HCIIP HCI Group Inc (PK)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): November 3, 2023

HCI GROUP, INC.

(Exact name of registrant as specified in its charter)

Florida		01-34126		20-5961396
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification Number)
3802 Coconut Palm Drive Tampa, Florida 33619
(Address of Principal Executive Offices)

Registrant’s telephone number, including area code:

(813) 405-3600

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		HCI		New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

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Item 1.01. Entry into a Material Definitive Agreement.

 

On November 3, 2023, we executed a Second Amended and Restated Credit Agreement to extend the term of our revolving credit facility from Fifth Third Bank until November 3, 2028. Under the terms of the amendment, the maximum Debt to Capital Ratio as defined in the Credit Agreement is 67.5%. The maximum balance of the line of credit is increased to $75,000,000 and the borrowing rate is based partially on the one or three month Secured Overnight Finance Rate (known as SOFR) plus a 10 basis points adjustment.

 

The summary of the foregoing transaction is qualified in its entirety by reference to the Second Amended and Restated Credit Agreement and other amended documents, which are filed as Exhibits 99.1 through 99.3 to this Form 8-K and are incorporated herein by reference.

Item 2.03. Creation of a Direct Financial Obligation or an Off-Balance Sheet Arrangement of a Registrant.

 

See Item 1.01 above.

Item 9.01. Exhibits.

Exhibit 99.1 Second Amended and Restated Credit Agreement

Exhibit 99.2 Second Amended and Restated Security and Pledge Agreement

Exhibit 99.3 Renewed, Amended and Restated Revolving Credit Promissory Note

Exhibit 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

 

 

 

 

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

				HCI GROUP, INC.
Date: November 9, 2023				By:		/s/ James Mark Harmsworth
				Name:		James Mark Harmsworth
				Title:		Chief Financial Officer

 

 

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Exhibit 99.1

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is made and entered into as of this 3rd day of November, 2023, by and among Borrower (defined herein), Guarantors (defined herein) and Lender (defined herein).

W I T N E S S E T H:

 

WHEREAS, Lender made available to Borrower a revolving line of credit loan (the "Loan") pursuant to that certain Amended and Restated Credit Agreement dated June 2, 2023 (the "Prior Credit Agreement"). This Agreement amends and restates the Prior Credit Agreement in its entirety;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, Borrower, Guarantors and Lender agree as follows:

"Accounts" shall mean "accounts", as defined in Article 9 of the UCC.

"Acquisition" shall mean (a) any Investment by Borrower or any of its Subsidiaries in any other Person pursuant to which such Person shall become a Subsidiary or shall be merged with Borrower or any of its Subsidiaries or (b) any acquisition by Borrower or any of its Subsidiaries of the assets of any Person (other than a Subsidiary) that constitute all or a substantial portion of the assets of such Person or a division or business unit of such Person.

"Advance" means a disbursement of the proceeds of the Revolving Loan.

"Advance Rates" shall have the meaning set forth in the Letter Agreement.

"Affiliate" shall mean, as to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such Person.

"Agreement" shall have the meaning set forth in the introductory paragraph hereto.

"Anti-Corruption Laws" shall mean all laws, rules, and regulations of any jurisdiction applicable to Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption.

"Applicable Margin" shall have the meaning set forth in the Letter Agreement.

"Asset Sale" shall mean the sale, transfer, license, lease or other disposition of any property by Borrower or any Subsidiary, including any sale and leaseback transaction and any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, but excluding (a) the sale of inventory in the ordinary course of business; (b) the sale or disposition for fair market value of obsolete or worn out property or other property not necessary for operations of Borrower and its Subsidiaries disposed of in the ordinary course of business; (c) the disposition of property (including the cancellation of Indebtedness permitted by Section 7.1 to Borrower or

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any Subsidiary; provided, that if the transferor of such property is a Loan Party then the transferee thereof must be a Loan Party; (d) the disposition of accounts receivable in connection with the collection or compromise thereof; (e) licenses, sublicenses, leases or subleases granted to others in the ordinary course of business or not interfering in any material respect with the business of Borrower or any Subsidiary; and (f) the sale or disposition of Cash Equivalents for fair market value in the ordinary course of business.

"Assignment of Rents" shall mean any Assignment of Leases and Rents that purports to grant to Lender a security interest in the leases and rents of any Loan Party related to any Real Property.

"Authorized Control Level Risk Based Capital Ratio" shall mean the ratio of (x) Total Adjusted Capital to (y) Authorized Control Level Risk Based Capital, in each case as set forth for such fiscal year under the section titled "Five Year Historical Data" in HCPCIC's statutory financial statements for such fiscal year and TypTap's statutory financial statements for such fiscal year, as applicable.

 

"Availability Period" shall mean the period from the Effective Date to but excluding the Revolving Commitment Termination Date.

"Bank Product" means any of the following products, services or facilities extended to any Loan Party from time to time by Lender or any of Affiliate of Lender or any Person who was Lender or an Affiliate of Lender at the time it provided such products, services or facilities: (a) any services in connection with operating, collections, payroll, trust, or other depository or disbursement accounts, including automated clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled disbursement, overdraft, depository, information reporting, lockbox services, stop payment services, and other treasury management services; (b) commercial credit card and merchant card services; and (c) other banking products or services as may be requested by any Loan Party, other than Letters of Credit and Rate Contracts.

"Base Rate" means a variable per annum rate, as of any date of determination, equal to the Prime Rate. The Base Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. Lender may make commercial loans or other loans at rates of interest at, above or below the Base Rate. Any change in the Base Rate shall be effective for purposes of this Agreement on the date of such change without notice to Borrower.

"Base Rate Loans" means Advances that accrue interest by reference to the Base Rate, in accordance with the terms of this Agreement.

"Borrower" shall mean HCI Group, Inc., a Florida corporation.

"Borrowing Base" means, as of the relevant date of determination, the sum of the Advance Rates for all Eligible Collateral, as reasonably determined by Lender; provided, however, that the aggregate amount arising from Securities Account Collateral shall be limited to $15,000,000.00.

"Borrowing Base Certificate" shall mean a company prepared Borrowing Base certificate in a form acceptable to Lender, which shall include (a) with respect to security collateral, the eligible collateral type, name, CUSIP, current value (face and market) and the eligible value (lower of face and market) and (b) with respect to real estate, the asset name, address, book value, appraised value, debt service coverage, profit and loss before taxes, funds from operations, net operating income, net operating income budget, OCC and cap rate.

"Business Day" means (a) with respect to all notices and determinations, including Interest Payment Dates, in connection with the Tranche Rate, any day that commercial banks in New York, New York are required by law to be open for business and that is a U.S. Government Securities Business Day, which

 

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means any day other than a Saturday, Sunday, or day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities and (b) in all other cases, any day on which commercial banks in New York, NY or Cincinnati, Ohio are required by Law to be open for business; provided that, notwithstanding anything to the contrary in this definition of "Business Day", at any time during which a Rate Contract with Lender is then in effect with respect to all or a portion of the Obligations, then the definitions of "Business Day" and "Banking Day", as applicable, pursuant to such Rate Contract shall govern with respect to all applicable notices and determinations in connection with such portion of the Obligations arising under such Rate Contract. Periods of days referred to in the Loan Documents will be counted in calendar days unless Business Days are expressly prescribed.

"Capital" shall mean all interest-bearing Indebtedness plus Shareholders' Equity.

 

"Capital Expenditures" shall mean for any period, without duplication, (a) the additions to property, plant and equipment and other capital expenditures of Borrower and its Subsidiaries that are (or would be) set forth on a consolidated statement of cash flows of Borrower for such period and (b) Capital Lease Obligations incurred by Borrower and its Subsidiaries during such period.

"Capital Lease Obligations" of any Person shall mean all obligations of such Person to pay rent or other amounts under any lease (or other arrangement conveying the right to use) of real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person, and the amount of such obligations shall be the capitalized amount thereof.

"Capital Stock" shall mean all shares, options, warrants, general or limited partnership interests, membership interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including common stock, preferred stock or any other "equity security" (as such term is defined in Rule 3a11‑1 of the General Rules and Regulations promulgated by the SEC under the Securities Exchange Act of 1934).

"Cash Equivalents" shall mean:

 

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"Centerbridge Advance Cap" means Revolving Loan proceeds in an amount not to exceed $50,000,000.00 in the aggregate, which may be used to refinance the Centerbridge Debt.

"Centerbridge Debt" means the $100,000,000.00 capital investment transaction dated February 26, 2021 with Centerbridge Partners, L.P.

"Centerbridge Permitted Refinancing Indebtedness" means unsecured Indebtedness of Borrower or its Subsidiaries incurred from and after the Effective Date in an aggregate amount not to exceed $100,000,000.00 for the sole purpose of refinancing the Centerbridge Debt; provided, however, that if the existing Centerbridge Debt is partially refinanced, the Centerbridge Permitted Refinancing Indebtedness will be capped at the remaining amount of the Centerbridge Indebtedness or $20,000,000.00, whichever is higher.

"Centerbridge Proceeds" means the amount of the Revolving Loan, if any, utilized by Borrower to refinance the Centerbridge Debt, which shall not exceed the amount of the Centerbridge Advance Cap.

"Change in Law" means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a "Change in Law", regardless of the date enacted, adopted or issued.

"Charles Schwab Accounts" means the Securities Account (as defined in the Charles Schwab Account Security Agreement).

"Charles Schwab Account Security Agreement" means that certain Amended and Restated Security Agreement: Securities Account dated on or about the date hereof by and between Borrower and Lender.

"Code" shall mean the Internal Revenue Code of 1986, as amended and in effect from time to time.

"Collateral" shall mean a collective reference to all real and personal property with respect to which Liens in favor of Lender are granted pursuant to and in accordance with the terms of the Collateral Documents.

"Collateral Documents" shall mean a collective reference to the Security Agreement, any Mortgage, any Assignment of Rents, each deposit account control agreement or securities account control agreement in a form acceptable to Lender and any other security documents executed and delivered by any Loan Party pursuant to this Agreement.

"Commodity Exchange Act" shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

 

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"Compliance Certificate" shall mean a certificate from the principal executive officer or the principal financial officer of Borrower in a form acceptable to Lender.

"Conforming Changes" means, with respect to the use, administration of, or any conventions associated with the Tranche Rate or any proposed Successor Rate, as applicable, any changes to the terms of this Agreement related to the timing, frequency, and methodology of determining rates and making payments of interest, including changes to the definition of Business Day, lookback periods or observation shift, prepayments, and borrowing, conversion, or continuation notices, and other technical, administrative, or operational matters, as may be appropriate, in the discretion of Lender, to reflect the adoption and implementation of such applicable rate and to permit the administration thereof by Lender in an operationally feasible manner and, to the extent feasible, consistent with market practice.

"Consolidated Assumed Management Fees" shall mean the management fees due under any Management Agreement.

"Contractual Obligation" of any Person shall mean any provision of any security issued by such Person or of any agreement, instrument or undertaking under which such Person is obligated or by which it or any of the property in which it has an interest is bound.

"Control" shall mean the power, directly or indirectly, either to (a) vote five percent (5%) or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of a Person or (b) direct or cause the direction of the management and policies of a Person, whether through the ability to exercise voting power, by control or otherwise. The terms "Controlling", "Controlled by", and "under common Control with" have the meanings correlative thereto.

 

"Daily Simple SOFR" means a rate based on SOFR with interest accruing on a simple daily basis in arrears with a methodology and conventions selected by Lender.

"Debt-To-Capital Ratio" shall mean total Indebtedness divided by total Capital.

 

"Debtor Relief Laws" shall mean the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.

 

"Default" shall mean any condition or event that, with the giving of notice or the lapse of time or both, would constitute an Event of Default.

 

"Default Rate" shall have the meaning given such term in Section 2.5(c).

 

"Disqualified Capital Stock" shall mean Capital Stock that by its terms (or by the terms of any security into which they are convertible or for which they are exchangeable) (a) require the payment of any cash dividends (other than dividends payable solely in shares of Qualified Capital Stock or, in the case of any pass through entity, in respect of taxes), (b) mature or are mandatorily redeemable or subject to mandatory repurchase or redemption or repurchase at the option of the holders thereof, in whole or in part and whether upon the occurrence of any event, pursuant to a sinking fund obligation, on a fixed date or otherwise, prior to the date that is ninety-one (91) days after the Revolving Commitment Termination Date or (c) are convertible or exchangeable, automatically or at the option of any holder thereof, into any Indebtedness other than Indebtedness otherwise permitted under Section 7.1.

"Dollar(s)" and the sign "$" shall mean lawful money of the United States of America.

 

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"EBITDA" shall mean, on a consolidated basis, the amount of Borrower's earnings before interest, taxes, depreciation and amortization expense for the measurement period.

"Effective Date" shall mean the date hereof.

"Eligible Collateral" means Collateral reviewed and approved by Lender and meeting Lender's requirements under this Agreement. Eligible Collateral may include (i) securities issued by the U.S. Treasury and U.S. Government Agencies, (ii) corporate bonds, (iii) state, municipal and political sub, (iv) equity securities, (v) Unencumbered Real Estate, (vi) Encumbered Real Estate, and (vii) Unimproved Raw Land. To be included in Eligible Collateral, (a) security collateral shall be restricted to publicly listed security instruments trading on a major exchange with a valid CUSIP, (b) Borrower shall have delivered Encumbered Real Property Security Documents with respect to any Encumbered Real Property, and (c) Borrower shall have delivered Real Property Security Documents with respect to any Unencumbered Real Property.

"Eligible Swap Counterparty" means Lender and any Affiliate of Lender that at any time it occupies such role or capacity (whether or not it remains in such capacity) enters into a Rate Contract permitted hereunder with Borrower or any Subsidiary of Borrower.

"Encumbered Real Estate" means any fee or leasehold interest of Borrower or a Subsidiary of Borrower in real property that is encumbered by a Lien in favor of a Party other than Lender.

"Encumbered Real Property Security Documents" shall mean:

(a) a fully executed and notarized Non-Taxable Agreement Not to Encumber encumbering the fee or leasehold interest of such Loan Party in such real property;

 

(b) if requested by Lender in its reasonable discretion, a current ALTA survey and a surveyor's certificate, in form and substance satisfactory to Lender, certified to Lender and to the title company that issues the title report required in subsection (c) hereof with respect thereto by a licensed professional surveyor reasonably satisfactory to Lender;

 

(c) an Ownership and Encumbrances Report or other title search acceptable to Lender;

 

(d) "life of loan" flood determination certificates evidencing (i) whether such real property is in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards (a "Flood Hazard Property") and (ii) if such real property is a Flood Hazard Property, (A) whether the community in which such real property is located is participating in the National Flood Insurance Program, (B) the applicable Loan Party's written acknowledgment of receipt of written notification from Lender (1) as to the fact that such real property is a Flood Hazard Property and (2) as to whether the community in which each such Flood Hazard Property is located is participating in the National Flood Insurance Program and (C) copies of flood insurance policies under the National Flood Insurance Program (or private insurance endorsed to cause such private insurance to be fully compliant with the federal law as regards private placement insurance applicable to the National Flood Insurance Program, with financially sound and reputable insurance companies not Affiliates of Borrower) or certificates of insurance of Borrower and its Subsidiaries evidencing such flood insurance coverage in such amounts and with such deductibles as Lender may request and naming Lender and its successors and/or assigns as sole loss payee;

 

(e) if requested by Lender, (i) environmental questionnaires or (ii) Phase I Environmental Site Assessment Reports, consistent with American Society of Testing and Materials (ASTM)

 

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Standard E 1527-05, and applicable state requirements, on all of the owned real property, dated no more than six (6) months prior to the Effective Date (or date of the applicable Mortgage if provided post-closing), prepared by environmental engineers satisfactory to Lender, all in form and substance satisfactory to Lender, and such environmental review and audit reports, including Phase II reports, with respect to the real property of any Loan Party as Lender shall have requested, in each case together with letters executed by the environmental firms preparing such environmental reports, in form and substance satisfactory to Lender, authorizing Lender to rely on such reports, and Lender shall be satisfied with the contents of all such environmental questionnaires or reports;

 

"Environmental Indemnity" shall mean each environmental indemnity made by a Loan Party with respect to real property required to be pledged as Collateral in favor of Lender, in each case in form and substance satisfactory to Lender.

"Environmental Laws" shall mean all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, Release or threatened Release of any Hazardous Material or to health and safety matters.

"Environmental Liability" shall mean any liability, contingent or otherwise (including any liability for damages, costs of environmental investigation and remediation, costs of administrative oversight, fines, natural resource damages, penalties or indemnities), of Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) any actual or alleged violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) any actual or alleged exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute.

"Event of Default" shall have the meaning set forth in Article VIII.

"Excluded Swap Obligation" means any Swap Obligation that arises from any guaranty or collateral pledge with respect to the Obligations that becomes impermissible under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor's failure for any reason to constitute an "eligible contract participant" as defined in the Commodity Exchange Act at the time a Guaranty Agreement becomes effective with respect to such related Swap Obligation or, as to Borrower, as of the date of the Security Agreement.

 

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"Fees" means any and all fees payable to Lender pursuant to this Agreement or any of the other Loan Documents.

"Fifth Third" means Fifth Third Bank, National Association.

"Fifth Third Lease Obligations" means any and all liabilities, obligations and other Indebtedness of any Loan Party owed to Fifth Third, Fifth Third Equipment Finance Company, or any other Affiliate of Fifth Third Bancorp of every kind and description, whether now existing or hereafter arising, including those owed by any Loan Party to others and acquired by Fifth Third or any Affiliate of Fifth Third Bancorp, by purchase, assignment or otherwise, whether direct or indirect, primary or as guarantor or surety, absolute or contingent, liquidated or unliquidated, matured or unmatured, related or unrelated, and howsoever and whensoever (whether now or hereafter) created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), in each case arising out of, pursuant to, in connection with or under any lease or other transfer of the right to possession and use of goods for a term in return for consideration.

"Fiscal Quarter" shall mean any fiscal quarter of Borrower.

"Fiscal Year" shall mean any fiscal year of Borrower.

"GAAP" shall mean generally accepted accounting principles in the United States applied on a consistent basis and subject to the terms of Section 1.2.

"Governmental Authority" shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

"Guarantee" of or by any Person (the "guarantor") shall mean any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the "primary obligor") in any manner, whether directly or indirectly and including any obligation, direct or indirect, of the guarantor (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (d) as an account party in respect of any letter of credit or letter of guaranty issued in support of such Indebtedness or obligation; provided, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which Guarantee is made or, if not so stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith. The term "Guarantee" used as a verb has a corresponding meaning.

"Guarantor Joinder Agreement" shall mean a joinder agreement in a form acceptable to Lender executed and delivered by a Subsidiary in accordance with the provisions of Section 5.10.

"Guarantors" shall mean, collectively, (a) each Subsidiary identified as a "Guarantor" on the signature pages hereto, and (b) each Person that joins as a Guarantor pursuant to Section 5.10 or otherwise.

 

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"Guaranty" shall mean the Guaranty made by the Guarantors in favor of Lender pursuant to Article IX.

"Hazardous Materials" shall mean all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

"HCPCIC" means Homeowners Choice Property & Casualty Company, Inc., a Florida corporation.

"Hostile Acquisition" shall mean the Acquisition of the Capital Stock of a Person through a tender offer or similar solicitation of the owners of such Capital Stock which has not been approved (prior to such Acquisition) by resolutions of the Board of Directors of such Person (or by similar action if such Person is not a corporation) or if such approval has been withdrawn.

"Indebtedness" of any Person shall mean, without duplication (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person in respect of the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business, (d) all obligations of such Person under any conditional sale or other title retention agreement(s) relating to property acquired by such Person, (e) all Capital Lease Obligations of such Person, (f) all obligations, contingent or otherwise, of such Person in respect of letters of credit, acceptances or similar extensions of credit, (g) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any Disqualified Capital Stock of such Person, (h) Off-Balance Sheet Liabilities, (i) all Guarantees of such Person of the type of Indebtedness described in clauses (a) through (i) above, and (j) all Indebtedness of a third party secured by any Lien on property owned by such Person, whether or not such Indebtedness has been assumed by such Person. The Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer, except to the extent that the terms of such Indebtedness provide that such Person is not liable therefor. For purposes of this Agreement, the obligations of Borrower in connection with the Parent Guaranty shall be included as Indebtedness of Borrower.

"Index Floor" has the meaning given to such term in the definition of "Tranche Rate."

"Interest Payment Date" means, all as determined by Lender in accordance with the Loan Documents and Lender's loan systems and procedures periodically in effect (and subject to the terms of any BillPayer Service, as applicable), the first Business Day after the end of each December, March, June and September; provided that, in addition to the foregoing, each of (x) the date upon which the Revolving Loan Commitment has been terminated and the Advances have been paid in full and (y) the Revolving Commitment Termination Date shall be deemed to be an "Interest Payment Date" with respect to any interest that has then accrued under this Agreement.

"Interest Period" means, with respect to any Tranche Rate Loan, a period commencing on the date of such Tranche Rate Loan and ending on the numerically corresponding day in the calendar month that is one or three months thereafter, as designated by Borrower to Lender from time to time in a Notice of Borrowing or Notice of Conversion or as otherwise set pursuant to the terms of this Agreement, as applicable, determined by Lender in accordance with this Agreement and Lender's loan systems and procedures periodically in effect, including in accordance with the following terms and conditions, as applicable:

 

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"Investments" shall mean, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) purchase or other acquisition of any Capital Stock of another Person, (b) a loan, advance, other evidence of indebtedness or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other indebtedness or equity participation or interest in, another Person, or (c) an Acquisition. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

"IRS" shall mean the United States Internal Revenue Service.

"Laws" or "Law" shall mean, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

"Lender" shall mean Fifth Third Bank, National Association, and its successors and assigns.

"Letter Agreement" shall mean that certain Second Amended and Restated Letter Agreement between Borrower and Lender dated as of the Effective Date.

 

"Letters of Credit" means commercial or standby letters of credit issued for the account of Borrower by Lender.

 

"Lien" shall mean any mortgage, pledge, security interest, lien (statutory or otherwise), charge, encumbrance, hypothecation, assignment, deposit arrangement, or other arrangement having the practical effect of any of the foregoing or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having the same economic effect as any of the foregoing).

"Loan Documents" shall mean, collectively, this Agreement, the Collateral Documents, the Management Fee Subordination Agreements, all Borrowing Base Certificates, all Compliance Certificates, all UCC Financing Statements, all stock powers and similar instruments of transfer, the Note, including, without limitation, any Rate Management Agreement, together with all amendments, restatements, supplements and modifications thereof and any and all other instruments, agreements, documents and writings executed in connection with any of the foregoing.

 

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"Loan Expenses" means (a) without limitation, any points, loan fees, service charges, commitment fees or other fees due to Lender in connection with the Loan; (b) all amounts due under any Rate Management Agreement; (c) all title examination, survey, escrow, filing, search, recording and registration fees and charges; (d) all reasonable fees and disbursements of architects, engineers and consultants engaged by Borrower and Lender; (e) all documentary stamp and other taxes and charges imposed by law on the issuance or recording of any of the Loan Documents; (f) all Collateral appraisal fees; (g) all title, casualty, liability, payment, performance or other insurance premiums; (h) all fees and disbursements of legal counsel engaged by Lender in connection with the Loan, including, without limitation, counsel engaged in connection with the enforcement, negotiation, preparation or administration of this Agreement or any of the Loan Documents; and (i) any costs or expenses required to be paid by Borrower under this Agreement, the Security Agreement or any Loan Document after the occurrence of an Event of Default.

"Loan Parties" shall mean, collectively, Borrower and each Guarantor.

"Management Agreement" shall mean any agreement made by (or on behalf of) any Loan Party with respect to any payment of fees for administrative services, management or consulting to an Affiliate or non-affiliated third party.

 

"Management Fees" shall have the meaning set forth in Section 5.14.

 

"Management Fee Subordination Agreement" shall mean each management fee subordination agreement entered into by the Person acting as manager or administrative services provider under any Management Agreement.

"Material Adverse Effect" shall mean, with respect to any event, act, condition or occurrence of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singularly or in conjunction with any other event or events, act or acts, condition or conditions, occurrence or occurrences whether or not related, resulting in a material adverse change in, or a material adverse effect on, (a) the business, results of operations, financial condition, assets, liabilities or prospects of Borrower and its Subsidiaries taken as a whole, (b) the ability of Borrower or any Guarantor to perform any of its respective obligations under the Loan Documents, (c) the rights and remedies of Lender under any of the Loan Documents or (d) the legality, validity or enforceability of any of the Loan Documents.

"Material Indebtedness" shall mean any Indebtedness (other than the Revolving Loan) of Borrower or any of its Subsidiaries, individually or in an aggregate, with a committed or outstanding principal amount exceeding $250,000.

"Maturity Date" shall mean the Revolving Commitment Termination Date.

"Moody's" shall mean Moody's Investors Service, Inc.

"Mortgaged Property" shall mean any real property that is owned or leased by a Loan Party and is subject to a Mortgage.

"Mortgages" shall mean the mortgages, deeds of trust or deeds to secure debt that purport to grant to Lender a security interest in the fee interests and/or leasehold interests of any Loan Party in any real property.

"Net Cash Proceeds" shall mean the aggregate cash or Cash Equivalents proceeds received by Borrower or any Subsidiary in respect of any Asset Sale, Recovery Event or any issuance of Indebtedness

 

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or equity securities net of (a) direct costs incurred in connection therewith (including legal, accounting and investment banking fees, and sales commissions), (b) taxes paid or payable as a result thereof and (c) in the case of any Asset Sale or any Recovery Event, the amount necessary to retire any Indebtedness secured by a Lien permitted by Section 7.2 (ranking senior to any Lien of Lender) on the related property.

"Non-Taxable Agreement Not to Encumber" shall mean any Non-Taxable Agreement Not to Encumber in a form approved by Lender executed by any Loan Party with respect to Encumbered Real Estate owned by such Loan Party and to be recorded in the Public Records of the county in which the Encumbered Real Estate is located.

"Note" shall mean that certain Renewed, Amended and Restated Revolving Credit Promissory Note dated of even date herewith from Borrower in favor of Lender in the amount of $75,000,000.00.

"Notice of Borrowing" shall mean a notice of borrowing with respect to any Advance hereunder, which notice shall be in form and substance, and delivered by Borrower to Lender in a manner, acceptable to Lender in its sole discretion.

 

"Notice of Conversion" shall mean a notice of conversion with respect to any Advance hereunder, which notice shall be in form and substance, and delivered by Borrower to Lender in a manner, acceptable to Lender in its sole discretion.

 

"Obligations" means all loans, advances, debts, liabilities and obligations for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or such amounts are liquidated or determinable) owing by any Loan Party to Lender, or any Affiliate of Lender, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether direct or indirect (including acquired by assignment), related or unrelated, absolute or contingent, due or to become due, now existing or hereafter arising and however acquired, and whether or not evidenced by any note, agreement, letter of credit agreement or other instrument. The term "Obligations" includes all principal, interest, Fees, expenses, reasonable attorneys' fees and any other sum chargeable to any Loan Party under, or arising out of, this Agreement, the Note, any of the other Loan Documents or any agreement entered into in respect of Bank Products, all Fifth Third Lease Obligations, and all Rate Contract Obligations (including all amounts that accrue after the commencement of any case or proceeding by or against any Loan Party in bankruptcy, whether or not allowed in such case or proceeding). Notwithstanding the foregoing, "Obligations" of a Guarantor shall not include Excluded Swap Obligations with respect to such Guarantor.

"OFAC" shall mean the U.S. Department of the Treasury's Office of Foreign Assets Control.

"Off-Balance Sheet Liabilities" of any Person shall mean (a) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (b) any liability of such Person under any sale and leaseback transactions that do not create a liability on the balance sheet of such Person, (c) any Synthetic Lease Obligation or (d) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person.

"Organization Documents" shall mean, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in

 

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connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

"OSHA" shall mean the Occupational Safety and Health Act of 1970, as amended from time to time, and any successor statute.

"Parent Guaranty" means that certain Parent Guaranty Agreement dated February 26, 2021 by and between Borrower and CB Snowbird Holdings, L.P., a Delaware limited partnership, whereby Borrower guaranteed certain obligations of TypTap.

 

"Permitted Encumbrances" shall mean:

provided, that the term "Permitted Encumbrances" shall not include any Lien securing Indebtedness.

"Permitted Tax Distributions" shall mean cash distributions made by Borrower (with respect to any period for which Borrower is an entity disregarded as separate from its owner for federal income tax purposes, and its direct or indirect owner is a pass-through entity for federal income tax purposes) to the holders of its Capital Stock to solely provide such holders (or their direct or indirect owners) with funds

 

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sufficient to pay, at the highest marginal tax rate applicable for any holder, any federal, state or local income taxes for the current period as a result of the items of income, gain, loss and deduction of such Borrower allocated to such holders (net of all taxable losses allocated to such holders and not previously taken into account pursuant to this sentence and assuming the deductibility of state and local income taxes for federal income tax purposes). Such distributions shall not be made more frequently than quarterly with respect to each taxable year for which an installment of estimated tax is required to be paid by such holders.

"Person" shall mean any individual, partnership, firm, corporation, association, joint venture, limited liability company, trust or other entity, or any Governmental Authority.

"Prime Rate" means, as of any date, the greater of: (a) 3.0% or (b) the rate that Fifth Third publicly announces, publishes or designates from time to time as its index rate or prime rate, or any successor rate thereto, in effect at its principal office. Such rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. Fifth Third may make commercial loans or other loans at rates of interest at, above or below its index rate or prime rate.

"Pro Forma Basis" shall mean, for purposes of calculating compliance with respect to any Asset Sale, Recovery Event, Restricted Payment or incurrence of Indebtedness, or any other transaction subject to calculation on a "Pro Forma Basis" as indicated herein, that such transaction shall be deemed to have occurred as of the first day of the period of four (4) Fiscal Quarters most recently ended for which Borrower have delivered financial statements pursuant to Section 5.1(a) or (b).

"Qualified Capital Stock" shall mean any Capital Stock other than Disqualified Capital Stock.

"Rate Contract" means any agreement, device or arrangement providing for payments which are related to fluctuations of commodities, currencies, or interest rates, exchange rates, forward rates, or equity prices, including Dollar denominated or cross currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts and warrants, and any agreement pertaining to equity derivative transactions (e.g., equity or equity index swaps, options, caps, floors, collars and forwards), including any ISDA Master Agreement (including the Existing ISDA), and any schedules, confirmations and documents and other confirming evidence between the parties confirming transactions thereunder, all whether now existing or hereafter arising, and in each case as amended, modified or supplemented from time to time.

"Rate Contract Obligations" means any and all obligations of a Loan Party to an Eligible Swap Counterparty, whether absolute, contingent or otherwise and howsoever and whensoever (whether now or hereafter) created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under or in connection with (a) any and all Rate Contracts between a Loan Party and an Eligible Swap Counterparty, and (b) any and all cancellations, buy-backs, reversals, terminations or assignments of any such Rate Contract.

"Rate Management Agreements" means any Rate Contract.

 

"Rate Management Obligations" means any Rate Contract Obligations.

 

"Real Property" means any and all Encumbered Real Estate, Unencumbered Real Estate and Unimproved Raw Land.

"Real Property Security Documents" shall mean:

 

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(a) a fully executed and notarized Mortgage and a fully executed and notarized Assignment of Rents encumbering the fee or leasehold interest of such Loan Party in such real property;

 

(b) a current ALTA survey and a surveyor's certificate, in form and substance satisfactory to Lender, certified to Lender and to the title company that issues the title insurance policies required in subsection (c) hereof with respect thereto by a licensed professional surveyor reasonably satisfactory to Lender;

 

(c) an ALTA mortgagee title insurance policies issued by a title insurance company reasonably acceptable to Lender with respect to such real property, assuring Lender that the Mortgage covering such real property creates a valid and enforceable first priority mortgage lien on such real property, free and clear of all defects and encumbrances except Permitted Encumbrances, which title insurance policies shall otherwise be in form and substance satisfactory to Lender and shall include such endorsements as are requested by Lender;

 

(d) "life of loan" flood determination certificates evidencing (i) whether such real property is in an area designated by the Federal Emergency Management Agency as a Flood Hazard Property and (ii) if such real property is a Flood Hazard Property, (A) whether the community in which such real property is located is participating in the National Flood Insurance Program, (B) the applicable Loan Party's written acknowledgment of receipt of written notification from Lender (1) as to the fact that such real property is a Flood Hazard Property and (2) as to whether the community in which each such Flood Hazard Property is located is participating in the National Flood Insurance Program and (C) copies of flood insurance policies under the National Flood Insurance Program (or private insurance endorsed to cause such private insurance to be fully compliant with the federal law as regards private placement insurance applicable to the National Flood Insurance Program, with financially sound and reputable insurance companies not Affiliates of Borrower) or certificates of insurance of Borrower and its Subsidiaries evidencing such flood insurance coverage in such amounts and with such deductibles as Lender may request and naming Lender and its successors and/or assigns as sole loss payee;

 

(e) a duly executed Environmental Indemnity with respect thereto;

 

(f) if requested by Lender, (i) environmental questionnaires or (ii) Phase I Environmental Site Assessment Reports, consistent with American Society of Testing and Materials (ASTM) Standard E 1527-05, and applicable state requirements, on all of the owned real property, dated no more than six (6) months prior to the Effective Date (or date of the applicable Mortgage if provided post-closing), prepared by environmental engineers satisfactory to Lender, all in form and substance satisfactory to Lender, and such environmental review and audit reports, including Phase II reports, with respect to the real property of any Loan Party as Lender shall have requested, in each case together with letters executed by the environmental firms preparing such environmental reports, in form and substance satisfactory to Lender, authorizing Lender to rely on such reports, and Lender shall be satisfied with the contents of all such environmental questionnaires or reports;

 

(g) if requested by Lender, evidence satisfactory to Lender that such real property, and the uses of such real property, are in compliance in all material respects with all applicable zoning Laws (the evidence submitted as to which should include the zoning designation made for such real property, the permitted uses of such real property under such zoning designation and, if available, zoning requirements as to parking, lot size, ingress, egress and building setbacks);

 

 

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"Recovery Event" shall mean any loss of, damage to or destruction of, or any condemnation or other taking for public use of, any property of Borrower or any Subsidiary.

"Regulation T" shall mean Regulation T of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time, and any successor regulations.

"Regulation U" shall mean Regulation U of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time, and any successor regulations.

"Related Parties" shall mean, with respect to any specified Person, such Person's Affiliates and the respective managers, administrators, trustees, partners, directors, officers, employees, agents, advisors, legal counsel, consultants or other representatives of such Person and such Person's Affiliates.

"Release" shall mean any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or within any building, structure, facility or fixture.

"Responsible Officer" shall mean, with respect to any Person, any of the president, the chief executive officer, the chief operating officer, the chief financial officer, the treasurer or a vice president of such Person or such other representative of such Person as may be designated in writing by any one of the foregoing with the consent of Lender; and, with respect to the financial covenants only, the chief financial officer or the treasurer of such Person.

"Restricted Payment" shall mean any dividend or other distribution (whether in cash, securities or other property) with respect to any Capital Stock of any Person, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such Capital Stock or on account of any return of capital to such Person's stockholders, partners or members (or the equivalent Person thereof).

 

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"Revolving Commitment" shall mean the commitment of Lender to make Advances to Borrower in an aggregate principal amount not exceeding $75,000,000.00, as such commitment may subsequently be increased or decreased pursuant to terms hereof.

"Revolving Commitment Termination Date" shall mean the earliest of (i) November 3, 2028, (ii) the date on which the Revolving Commitment is terminated pursuant to Section 2.3 and (iii) the date on which all amounts outstanding under this Agreement have been declared or have automatically become due and payable (whether by acceleration or otherwise).

"Revolving Credit Exposure" shall mean, at any time, the outstanding principal amount of Advances.

"Revolving Loan" shall mean the loan made by Lender to Borrower in the amount of the Revolving Commitment. Any reference to the "Loan" in this Agreement or any other Loan Document shall mean the Revolving Loan.

"Revolving Loan Availability" shall have the meaning given such term in Section 2.1.

"S&P" shall mean Standard & Poor's Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc., and any successor thereto.

"Sanctioned Country" shall mean, at any time, a country or territory that is, or whose government is, the subject or target of any Sanctions.

"Sanctioned Person" shall mean, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State, the United Nations Security Council, the European Union or any European Union member state, (b) any Person located, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.

"Sanctions" shall mean economic or financial sanctions or trade embargoes administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State or (b) the United Nations Security Council, the European Union or Her Majesty's Treasury of the United Kingdom.

"SEC" shall mean the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

"Securities Account Collateral" means Collateral in the Charles Schwab Accounts and any other securities account.

"Security Agreement" shall mean, collectively, the Amended and Restated Security and Pledge Agreement dated of even date herewith executed in favor of Lender by each of the Loan Parties and the Charles Schwab Account Security Agreement.

"Shareholders' Equity" shall mean total assets minus total liabilities.

"Social Security Act" shall mean the Social Security Act of 1965 as set forth in Title 42 of the United States Code, as amended, and any successor statute thereto, as interpreted by the rules and regulations issued thereunder, in each case, as in effect from time to time. References of sections of the Social Security Act shall be construed to refer to any successor sections.

 

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"SOFR" means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate published by the Federal Reserve Bank of New York (or a successor administrator) on the administrator's website (or any successor source for the secured overnight financing rate identified as such by the administrator) at approximately 2:30 p.m. (New York City time) on the immediately succeeding Business Day.

"Spread Adjustment" means a mathematical or other adjustment to an alternate benchmark rate selected pursuant to Section 2.6(b) or 2.6(c) of this Agreement and such adjustment may be positive, negative, or zero, subject to the specific Spread Adjustments set forth in Section 2.6(c).

"Solvent" shall mean, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including subordinated and contingent liabilities, of such Person; (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts and liabilities, including subordinated and contingent liabilities as they become absolute and matured; (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; (d) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person's property would constitute an unreasonably small capital; (e) such Person is able to pay its debts and other liabilities, contingent obligations and other commitments as they mature in the ordinary course of business; and (f) such Person does not intend, in any transaction, to hinder, delay or defraud either present or future creditors or any other person to which such Person is or will become, through such transaction, indebted. The amount of contingent liabilities (such as litigation, guaranties and pension plan liabilities) at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that would reasonably be expected to become an actual or matured liability.

"Subsidiary" shall mean, with respect to any Person (the "parent"), any corporation, partnership, joint venture, limited liability company, association or other entity the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, (a) of which securities or other ownership interests representing more than fifty percent (50%) of the equity or more than fifty percent (50%) of the ordinary voting power, or in the case of a partnership, more than fifty percent (50%) of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. Unless otherwise indicated, all references to "Subsidiary" hereunder shall mean a Subsidiary of Borrower.

"Successor Rate" means any successor index rate determined pursuant to Section 2.6(c) from time to time, including any applicable Spread Adjustment.

 

"Swap Obligation" means any Rate Management Obligation that constitutes a "swap" within the meaning of Section 1a(47) of the Commodity Exchange Act.

"Synthetic Lease" shall mean a lease transaction under which the parties intend that (a) the lease will be treated as an "operating lease" by the lessee pursuant to Accounting Standards Codification Sections 840-10 and 840-20, as amended and (b) the lessee will be entitled to various tax and other benefits ordinarily available to owners (as opposed to lessees) of like property.

"Synthetic Lease Obligations" shall mean, with respect to any Person, the sum of (a) all remaining rental obligations of such Person as lessee under Synthetic Leases which are attributable to principal and, without duplication, (b) all rental and purchase price payment obligations of such Person under such

 

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Synthetic Leases assuming such Person exercises the option to purchase the lease property at the end of the lease term.

"Tangible Net Worth" shall mean as of any applicable date, the consolidated total assets of Borrower and its Subsidiaries minus, without duplication, (i) the sum of any amounts attributable to (a) goodwill, (b) intangible items such as unamortized debt discount and expense, patents, trade and service marks and names, copyrights and research and development expenses except prepaid expenses, and (c) all reserves not already deducted from assets, and (ii) total liabilities.

"Taxes" shall mean all present or future taxes, assessments, levies and charges imposed by any public or quasi-public authority having jurisdiction over the Collateral that are or may affect, or become a lien upon, the Collateral, or interest therein, or imposed by any Governmental Authority upon Borrower, any Loan Party or Lender by reason of their respective interests in the Collateral or by reason of any payment, or portion thereof, made to Lender hereunder or pursuant to any Obligation or any of the other Loan Documents, other than taxes which are measured by and imposed upon Lender's general net income.

"Term SOFR" means, with respect to a Tranche Rate Loan for any Interest Period, the forward-looking SOFR rate administered by CME Group, Inc. (or other administrator selected by Lender) and published on the applicable Bloomberg LP screen page (or such other commercially available source providing such quotations as may be selected by Lender), fixed by the administrator thereof two Business Days prior to the commencement of the applicable Interest Period (provided, however, that if Term SOFR is not published for such Business Day, then Term SOFR shall be determined by reference to the immediately preceding Business Day on which such rate is published), rounded upwards, if necessary, to the next 1/8th of 1% and adjusted for reserves if Lender is required to maintain reserves with respect to the relevant Advances, all as determined by Lender in accordance with this Agreement and Lender's loan systems and procedures periodically in effect.

"Trading with the Enemy Act" shall mean the Trading with the Enemy Act of the United States of America (50 U.S.C. App. §§ 1 et seq.), as amended and in effect from time to time.

"Tranche Rate" means, with respect to any Interest Period, the greater of (a) 0% (the "Index Floor") and (b) Term SOFR relating to quotations for 1 or 3 months, as selected by Borrower in its Notice of Borrowing or Notice of Conversion, or as otherwise set pursuant to the terms of this Agreement, as applicable, in each case plus a 0.10% Spread Adjustment. Each determination by Lender of the Tranche Rate shall be conclusive and binding in the absence of manifest error. Notwithstanding anything to the contrary contained in this Agreement, at any time during which a Rate Contract is then in effect with respect to all or a portion of the Obligations bearing interest based upon the Tranche Rate or any Successor Rate, the provision that rounds up the Tranche Rate to the next 1/8th of 1% shall be disregarded and no longer of any force and effect with respect to such portion of the Obligations that are subject to such Rate Contract.

"Tranche Rate Loans" means any Advances that accrue interest by reference to the Tranche Rate for an Interest Period elected by Borrower in accordance with Section 2.6(a) of this Agreement and the other terms of this Agreement.

"TypTap" means TypTap Insurance Group, Inc., a Florida corporation.

 

"TypTap Articles" means the Amended and Restated Articles of Incorporation of TypTap Insurance Group, Inc. dated February 26, 2021.

 

 

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"UCC" shall mean the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in the State of Florida (or any other applicable jurisdiction, as the context may require).

"Unencumbered Real Estate" means any fee or leasehold interest of Borrower or a Subsidiary of Borrower in real property that is not encumbered by a Lien (except for a Lien in favor of Lender).

"Unimproved Raw Land" means any fee or leasehold interest of Borrower or a Subsidiary of Borrower in unimproved real property that is not encumbered by a Lien (except for a Lien in favor of Lender).

"United States" or "U.S." shall mean the United States of America.

"U.S. Person" shall mean any Person that is a "United States person" as defined in Section 7701(a)(30) of the Code.

 

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At any time (including in connection with the implementation of a Successor Rate), Lender may remove any tenor of a Tranche Rate that is unavailable, non-representative, or not in compliance with or aligned with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks, in Lender's sole discretion, for Tranche Rate settings; provided however that Lender may reinstate such previously removed tenor for Tranche Rate settings, if Lender determines in its sole discretion that such tenor has become available and representative again.

 

(c) Tranche Rate Replacement.

 

 

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(vii) Notwithstanding anything to the contrary contained herein, if, after the Effective Date, Borrower enters into a Rate Contract with respect to all or part of a Tranche Rate

 

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Loan and the floating interest rate under the Rate Contract is Daily Simple SOFR, Lender may replace the Tranche Rate hereunder with Daily Simple SOFR and a Spread Adjustment without the consent of any other party hereto; provided further that, if subsequent thereto, Lender and Borrower amend such Rate Contract to include, or terminate such Rate Contract and enter into a new Rate Contract with, a floating interest rate thereunder of the original Tranche Rate, then Lender may further replace Daily Simple SOFR hereunder with the original Tranche Rate (and a Spread Adjustment, if applicable) hereunder without the consent of any other party hereto; and, in either such event, (A) such rate shall be a Successor Rate hereunder, and (B) Lender shall provide written notice thereof to Borrower.

 

 

 

 

 

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Section 2.7 Releases. Borrower may request a release of Real Property from the Collateral so long as (a) no Default or Event of Default exists immediately before or immediately after giving effect thereto and (b) Borrower submits a Borrowing Base Certificate to Lender reflecting that after such release, the Revolving Loan will be in compliance with Section 2.1 of this Agreement and, to the extent necessary, Borrower shall reduce the then outstanding principal balance of the Revolving Loan so that no Overadvance exists after such release. In connection with the release of any Real Property from the Collateral, Lender shall take such action, and execute and deliver all such instruments of release and agreements, as may reasonably be requested by Borrower, all at Borrower's sole cost and expense.

Section 2.8 Appraisals.

 

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Section 3.2 Each Advance. The obligation of Lender to make any Advance or convert or continue any Advance as a Tranche Rate Loan is subject to the satisfaction of the following conditions:

 

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Each Advance (including the conversion or continuance of any Advance as a Tranche Rate Loan) shall be deemed to constitute a representation and warranty by Borrower on the date thereof as to the matters specified in clauses (a) and (b) of this Section 3.2.

Section 3.3 Delivery of Documents. All of the Loan Documents, certificates, legal opinions and other documents and papers referred to in this Article III, unless otherwise specified, shall be delivered to Lender and shall be in form and substance satisfactory in all respects to Lender.

Each Loan Party represents and warrants to Lender as follows:

 

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() None of Borrower or any Subsidiary is in default under or with respect to any Contractual Obligation that could reasonably be expected to have a Material Adverse Effect.

 

() No Default has occurred and is continuing.

 

 

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Each Loan Party covenants and agrees that so long as the Revolving Loan Commitment has not expired or been terminated or any Obligation remains unpaid or outstanding, such Loan Party shall and shall cause each Subsidiary to:

 

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If at any time Borrower is required to file periodic reports under Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, Borrower may satisfy its obligation to deliver the financial statements referred to in clauses (a) and (b) above by delivering such financial statements by electronic mail to such e-mail addresses as Lender shall have provided to Borrower from time to time.

 

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Each notice delivered under this Section 5.2 shall be accompanied by a written statement of a Responsible Officer setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

 

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Borrower covenants and agrees, on a consolidated basis, that so long as the Revolving Loan Commitment has not expired or been terminated or any Obligation remains unpaid or outstanding, Borrower shall not:

 

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Each Loan Party covenants and agrees that so long as the Revolving Loan Commitment has not expired or been terminated or any Obligation remains unpaid or outstanding, no Loan Party shall, directly or indirectly:

 

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Section 7.16 Parent Guaranty. Amend the Parent Guaranty in any material respect or cause or permit the TypTap Articles to be amended in any material respect.

 

 

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then, and in every such event (other than an event with respect to Borrower or any Subsidiary described in clause (g) or (h) of this Section 8.1) and at any time thereafter during the continuance of such event, Lender may, take any or all of the following actions, at the same or different times: (i) terminate the Revolving Commitment, whereupon the Revolving Commitment shall terminate immediately, (ii) declare the principal

 

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of and any accrued interest on the Revolving Loan, and all other Obligations owing hereunder, to be, whereupon the same shall become, due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by Borrower, (iii) exercise all remedies contained in any other Loan Document, and (iv) exercise any other remedies available at Law or in equity; and that, if an Event of Default specified in either clause (g) or (h) shall occur, the Revolving Commitment shall automatically terminate and the principal of the Revolving Loan then outstanding, together with accrued interest thereon, and all fees, and all other Obligations shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by Borrower.

At the election of Lender, after the occurrence of an Event of Default and for so long as it continues, the Tranche Rate election will not be available to Borrower and as the Interest Periods for Tranche Rate Loans then in effect expire, such Advances shall be converted into Base Rate Loans.

After the exercise of remedies provided for in Section 8.1 (or immediately after an Event of Default specified in either clause (g) or (h) of Section 8.1), any amounts received on account of the Obligations shall be applied by Lender in the following order:

Excluded Swap Obligations with respect to any Guarantor shall not be paid with amounts received from such Guarantor or its assets, but appropriate adjustments shall be made with respect to payments from other Loan Parties to preserve the allocation to Obligations otherwise set forth above in this Section.

 

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Notwithstanding any provision to the contrary contained herein or in any other of the Loan Documents or the other documents relating to the Obligations, the obligations of each Guarantor under this Agreement and the other Loan Documents shall not exceed an aggregate amount equal to the largest amount that would not render such obligations subject to avoidance under applicable Debtor Relief Laws.

With respect to its obligations hereunder, each Guarantor hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever and any requirement that Lender or any other holder of the Obligations exhaust any right, power or remedy or proceed against any Person under any of the Loan Documents or any other document relating to the Obligations or against any other Person under any other guarantee of, or security for, any of the Obligations.

 

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To any Loan Party: HCI Group, Inc.
3802 Coconut Palm Drive
Tampa, Florida 33619
Attention: Gil Simon and Andrew Jakubowicz

With a copy to:

Brook Baker, Esquire
3802 Coconut Palm Drive
Tampa, Florida 33619
 

To Lender: Fifth Third Bank, National Association

38 Fountain Square Plaza

MD 1090RF

Cincinnati, Ohio 45202

Attention: Michael Schaltz, Managing Director & SVP

Email: Michael.Schaltz@53.com

 

With a copy to:

 

Fifth Third Bank, National Association

222 South Riverside Plaza

Chicago, Illinois 60606

Attn: Dave Meier

Email: david.meier@53.com

 

And a copy to:

 

Bradley Arant Boult Cummings LLP

100 N. Tampa Street, Suite 2200

Tampa, Florida 33602

Attn: Stephanie Kane

Email: skane@bradley.com

 

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All such notices and other communications shall be effective upon actual receipt by the relevant Person or, if delivered by overnight courier service, upon the first Business Day after the date deposited with such courier service for overnight (next-day) delivery or, if sent by telecopy, upon transmittal in legible form by facsimile machine or, if mailed, upon the third Business Day after the date deposited into the mail or, if delivered by hand, upon delivery; provided that notices delivered to Lender shall not be effective until actually received by such Person at its address specified in this Section. Any agreement of Lender herein to receive certain notices by telephone or facsimile is solely for the convenience and at the request of Borrower. Lender shall be entitled to rely on the authority of any Person purporting to be a Person authorized by Borrower to give such notice and Lender shall not have any liability to Borrower or other Person on account of any action taken or not taken by Lender in reliance upon such telephonic or facsimile notice. The obligation of Borrower to repay the Loan and all other Obligations hereunder shall not be affected in any way or to any extent by any failure of Lender to receive written confirmation of any telephonic or facsimile notice or the receipt by Lender of a confirmation which is at variance with the terms understood by Lender to be contained in any such telephonic or facsimile notice.

 

 

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(Signature pages follow)

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

BORROWER: HCI GROUP, INC.,

a Florida corporation

 

By:

James Mark Harmsworth,
its Chief Financial Officer

 

 

Signature Page to Second Amended and Restated Credit Agreement – Borrower

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

GUARANTORS: HOMEOWNERS CHOICE MANAGERS, INC.,

a Florida corporation

GREENLEAF CAPITAL, LLC,

a Florida limited liability company

OMEGA INSURANCE AGENCY, INC.,

a Florida corporation

SOUTHERN ADMINISTRATION, INC.,

a Florida corporation

ENCLAVE SERVICES, INC.,

a Florida corporation

GATORS ON THE PASS HOLDINGS LLC,

a Florida limited liability company

JOHN'S PASS MARINA INVESTMENT HOLDINGS LLC,

a Florida limited liability company

PASS INVESTMENT HOLDINGS LLC,

a Florida limited liability company

TV INVESTMENT HOLDINGS LLC,

a Florida limited liability company

SILVER SPRINGS PROPERTY INVESTMENTS, LLC,

a Florida limited liability company

GRISTON CLAIM SERVICES, INC.,

a Florida corporation

HCPCI HOLDINGS, LLC,

a Florida limited liability company

BIG BEND LINCOLN SWC, LLC,

a Florida limited liability company

FMKT MEL OWNER LLC,

a Florida limited liability company

SORRENTO PBX, LLC,

a Florida limited liability company

CENTURY PARK HOLDINGS, LLC,

a Florida limited liability company

GULF TO BAY LM, LLC,

a Florida limited liability company

JP BEACH HOLDINGS LLC,

a Florida limited liability company

HCI INSURANCE ADMINISTRATION SERVICES, INC.,

a Florida corporation

WESTVIEW HOLDINGS, LLC,

a Florida limited liability

GRISTON CLAIM MANAGEMENT, INC.,

a Florida corporation

SAGE PROPERTY ADVISORS, LLC,

a Florida limited liability company

COCONUT PALM PROPERTY HOLDINGS, LLC,

a Florida limited liability company

 

By:

James Mark Harmsworth,

its Chief Financial Officer

Signature Page to Second Amended and Restated Credit Agreement – Guarantors

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

LENDER:

 

FIFTH THIRD BANK,

NATIONAL ASSOCIATION

 

 

By:

Michael J. Schaltz, Jr., its Managing

Director & Senior Vice President

 

 

 

 

 

 

 

 

 

Signature Page to Second Amended and Restated Credit Agreement – Lender

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SCHEDULE 4.15

SUBSIDIARIES

 

 

 

 

 

 

HCI GROUP, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Schedule 4.15

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SCHEDULE 4.17-1

REAL PROPERTY COLLATERAL

 

 

 

 

 

HCI GROUP, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Schedule 4.17-1

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SCHEDULE 4.17-2

 

 

 

 

HCI GROUP, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Schedule 4.17-2

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SCHEDULE 7.1

 

INDEBTEDNESS

 

 

Loan Party	Maturity Date	Face Value
4.25% Convertible senior notes	March 1, 2037	$23,900,000 outstanding
4.75% Convertible senior notes	March 1, 2042	$ 172,500,000
5.5% Promissory Note	July 1, 2033	$ 12,000,000
4.55% Promissory note	August 1, 2036	$ 6,000,000

 

 

 

 

 

HCI GROUP, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Schedule 7.1

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SCHEDULE 7.2

 

LIENS

 

 

Lien	Maturity Date	Face Value
Mortgage, Security Agreement, Absolute Assignment of Leases and Rents and Fixture Filing by and between Century Park Holdings, LLC and Woodmen of the World Life Insurance Society	August 1, 2036	$6,000,000
Mortgage, Security Agreement, Absolute Assignment of Leases and Rents and Fixture Filing from Gulf to Bay LM, LLC, a Florida limited liability company to Woodmen of the World Life Insurance Society, a Nebraska corporation, dated June 26, 2023	July 1, 2033	$12,000,000

 

 

 

 

HCI GROUP, INC.

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Schedule 7.2

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Exhibit 99.2

SECOND AMENDED AND RESTATED SECURITY AND PLEDGE AGREEMENT

THIS SECOND AMENDED AND RESTATED SECURITY AND PLEDGE AGREEMENT (this "Agreement") is entered into as of November 3, 2023 among the parties identified as "Obligors" on the signature pages hereto and such other parties that may become Obligors hereunder after the date hereof (each individually an "Obligor" and collectively the "Obligors"), and FIFTH THIRD BANK, NATIONAL ASSOCIATION ("Lender").

RECITALS

WHEREAS, pursuant to the terms of that certain Second Amended and Restated Credit Agreement (as amended, modified, supplemented, increased, extended, restated, refinanced and replaced from time to time, the "Credit Agreement") dated as of the date hereof among HCI Group, Inc., a Florida corporation ("Borrower"), the Guarantors from time to time a party thereto and Lender, Lender has agreed to make Advances to Borrower upon the terms and subject to the conditions set forth therein; and

WHEREAS, certain of the Obligors and Lender entered into that certain Amended and Restated Security and Pledge Agreement dated June 2, 2023 (the "Prior Security and Pledge Agreement"). This Agreement amends and restates the Prior Security and Pledge Agreement in its entirety.

NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions.

(a) Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement, and the following terms which are defined in the Uniform Commercial Code in effect from time to time in the State of Florida except as such terms may be used in connection with the perfection of the Collateral and then the applicable jurisdiction with respect to such affected Collateral shall apply (the "UCC"): Accession, Account, Adverse Claim, As-Extracted Collateral, Chattel Paper, Commercial Tort Claim, Consumer Goods, Deposit Account, Document, Electronic Chattel Paper, Equipment, Farm Products, Financial Asset, Fixtures, General Intangible, Goods, Instrument, Inventory, Investment Company Security, Investment Property, Letter-of-Credit Right, Manufactured Home, Money, Proceeds, Securities Account, Securities Intermediary, Security, Security Entitlement, Software, Supporting Obligation and Tangible Chattel Paper.

(b) In addition, the following terms shall have the meanings set forth below:

"Agreement" has the meaning provided in the introductory paragraph hereof.

"Borrower" has the meaning provided in the recitals hereof.

"Collateral" has the meaning provided in Section 2 hereof.

"Credit Agreement" has the meaning provided in the recitals hereof.

"Obligor" and "Obligors" have the meanings provided in the introductory paragraph hereof.

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"Secured Obligations" shall mean, without duplication, (a) all Obligations and (b) all costs and expenses incurred in connection with enforcement and collection of the Obligations, including the fees, charges and disbursements of counsel.

"UCC" has the meaning provided in Section 1(a) hereof.

2. Grant of Security Interest in the Collateral. To secure the prompt payment and performance in full when due, whether by lapse of time, acceleration, mandatory prepayment or otherwise, of the Secured Obligations, each Obligor hereby grants to Lender a continuing security interest in, and a right to set off against, any and all right, title and interest of such Obligor in and to all assets of such Obligor whether now owned or existing or owned, acquired, or arising hereafter, including, but not limited to, the following (collectively, the "Collateral"): () all Accounts; () all Money; () all Chattel Paper; () those certain Commercial Tort Claims set forth on Schedule 1 hereto; () all Deposit Accounts; (f) all Documents; (g) all Equipment; (h) all Fixtures; (i) all General Intangibles; (j) all Goods; (k) all Instruments; (l) all Inventory; (m) all Investment Property; (n) all Letter-of-Credit Rights; (o) all Software; (p) all Supporting Obligations; (q) all books and records related to the Collateral; (r) all Rate Management Obligations, and (s) all Accessions and all Proceeds of any and all of the foregoing.

The Obligors and Lender hereby acknowledge and agree that the security interest created hereby in the Collateral constitutes continuing collateral security for all of the Secured Obligations, whether now existing or hereafter arising.

3. Representations and Warranties. Each of the Obligors hereby represents and warrants to Lender that:

(a) Ownership. Such Obligor is the legal and beneficial owner of its Collateral and has the right to pledge, sell, assign or transfer the same.

(b) Security Interest/Priority. This Agreement creates a valid security interest in favor of Lender in the Collateral of such Obligor and, when properly perfected by filing, shall constitute a valid and perfected, first priority security interest in such Collateral, to the extent such security interest can be perfected by filing under the UCC, free and clear of all Liens except for Liens expressly permitted by the Credit Agreement. With respect to any Collateral consisting of a Deposit Account, Security Entitlement or assets held in a Securities Account, upon execution and delivery by the applicable Obligor, the bank or Securities Intermediary, as applicable, and Lender of an agreement granting control to Lender over such Collateral, Lender shall have a valid and perfected, first priority security interest in such Collateral, subject to Liens expressly permitted by the Credit Agreement.

(c) Types of Collateral. None of the Collateral consists of, or is the Proceeds of, As-Extracted Collateral, Consumer Goods, Farm Products, Manufactured Homes or standing timber.

(d) Equipment and Inventory. With respect to any Equipment and/or Inventory of such Obligor, such Obligor has exclusive possession and control of such Equipment and Inventory of such Obligor except for (i) Equipment leased by such Obligor as a lessee or (ii) Equipment or Inventory in transit with common carriers. No Inventory of such Obligor is held by a Person other than such Obligor pursuant to consignment, sale or return, sale on approval or similar agreement.

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(e) Contracts; Agreements; Licenses. Such Obligor has no Material Agreements which are non-assignable by their terms, or as a matter of law, or which prevent the granting of a security interest therein for which consent has not been obtained.

(f) Consents; Etc. Except for (i) the filing or recording of UCC financing statements, (ii) obtaining control to perfect the Liens created by this Agreement (to the extent required under Section 4(a) hereof), (iii) such actions as may be required by Laws affecting the offering and sale of securities and (iv) consents, authorizations, filings or other actions which have been obtained or made, no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or Governmental Authority and no consent of any other Person (including, without limitation, any stockholder, member or creditor of such Obligor), is required for (A) the grant by such Obligor of the security interest in the Collateral granted hereby or for the execution, delivery or performance of this Agreement by such Obligor, (B) the perfection of such security interest (to the extent such security interest can be perfected by filing under the UCC), the granting of control (to the extent required under Section 4(a) hereof) or (C) the exercise by Lender of the rights and remedies provided for in this Agreement.

(g) Commercial Tort Claims. As of the Closing Date, no such Obligor has any Commercial Tort Claims seeking damages in excess of $100,000 in any individual instance or $250,000 in the aggregate when taken together with all Commercial Tort Claims of all of the other Obligors, other than as set forth on Schedule 1 hereto.

(h) Accounts. Schedule 2 hereto identifies each Deposit Account and Securities Account of an Obligor on the date hereof.

4. Covenants. Each Obligor covenants that until such time as the Secured Obligations arising under the Loan Documents have been paid in full and the Revolving Commitment has expired or been terminated, such Obligor shall:

(a) Instruments/Chattel Paper/Control.

(i) If any amount in excess of $100,000 in any individual instance or $250,000 in the aggregate payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Tangible Chattel Paper, or if any property constituting Collateral shall be stored or shipped subject to a Document, ensure that such Instrument, Tangible Chattel Paper or Document is either in the possession of such Obligor at all times or, if requested by Lender to perfect its security interest in such Collateral, is delivered to Lender duly endorsed in a manner satisfactory to Lender. Such Obligor shall ensure that any Collateral consisting of Tangible Chattel Paper is marked with a legend acceptable to Lender indicating Lender's security interest in such Tangible Chattel Paper.

(ii) Execute and deliver all agreements, assignments, instruments or other documents as reasonably requested by Lender for the purpose of obtaining and maintaining control with respect to any Collateral consisting of (A) Deposit Accounts, (B) Investment Property, (C) Letter-of-Credit Rights and (D) Electronic Chattel Paper.

(b) Filing of Financing Statements, Notices, Etc. Execute and deliver to Lender such agreements, assignments or instruments (including affidavits, notices, reaffirmations and

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amendments and restatements of existing documents, as Lender may reasonably request) and do all such other things as Lender may reasonably deem necessary or appropriate (i) to assure to Lender its security interests hereunder, including such instruments as Lender may from time to time reasonably request in order to perfect and maintain the security interests granted hereunder in accordance with the UCC, (ii) to consummate the transactions contemplated hereby and (iii) to otherwise protect and assure Lender of its rights and interests hereunder. Furthermore, such Obligor also hereby irrevocably makes, constitutes and appoints Lender, its nominee or any other person whom Lender may designate, as such Obligor's attorney in fact with full power and for the limited purpose to prepare and file (and, to the extent applicable, sign) in the name of such Obligor any financing statements, or amendments and supplements to financing statements, renewal financing statements, notices or any similar documents which in Lender's reasonable discretion would be necessary or appropriate in order to perfect and maintain perfection of the security interests granted hereunder, such power, being coupled with an interest, being and remaining irrevocable until such time as the Secured Obligations arising under the Loan Documents have been paid in full and the Revolving Commitment has been terminated. Such Obligor hereby agrees that a carbon, photographic or other reproduction of this Agreement or any such financing statement is sufficient for filing as a financing statement by Lender without notice thereof to such Obligor wherever Lender may in its sole discretion desire to file the same.

(c) Collateral Held by Warehouseman, Bailee, Etc. If any Collateral is at any time in the possession or control of a warehouseman, bailee or any agent or processor of such Obligor and Lender so requests (i) notify such Person in writing of Lender's security interest therein, (ii) instruct such Person to hold all such Collateral for Lender's account and subject to Lender's instructions and (iii) use commercially reasonable efforts to obtain a written acknowledgment from such Person that it is holding such Collateral for the benefit of Lender.

(d) Commercial Tort Claims. (i) Promptly forward to Lender an updated Schedule 1 listing any and all Commercial Tort Claims by or in favor of such Obligor seeking damages in excess of $100,000 in any individual instance or $250,000 in the aggregate for all Commercial Tort Claims of the Obligors not subject to a Lien in favor of Lender and (ii) execute and deliver such statements, documents and notices and do and cause to be done all such things as may be reasonably required by Lender, or required by Law to create, preserve, perfect and maintain Lender's security interest in any Commercial Tort Claims initiated by or in favor of any Obligor.

(e) Books and Records. Each Obligor shall mark its books and records to reflect the security interest granted pursuant to this Agreement.

(f) Nature of Collateral. At all times maintain the Collateral as personal property and not affix any of the Collateral to any real property in a manner which would change its nature from personal property to real property or a Fixture to real property, unless Lender shall have a perfected Lien on such Fixture or real property.

5. Authorization to File Financing Statements. Each Obligor hereby authorizes Lender to prepare and file such financing statements (including continuation statements) or amendments thereof or supplements thereto or other instruments as Lender may from time to time deem necessary or appropriate in order to perfect and maintain the security interests granted hereunder in accordance with

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the UCC (including authorization to describe the Collateral as "all personal property", "all assets" or words of similar meaning).

6. Advances. On failure of any Obligor to (a) pay any taxes required herein or in any other Loan Document, Lender may, at its sole option and in its sole discretion, expend such sums as Lender may reasonably deem advisable for the payment of any taxes, and (b) perform any of the covenants and agreements contained herein or in any other Loan Document, Lender may, at its sole option and in its sole discretion, perform the same and in so doing may expend such sums as Lender may reasonably deem advisable in the performance thereof, including, without limitation, the payment of any insurance premiums, a payment to obtain a release of a Lien or potential Lien, expenditures made in defending against any adverse claim and all other expenditures which Lender may make for the protection of the security hereof or which may be compelled to make by operation of Law. All such sums and amounts so expended shall be repayable by the Obligors on a joint and several basis promptly upon timely notice thereof and demand therefor, shall constitute additional Secured Obligations and shall bear interest from the date said amounts are expended at the Default Rate. No such performance of any covenant or agreement by Lender on behalf of any Obligor, and no such advance or expenditure therefor, shall relieve the Obligors of any Default or Event of Default. Lender may make any payment hereby authorized in accordance with any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax assessment, sale, forfeiture, tax lien, title or claim except to the extent such payment is being contested in good faith by an Obligor in appropriate proceedings and against which adequate reserves are being maintained in accordance with GAAP.

7. Event of Default/Remedies. The occurrence of an "Event of Default" under the Credit Agreement or any other Loan Document shall be an "Event of Default" under this Agreement.

(a) General Remedies. During the continuance of an Event of Default, Lender shall have, in addition to the rights and remedies provided herein, in the Loan Documents, in any other documents relating to the Secured Obligations, or by Law (including, but not limited to, levy of attachment, garnishment and the rights and remedies set forth in the UCC of the jurisdiction applicable to the affected Collateral), the rights and remedies of a secured party under the UCC (regardless of whether the UCC is the law of the jurisdiction where the rights and remedies are asserted and regardless of whether the UCC applies to the affected Collateral), and further, Lender may, with or without judicial process or the aid and assistance of others, (i) enter on any premises on which any of the Collateral may be located and, without resistance or interference by the Obligors, take possession of the Collateral, (ii) dispose of any Collateral on any such premises, (iii) require the Obligors to assemble and make available to Lender at the expense of the Obligors any Collateral at any place and time designated by Lender which is reasonably convenient to both parties, (iv) remove any Collateral from any such premises for the purpose of effecting sale or other disposition thereof, and/or (v) without demand and without advertisement, notice, hearing or process of law, all of which each of the Obligors hereby waives to the fullest extent permitted by Law, at any place and time or times, sell and deliver any or all Collateral held by or for it at public or private sale, at any exchange or broker's board or elsewhere, by one or more contracts, in one or more parcels, for cash, upon credit or otherwise, at such prices and upon such terms as Lender deems advisable, in its sole discretion (subject to any and all mandatory legal requirements). Each Obligor acknowledges that any such private sale may be at prices and on terms less favorable to the seller than the prices and other terms which might have been obtained at a public sale and, notwithstanding the foregoing, agrees that such private sale shall be deemed to have been made in a commercially reasonable manner. Neither Lender's compliance with applicable Law nor its disclaimer of warranties relating to the Collateral shall be considered to adversely affect

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the commercial reasonableness of any sale. To the extent the rights of notice cannot be legally waived hereunder, each Obligor agrees that any requirement of reasonable notice shall be met if such notice, specifying the place of any public sale or the time after which any private sale is to be made, is personally served on or mailed, postage prepaid, to the Obligors in accordance with the notice provisions of the Credit Agreement at least ten (10) days before the time of sale or other event giving rise to the requirement of such notice. Lender may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Lender shall not be obligated to make any sale or other disposition of the Collateral regardless of notice having been given. To the extent permitted by applicable Law, any holder of Secured Obligations may be a purchaser at any such sale. Subject to the provisions of applicable Law, Lender may postpone or cause the postponement of the sale of all or any portion of the Collateral by announcement at the time and place of such sale, and such sale may, without further notice, to the extent permitted by Law, be made at the time and place to which the sale was postponed, or Lender may further postpone such sale by announcement made at such time and place.

(b) Remedies Relating to Accounts. During the continuance of an Event of Default, whether or not Lender has exercised any or all of its rights and remedies hereunder, (i) each Obligor will promptly upon request of Lender instruct all account debtors to remit all payments in respect of Accounts to a mailing location selected by Lender and (ii) Lender shall have the right to enforce any Obligor's rights against its customers and account debtors, and Lender or its designee may notify any Obligor's customers and account debtors that the Accounts of such Obligor have been assigned to Lender or of Lender's security interest therein, and may (either in its own name or in the name of an Obligor or both) demand, collect (including without limitation by way of a lockbox arrangement), receive, take receipt for, sell, sue for, compound, settle, compromise and give acquittance for any and all amounts due or to become due on any Account, and, in Lender's discretion, file any claim or take any other action or proceeding to protect and realize upon the security interest of the holders of the Secured Obligations in the Accounts. Each Obligor acknowledges and agrees that the Proceeds of its Accounts remitted to or on behalf of Lender in accordance with the provisions hereof shall be solely for Lender's own convenience and that such Obligor shall not have any right, title or interest in such Accounts or in any such other amounts except as expressly provided herein. Lender shall have no liability or responsibility to any Obligor for acceptance of a check, draft or other order for payment of money bearing the legend "payment in full" or words of similar import or any other restrictive legend or endorsement or be responsible for determining the correctness of any remittance. Furthermore, during the continuance of an Event of Default, (i) Lender shall have the right, but not the obligation, to make test verifications of the Accounts in any manner and through any medium that it reasonably considers advisable, and the Obligors shall furnish all such assistance and information as Lender may require in connection with such test verifications, (ii) upon Lender's request and at the expense of the Obligors, the Obligors shall cause independent public accountants or others satisfactory to Lender to furnish to Lender reports showing reconciliations, aging and test verifications of, and trial balances for, the Accounts and (iii) Lender in its own name or in the name of others may communicate with account debtors on the Accounts to verify with them to Lender's satisfaction the existence, amount and terms of any Accounts.

(c) Deposit Accounts. Upon the occurrence of an Event of Default and during the continuation thereof, Lender may (i) prevent withdrawals or other dispositions of funds in Deposit Accounts maintained with Lender and (ii) exercise control pursuant to any control agreement governing a Deposit Account or Securities Account not maintained with Lender.

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(d) Access. In addition to the rights and remedies hereunder, during the continuance of an Event of Default, Lender shall have the right to enter and remain upon the various premises of the Obligors without cost or charge to Lender, and use the same, together with materials, supplies, books and records of the Obligors for the purpose of collecting and liquidating the Collateral, or for preparing for sale and conducting the sale of the Collateral, whether by foreclosure, auction or otherwise. In addition, Lender may remove Collateral, or any part thereof, from such premises and/or any records with respect thereto, in order to effectively collect or liquidate such Collateral.

(e) Nonexclusive Nature of Remedies. Failure by Lender to exercise any right, remedy or option under this Agreement, any other Loan Document, any other document relating to the Secured Obligations, or as provided by Law, or any delay by Lender in exercising the same, shall not operate as a waiver of any such right, remedy or option. No waiver hereunder shall be effective unless it is in writing, signed by the party against whom such waiver is sought to be enforced and then only to the extent specifically stated, which in the case of Lender shall only be granted as provided herein. To the extent permitted by Law, neither Lender nor any party acting as attorney for Lender, shall be liable hereunder for any acts or omissions or for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct hereunder. The rights and remedies of Lender under this Agreement shall be cumulative and not exclusive of any other right or remedy which Lender may have.

(f) Retention of Collateral. In addition to the rights and remedies hereunder, Lender may, in compliance with Sections 679.620 and 679.621 of the UCC or otherwise complying with the requirements of applicable Law of the relevant jurisdiction, accept or retain the Collateral in satisfaction of the Secured Obligations. Unless and until Lender shall have provided such notices, however, Lender shall not be deemed to have retained any Collateral in satisfaction of any Secured Obligations for any reason.

(g) Deficiency. In the event that the proceeds of any sale, collection or realization are insufficient to pay all amounts to which Lender is legally entitled, the Obligors shall be jointly and severally liable for the deficiency, together with interest thereon at the Default Rate, together with the costs of collection and the fees, charges and disbursements of counsel. Any surplus remaining after the full payment and satisfaction of the Secured Obligations shall be returned to the Obligors or to whomsoever a court of competent jurisdiction shall determine to be entitled thereto. Notwithstanding any provision to the contrary contained herein, in any other of the Loan Documents or in any other documents relating to the Secured Obligations, the obligations of each Obligor under the Credit Agreement and the other Loan Documents shall be limited to an aggregate amount equal to the largest amount that would not render such obligations subject to avoidance under Section 548 of the Bankruptcy Code of the United States or any other applicable Debtor Relief Law (including any comparable provisions of any applicable state Law).

(h) Right of Setoff. In addition to any rights now or hereafter granted under applicable Law and not by way of limitation of any such rights, Lender shall have the right, at any time or from time to time upon the occurrence and during the continuance of an Event of Default, without prior notice to Obligors, any such notice being expressly waived by Obligors to the extent permitted by applicable Law, to set off and apply against all deposits (general or special, time or demand, provisional or final) of Obligors at any time held or other obligations at any time owing by Lender to or for the credit or the account of Obligors against any and all Secured Obligations held by Lender irrespective of whether Lender shall have made demand hereunder and although such Secured Obligations may be unmatured.

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8. Rights of Lender.

(a) Power of Attorney. In addition to other powers of attorney contained herein, each Obligor hereby designates and appoints Lender and each of its designees or agents, as attorney-in-fact of such Obligor, irrevocably and with power of substitution, with authority to take any or all of the following actions during the continuance of an Event of Default:

(i) to demand, collect, settle, compromise, adjust, give discharges and releases, all as Lender may reasonably determine;

(ii) to commence and prosecute any actions at any court for the purposes of collecting any Collateral and enforcing any other right in respect thereof;

(iii) to defend, settle or compromise any action brought and, in connection therewith, give such discharge or release as Lender may deem reasonably appropriate;

(iv) to receive, open and dispose of mail addressed to an Obligor and endorse checks, notes, drafts, acceptances, money orders, bills of lading, warehouse receipts or other instruments or documents evidencing payment, shipment or storage of the Goods giving rise to the Collateral of such Obligor on behalf of and in the name of such Obligor, or securing, or relating to such Collateral;

(v) to sell, assign, transfer, make any agreement in respect of, or otherwise deal with or exercise rights in respect of, any Collateral or the Goods or services which have given rise thereto, as fully and completely as though Lender were the absolute owner thereof for all purposes;

(vi) to adjust and settle claims under any insurance policy relating thereto;

(vii) to execute and deliver all assignments, conveyances, statements, financing statements, renewal financing statements, security agreements, affidavits, notices and other agreements, instruments and documents that Lender may determine necessary in order to perfect and maintain the security interests and liens granted in this Agreement and in order to fully consummate all of the transactions contemplated therein;

(viii) to institute any foreclosure proceedings that Lender may deem appropriate;

(ix) to sign and endorse any drafts, assignments, proxies, stock powers, verifications, notices and other documents relating to the Collateral;

(x) to pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the Collateral;

(xi) to direct any parties liable for any payment in connection with any of the Collateral to make payment of any and all monies due and to become due thereunder directly to Lender or as Lender shall direct;

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(xii) to receive payment of and receipt for any and all monies, claims, and other amounts due and to become due at any time in respect of or arising out of any Collateral; and

(xiii) to do and perform all such other acts and things as Lender may reasonably deem to be necessary, proper or convenient to accomplish the purposes of the Loan Documents.

This power of attorney is a power coupled with an interest and shall be irrevocable until such time as the Secured Obligations arising under the Loan Documents have been paid in full and the Revolving Commitment has expired or been terminated. Lender shall be under no duty to exercise or withhold the exercise of any of the rights, powers, privileges and options expressly or implicitly granted to Lender in this Agreement, and shall not be liable for any failure to do so or any delay in doing so. Lender shall not be liable for any act or omission or for any error of judgment or any mistake of fact or law in its individual capacity or its capacity as attorney-in-fact except acts or omissions resulting from its gross negligence or willful misconduct. This power of attorney is conferred on Lender solely to protect, preserve and realize upon its security interest in the Collateral.

(b) Lender's Duty of Care. Other than the exercise of reasonable care to assure the safe custody of the Collateral while being held by Lender hereunder, Lender shall have no duty or liability to preserve rights pertaining thereto, it being understood and agreed that the Obligors shall be responsible for preservation of all rights in the Collateral, and Lender shall be relieved of all responsibility for the Collateral upon surrendering it or tendering the surrender of it to the Obligors. Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which Lender accords its own property, which shall be no less than the treatment employed by a reasonable and prudent agent in the industry, it being understood that Lender shall not have responsibility for taking any necessary steps to preserve rights against any parties with respect to any of the Collateral. In the event of a public or private sale of Collateral pursuant to Section 7 hereof, Lender shall have no responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Collateral, whether or not Lender has or is deemed to have knowledge of such matters, or (ii) taking any steps to clean, repair or otherwise prepare the Collateral for sale.

(c) Liability with Respect to Accounts. Anything herein to the contrary notwithstanding, each of the Obligors shall remain liable under each of the Accounts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to each such Account. Lender shall have no obligation or liability under any Account (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by Lender of any payment relating to such Account pursuant hereto, nor shall Lender or any holder of Secured Obligations be obligated in any manner to perform any of the obligations of an Obligor under or pursuant to any Account (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

(d) Releases of Collateral. If any Collateral shall be sold, transferred or otherwise disposed of by any Obligor in a transaction permitted by the Credit Agreement, then Lender, at the request and sole expense of such Obligor, shall promptly execute and deliver to such Obligor all

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releases and other documents, and take such other action, reasonably necessary for the release of the Liens created hereby or by any other Collateral Document on such Collateral.

9. Application of Proceeds. Upon the acceleration of the Obligations under the Loan Documents, any payments in respect of the Secured Obligations and any proceeds of the Collateral, when received by Lender or any holder of the Secured Obligations in money or its equivalent, will be applied in reduction of the Secured Obligations in the manner set forth in the Credit Agreement.

10. Continuing Agreement.

(a) This Agreement shall remain in full force and effect until such time as the Secured Obligations arising under the Loan Documents have been paid in full and the Revolving Commitment has expired or been terminated, at which time this Agreement shall be automatically terminated and Lender shall, upon the request and at the expense of the Obligors, forthwith release all of its liens and security interests hereunder and shall execute and deliver all UCC termination statements and/or other documents reasonably requested by the Obligors evidencing such termination.

(b) This Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Secured Obligations is rescinded or must otherwise be restored or returned by Lender or any holder of the Secured Obligations as a preference, fraudulent conveyance or otherwise under any Debtor Relief Law, all as though such payment had not been made; provided that in the event payment of all or any part of the Secured Obligations is rescinded or must be restored or returned, all reasonable costs and expenses (including without limitation any reasonable legal fees and disbursements) incurred by Lender or any holder of the Secured Obligations in defending and enforcing such reinstatement shall be deemed to be included as a part of the Secured Obligations.

11. Amendments; Waivers; Modifications, Etc. This Agreement and the provisions hereof may not be amended, waived, modified, changed, discharged or terminated except as set forth in Section 10.2 of the Credit Agreement; provided that any update or revision to Schedule 1 hereof delivered by any Obligor shall not constitute an amendment for purposes of this Section 11 or Section 10.2 of the Credit Agreement.

12. Successors in Interest. This Agreement shall be binding upon each Obligor, its successors and assigns and shall inure, together with the rights and remedies of Lender hereunder, to the benefit of Lender and its successors and permitted assigns.

13. Notices. All notices required or permitted to be given under this Agreement shall be in conformance with Section 10.1 of the Credit Agreement.

14. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means (e.g. "pdf" or "tif") shall be effective as delivery of a manually executed counterpart of this Agreement.

15. Headings and Recitals. The headings of the sections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this

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Agreement. The Recitals set forth above are true and correct and are hereby incorporated by reference as if the same were fully set forth herein.

 

16. Governing Law; Submission to Jurisdiction; Venue; WAIVER OF JURY TRIAL. The terms of Sections 10.5 and 10.6 of the Credit Agreement with respect to governing law, submission to jurisdiction, venue and waiver of jury trial are incorporated herein by reference, mutatis mutandis, and the parties hereto agree to such terms.

17. Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

18. Entirety. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

19. Other Security. To the extent that any of the Secured Obligations are now or hereafter secured by property other than the Collateral (including, without limitation, real property and securities owned by an Obligor), or by a guarantee, endorsement or property of any other Person, then Lender shall have the right to proceed against such other property, guarantee or endorsement during the continuance of any Event of Default, and Lender shall have the right, in its sole discretion, to determine which rights, security, liens, security interests or remedies Lender shall at any time pursue, relinquish, subordinate, modify or take with respect thereto, without in any way modifying or affecting any of them or the Secured Obligations or any of the rights of Lender, under any other of the Loan Documents or under any other document relating to the Secured Obligations.

20. Joinder. At any time after the date of this Agreement, one or more additional Persons may become party hereto by executing and delivering to Lender a Guarantor Joinder Agreement. Immediately upon such execution and delivery of such Guarantor Joinder Agreement (and without any further action), each such additional Person will become a party to this Agreement as an "Obligor" and have all of the rights and obligations of an Obligor hereunder and this Agreement and the schedules hereto shall be deemed amended by such Guarantor Joinder Agreement.

21. Joint and Several Obligations of Obligors.

 

(a) Subject to subsection (c) of this Section 21, each of the Obligors is accepting joint and several liability hereunder in consideration of the financial accommodation to be provided by Lender and in consideration of the undertakings of each of the Obligors to accept joint and several liability for the obligations of each of them.

 

(b) Subject to subsection (c) of this Section 21, each of the Obligors jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Obligors with respect to the payment and performance of all of the Secured

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Obligations arising under this Agreement, the other Loan Documents and any other documents relating to the Secured Obligations, it being the intention of the parties hereto that all the Secured Obligations shall be the joint and several obligations of each of the Obligors without preferences or distinction among them.

 

(c) Notwithstanding any provision to the contrary contained herein, in any other of the Loan Documents or in any other documents relating to the Secured Obligations, the obligations of each Guarantor under the Credit Agreement, the other Loan Documents and the other documents relating to the Secured Obligations shall be limited to an aggregate amount equal to the largest amount that would not render such obligations subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of any other Debtor Relief Law.

 

[SIGNATURE PAGES FOLLOW]

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Each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.

OBLIGORS: HCI GROUP, INC.,

a Florida corporation

 

 

By:

James Mark Harmsworth,
its Chief Financial Officer

 

 

 

 

 

 

 

(Signatures continue on the following pages)

 

Signature Page to Second Amended and Restated Security and Pledge Agreement - Obligors

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Each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.

OBLIGORS: HOMEOWNERS CHOICE MANAGERS, INC.,

a Florida corporation

GREENLEAF CAPITAL, LLC,

a Florida limited liability company

OMEGA INSURANCE AGENCY, INC.,

a Florida corporation

SOUTHERN ADMINISTRATION, INC.,

a Florida corporation

ENCLAVE SERVICES, INC.,

a Florida corporation

GATORS ON THE PASS HOLDINGS LLC,

a Florida limited liability company

JOHN'S PASS MARINA INVESTMENT HOLDINGS LLC,

a Florida limited liability company

PASS INVESTMENT HOLDINGS LLC,

a Florida limited liability company

TV INVESTMENT HOLDINGS LLC,

a Florida limited liability company

SILVER SPRINGS PROPERTY INVESTMENTS, LLC,

a Florida limited liability company

GRISTON CLAIM SERVICES, INC.,

a Florida corporation

HCPCI HOLDINGS, LLC,

a Florida limited liability company

BIG BEND LINCOLN SWC, LLC,

a Florida limited liability company

FMKT MEL OWNER LLC,

a Florida limited liability company

SORRENTO PBX, LLC,

a Florida limited liability company

CENTURY PARK HOLDINGS, LLC,

a Florida limited liability company

GULF TO BAY LM, LLC,

a Florida limited liability company

JP BEACH HOLDINGS LLC,

a Florida limited liability company

HCI INSURANCE ADMINISTRATION SERVICES, INC.,

a Florida corporation

WESTVIEW HOLDINGS, LLC,

a Florida limited liability

GRISTON CLAIM MANAGEMENT, INC.,

a Florida corporation

SAGE PROPERTY ADVISORS, LLC,

a Florida limited liability company

COCONUT PALM PROPERTY HOLDINGS, LLC,

a Florida limited liability company

 

By:

James Mark Harmsworth, its
Chief Financial Officer

Signature Page to Second Amended and Restated Security and Pledge Agreement - Obligors

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Accepted and agreed to as of the date first written above.

 

LENDER:

 

FIFTH THIRD BANK,

NATIONAL ASSOCIATION

 

 

By:______________________________

Michael J. Schaltz, Jr., its Managing

Director & Senior Vice President

 

 

Signature Page to Second Amended and Restated Security and Pledge Agreement - Lender

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SCHEDULE 1

COMMERCIAL TORT CLAIMS

None.

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Exhibit 99.3

THIS NOTE RENEWS, AMENDS AND RESTATES THE PRIOR NOTE IN ITS ENTIRETY. FLORIDA DOCUMENTARY STAMP TAXES IN THE AMOUNT REQUIRED BY LAW WERE PAID IN CONNECTION WITH THE EXECUTION AND DELIVERY OF THE PRIOR NOTE. THIS NOTE DOES NOT ADD ANY ADDITIONAL OBLIGORS. THEREFORE, NO ADDITIONAL FLORIDA DOCUMENTARY STAMP TAXES ARE DUE IN CONNECTION WITH THE EXECUTION AND DELIVERY OF THIS NOTE.

 

 

RENEWED, AMENDED AND RESTATED

REVOLVING CREDIT PROMISSORY NOTE

 

$75,000,000.00 November 3, 2023

(the "Effective Date")

FOR VALUE RECEIVED, the undersigned, HCI GROUP, INC., a Florida corporation ("Borrower"), with an address of 3802 Coconut Palm Drive, Tampa, Florida 33619, hereby unconditionally promises to pay to the order of FIFTH THIRD BANK, NATIONAL ASSOCIATION (together with its successors and permitted assigns, "Lender"), for its account pursuant to the Credit Agreement referred to below, at the principal office of Lender at 38 Fountain Square Plaza, MD #10908F, Cincinnati, Ohio 45263, or such other address as Lender may provide from time to time, the principal sum of SEVENTY-FIVE MILLION AND NO/100 DOLLARS ($75,000,000.00) or, if less, the aggregate unpaid principal amount of all Advances made by Lender to Borrower under the Credit Agreement, in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, together with any Fees and interest, on the dates and in the amounts as provided in the Credit Agreement, from the Effective Date until this Renewed, Amended and Restated Revolving Credit Promissory Note (this "Note") is fully paid, on the principal amount hereunder remaining unpaid from time to time, at such office, in like money and funds, computed in the manner, and at the rates from time to time in effect, and payable on the dates provided, under the Credit Agreement. The entire unpaid principal balance of this Note, together with all Fees and accrued but unpaid interest, shall, if not sooner paid or required to be paid pursuant to the Credit Agreement, be due and payable in full on the Revolving Commitment Termination Date.

 

Borrower executed and delivered to Lender that certain Renewed, Amended and Restated Revolving Credit Promissory Note in the amount of $50,000,000.00 dated June 2, 2023 (the "Prior Note"). This Note renews, amends and restates the Prior Note in its entirety and is given in replacement of and in substitution for, but not in payment of the Prior Note. This Note hereby renews and increases the principal indebtedness evidenced by the Prior Note.

 

This Note is: (a) made by Borrower to the order of Lender pursuant to that certain Second Amended and Restated Credit Agreement, dated as of the Effective Date, by and among Borrower, the Guarantors from time-to-time a party thereto and Lender (as amended, renewed, restated, replaced or otherwise modified from time to time, the "Credit Agreement"), and (b) entitled to the benefits and security, and is subject to the terms and conditions, of the Credit Agreement, including, without limitation, acceleration upon the terms provided therein, and of the other Loan Documents. This Note, and any request by Borrower from time to time for an Advance of a specified principal amount hereunder shall be subject to the terms and conditions of the Credit Agreement. Capitalized terms used herein which are not otherwise defined in this Note shall have the meanings set forth in the Credit Agreement.

 

This Note is subject to voluntary and mandatory prepayment, in full or in part, in accordance with, and subject to the terms of, the Credit Agreement.

 

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Upon the occurrence and during the continuance of any Event of Default, subject to any applicable cure period, the entire unpaid principal balance of this Note, together with all accrued but unpaid interest, and all other Obligations, may become, or may be declared to be, immediately due and payable as provided in the Credit Agreement, provided that if there occurs an Event of Default of the type described in Sections 8.1(h) or 8.1(i) of the Credit Agreement, the entire unpaid principal balance of this Note, together with all accrued but unpaid interest, and all other Obligations shall become automatically and immediately due and payable as provided in the Credit Agreement.

 

Borrower hereby agrees to pay all costs of collection, including reasonable attorneys' fees, if this Note is not paid when due, whether or not legal proceedings are commenced as further set forth in, and in accordance with, the terms of the Credit Agreement.

 

Presentment or other demand for payment, notice of dishonor and protest are hereby expressly waived. No failure to exercise, and no delay in exercising any rights hereunder on the part of the holder hereof shall operate as a waiver of any such rights.

 

THE VALIDITY OF THIS NOTE AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.

 

AS A SPECIFICALLY BARGAINED INDUCEMENT FOR LENDER TO ENTER INTO THE CREDIT AGREEMENT AND EXTEND CREDIT TO BORROWER, BORROWER AGREES THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE OR THE OTHER LOAN DOCUMENTS, THEIR VALIDITY OR PERFORMANCE, AND WITHOUT LIMITATION ON THE ABILITY OF LENDER, AND ITS SUCCESSORS AND ASSIGNS, TO EXERCISE ALL RIGHTS AS TO THE COLLATERAL AND TO INITIATE AND PROSECUTE IN ANY APPLICABLE JURISDICTION ACTIONS RELATED TO REPAYMENT AND COLLECTION OF THE OBLIGATIONS, MAY BE INITIATED AND PROSECUTED AS TO ALL PARTIES AND THEIR SUCCESSORS AND ASSIGNS IN THE STATE OR FEDERAL COURTS WITHIN THE COUNTY OF HILLSBOROUGH, STATE OF FLORIDA. BORROWER CONSENTS TO AND SUBMITS TO THE EXERCISE OF JURISDICTION OVER ITS PERSON BY ANY COURT SITUATED IN THE COUNTY OF HILLSBOROUGH, STATE OF FLORIDA HAVING JURISDICTION OVER THE SUBJECT MATTER, AND CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL DIRECTED TO BORROWER AT ITS ADDRESS SET FORTH ON BORROWER'S SIGNATURE PAGE TO THE CREDIT AGREEMENT OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE STATE OF FLORIDA. BORROWER WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.

 

AS A SPECIFICALLY BARGAINED INDUCEMENT FOR LENDER TO ENTER INTO THE CREDIT AGREEMENT AND EXTEND CREDIT TO BORROWER, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND LENDER WAIVE TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE OR THE OTHER LOAN DOCUMENTS OR THE CONDUCT OF THE RELATIONSHIP BETWEEN OR AMONG LENDER AND ANY ONE OR MORE LOAN PARTIES. BORROWER

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REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

This Note renews the principal indebtedness evidenced by the Prior Note. There are no new obligors. Therefore, no additional Florida documentary stamp taxes are due in connection with this Agreement. It is the intent of the parties hereto that the original of the Prior Note shall be attached to this Note to comply with the provisions of Florida Statute §201.09. Borrower acknowledges, stipulates, covenants and agrees that Borrower is solely responsible for payment of any and all documentary stamp taxes and intangible taxes with respect to the Loan. In the event that at any time or from time to time the Florida Department of Revenue shall impose any documentary stamp tax, intangible tax, interest, penalties or fines with respect to the Loan or the Loan Documents, Borrower shall pay same immediately upon demand and Borrower shall indemnify, defend and hold Lender harmless of, from and against any and all such documentary stamp tax, intangible tax, interest, penalties or fines, together with all costs of collection thereof.

 

 

 

 

 

 

[Signature Page Follows]

3

DOCVARIABLE BABC_DocID4881-3788-3015.2

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IN WITNESS WHEREOF, Borrower has executed this Note by its duly authorized officer as of the Effective Date.

 

 

HCI GROUP, INC.,

a Florida corporation
 

 

 

By:

James Mark Harmsworth,
its Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page To

Renewed, Amended and Restated Revolving Credit Promissory Note

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v3.23.3

Cover	Nov. 03, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 03, 2023
Entity Registrant Name	HCI GROUP, INC.
Entity Central Index Key	0001400810
Entity Emerging Growth Company	false
Entity File Number	01-34126
Entity Incorporation State Country Code	FL
Entity Tax Identification Number	20-5961396
Entity Address, Address Line One	3802 Coconut Palm Drive
Entity Address, City or Town	Tampa
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33619
City Area Code	813
Local Phone Number	405-3600
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of each class	Common Stock
Trading Symbol(s)	HCI
Name of each exchange on which registered	NYSE

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