Lien securing indebtedness assumed pursuant to a
Permitted Acquisition, provided that such Lien is limited to the
property so acquired, and was not entered into, extended or renewed in
contemplation of such acquisition;
(d) Liens in favor of Agent, as security for the Indebtedness;
(e) attachments, judgements and other similar Liens, for sums not
exceeding, in the aggregate, $500,000 (excluding any portion thereof
which is covered by adequate insurance with a reputable carrier and
which insurer has accepted a tender of defense and indemnification
without reservation of rights) arising in connection with court
proceedings, provided that the execution or other enforcement of such
Liens is effectively stayed and claims secured thereby are being
actively contested in good faith and by appropriate proceedings);
(f) other Liens, existing on the Effective Date, set forth on
Schedule 8.2.
8.3 Limitation on Guarantee Obligations. Create, incur, assume or
suffer to exist any Guarantee Obligation except pursuant to the Loan Documents.
8.4 Acquisitions. Other than Permitted Acquisitions, purchase or
otherwise acquire or become obligated for the purchase of all or substantially
all or any material portion of the assets or business interests of any Person,
firm or corporation, or any shares of stock (or other ownership interests) of
any corporation, trusteeship or association, or any business or going concern,
or in any other manner effectuate or attempt to effectuate an expansion of
present business by acquisition.
8.5 Limitation on Mergers, or Sale of Assets. Enter into any merger or
consolidation or convey, sell, lease, assign, transfer or otherwise dispose of
any of its property, business or assets (including, without limitation,
receivables and leasehold interests), whether now owned or hereafter acquired,
except:
(a) inventory leased or sold in the ordinary course of business;
(b) 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, in each case disposed of in the ordinary course of
business; and
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(c) mergers in which the Company (if the Company is a party
thereto) or a Subsidiary is the surviving corporation and which
otherwise meet the definition of "Permitted Acquisition".
8.6 Restricted Payments. Declare or make, or permit any Subsidiary to,
declare or make any distributions, dividend, payment or other distribution of
assets, properties, cash, rights, obligations or securities (collectively,
"Distributions") on account of any membership interests or any shares of any
class of its capital stock, as applicable, or purchase, redeem or otherwise
acquire for value any membership interests or any shares of its capital stock,
as applicable, or any warrants, rights or options to acquire such shares or
membership interests, now or hereafter outstanding; except:
(a) Company's Subsidiaries may make Distributions to Company;
(b) so long as no Default or Event of Default has occurred and is
continuing or would occur after giving effect thereto, Distributions by
Company to its shareholders during any single fiscal year (together
with redemptions of Company's stock during such fiscal year) not
exceeding five percent (5%) of Company's contributed equity capital
(determined in accordance with GAAP) determined as of the last day of
the fiscal year preceding such fiscal year.
8.7 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities, of or any assets constituting a
business unit of, or make any other investment in, any Person, except:
(a) Permitted Investments;
(b) extensions of trade credit in the ordinary course of
business;
(c) (i) loans and advances to officers and employees for
relocation expenses which are required to be repaid within one year of
the date made and (ii) other loans and advances to officers and
employees of the Company or any Subsidiary in the ordinary course of
business in an aggregate amount, not to exceed $250,000 at any one time
outstanding; and
(d) intercompany loans, advances or Investments to Company's
Subsidiaries;
(e) Permitted Acquisitions permitted pursuant to Section 8.4.
In valuing any Investments for the purpose of applying the limitations set forth
in this Section 8.7 (except as otherwise expressly provided herein), such
Investment shall be taken at the original cost thereof, without allowance for
any subsequent write-offs or appreciation or depreciation, but less any amount
repaid or recovered on account of capital or principal.
8.8 Transactions with Affiliates. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate
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of the Company or any Subsidiary unless such transaction is otherwise permitted
under this Agreement, is in the ordinary course of the Company's or such
Subsidiary's business and is upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than it would obtain in a comparable arms length
transaction with a Person not a Subsidiary.
8.9 Limitation on Negative Pledge Clauses. Enter into 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.
8.10 Prepayment of Debts. Prepay, purchase, redeem or defease any Debt
for money borrowed or any capital leases excluding, subject to the terms hereof,
the Indebtedness and except for prepayments, purchases and redemptions of Debt
in an aggregate amount not exceeding $500,000 during any single fiscal year of
Company.
8.11 Subordinated Debt. Amend or modify any document evidencing any
Subordinated Debt or make any payment with respect to the Subordinated Debt
except for regularly scheduled payments of principal and interest, subject to
the blockage provisions contained in the Subordinated Debt Documents.
8.12 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 A.M. Best Company, (ii) has a rating of at least A by Standard &
Poor's, (iii) is a syndicate in Lloyds of London or (iv) is a reinsurer which
has provided security to collateralize its obligations in compliance with
applicable insurance regulations.
8.13 Investment Portfolio. Permit or suffer any material change in
either the quality of its investments or its investment policies.
9. DEFAULTS
9.1 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,
(ii) any Reimbursement Obligation, or (iii) any Fees, and in the case
of interest payments and Fees, continuance thereof for three (3)
Business Days;
(b) non-payment of any money by Company under this Agreement or
by Company or any Subsidiary under any of the Loan Documents to which
it is a party, other than as set forth in subsection (a), above within
five Business Days after notice from Agent that the same is due and
payable;
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(c) default in the observance or performance of any of the
conditions, covenants or agreements of Company set forth in Sections
2.7, 3.6, 7 (in its entirety) or 8 (in its entirety);
(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 without cure for a period of thirty
(30) consecutive days after written notice of such default by Agent or
any Bank to Company;
(e) any representation or warranty made by Company or any
Subsidiary herein or 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;
(f) default in the observance or performance of or failure to
comply with any of the conditions, covenants or agreements of Company
or any Subsidiary 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;
(g) default (i) in the payment of any indebtedness for borrowed
money (other than Indebtedness hereunder) of Company or any Subsidiary
in excess of One Hundred Thousand Dollars ($100,000) in the aggregate
when due (whether by acceleration or otherwise) and continuance thereof
beyond any applicable period of cure or (ii) failure to comply with the
terms of any other obligation of Company or any Subsidiary with respect
to any indebtedness for borrowed money (other than Indebtedness
hereunder) in excess of One Hundred Thousand Dollars ($100,000) in the
aggregate, which with the giving of notice or passage of time or both
would permit the holder or holders thereto to accelerate such other
indebtedness for borrowed money or terminate its commitment thereunder,
as applicable;
(h) the rendering of any judgment(s) for the payment of money in
excess of the sum of One Hundred Thousand Dollars ($100,000)
individually or in the aggregate against Company or any Subsidiary, and
such judgments shall remain unpaid, unvacated, unbonded or unstayed by
appeal or otherwise for a period of forty five (45) 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;
(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 subject to
Title IV of ERISA 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 sixty (60) 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 Guaranty Corporation to terminate
any such Pension Plan or to appoint a trustee by the
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appropriate United States District Court to administer any such Pension
Plan, which in either case could reasonably be expected to have a
Material Adverse Effect;
(j) the Company or any Subsidiary shall be dissolved or
liquidated (or any judgment, order or decree therefor shall be entered)
or; if a creditors' committee shall have been appointed for the
business of Company or any Subsidiary; or if Company or any Subsidiary
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 fail to pay its debts generally as
such debts become due in the ordinary course of business (except as
contested in good faith and for which adequate reserves are made in
such party's financial statements); 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 of its property or assets (otherwise than upon
application or consent of Company or any of its Subsidiaries); or if
any involuntary bankruptcy, reorganization or other case or proceeding
under any bankruptcy or insolvency law is commenced in respect of the
Company or any Subsidiary and if such case or proceeding remains for 60
days undismissed; or if an order shall be entered approving any
petition for reorganization of Company or any Subsidiary; or the
Company or any Subsidiary shall take any action (corporate or other)
authorizing or in furtherance any of the actions described above in
this subsection;
(k) a "Change in Control" under and as defined in any
Subordinated Debt Documents shall have occurred;
(l) (i) any Person or group of Persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
other than Xxxxxx X. Xxxxx or any trust established by him for estate
planning purposes shall acquire beneficial ownership (within the
meaning of Rule 13d-3 promulgated under such Act) of 25% or more of the
outstanding shares of common stock of the Company; or (ii) during any
24-month period, individuals who at the beginning of such period
constituted the Company's Board of Directors (together with any new
directors whose election by the Company's Board of Directors or whose
nomination for election by the Company's shareholders was approved by a
vote of at least two-thirds of the directors who either were directors
at beginning of such period or whose election or nomination was
previously so approved) cease for any reason to constitute a majority
of the Board of Directors of the Company;
(m) 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;
(n) any of the Insurance Subsidiaries shall fail to maintain such
catastrophe reinsurance as a prudent insurance company would deem
necessary, as determined by Bank;
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(o) 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;
(p) if any of the Insurance Subsidiaries currently rated by Best
shall receive a rating from Best of less than A- or, if after Best has
rated an Insurance Subsidiary, Best shall withdraw its rating for the
Insurance Subsidiary; provided that this clause (p) shall not apply to
an Insurance Subsidiary acquired after the Effective Date as a result
of a Permitted Acquisition.
9.2 Exercise of Remedies. If an Event of Default has occurred and is
continuing hereunder: (a) the Agent shall, upon being directed to do so by the
Majority Banks, declare the Revolving Credit Aggregate Commitment terminated;
(b) 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; (c) upon the occurrence of any Event of Default
specified in subsection 9.1(j), above, and notwithstanding the lack of any
declaration by Agent under preceding clause (b), 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; (d) the Agent shall, upon being
directed to do so by the Majority Banks, demand immediate delivery of cash
collateral, and the Company and each Account Party agrees to deliver such cash
collateral upon demand, in an amount equal to the maximum amount that may be
available to be drawn at any time prior to the stated expiry of all outstanding
Letters of Credit, and (e) 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 other Loan Documents or law.
9.3 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.
9.4 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 security interest or mortgage contemplated by or granted
under or in connection with this Agreement. These waivers have been voluntarily
given, with full knowledge of the consequences thereof.
9.5 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 13.11 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
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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.
9.6 Set Off.
Upon the occurrence and during the continuance of any Event of Default,
each Bank may at any time and from time to time, without notice to the Company
but subject to the provisions of Section 10.3 hereof, (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 but not
trust accounts) at any time held and other indebtedness 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 and security interest in 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 9.6
are in addition to the other rights and remedies (including, without limitation,
other rights of setoff) which such Bank may have.
10. PAYMENTS, RECOVERIES AND COLLECTIONS
10.1 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 12:00
noon (Detroit time) in immediately available funds to Agent, for the
ratable account of the Banks, at Agent's office located at Xxx Xxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000, (care of Agent's Eurocurrency
Lending Office, for Eurocurrency-based Advances). 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
Eurocurrency-based Advances, to such Bank's Eurocurrency 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 Bank 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
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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,
the Federal Funds Effective Rate (daily average), as the same may vary
from time to time, and (ii) with respect to Eurocurrency-based
Advances, 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 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 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 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 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.
As used herein, the terms "tax", "taxes" and "taxation" include all
existing or future income, stamp or other taxes (excluding, in the case of the
Agent and each Bank, net income and franchise taxes imposed on the Agent or such
Bank by the jurisdiction under the laws of which the Agent or such Bank is
organized or any political subdivision or taxing authority thereof or therein,
or by any jurisdiction in which such Bank's domestic lending office or
Eurocurrency Lending Office, as the case may be, is located or any political
subdivision or taxing authority thereof or therein) 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).
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10.2 Application of Proceeds of Collateral. Notwithstanding anything to
the contrary in this Agreement, after an Event of Default, the proceeds of any
Collateral, together with any offsets, voluntary payments by Company or any
Subsidiary or others and any other sums received or collected in respect of the
Indebtedness, shall be applied, first, to the Notes and any Reimbursement
Obligations on a pro rata basis (or in such order and manner as determined by
the Majority Banks; subject, however, to the applicable Percentages of the loans
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 or the applicable Subsidiary, as
the case may be. The application of such proceeds and other sums to the Notes
and the Reimbursement Obligations shall be based on each Bank's Percentage of
the aggregate of the loans.
10.3 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 Indebtedness in excess of
its pro rata share of payments then or thereafter obtained by all Banks upon
principal of and interest on all Indebtedness, such Bank shall purchase from the
other Banks such participations in the Notes and/or Reimbursement Obligation
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 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.
11. CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS
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11.1 Reimbursement of Prepayment Costs. If Company makes any payment of
principal with respect to any Eurocurrency-based Advance 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
Eurocurrency-based 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 Eurocurrency-based
Advance when due, then Company shall reimburse Agent and Banks, as the case may
be on demand for any resulting loss, cost or expense 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. 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) 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 through the purchase of an underlying deposit in an amount
equal to the amount of such Advance and having a maturity comparable to the
relevant Interest Period; provided, however, that any Bank may fund any
Eurocurrency-based Advance in any manner it deems fit and the foregoing
assumptions shall be utilized only for the purpose of the calculation of amounts
payable under 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 deemed
correct, absent manifest error.
11.2 Agent's Eurocurrency Lending Office. For any Advance to which the
Eurocurrency-based Rate is applicable, if Agent shall designate a Eurocurrency
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 on
the books of such Eurocurrency Lending Office.
11.3 Circumstances Affecting Eurocurrency-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 the Banks to make
Eurocurrency-based Advances, and the right of Company to convert an Advance to
or refund an Advance as a Eurocurrency-based Advance shall be suspended, and the
Company shall repay in full (or cause to be repaid in full) the then outstanding
principal amount of each such Eurocurrency-based Advance covered hereby together
with accrued interest thereon, any amounts payable (but not yet paid) under
Section 11.1, hereof, and all other amounts payable hereunder on the last day of
the then current Interest Period applicable to such Advance. Upon the date for
repayment as aforesaid and unless Company notifies Agent to the
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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 as of the last day of such Interest Period.
11.4 Laws Affecting Eurocurrency-based Advance 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
Eurocurrency 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 Eurocurrency Lending
Offices) to honor its obligations hereunder to make or maintain any Advance with
interest at the Eurocurrency-based Rate, such Bank or the Agent shall forthwith
give notice thereof to Company and the Agent. Thereafter the Agent shall so
notify Company and the right of Company to convert an Advance or refund an
Advance as a Eurocurrency-based Advance, 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 to the end of the then
current Interest Period applicable thereto as a Eurocurrency-based Advance,
Company shall immediately prepay such Advance, together with interest to the
date of payment, and any amounts payable under Sections 11.1 or 11.6 with
respect to such prepayment and the applicable Advance shall immediately be
converted to a Prime-based Advance and the Prime-based Rate shall be applicable
thereto.
11.5 Increased Cost of Eurocurrency-based Advances. In the event that
any change in 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 (or any of
their respective Eurocurrency Lending Offices) 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 (or any of their
respective Eurocurrency Lending Offices) to any tax, duty or other
charge with respect to any Advance or any Note or shall change the
basis of taxation of payments to the Agent or any of the Banks (or any
of their respective Eurocurrency Lending Offices) of the principal of
or interest on any Advance 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 of the Agent or of any of the
Banks (or any of their respective Eurocurrency Lending Offices) imposed
by the United States of America or the jurisdiction in which such
Bank's principal executive 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 any of their respective
Eurocurrency Lending
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Offices) or shall impose on the Agent or any of the Banks (or any of
their respective Eurocurrency Lending Offices) or the interbank
markets any other condition affecting any Advance 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 as a Eurocurrency-based Advance 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 in respect of a Eurocurrency-based Advance then Agent or such
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 such Bank
or Banks shall accompany such demand for payment and shall be deemed to be
correct absent manifest error.
For purposes of this Section, a change in law, rule, regulation,
interpretation, administration, request or directive shall include, without
limitation, any change made or which becomes effective on the basis of a law,
rule, regulation, interpretation, administration, request or directive presently
in force, the effective date of which change is delayed by the terms of such
law, rule, regulation, interpretation, administration, request or directive.
11.6 Indemnity. The Company will indemnify Agent and each of the Banks
against any loss or expense which may arise or be attributable to the Agent's
and each Bank's obtaining, liquidating or employing deposits or other funds
acquired to effect, fund or maintain the Advances (a) as a consequence of any
failure by the Company to make any payment when due of any amount due hereunder
in connection with a Eurocurrency-based Advance, (b) due to any failure of the
Company to borrow on a date specified therefor in a Request for Revolving Credit
Advance or (c) due to any payment or prepayment of any Eurocurrency-based
Advance on a date other than the last day of the Interest Period for such
Advance, whether required by another provision of this Agreement or otherwise.
The Agent's and each Bank's (as applicable) calculations of any such loss or
expense shall be furnished to the Company and shall be deemed correct, absent
manifest error.
11.7 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
or Advances 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 or Advances hereunder to a level below that
which such Bank or Agent (or such controlling corporation) could have achieved
but for such circumstances
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(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Bank or Agent to be material (collectively, "Increased
Costs"), then Agent or such Bank shall notify the Company, and thereafter 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 or Advances 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 11.7 and shall be deemed correct, absent manifest error.
11.8 Substitution of Banks. If (i) the obligation of any Bank to make
Eurocurrency-based Advances has been suspended pursuant to Section 11.3 or
Section 11.4 or (ii) any Bank has demanded compensation under Section 11.5 or
Section 11.7 (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 "Purchasing
Lenders") to purchase the Notes and assume the commitment (including without
limitation its participations in Letters of Credit) 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 11.1 if Company has prepaid the
outstanding Eurocurrency-based Advances of the Affected Lender on the date of
such sale and (ii) any additional compensation accrued for its account under
Section 11.5 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. If any Purchasing Lender is not already one of the Banks,
the Affected Lender, as assignor, such Purchasing Lender, as assignee, Company
and the Agent shall enter into an Assignment Agreement pursuant to Section 13.8
hereof, whereupon such Purchasing Lender shall be a Bank party to this
Agreement, shall be deemed to be an assignee hereunder and shall have all the
rights and obligations of a Bank with a Percentage equal to its ratable share of
the Revolving Credit Aggregate Commitment of the Affected Lender. In connection
with any assignment pursuant to this Section 11.8, the Purchasing Lender shall
pay to the Agent the administrative fee for processing such assignment referred
to in Section 13.8. Upon the consummation of any sale pursuant to this Section
11.8, the Affected Lender, the Agent and Company shall make appropriate
arrangements so that, if required, each Purchasing Lender receives a new Notes,
as applicable.
12. AGENT
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12.1 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 other 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 other 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 Percentage, but excluding any such expense resulting from Agent's gross
negligence or wilful misconduct. Agent shall not be required to take any action
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 (excluding liability resulting from its gross
negligence or wilful misconduct). 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.
12.2 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.
12.3 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). None of Agent, its Affiliates nor any of their
respective directors, officers, employees or agents shall be liable to any Bank
for any action taken or omitted to be taken by it or them 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 all of the Banks
for those acts requiring consent of all of the Banks) (except for its or their
own wilful misconduct or gross negligence), nor be responsible for or have any
duties to ascertain, inquire into or verify (a) any recitals or warranties made
by the Company, or any Subsidiary or Affiliate of the Company, or any officer
thereof contained 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 and its Affiliates 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
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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 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.
12.4 Successor Agent. Agent may resign as such at any time upon at
least 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 resigning
agent shall be discharged from its duties and obligations hereunder, except for
its gross negligence or wilful misconduct arising prior to its resignation
hereunder, and the provisions of this Article 13 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.
12.5 Agent in its Individual Capacity. Comerica Bank, its Affiliates
and their respective successors and assigns, shall have the same rights and
powers hereunder as any other Bank and may exercise or refrain from exercising
the same as though Comerica Bank 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 its Subsidiaries) as if
Comerica Bank were not acting as Agent hereunder, and may accept fees and other
consideration therefor without having to account for the same to the Banks.
12.6 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.
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12.7 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 Company and Agent dated July 30, 1999, as such letter
may be amended or restated with the Company's prior written consent from time to
time. The Agent's Fees described in this Section 12.7 shall not be refundable
under any circumstances.
12.8 Authority of Agent to Enforce Notes and This Agreement. 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.
12.9 Indemnification. The Banks agree to indemnify the Agent and its
Affiliates (to the extent not reimbursed by Company, but without limiting any
obligation of Company to make such reimbursement), ratably according to their
respective Percentages, 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 and its Affiliates 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
and its Affiliates under this Agreement or any of the 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 or its
Affiliates's gross negligence or willful misconduct. Without limitation of the
foregoing, each Bank agrees to reimburse the Agent and its Affiliates promptly
upon demand for its ratable share of any out-of-pocket expenses (including,
without limitation, fees and expenses of counsel) incurred by the Agent and its
Affiliates 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 and its Affiliates are 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 and its
Affiliates promptly upon demand for its ratable share of any amounts owing to
the Agent and its Affiliates by the Banks pursuant to this Section, provided
that, if the Agent or its Affiliates is subsequently reimbursed by the Company
for such amounts, it shall refund to the Banks on a pro rata basis the amount of
any excess reimbursement. If the indemnity furnished to the Agent and its
Affiliates 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.
12.10 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
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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 and, shall endeavor to provide such notice to the Banks within three (3)
Business Days (but without any liability whatsoever in the event of its failure
to do so). Agent shall also furnish the Banks, promptly upon receipt, with
copies of all other notices or other information required to be provided by
Company hereunder.
12.11 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.
12.12 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 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.
13. MISCELLANEOUS
13.1 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. Furthermore, all financial statements required to be
delivered hereunder, subject to year-end audit adjustments thereto, shall be
prepared in accordance with GAAP.
13.2 Consent to Jurisdiction. Company, Agent and Banks hereby
irrevocably submit to the non-exclusive jurisdiction of any United States
Federal Court or Michigan state court sitting in Detroit, Michigan in any action
or proceeding arising out of or relating to this Agreement or any of the Loan
Documents and Company, Agent 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 Court or Michigan state court. Company irrevocably
consents to the service of any and all process
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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 13.6.
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 Subsidiary or any of its or their property in the courts
with subject matter jurisdiction 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.
13.3 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 (without regard to its
conflict of laws provisions). 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.
13.4 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.
13.5 Closing Costs and Other Costs; Indemnification. (a) Company agrees
to pay, or reimburse the Agent for payment of, on demand (i) all reasonable
closing costs and expenses, including, by way of description and not limitation,
house and outside attorney fees (but without duplication of fees and expenses
for the same services provided to the same party) 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, (ii) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing, recording or
amendment 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, (iii)
in connection with any Default or Event of Default, all reasonable costs and
expenses of the Agent or any of the Banks (including reasonable fees and
expenses of house and outside counsel, but without duplication of fees and
expenses for the same services, and whether incurred through negotiations, legal
proceedings or otherwise) in connection with 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 (iv) all reasonable costs and expenses of the Agent or any of the
Banks (including reasonable fees and expenses of house and outside counsel, but
without duplication of fees and expenses for the same
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services, 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 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. At Agent's
option, all of said amounts required to be paid by Company, if not paid when
due, may be charged by Agent as a Prime-based Advance against the Indebtedness.
(b) Company agrees to indemnify and save Agent and each of the Banks
harmless from all loss, cost, damage, liability or expenses, including
reasonable house and outside attorneys' fees and disbursements, incurred by
Agent and the Banks (but without duplication of fees and expenses for the same
services) by reason of an Event of Default, or enforcing the obligations of
Company or any Subsidiary under this Agreement or any of the other Loan
Documents or in the prosecution or defense of any action or proceeding
concerning any matter growing out of or connected with this Agreement or any of
the Loan Documents, excluding, however, any loss, cost, damage, liability or
expenses arising solely as a result of the gross negligence or willful
misconduct of the party seeking to be indemnified under this Section 13.5(b).
(c) Company agrees to defend, indemnify and hold harmless Agent and
each of the Banks, and their respective employees, agents, officers and
directors from and against any and all claims, demands, penalties, fines,
liabilities, settlements, damages, costs or expenses of whatever kind or nature
arising out of or related to (i) the presence, disposal, release or threatened
release of any Hazardous Materials on, from or affecting any premises owned or
occupied by Company or any of its Subsidiaries, (ii) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to such Hazardous Materials, (iii) any lawsuit or other proceeding
brought or threatened, settlement reached or governmental order or decree
relating to such Hazardous Materials, (iv) the cost of removal of all Hazardous
Materials from all or any portion of any premises owned by Company or its
Subsidiaries, (v) the taking of necessary precautions to protect against the
release of Hazardous Materials on or affecting any premises owned by Company or
any of its Subsidiaries, (vi) complying with all Hazardous Material Laws and/or
(vii) any violation of Hazardous Material Laws, including without limitation,
reasonable attorneys and consultants fees, investigation and laboratory fees,
environmental studies required by Agent or any Bank in connection with the
violation of Hazardous Material Laws (whether before or after the occurrence of
any Default or Event of Default hereunder), court costs and litigation expenses,
excluding however, those arising as a result of its or their gross negligence or
willful misconduct. The obligations of Company under this Section 13.5(c) shall
be in addition to any and all other obligations and liabilities the Company may
have to Agent or any of the Banks at common law or pursuant to any other
agreement.
13.6 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 Schedule
13.6 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
13.6. 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
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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 (answer back confirmed in the case of telexes and
receipt confirmed in the case of telecopies). Agent may, but, except as
specifically provided herein, 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.
13.7 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.
13.8 Successors and Assigns; Participations; Assignments.
(a) This Agreement shall be binding upon and shall inure to the
benefit of Company 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 the Banks.
(c) The Company and Agent acknowledge that each of the Banks may at
any time and from time to time, subject to the terms and conditions hereof,
assign or grant participations in such Bank's rights and obligations hereunder
and under the other Loan Documents to any commercial bank, savings and loan
association, insurance company, pension fund, mutual fund, loan or debt fund,
commercial finance company or other similar financial institution, the identity
of which institution is approved by Company and Agent, such approval not to be
unreasonably withheld or delayed; provided, however, that (i) the approval of
Company shall not be required upon the occurrence and during the continuance of
a Default or Event of Default, and (ii) the approval of Company and Agent shall
not be required for any such sale, transfer, assignment or participation to the
Affiliate of an assigning Bank, any other Bank or any Federal Reserve Bank. The
Company authorizes each Bank to disclose to any prospective assignee or
participant, once approved by Company and Agent, 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 13.12 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 E (with appropriate insertions
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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 to the assigning Bank (and not any
particular note or notes), 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 the lesser
of (X) Five Million Dollars ($5,000,000) and (Y) the entire
remaining amount of assigning Bank's interest in the
Revolving Credit (and participations in any outstanding
Letters of Credit);
(iii) 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; and (y)
the assigning Bank shall have delivered to the Agent the original of each Note
held by the assigning Bank under this Agreement. 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 a
Bank under this Agreement and the other Loan Documents (including without
limitation the right to receive fees payable hereunder in respect of the period
following such assignment). 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
and the other Loan Documents.
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, new Note(s) 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 may
contain a provision confirming such agreement. In addition, promptly following
receipt of such Notes, Agent shall prepare and distribute
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to Company and each of the Banks a revised Schedule 1.2 to this Agreement
setting forth the applicable new Percentages of the Banks (including the
assignee Bank), taking into account such assignment.
(e) 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 13.8(e) with
respect to rights of setoff and the benefits of Section 11
hereof, a participant shall have no direct rights or remedies
hereunder;
(iii) a participant shall not reassign or transfer, or grant any
sub-participations 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 the other 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
13.11(a) through (e) and (h) 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).
Company agrees that each participant shall be deemed to have the right of setoff
under Section 9.6 hereof in respect of its participation interest in amounts
owing under this Agreement and the other 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 10.3 hereof and shall
be entitled to the benefits of Section 11 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 Documents, and all actions hereunder shall be conducted as if no such
participation had been granted.
(f) Nothing in this Agreement, the Notes or the other Loan Documents,
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 and
participants permitted hereunder and thereunder any
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benefit or any legal or equitable right, remedy or other claim under this
Agreement, the Notes or the other Loan Documents.
13.9 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.
13.10 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.
13.11 Amendment and Waiver. No amendment or waiver of any provision of
this Agreement or any other Loan Document, nor consent to any departure by
Company or any Subsidiary therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Majority Banks (or by the Agent at
the written request of 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 or the Subsidiaries which are signatories thereto), 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) increase any Bank's commitments hereunder, (b) reduce the principal of, or
interest on, the Notes or any Fees or other amounts payable hereunder, (c)
postpone any date fixed for any payment of principal of, or interest on, the
Notes or any Fees or other amounts payable hereunder, (d) waive any Event of
Default specified in Sections 9.1(a) or (b) hereof, (e) release any guaranty or
similar undertaking provided by any Person except as shall be otherwise
expressly permitted in this Agreement or any other Loan Document; (f) terminate
or modify any indemnity provided to the Banks hereunder or under the other Loan
Documents, except as shall be otherwise expressly provided in this Agreement or
any other Loan Document, (g) take any action which requires the approval or
consent of all Banks pursuant to the terms of this Agreement or any other Loan
Document, (h) 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 (i) change the definition of "Majority Banks"
or this Section 12.11; provided further, however, 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
other Loan Document. All references in this Agreement to "Banks" or "the Banks"
shall refer to all Banks, unless expressly stated to refer to Majority Banks.
13.12 Confidentiality. Each Bank agrees that it will not disclose
without the prior consent of Company (other than to its employees, its
Subsidiaries, 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
other Loan Documents and will not use such information for its financial benefit
outside of the corporate lending relationship; provided that any Bank may
disclose any such information (a) as has become generally available to the
public or has been lawfully obtained by such Bank from any third party under no
duty of confidentiality to Company, (b) as may be required or appropriate in any
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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 or appropriate 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.
13.13 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 1001 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 4224 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 and Company 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 non-misleading 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.
13.14 Taxes and Fees. Should any tax (other than as a result of a
Bank's failure to comply with Section 14.13 or a tax based upon the net income
or capitalization of any Bank or the Agent by any jurisdiction where a Bank or
Agent is located), recording or filing fee become payable in respect of this
Agreement or any of the other Loan Documents or any amendment, modification or
supplement hereof or thereof, the Company agrees to pay the same, together with
any interest or penalties thereon arising from the Company's act or omission,
and agrees to hold the Agent and the Banks harmless with respect thereto.
Notwithstanding the foregoing, nothing contained in this Section 13.14 shall
affect or reduce the rights of any Bank or the Agent under Section 11.7 hereof.
13.15 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
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THE BANKS AND THE AGENT OR COMPANY EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY
ALL OF THEM.
13.16 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.
13.17 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.
13.18 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.
13.19 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.
13.20 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 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.
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13.21 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 Subsidiary 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
Section 11.6 hereof (together with any other indemnities of Company or any
Subsidiary contained elsewhere in this Agreement or in any of the other Loan
Documents) and of Banks set forth in Section 12.9 hereof shall survive the
repayment in full of the Indebtedness and the termination of the Revolving
Credit Aggregate Commitment.
* * *
[Signatures follow on succeeding pages]
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WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK, MEADOWBROOK INSURANCE GROUP,
as Agent INC.
By: By:
------------------------------ --------------------------------
Xxx X. Xxxxxxxxxx
Its: Vice President Its:
-------------------------------
BANKS: COMERICA BANK
By:
--------------------------------
Xxx X. Xxxxxxxxxx
Its: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By:
--------------------------------
Its:
-------------------------------
[SIGNATURE PAGE TO CREDIT AGREEMENT]
81
SCHEDULE 1.1
APPLICABLE MARGINS
-----------------------------------------------------------------------------------------------------
BASIS FOR PRICING XXXXX X XXXXX XX XXXXX XXX XXXXX XX
-----------------------------------------------------------------------------------------------------
Funded Debt to Total > .35 to 1.0 < .35 to 1.0 < .25 to 1.0 < .15 to 1.0
Capitalization - and and
> .25 to 1.0 > .15 to 1.0
- -
-----------------------------------------------------------------------------------------------------
Prime-based Margin 0% 0% 0% -1/2%
-----------------------------------------------------------------------------------------------------
Eurocurrency Margin 1.90% 1.65% 1.40% 1.00%
-----------------------------------------------------------------------------------------------------
Letter of Credit Fee 1.90% 1.65% 1.40% 1.00%
-----------------------------------------------------------------------------------------------------
82
SCHEDULE 1.2
PERCENTAGES
Bank Percentage
---- ----------
Comerica Bank 66.66667%
The First National Bank
of Chicago 33.33333%
Total 100%
83
SCHEDULE 2
EXISTING LETTERS OF CREDIT
84
EXHIBIT A
REQUEST FOR REVOLVING CREDIT ADVANCE
No. Dated:
---------------- -------------------
To: Comerica Bank - Agent
Re: Credit Agreement dated as of August 3, 1999 (as amended or otherwise
modified from time to time, the "Agreement") by and among the lenders
from time to time parties thereto (collectively, the "Banks"), Comerica
Bank, as Agent for the Banks (the "Agent"), and Meadowbrook Insurance
Group, Inc. (the "Company")
Pursuant to the Agreement, the Company requests an Advance from Banks
as follows:
A. Date of Advance:
---------------------------
B. Amount of Advance:
$
-----------------
[ ] Comerica Bank Account No.
--------------
[ ] Other:
---------------------------------
---------------------------------
C. Type of Activity:
1. Advance [ ]
2. Refunding [ ]
3. Conversion [ ]
D. Interest Rate:
1. Prime-based Rate [ ]
2. Eurocurrency-based Rate [ ]
E. Interest Period (for Eurocurrency-based Advances only):
1. One (1) Month [ ]
2. Two (2) Months [ ]
3. Three (3) Months [ ]
4. Six (6) Months [ ]
The Company certifies to the matters specified in Section 2.3(e) of the
Agreement.
MEADOWBROOK INSURANCE GROUP, INC.
By:
----------------------------------
Its:
---------------------------------
2
85
EXHIBIT B
REVOLVING CREDIT NOTE
$ August 3, 1999
------------------------
On the Revolving Credit Maturity Date, FOR VALUE RECEIVED, Meadowbrook
Insurance Group, Inc., a Michigan corporation ("Company"), promises to pay to
the order of [insert Bank] ("Bank") at Detroit, Michigan, in care of Agent, in
lawful money of the United States of America, the sum of [Insert amount derived
from Percentages] Dollars ($ ), or so much of said sum as may from
time to time have been advanced and then be outstanding hereunder pursuant to
the Revolving Credit and Term Loan Agreement dated as of August 3, 1999, made by
and among the Company, certain banks, including the Bank, and Comerica Bank as
Agent for such banks, as the same may be amended or otherwise modified from time
to time (the "Agreement"), together with interest thereon as hereinafter set
forth.
Each of the Advances made hereunder shall bear interest at the
Applicable Interest Rate from time to time applicable thereto under the
Agreement or as otherwise determined thereunder, and interest shall be computed,
assessed and payable as set forth in the Agreement.
This Note is a note under which advances (including refundings and
conversions), repayments and readvances may be made from time to time, but only
in accordance with the terms and conditions of the Agreement. This Note
evidences borrowings under, is subject to, is secured in accordance with, and
may be accelerated or matured under, the terms of the Agreement, to which
reference is hereby made. Definitions and terms of the Agreement are hereby
incorporated by reference herein.
This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of Michigan
(without regard to its conflict of laws principles).
Company hereby waives presentment for payment, demand, protest and
notice of dishonor and nonpayment of this Note and agrees that no obligation
hereunder shall be discharged by reason of any extension, indulgence, release,
or forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or any present or subsequent owner of any property, real or
personal, which is now or hereafter security for this Note.
Nothing herein shall limit any right granted Bank by any other
instrument or by law.
MEADOWBROOK INSURANCE GROUP, INC.
By:
----------------------------------
Its:
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2
86
EXHIBIT C
NOTICE OF LETTERS OF CREDIT
TO: Members of the Bank Group
RE: Credit Agreement dated as of August 3, 1999 (as amended or otherwise
modified from time to time, the "Agreement") by and among the lenders
from time to time parties thereto (collectively, the "Banks"), Comerica
Bank, as Agent for the Banks (the "Agent"), and Meadowbrook Insurance
Group, Inc. (the "Company")
On , 19 ,1/ Issuing Bank, in accordance with Article 3 of
the Agreement, issued its Letter of Credit number , in favor of 2/ for
the account of Company. The face amount of such Letter of Credit is $ .
The amount of each Bank's participation in the Letter of Credit is as follows:3/
Comerica Bank $
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$
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$
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This notification is delivered this day of , ,
pursuant to Section 3.3 of the Agreement. Except as otherwise defined,
capitalized terms used herein have the meanings given them in the Agreement.
Signed:
COMERICA BANK, AS AGENT
By:
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--------
1/Date of Issuance
2/Beneficiary
3/Amounts based on Percentages
Its:
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87
EXHIBIT D
COVENANT COMPLIANCE REPORT
To: Comerica Bank, as Agent
Re: Credit Agreement dated as of August 3, 1999 (as amended or
otherwise modified from time to time, the "Agreement") by and
among the lenders from time to time parties thereto
(collectively, the "Banks"), Comerica Bank, as Agent for the
Banks (the "Agent"), and Meadowbrook Insurance Group, Inc.
(the "Company")
This Covenant Compliance Report ("Report") is furnished pursuant to
Section 7.2 of the Agreement and sets forth various information as of
, (the "Computation Date").
1. Base Net Worth. On the Computation Date, Base Net Worth which is
required to be not less than $ , was $ as computed
in the supporting documents attached hereto as Schedule 1.
2. Fixed Charge Coverage. On the Computation Date, the Fixed Charge
Coverage Ratio, which is required to be not less than to 1.0 as of the
fiscal quarter then ending was to 1.0 as computed in the supporting documents
attached as Schedule 2.
3. Risk-Based Capital Ratio. On the Computation Date, the ratio of
Total Adjusted Capital to Company Action Level RBC, which is required to be not
more than % as of the fiscal quarter then ending was , as computed
in the supporting documents attached hereto as Schedule 3.
4. Funded Debt to Total Capitalization Ratio. On the Computation Date,
the Funded Debt to Total Capitalization Ratio which is required to be not more
than to 1.0 as of the fiscal quarter then ending, was to 1.0, as computed
in the supporting documents attached hereto as Schedule 4.
5. Net Premium and Gross Premium Ratios. On the Computation Date, the
Net Premium Ratio, which is required to be not more than 1.0 was
to 1.0 and the Gross Premium Ratio which is required to be not
more than to 1.0 was to 1.0 as computed in the supporting
documents attached as Schedule 5.
6. Minimum Statutory Surplus. On the Computation Date, Minimum
Statutory Surplus which was required to be not less than $ was $
as computed in the supporting documents attached as Schedule 6.
The undersigned officer of Company hereby certifies that:
A. All of the information set forth in this Report (and in any Schedule
attached hereto) is true and correct in all material respects.
B. As of the Computation Date, the Company and its Subsidiaries have
observed and performed all of their covenants and other agreements contained in
the Agreement and in the Notes and any other Loan Documents to be observed,
performed and satisfied by them. C. I have reviewed the Agreement and this
Report is based on an examination sufficient to assure that this Report is
accurate.
D. Except as stated in Schedule 7 hereto (which shall describe any
existing Default or Event of Default and the notice and period of existence
thereof and any action taken with respect thereto or contemplated to be taken by
Company), no Default or Event or Default has occurred and is continuing on the
date of this Report.
Capitalized terms used in this Report and in the schedules hereto, unless
specifically defined to the contrary, have the meanings given to them in the
Agreement.
IN WITNESS WHEREOF, Company has caused this Report to be executed and
delivered by its duly authorized officer this day of ,
.
MEADOWBROOK INSURANCE GROUP, INC.
By:
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Its:
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2
88
EXHIBIT E
ASSIGNMENT AGREEMENT
Date:
To: COMERICA BANK, in its capacity as Agent ("Agent")
Re: Credit Agreement dated as of August 3, 1999 (as amended or otherwise
modified from time to time, the "Credit Agreement") by and among the
lenders from time to time parties thereto (collectively, the "Banks"),
Comerica Bank, as Agent for the Banks (the "Agent"), and Meadowbrook
Insurance Group, Inc. (the "Company")
Ladies and Gentlemen:
Reference is made to Sections 13.8 (c) and (d) of the Credit Agreement.
Unless otherwise defined herein or the context otherwise requires, all initially
capitalized terms used herein without definition shall have the meanings
specified in the Credit Agreement.
This Agreement constitutes notice to each of you of the proposed
assignment and delegation by (the "Assignor") to (the "Assignee"),
and the Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, as of the Effective Date (as
defined below), a % undivided interest in each of Assignor's rights and
obligations under the Credit Agreement, its Notes (including any participations
in any outstanding Letters of Credit) and the other Loan Documents such that,
after giving effect to the foregoing assignment and assumption, [and the other
assignments by Assignor to on the date hereof, the Assignee's
interest in the Revolving Credit shall equal $ and the Assignee's
Percentage shall equal %.
The Assignor hereby instructs the Agent to make all payments from and
including the Effective Date hereof in respect of the interest assigned hereby,
directly to the Assignee. The Assignor and the Assignee agree that all interest
and fees accrued up to, but not including, the Effective Date of the assignment
and delegation being made hereby are the property of the Assignor, and not the
Assignee. The Assignee agrees that, upon receipt of any such interest or fees
accrued up to the Effective Date, or any other payments in respect of the
interest assigned hereby applicable to the period prior to the Effective Date,
the Assignee will promptly remit the same to the Assignor in the same funds
received by the Assignee.
The Assignor and the Assignee agree that all interest and fees accruing
from and after the Effective Date of the assignment and delegation being made
hereby are the property of the Assignee, and not the Assignor. The Assignor
agrees that, upon receipt of any such interest or fees accruing from and after
the Effective Date or any other payments in respect of the interest assigned
hereby applicable to the period from and after the Effective Date, the Assignor
will promptly remit the same to the Assignee in the same funds received by the
Assignor.
89
The Assignee hereby confirms that it has received a copy of the Credit
Agreement and the exhibits and schedules referred to therein, and all other Loan
Documents which it considers necessary, together with copies of the other
documents which were required to be delivered under the Credit Agreement as a
condition to the making of the loans thereunder. The Assignee acknowledges and
agrees that it: (a) has made and will continue to make such inquiries and has
taken and will take such care on its own behalf as would have been the case had
its Commitment been granted and its loans been made directly by such Assignee to
the Company without the intervention of the Agent, the Assignor or any other
Bank; and (b) has made and will continue to make, independently and without
reliance upon the Agent, the Assignor or any other Bank, and based on such
documents and information as it has deemed appropriate, its own credit analysis
and decisions relating to the Credit Agreement. The Assignee further
acknowledges and agrees that neither the Agent, nor the Assignor has made any
representations or warranties about the creditworthiness of the Company or any
other party to the Credit Agreement or any other of the Loan Documents, or with
respect to the legality, validity, sufficiency or enforceability of the Credit
Agreement, or any other of the Loan Documents. This assignment shall be made
without recourse to or warranty by the Assignor, except as set forth herein.
Assignee represents and warrants that it is a Person to which
assignments are permitted pursuant to Sections 13.8(c) and (d) of the Credit
Agreement.
Assignor represents and warrants, as of the Effective Date, that it is
the legal and beneficial owner of the interest being assigned and delegated by
it hereunder and that such interest is free and clear of any pledge, encumbrance
or other adverse claim or interest created by Assignor.
Except as otherwise provided in the Credit Agreement, effective as of
the Effective Date:
(a) the Assignee: (i) shall be deemed automatically to have become a
party to the Credit Agreement and the other Loan Documents, to
have assumed all of the Assignor's obligations thereunder to the
extent of the Assignee's percentage referred to in the second
paragraph of this Assignment Agreement, and to have all the rights
and obligations of a party to the Credit Agreement and the other
Loan Documents, as if it were an original signatory thereto to the
extent specified in the second paragraph hereof; and (ii) agrees
to be bound by the terms and conditions set forth in the Credit
Agreement and the other Loan Documents as if it were an original
signatory thereto; and
(b) the Assignor's obligations under the Credit Agreement and the
other Loan Documents shall be reduced by the Percentage referred
to in the second paragraph of this Assignment Agreement.
As used herein, the term "Effective Date" means the date on which all
of the following have occurred or have been completed, as reasonably determined
by the Agent:
90
(1) the delivery to the Agent of an original of this Assignment
Agreement executed by the Assignor and the Assignee;
(2) the payment to the Agent, of all accrued fees, expenses and other
items for which reimbursement is then owing under the Credit
Agreement;
(3) payment to the Agent of the $3,500 assignment fee referred to in
Section 13.8(d)(iii) of the Credit Agreement;
(4) all other restrictions and items noted in Sections 13.8(c) and (d)
of the Credit Agreement have been completed.
On the Effective Date the Assignee shall pay to the Assignor an amount
equal to the outstanding principal amount of the indebtedness owed to it by the
Company under the Agreement in respect of the interest being assigned hereby.
The Agent shall notify the Assignor and the Assignee, along with
Company, of the Effective Date.
The Assignee hereby advises each of you of the following administrative
details with respect to the assigned loans:
(A) Address for Notices:
Institution Name:
Address:
Attention:
Telephone:
Facsimile:
(B) Payment Instructions:
(C) Proposed effective date of assignment.
The Assignor has delivered to the Agent (or is delivering to Agent
concurrently herewith), the original of each Note held by the Assignor under the
Credit Agreement.
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91
Please evidence your consent to and acceptance of the proposed
assignment and delegation set forth herein by signing and returning counterparts
hereof to the Assignor and the Assignee.
[ASSIGNOR BANK]
By:
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Its:
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[ASSIGNEE BANK]
By:
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Its:
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ACCEPTED AND CONSENTED TO
this day of
COMERICA BANK, as Agent
By:
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Its:
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4
