FIFTH AMENDMENT TO CREDIT AGREEMENT AND MODIFICATION OF OTHER LOAN DOCUMENTS
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT AND MODIFICATION OF OTHER LOAN DOCUMENTS (this "Amendment") is executed on December 1 2022 (the "Amendment Effective Date"), by and among HCI GROUP, INC., a Florida corporation ("Borrower"), the Guarantors party hereto, and FIFTH THIRD BANK, NATIONAL ASSOCIATION ("Lender").
BACKGROUND
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Amendment, the parties mutually agree as follows:
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"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.
"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 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, New York 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 Management Agreements 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 Management Agreements shall govern with respect to all applicable notices and determinations in connection with such portion of the Obligations arising under such Rate Management Agreements. Periods of days referred to in the Loan Documents will be counted in calendar days unless Business Days are expressly prescribed.
"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
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III, shall in each case be deemed to be a "Change in Law", regardless of the date enacted, adopted or issued.
"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 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.
"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.
"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), as applicable, the date set forth in Section 2.6(i) of this Agreement; provided that, in addition to the foregoing, each of (x) the date upon which the Revolving 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 and any applicable Unused Commitment Fee 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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"Letter Agreement" means, collectively, those certain Letter Agreements between Borrower and Lender dated December 31, 2020 and November ___, 2022.
"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, and which shall state the amount and date of the requested Advance.
"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.
"Prime Rate" means, as of any date, the rate that Lender 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. Lender may make commercial loans or other loans at rates of interest at, above or below its index rate or prime rate. Each determination by Lender of the Prime Rate shall be binding and conclusive in the absence of manifest error. Any change in the Prime Rate shall be effective for purposes of this Agreement on the date of such change without notice to Borrower.
"Revolving Commitment" shall mean the commitment of Lender to make Advances to Borrower in an aggregate principal amount not exceeding $50,000,000.00, as such commitment may subsequently be increased or decreased pursuant to terms hereof.
"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 2.9 (b) or 2.9(c) of this Agreement and
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such adjustment may be positive, negative, or zero, subject to the specific Spread Adjustments set forth in Section 2.9(c).
"Successor Rate" means any successor index rate determined pursuant to Section 2.9(c) from time to time, including any applicable Spread Adjustment.
"Swap Contract" means any "swap agreement", as defined in Section 101 of the Bankruptcy Code.
"Swap Obligation" means any obligation in respect of a Swap Contract that constitutes a "swap" within the meaning of Section 1a(47) of the Commodity Exchange Act, as amended from time to time.
"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.
"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. 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 Management Agreement 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 Management Agreements.
"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 2.9(a) of this Agreement and the other terms of this Agreement.
2.5 Interest .
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2.9 Tranche Rate Provisions.
(a) Tranche Rate Election. Subject to the provisions of Section 8.2, Borrower may request that Advances permitted to be made hereunder be Tranche Rate Loans and that outstanding portions of Advances made hereunder be converted to Tranche Rate Loans. Any request with respect to a new Advance will be made by submitting a Notice of Borrowing to Lender. Once given, and except as provided in clauses (b)-(f) below, a Notice of Borrowing shall be irrevocable and Borrower shall be bound thereby. In the case of any conversion of a Base Rate Loan to a Tranche Rate Loan or any conversion of an existing Tranche Rate Loan to a new Tranche Rate Loan with a different Interest Period, such election must be made pursuant to a Notice of Conversion. In addition to the other provisions of this Agreement, as a condition to any Tranche Rate election hereunder, on or before the date on which the applicable Tranche Rate Loan is to be advanced or converted hereunder, in each case in accordance with Lender's loan policies and procedures periodically in effect, Borrower shall notify Lender of each of the following: (i) the requested amount of such Tranche Rate Loan, (ii) the Interest Period that Borrower has elected to apply to such Tranche Rate Loan, and (iii) the date of the requested advance or conversion. In the absence of a Notice of Conversion submitted to Lender not later than noon Cincinnati, Ohio time (or such later time acceptable to Lender in its sole discretion) on the Business Day on which such Interest Period expires, Borrower will be deemed to have requested that the Tranche Rate Loan then maturing be continued as a Tranche Rate Loan for the same Interest Period commencing on the date on which such expiring Interest Period ends. If Borrower requests a new Advance but fails to submit a Notice of Borrowing as required by this paragraph, and if Borrower would otherwise be entitled to elect a Tranche Rate Loan under the terms of this Agreement, Borrower will be deemed to have elected to have such principal amount bear interest as a Tranche Rate Loan with a Tranche Interest Period of one month, commencing on the date of the advance. Unless otherwise permitted by Lender in its sole discretion: (A) in no event may the last day of any Interest Period exceed the Revolving Commitment Termination Date, and (B) in no event may any new Interest Period commence with respect to any Tranche Rate Loan requested to be converted hereunder prior to the expiration of the applicable Interest Period then in effect with respect to such Tranche Rate Loan.
(b) Temporary Replacement of the Tranche Rate and Tenor Replacement. In the event that prior to the commencement of any Interest Period relating to a Tranche Rate Loan, Lender shall determine either: (i) the Tranche Rate is unavailable, unrepresentative, or unreliable, (ii) the Tranche Rate as determined by Lender will not adequately and fairly reflect the cost to Lender of funding the Tranche Rate Loans for such Interest Period, or (iii) the making or funding of Tranche Rate Loans has become impracticable; then, in any such case, Lender shall promptly provide notice of such determination to Borrower (which shall be conclusive and binding on Borrower absent manifest error), and (A) any request for a Tranche Rate Loan or for a conversion to or continuation of a Tranche Rate Loan shall be automatically withdrawn and shall be deemed a request for a Base Rate
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Loan, (B) each Tranche Rate Loan will automatically, on the last day of the then current Interest Period relating thereto, become a Base Rate Loan, and (C) the obligations of Lender to make Tranche Rate Loans shall be suspended until Lender determines that the circumstances giving rise to such suspension no longer exist, in which event Lender shall so notify Borrower.
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) Permanent Replacement of the Tranche Rate.
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(d) Illegality. Notwithstanding any other provisions hereof, if any Law shall make it unlawful for Lender to make, fund or maintain Tranche Rate Loans, Lender shall promptly give notice of such circumstances to Borrower. In such an event, (i) the commitment of Lender to make Tranche Rate Loans as Tranche Rate Loans or convert Base Rate Loans to Tranche Rate Loans shall be immediately
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suspended and (ii) all outstanding Tranche Rate Loans shall be converted automatically to Base Rate Loans on the last day of the Interest Period thereof or at such earlier time as required by Law.
Other unsecured Indebtedness of Borrower or its Subsidiaries incurred from and after
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March 31, 2021 in an aggregate amount not to exceed $20,000,000.00 (the "Unsecured Indebtedness Cap"). For the avoidance of doubt, the Unsecured Indebtedness Cap will be in addition to any amount borrowed under the Revolving Loan, up to the maximum amount of the Revolving Loan.
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[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed effective as of the Amendment Effective Date.
BORROWER: HCI GROUP, INC.,
a Florida corporation
By:
Name: James Mark Harmsworth
Title: Chief Financial Officer
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
By:
Name: James Mark Harmsworth
Title: Chief Financial Officer
LENDER: FIFTH THIRD BANK,
NATIONAL ASSOCIATION
By:__________________________
Michael J. Schaltz, Jr., its Managing
Director & Senior Vice President