Exhibit 10.21
March 14, 2006
KSW, Inc.
37-16 23rd Street
Long Island City, New York 11101
Gentlemen:
We are pleased to advise you that Bank of America, N.A., successor by
merger to Fleet National Bank (the "Bank") understands that KSW, Inc., a
Delaware corporation (the "Borrower") may from time to time request advances for
working capital purposes (the "Loans") under an unsecured line of credit
established by the Bank in the amount of up to TWO MILLION AND 00/100 DOLLARS
($2,000,000.00) (the "Line") upon the following terms and conditions:
1. Discretionary Facility.
----------------------
(a) The Bank, in its sole discretion, shall consider requests for
Loans hereunder from the Effective Date (as defined in Paragraph 11 below) until
the first to occur of (i) April 1, 2007 or (ii) the date upon which this letter
is cancelled by the Bank as set forth below (the "Credit Period"). The Line
replaces the line in the identical amount made available under the Bank's prior
letter of March 28, 2005. All Loans shall mature on the last day of the Credit
Period. Any Loan hereunder shall be made in the Bank's sole and absolute
discretion, but in any event shall be subject to the following: (v) the Bank
shall have determined that money market conditions are favorable for it to
acquire loan assets, (w) the Bank shall continue to be satisfied with the
Borrower's business, financial condition and prospects and the condition and
prospects of the industry in which the Borrower is engaged, (x) the Bank shall
have received the Borrower's financial statements and other information
requested in Paragraph 5 below and any other financial information regarding the
Borrower which the Bank shall reasonably request from time to time, (y) the
Borrower and/or any guarantor hereunder defaults under any agreement with the
Bank and (z) the Borrower shall have maintained and be maintaining a
satisfactory relationship with the Bank.
(b) In the event that the Bank agrees to lend pursuant to any such
request by the Borrower, any such Loan shall be evidenced by the promissory note
enclosed with this letter (the "Note") and be subject to the conditions therein
contained and other documentation in form and substance satisfactory to the
Bank.
(c) In order to expedite future requests for Loans, the Note must be
executed by a duly authorized officer of the Borrower and returned to the Bank.
The Bank may treat all signatures on this letter, the Note and the Guaranty
(defined below) as genuine. The principal amount set forth in the Note is
specified solely to expedite any Loans the Bank may choose to make and is not a
credit line.
KSW, Inc. March 14, 2006
(d) All Loans made by the Bank hereunder shall at all times be within
the sole and absolute discretion of the Bank. This letter does not constitute
and should not be construed as constituting a commitment and in no way obligates
the Bank to lend to the Borrower at any time or from time to time hereafter. The
making of a Loan hereunder by the Bank to the Borrower at any time or from time
to time shall not be deemed a waiver of the foregoing or a consent, agreement or
commitment by the Bank to the making of any future Loan to the Borrower. This
letter and the Bank's willingness to receive and consider requests from the
Borrower for Loans hereunder are subject to cancellation by the Bank in its sole
and absolute discretion at any time without prior notice to the Borrower.
(e) Loans granted by the Bank will be in response to the Borrower's
prior written notice to the Bank (duly executed by an authorized officer of the
Borrower), such notice to be in a form satisfactory to the Bank which may be
accomplished by facsimile transmission. Each such notice shall be accompanied by
detailed information satisfactory in all respects to the Bank regarding (if
applicable) the proposed uses by the Borrower for the proceeds of any Loan then
being requested. Such notice shall be given at least one Business Day prior to
any requested Prime Based Loan, as hereinafter defined, and at least three
Business Days prior to any requested LIBOR Based Loan, as hereinafter defined.
(f) Any Loans which the Bank, in its sole discretion, decides to make
available, shall be upon such additional terms and conditions, including,
without limitation, as to amount, use of proceeds, term and others, which at the
time such Loan is made available, are acceptable to the Bank.
(g) Additionally, no fact or circumstance of any kind whatsoever,
including, without limitation, the fact that the Bank may discuss or make Loans
available from time to time, the fact that the Borrower may depend on Loans from
the Bank from time to time, or any act, practice, course of dealing or procedure
which the Bank (or any person purporting to act on behalf of the Bank) may take,
omit to take or establish or follow in connection with the Loans made hereunder,
shall create or result in any obligation on the part of the Bank at any time to
make any Loan available hereunder. Any modification to this letter or the Note
shall be made in writing and shall be executed by the Borrower and the Bank.
(h) This letter is solely for the information of the Borrower and is
not to be shown to or relied upon by third parties. This letter together with
the Note constitutes the entire understanding between the Bank and the Borrower
with respect to the Loans hereunder.
2. Clean-up Requirement. Notwithstanding the foregoing, during a
single clean up period elected by the Borrower comprised of any thirty (30)
consecutive days during the Credit Period there shall be no unsecured Loans
outstanding under the Line.
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KSW, Inc. March 14, 2006
3. Interest and Fees. The Bank shall charge and shall be entitled to
receive the following (which amounts, together with any other amounts owing by
the Borrower to the Bank, may be charged to any demand deposit account
maintained by the Borrower with the Bank): Loans shall bear interest at a rate
per annum to be elected by the Borrower in accordance with the notice provisions
in 1(d) above (at the Borrower's option subject to availability) equal to the
following: (y) the Prime Rate, as defined in Schedule I attached hereto plus one
(1.0%) percent (the "Prime Based Loans"), or (z) the LIBOR Rate, as defined in
Schedule I attached hereto, plus two and one-half (2.50%) percent per annum (the
"LIBOR Based Loan")
(a) LIBOR Based Loans shall be available for an interest period of
one month (the "Interest Period"). In no event shall any LIBOR Based Loan
Interest Period continue beyond the expiration of the Credit Period. Loans shall
be in minimum amounts of $100,000.00 with respect to Prime Based Loans and
$250,000.00 with respect to LIBOR Based Loans, or an integral multiple of
$100,000 in excess thereof. The outstanding principal balance of any Loan may be
converted from a Prime Based Loan to a LIBOR Based Loan, or from a LIBOR Based
Loan to a Prime Based Loan, provided that LIBOR Based Loans may only be
converted on the last day of the Interest Period applicable thereto and the
required prior notice must be provided in connection with the conversion of a
Prime Based Loan to a LIBOR Based Loan. Loans under the Line shall be evidenced
by a note in an amount equal to the maximum aggregate amount of Loans hereunder
(the "Note"). The Note shall contain standard provisions with regard to LIBOR
Based Loans for illegality, inability to determine rate, indemnification for
break funding, and increased cost or reduced return.
(b) Shall be computed on the basis of a 360-day year for actual days
elapsed and shall be payable monthly in arrears on the first day of each month.
(c) If the entire amount of any required principal and/or interest
payment under the Loans is not paid in full within ten (10) days after the same
is due, the Borrower shall pay to the Bank a late fee equal to five (5%) percent
of the required payment. Upon default or after maturity or after judgment has
been rendered, or if any Event of Default has occurred and is continuing, the
Borrower's right to select pricing options shall cease and the unpaid principal
of all Loans (excluding any defaulted payment of principal accruing interest in
accordance with the preceding sentence) shall, at the option of the Bank, bear
interest at a rate which is four (4) percentage points per annum greater than
the otherwise applicable rate.
(d) Loans may be prepaid in whole or in part in a minimum amount of
$250,000.00 for LIBOR Based Loans and $100,000.00 for Prime Based Loans,
provided however, that any prepayment of any LIBOR Based Loan shall be upon at
least three (3) Business days prior written notice to the Bank (which notice
shall be irrevocable) and any such prepayment shall occur only on the last day
of the Interest Period for such LIBOR Based Loan and is subject to the LIBOR
Indemnification Provisions described on Schedule I attached hereto.
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KSW, Inc. March 14, 2006
(e) An underwriting fee of $5,000.00 and all reasonable fees and
disbursements of the Bank's counsel in connection with the preparation of any
documentation, enforcement of the Bank's rights or otherwise in connection with
the Line, are due upon presentment of an invoice therefor.
4. Guarantee. By execution of this Line Letter in the space provided
below, KSW Mechanical Services, Inc. (the "Guarantor") hereby consents to this
Line Letter and the borrowing of the Loans set forth herein, and reaffirms its
continuing liability under its guarantee dated March 31, 2005, in respect of the
Loans and all documents, instruments and agreements to which it is a party,
executed pursuant thereto or in connection therewith, without offset, defense or
counterclaim (any such offset, defense or counterclaim as may exist being hereby
irrevocably waived by such guarantor).
5. Other Conditions. In addition to the foregoing, at all times
during the Credit Period and as long as any Loans remain outstanding, the
Borrower shall:
(a) Furnish to the Bank:
(i) Within ninety (90) days of the close of its fiscal year,
the consolidated balance sheets and related consolidated income
statements of the Borrower as of the last day of and for such
fiscal year, each such statement to be prepared in accordance
with GAAP consistently applied, such statements to contain
schedules of completed contracts and contracts in process and be
audited by a firm of independent certified public accountants
satisfactory to the Bank;
(ii) Within forty-five (45) days of the close of the first,
second and third quarters of the Borrower's fiscal year
throughout the Credit Period, the consolidated balance sheet and
related consolidated income statement of the Borrower as of the
last day of and for such quarterly periods, each such statement
to be prepared in accordance with GAAP, consistently applied,
such statements to contain schedules of completed contracts and
contracts in process, and reviewed by a firm of independent
certified public accountants satisfactory to the Bank;
(iii) at the same time that the financial statements are
provided in subparagraphs (i) and (ii) above, an aging of the
accounts receivable and an accounts payable report of the
Borrower, (in a format satisfactory to the Bank), each as of the
last day of and for such period. The accounts receivable aging
shall include retainage receivables and any allowance for
doubtful accounts;
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KSW, Inc. March 14, 2006
(iv) At the same time as items (i), (ii) and (iii) above are
delivered, a schedule of all construction projects in which the
Borrower is then involved and contracts which have been completed
during such period (each a "Work-in-Progress Schedule"), in form
and substance satisfactory to the Bank and including, without
limitation: (A) an identification of each project by name, and
(B) the contract price for each such Project (including any
change orders), the costs incurred to date, gross profit to date,
contract billings to date, costs and estimated earnings in excess
of billings and billings in excess of costs and estimated
earnings, and costs to complete. The Work-In-Progress Schedule
will include contract revenues earned and contract costs for the
period reported. Each such semi-annual Work-in-Progress Schedule
shall be certified by a duly authorized officer of the Borrower
as being true, correct and complete;
(v) Such other statements and reports as shall be reasonably
requested by the Bank.
(b) maintain insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Borrower operates and naming the Bank as
additional insured and loss payee thereon as its interests may appear.
6. Documentation. The Bank's obligation hereunder shall be subject to
preparation and execution of formal documentation acceptable to the Bank and its
counsel, which shall include without limitation provisions reflecting the terms
hereof, together with such representations, warranties, events of default
(including cross default provisions) and other covenants acceptable to the Bank.
There shall be no extension of credit hereunder unless and until there shall
have been executed documentation acceptable to the Bank, including without
limitation, the Line Letter, the Note and the Guarantee. The Bank shall also be
furnished upon the Bank's request with (i) the Borrower's Note, (ii) certificate
of incorporation, bylaws and good standing certificate for the Borrower and the
Guarantor, and (iii) such other items or documentation as requested by the Bank
or its counsel to fully effectuate and document the Line and the security
therefor.
7. Legal Opinion. The Borrower shall furnish the Bank upon request
with an opinion of counsel, in form and substance acceptable to the Bank and its
counsel, with respect to the Line, the Borrower and the Guarantor, including any
litigation against the Borrower or the Guarantor.
8. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Bank and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights under this Agreement without the prior written consent of the
Bank. The term "Bank" as used herein shall be deemed to include the Bank and its
successors, endorsees and assigns.
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KSW, Inc. March 14, 2006
9. Governing Law. This letter agreement and each extension of credit
hereunder shall be governed by and construed in accordance with the laws of the
State of New York and the Borrower hereby submits to the jurisdiction of the
United States Federal Courts and the Courts of the State of New York located in
any county or city as selected by the Bank within the State of New York.
IN ANY ACTION, SUIT OR PROCEEDING, IN RESPECT OF OR ARISING OUT OF THIS
AGREEMENT, THE NOTE, OR ANY OTHER DOCUMENTS RELATING TO THE LINE, THE BORROWER
AND THE BANK MUTUALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY
JURY, COUNTERCLAIM AND ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE, OR SPECIAL
DAMAGES.
10. Miscellaneous. The Bank reserves the right to sell participations
in the Line to other lenders and the Borrower agrees that its financial
statements and other information submitted to the Bank may be distributed to
other potential participants. The Bank shall have the unrestricted right at any
time and from time to time, and without the consent of or notice to the
Borrower, to grant to one or more banks or other financial institutions (each, a
"Participant") participating interests in the Bank's obligation to lend
hereunder and or any or all of the loans held by the Bank hereunder. In the
event of any such grant by the Bank of a participating interest to a
Participant, whether or not upon notice to the Borrower, the Bank shall remain
responsible for the performance of its obligations hereunder and the Borrower
shall continue to deal solely and directly with the Bank in connection with the
Bank's rights and obligations hereunder. The Bank may furnish any information
concerning the Borrower in its possession from time to time to prospective
Participants, provided that the Bank shall require any such prospective
participant to agree in writing to maintain the confidentiality of such
information. This letter shall not be assignable by operation of law or
otherwise, without the prior written consent of the Bank. Time shall be of the
essence regarding any time period stated herein. No waiver of any of the terms
and provisions hereof shall be effective unless in writing, and no waiver
furnished in writing shall be deemed a waiver of any future condition. All
notices shall be in writing. The Borrower shall indemnify the Bank and hold it
harmless against loss or damage suffered by it as a result of any claim by any
person, firm or corporation for any brokerage or other commissions alleged to be
due as a result of the transactions contemplated by this letter. This letter
supersedes all prior agreements regarding a line of credit with the Borrower.
The Bank may at any time pledge or assign all or any portion of its rights under
the loan documents to any of the twelve (12) Federal Reserve Banks organized
under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such
pledge shall release the Bank from its obligations under any of the Line
documents.
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KSW, Inc. March 14, 2006
11. Acceptance. If the foregoing is acceptable, please have the
enclosed copy of this letter signed by a duly authorized officer of the Borrower
and the Guarantor in the space provided below and returned to the Bank together
with the underwriting fee specified in Section 3(e) hereof on or before March
31, 2006. This letter shall be of no force or effect and shall be unenforceable
against the Bank: (i) unless fully signed and returned to the Bank by such date;
and (ii) unless the documentation specified in Section 6 is signed and returned
to the Bank by March 31, 2006 (the "Effective Date").
Very truly yours,
BANK OF AMERICA, N.A.
By: /s/ Russell K. Guter
-------------------------------
Russell K. Guter
Senior Vice-President
Accepted and Agreed this 14th day of March, 2006
Borrower:
KSW, INC.
By: /s/ Floyd Warkol
-------------------------------
Name: Floyd Warkol
Title: Chief Executive Officer
Guarantor:
KSW MECHANICAL SERVICES, INC.
By: /s/ Floyd Warkol
-------------------------------
Name: Floyd Warkol
Title: Chief Executive Officer
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KSW, Inc. March 14, 2006
The Guarantor indicated below hereby consents to this Line Letter and
the borrowing of the Loans set forth herein, and reaffirms its continuing
liability under its guaranty dated March 31, 2005 (guaranteeing payment, without
limitation, of the Loans) and all documents, instruments and agreements to which
it is a party executed pursuant thereto or in connection therewith, without
offset, defense or counterclaim (any such offset, defense or counterclaim as may
exist being hereby irrevocably waived by such Guarantor).
KSW MECHANICAL, INC.
By: /s/ Floyd Warkol
-------------------------------
Name: Floyd Warkol
Title: Chief Executive Officer
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KSW, Inc. March 14, 2006
SCHEDULE I: DEFINITIONS
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1. Prime Rate: The term "Prime Rate" means the variable per annum
rate of interest so designated from time to time by Fleet National Bank as its
prime rate. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate being charged to any customer. Changes in the
rate of interest resulting from changes in the Prime Rate shall take place
immediately without notice or demand of any kind.
2. LIBOR Rate: The term "LIBOR" shall mean, as applicable to any
LIBOR Based Loan, the rate per annum as determined on the basis of the offered
rates for deposits in U.S. Dollars, for a period of time comparable to such
LIBOR Based Loan which appears on the Telerate page 3750 as of 11:00 a.m. London
time on the day that is two London Banking Days preceding the first day of such
LIBOR Based Loan; provided, however, if the rate described above does not appear
on the Telerate System on any applicable interest determination date, the LIBOR
rate shall be the rate (rounded upward, if necessary, to the nearest one
hundred-thousandth of a percentage point), determined on the basis of the
offered rates for deposits in U.S. dollars for a period of time comparable to
such LIBOR Based Loan which are offered by four major banks in the London
interbank market at approximately 11:00 a.m. London time, on the day that is two
(2) London Banking Days preceding the first day of such LIBOR Based Loan as
selected by Bank. The principal London office of each of the four major London
banks will be requested to provide a quotation of its U.S. Dollar deposit
offered rate. If at least two such quotations are provided, the rate for that
date will be the arithmetic mean of the quotations. If fewer than two quotations
are provided as requested, the rate for that date will be determined on the
basis of the rates quoted for loans in U.S. dollars to leading European banks
for a period of time comparable to such LIBOR Based Loan offered by major banks
in New York City at approximately 11:00 a.m. New York City time, on the day that
is two London Banking Days preceding the first day of such LIBOR Based Loan. In
the event that Bank is unable to obtain any such quotation as provided above, it
will be deemed that LIBOR pursuant to an LIBOR Based Loan cannot be determined.
In the event that the Board of Governors of the Federal Reserve System shall
impose a Reserve Percentage with respect to LIBOR deposits of Bank, then for any
period during which such Reserve Percentage shall apply, LIBOR shall be equal to
the amount determined above divided by an amount equal to 1 minus the Reserve
Percentage. "Reserve Percentage" shall mean the maximum aggregate reserve
requirement (including all basic, supplemental, marginal and other reserves)
which is imposed on member banks of the Federal Reserve System against
"Euro-currency Liabilities" as defined in Regulation D.
3. Banking Day: The term "Banking Day" shall mean, in respect of any
city, any day on which commercial banks are open for business in that city.
Schedule I/ Page -1-
KSW, Inc. March 14, 2006
4. LIBOR Indemnification Provisions: Borrower may prepay a LIBOR
Based Loan only upon at least three (3) Banking Days prior written notice to
Bank (which notice shall be irrevocable), and any such prepayment shall occur
only on the last day of the Interest Period for such LIBOR Based Loan. Borrower
shall pay to Bank, upon request of Bank, such amount or amounts as shall be
sufficient (in the reasonable opinion of Bank) to compensate it for any loss,
cost, or expense incurred as a result of: (i) any payment of a LIBOR Based Loan
on a date other than the last day of the Interest Period for such Loan; (ii) any
failure by Borrower to borrow a LIBOR Based Loan on the date specified by
Borrower's written notice; (iii) any failure by Borrower to pay a LIBOR Based
Loan on the date for payment specified in Borrower's written notice. Without
limiting the foregoing, Borrower shall pay to Bank a "yield maintenance fee", if
any, in an amount computed as follows: The current rate for United States
Treasury securities (bills on a discounted basis shall be converted to a bond
equivalent) with a maturity date closest to the term chosen pursuant to the
LIBOR Rate Election as to which the prepayment is made, shall be subtracted from
the LIBOR in effect at the time of prepayment. If the result is zero or a
negative number, there shall be no yield maintenance fee. If the result is a
positive number, then the resulting percentage shall be multiplied by the amount
of the principal balance being prepaid. The resulting amount shall be divided by
360 and multiplied by the number of days remaining in the term chosen pursuant
to the LIBOR Rate Election as to which the prepayment is made. Said amount shall
be reduced to present value calculated by using the above referenced United
States Treasury securities rate and the number of days remaining in the term
chosen pursuant to the LIBOR Rate Election as to which prepayment is made. The
resulting amount shall be the yield maintenance fee due to Bank upon the
prepayment of a LIBOR Based Loan. Each reference in this paragraph to "LIBOR
Rate Election" shall mean the election by Borrower of the LIBOR Rate. If by
reason of an Event of Default, Bank elects to declare the Note to be immediately
due and payable, then any yield maintenance fee with respect to a LIBOR Based
Loan shall become due and payable in the same manner as though Borrower had
exercised such right of prepayment. In the event that the Bank shall be entitled
to compensation pursuant to this provision, it shall promptly notify the
Borrower of the event by reason of which it has become so entitled. The Borrower
shall pay the Bank the amount shown as due on any such notification within
fifteen (15) days after receipt thereof.
Schedule I/ Page -2-
LINE OF CREDIT NOTE
Date: March 14, 2006 Office Address: 300 Broad Hollow Road
$2,000,000.00 Melville, NY 11747
ON DEMAND for value received, the undersigned promises to pay to the order
of Bank of America, N.A., a national banking association, (hereinafter called
the Bank) at its Office in the place first above stated, or such other address
as the holder hereof may designate, in immediately available funds, the sum of
TWO MILLION AND 00/100 ($2,000,000.00) DOLLARS, or, the aggregate unpaid
principal amount of all loans made by the Bank to the undersigned hereunder,
whichever is less. The undersigned also promises to pay interest at said office
in like money on the unpaid principal amount hereof from time to time
outstanding prior to maturity at an annual rate equal to the rate(s) specified
in paragraph 1 of the attached Rider. Interest shall be payable on the 1st day
of each month commencing on May 1, 2006 and on the maturity hereof. Interest
shall be calculated on the basis of a 360 day year and actual days elapsed,
provided that any interest so calculated hereunder shall in no event be in
excess of the maximum permitted under applicable law. Upon and following demand
and/or after maturity, whether after stated maturity, acceleration or otherwise,
and/or after judgment has been rendered on this note, this note, and, to the
extent not specifically provided elsewhere to the contrary and to the extent
permitted by applicable law, any interest, fee or other amount due in connection
with the Liabilities (as hereinafter defined), shall bear interest at a per
annum rate determined daily and payable on demand which shall be 4% in excess of
the rate hereinbefore provided, but in no event in excess of the maximum rate of
interest permitted under applicable law. All payments made in connection with
this note and the documents, instruments and agreements executed pursuant hereto
or in connection herewith (collectively the "Loan Documents") shall be in lawful
money of the United States of America in immediately available funds, without
counterclaim or setoff and free and clear of, and without any deduction for, any
taxes or other payments. All payments shall be applied first to the payment of
all fees, expenses and other amounts due to the Bank (excluding principal and
interest), then to accrued interest, and the balance on account of outstanding
principal; provided, however, that after demand for payment and non-payment,
payments will be applied to the obligations of the undersigned to the Bank as
Bank determines in its sole discretion. If this note or any payment hereunder
becomes due on a day which is not a Business Day, the due date of this note or
payment shall be extended to the next succeeding Business Day, and such
extension of time shall be included in computing interest and fees in connection
with such payment. If the entire amount of principal and/or interest required to
be paid pursuant to this note or the Loan Documents is not paid in full within
ten (10) days after the same is due, whether at maturity, upon acceleration or
otherwise, if permitted by applicable law, the undersigned shall pay to the Bank
a late fee equal to five percent (5%) of the required payment. The Bank is
authorized (but not required) to charge principal and interest and all other
amounts due under this note to any account of the Borrower with the Bank when
and as it becomes due.
This Note does not constitute a commitment and the Bank shall have not
obligation to make any loan hereunder. The making of a loan, at any time, shall
not be deemed a waiver of, or consent, agreement or commitment by the Bank to
the making of any future loan to the undersigned.
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Subject to the terms of this note, the undersigned may borrow, repay and
reborrow hereunder, provided that all outstanding principal and interest and any
other amounts due hereunder are paid in full on maturity. If any loan is made
hereunder, the Bank shall record on the books and records of the Bank an
appropriate notation evidencing any such loan, the rate of interest thereon,
each repayment on account of the principal thereof, and the amount of interest
paid, and the undersigned authorizes the Bank to maintain such records or make
such notations and agrees that the amount shown on the books and records as
outstanding from time to time shall constitute the amount owing to the Bank
pursuant to this note, absent manifest error; provided, however, the failure to
make any such record or notation with respect to any loan or payment shall not
limit or otherwise affect the obligations of the undersigned hereunder. No
portion of the proceeds of any loan shall be used, in whole or in part, for the
purpose of purchasing or carrying any "margin stock" as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System.
Any loan may be prepaid in whole or in part at any time and from time to
time without premium or penalty together with interest accrued on the amount
prepaid to the date of any such prepayment.
As collateral security for the payment of this note and for all other notes
and/or obligations or Liabilities (as hereinafter defined) of the Obligors
(which term as used herein shall be deemed to include each and all of the
undersigned), or any one or more of them, now or hereafter owed to, or held by,
the Bank (and/or any entity controlling, controlled by or under common control
with the Bank, each such entity referred to herein as an "Affiliate"), the
undersigned hereby grants to the Bank a security interest in and transfers and
assigns to the Bank the following property: (i) any and all monies and/or other
property now or hereafter held by the Bank and/or any Affiliate on deposit, in
safekeeping, or otherwise, for the account of or to the credit of or belonging
to any Obligor or in which any Obligor shall have any interest and (ii) any and
all property described on the "Schedule of Specific Possessory Collateral"
together with any additions and accessions thereto and substitutions therefor
and the products and proceeds thereof. This note and all of the aforementioned
obligations and Liabilities are also secured by (a) any and all property of any
Obligor now or hereafter subject to a security agreement, pledge agreement,
assignment, hypothecation or other document granting the Bank or any Affiliate a
security interest or other lien or encumbrance with respect to the Liabilities
evidenced by this note and (b) any and all collateral described in any and all
credit accommodations, notes, loan agreements, and any other agreements and
documents, now or hereafter existing, creating, evidencing, guaranteeing,
securing or relating to any or all of the Liabilities evidenced by this note,
together with all amendments, modifications, renewals, or extensions thereof.
All of the property described in clauses (i), (ii), (a) and (b) shall be
collectively referred to herein as the "Collateral". At any time, without demand
or notice (any such notice being expressly waived by the undersigned), if
permitted by applicable law, the Bank may setoff all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of the Bank or any of its Affiliates, or in transit to
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any of them, or any part thereof and apply the same to any of the Liabilities
even though unmatured and regardless of the adequacy of any other collateral
securing the Liabilities. ANY AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS
RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE
LIABILITIES, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF ANY OBLIGOR, ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED. The term "Liabilities" shall include this
note and all other indebtedness and obligations and liabilities of any kind of
any Obligor to the Bank, now or hereafter existing, arising directly between any
Obligor and the Bank or acquired by assignment, conditionally or as collateral
security by the Bank, absolute or contingent, joint and/or several, secured or
unsecured, due or not due, contractual or tortious, liquidated or unliquidated,
arising by operation of law or otherwise, direct or indirect, including, but
without limiting the generality of the foregoing, indebtedness, obligations or
liabilities to the Bank or any Obligor as a member of any partnership,
syndicate, association or other group, and whether incurred by any Obligor as
principal, surety, endorser, guarantor, accommodation party or otherwise. Each
Obligor (if more than one, jointly and severally) hereby agrees that on demand
at any time and from time to time they will deposit and pledge with the Bank
additional collateral of a kind and of a market value required by it further to
secure any indebtedness or liabilities aforesaid.
ON DEMAND of the Bank the Liabilities shall become absolute, and
immediately due and payable without further demand or notice to any Obligor.
Whenever this note or any payment of principal or interest hereof shall become
due in accordance with any of the provisions hereof, the Bank may, but shall not
be required to (1) proceed to apply to the payment hereof the balance of any
account or accounts maintained with the Bank or any Affiliate by any Obligor and
(2) sell (without demand of performance, advertisement, notice of intention to
sell, notice of time or place of sale, notice to redeem or other notice
whatsoever, all of which are hereby waived) all or any part of the Collateral
(on all of which the Obligor does hereby give to the Bank a continuing lien,
security interest and/or right of setoff) at public or private sale or sales, or
at any exchange or broker's board, or at the Bank's office, at such prices as it
shall deem best, for cash or credit, with the right of the Bank at such sale to
purchase all or any part thereof, free from any right or equity of redemption,
applying the net proceeds of such sale to the payment of this note and of any
other liabilities, claims or obligations to the Bank of any of the Obligors, or
of any partnership in which any of the Obligors is a partner, all of whom
together with any endorser or guarantor hereby expressly agree to remain jointly
and severally liable for any deficiency. The Bank may exercise any other right
or remedy hereby granted or allowed to it by law, including but not limited to,
the rights and remedies of a Secured Party under the Uniform Commercial Code of
the Governing State (which term as used in this note shall mean the state in
which the office indicated above opposite "Office Address" is located; provided,
that, if no such office is so indicated then Governing State shall mean the
state where the Bank's office that originated the loan evidenced by this note is
located), and each and every right and remedy hereby granted to the Bank or
allowed to it by law shall be cumulative and not exclusive of one of the other
rights or remedies, and may be exercised by the Bank from time to time and as
often as may be necessary. The Bank shall have at any time in its discretion the
3
right to enforce collection and payment or liquidation of any of the Collateral
by appropriate action or proceedings, and the net amounts received therefrom,
after deducting all costs and expenses incurred in connection therewith, shall
be applied on account of this note and any other indebtedness or liabilities of
the Obligor aforesaid, all without notice to any Obligor. Any demand or notice,
if made or given, shall be sufficiently made upon or given to any Obligor if
left at or mailed to the last address of such Obligor known to the Bank or if
made or given in any other manner reasonably calculated to come to the attention
of such Obligor or the personal representatives, successors or assigns of such
Obligor, whether or not in fact received by them respectively. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Bank will give the undersigned
reasonable notice of the time and place of any public sale thereof or of the
time after which any private sale or other intended disposition is to be made.
Ten (10) days prior notice shall be deemed reasonable notice. The Bank may
assign and transfer this note to any other person, firm or corporation and may
deliver and repledge the Collateral or any part thereof to the assignee or
transferee of this note, who shall thereupon become vested with all the powers
and rights above given to the Bank in respect thereof, and the Bank shall
thereafter be forever released and discharged of and from all responsibility or
liability to the Obligor for or on account of the Collateral so delivered. If an
attorney is used to enforce or collect this note, the undersigned agrees to pay
the Bank's reasonable attorneys fees. The undersigned jointly and severally
promises to pay on demand all expenses of any nature as soon as incurred whether
in or out of court and whether incurred before or after this note shall become
due at its maturity date or otherwise and costs which the Bank may deem
necessary or proper in connection with the satisfaction of the indebtedness or
the administration, supervision, preservation, protection (including but not
limited to maintenance of adequate insurance) or of the realization upon the
Collateral. THE BANK (BY ACCEPTANCE OF THIS NOTE) AND THE UNDERSIGNED MUTUALLY
HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVE THE RIGHT TO
A TRIAL BY JURY IN RESPECT OF ANY CLAIM ARISING OUT OF, UNDER, OR IN CONNECTION
WITH THIS NOTE OR ANY OTHER LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY,
INCLUDING, WITHOUT LIMITATIONS, ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS OR ACTIONS OF THE BANK RELATING TO THE ADMINISTRATIONS OF THE LOAN OR
ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED. THE UNDERSIGNED CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
BANK WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE BANK TO ACCEPT
THIS NOTE AND MAKE THE LOAN. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR
THE BANK TO ACCEPT THIS NOTE AND ENTER INTO THE LOAN TRANSACTION EVIDENCED BY
THIS NOTE. The note shall be deemed to have been made and delivered in the
Governing State. The undersigned consents to the jurisdiction of the state and
federal courts of the Governing State in any action brought to enforce any
rights of the Bank under this note. The rights and obligations of the parties
4
under this note shall be construed and interpreted in accordance with the laws
of the Governing State (excluding the laws applicable to conflicts or choice of
law). This note and any other agreements, documents and instruments executed and
delivered pursuant to or in connection with the Liabilities contain the entire
agreement between the parties relating to the subject matter hereof and thereof.
All prior or contemporaneous promises, agreements and understandings, whether
oral or written, are deemed to be superseded by the Loan Documents, and no party
is relying on any promise, agreement or understanding not set forth in the Loan
Documents. The undersigned expressly acknowledges that the Bank has not made and
the undersigned is not relying on any oral representations, agreements or
commitments of the Bank or of any officer, employee, agent or representative
thereof. No change, modification, termination, waiver, or discharge, in whole or
in part, of this instrument shall be effective unless in writing and signed by
the party against whom such change, modification, termination, waiver, or
discharge is sought to be enforced.
All agreements between the Obligors and the Bank are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the indebtedness evidenced hereby or otherwise,
shall the amount paid or agreed to be paid to the Bank for the use or the
forbearance of the indebtedness evidenced hereby exceed the maximum permissible
rate under applicable law. As used herein, the term "applicable law" shall mean
the law in effect as of the date hereof provided, however, that in the event
there is a change in the law which results in a higher permissible rate of
interest, then this note shall be governed by such new law as of its effective
date. In this regard, it is expressly agreed that it is the intent of the
undersigned and the Bank in the execution, delivery and acceptance of this note
to contract in strict compliance with the laws of the Governing State from time
to time in effect. If, under or from any circumstances whatsoever, fulfillment
of any provision hereof or of any of the Loan Documents at the time of
performance of such provision shall be due, shall involve transcending the limit
of such validity prescribed by applicable law, then the obligation to be
fulfilled shall automatically be reduced to the limits of such validity, and if
under or from circumstances whatsoever the Bank should ever receive as interest
an amount which would exceed the highest lawful rate, such amount which would be
excessive interest shall be applied to the reduction of the principal balance
evidenced hereby and not to the payment of interest. This provision shall
control every other provision of all agreements between each and every Obligor
and the Bank.
Upon receipt of an affidavit of an officer of the Bank as to the loss,
theft, destruction or mutilation of this note or any other security document
which is not of public record, and, in the case of any such loss, theft,
destruction or mutilation, upon cancellation of such note or other security
document, the undersigned will issue, in lieu thereof, a replacement note or
other security document in the same principal amount thereof and otherwise of
like tenor.
The Bank shall have the unrestricted right at any time or from time to
time, and without the undersigned's or any Obligor's consent, to assign all or
any portion of its rights and obligations hereunder to one or more banks or
other financial institutions (each, an "Assignee"), and the undersigned and each
Obligor agrees that it shall execute, or cause to be executed, such documents,
including without limitation, amendments to this note and to any other Loan
Documents as the Bank shall deem necessary to effect the foregoing. In addition,
at the request of the Bank and any such Assignee, the undersigned shall issue
5
one or more new promissory notes, as applicable, to any such Assignee and, if
the Bank has retained any of its rights and obligations hereunder following such
assignment, to the Bank, which new promissory notes shall be issued in
replacement of, but not in discharge of, the liability evidenced by the
promissory note held by the Bank prior to such assignment and shall reflect the
amount of the respective commitments and loans held by such Assignee and the
Bank after giving effect to such assignment. Upon the execution and delivery of
the appropriate assignment documentation, amendments and any other documentation
required by the Bank in connection with such assignment, and the payment by
Assignee of the purchase price agreed to by the Bank, and such Assignee, such
Assignee shall be a payee of this note and shall have all of the rights and
obligations of the Bank hereunder (and under any and all other Loan Documents)
to the extent that such rights and obligations have been assigned by the Bank
pursuant to the assignment documentation between the Bank and such Assignee, and
the Bank shall be released from its obligations hereunder and thereunder to a
corresponding extent.
The Bank shall have the unrestricted right at any time and from time to
time, and without the consent of or notice to the undersigned or any Obligor, to
grant to one or more banks or other financial institutions (each, a
"Participant") participating interests in this note. In the event of any such
grant by the Bank of a participating interest to a Participant, whether or not
upon notice to the undersigned, the Bank shall remain responsible for the
performance of its obligations hereunder and the undersigned shall continue to
deal solely and directly with the Bank in connection with the Bank's rights and
obligations hereunder.
The Bank may furnish any information concerning the undersigned in its
possession from time to time to prospective Assignees and Participants, provided
that the Bank shall require any such prospective Assignee or Participant to
agree in writing to maintain the confidentiality of such information.
The Bank may at any time pledge all or any portion of its rights under the
Loan Documents including any portion of this note to any of the twelve (12)
Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12
U.S.C. Section 341. No such pledge or assignment or enforcement thereof shall
release the Bank from its obligations under any of the Loan Documents.
NO CLAIM MAY BE MADE BY THE UNDERSIGNED, ANY OBLIGOR OR ANY OTHER PERSON,
AGAINST THE BANK OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR
AGENTS OF THE BANK FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR, TO THE
FULLEST EXTENT PERMITTED BY LAW, FOR ANY PUNITIVE DAMAGES IN RESPECT OF ANY
CLAIM OR CAUSE OF ACTION (WHETHER BASED ON CONTRACT, TORT OR STATUTORY
LIABILITY, OR ANY OTHER GROUND) BASED ON, ARISING OUT OF OR RELATED TO THIS NOTE
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY ACT, OMISSION OR EVENT OCCURRING
IN CONNECTION THEREWITH, AND THE UNDERSIGNED (FOR ITSELF AND ON BEHALF OF EACH
OBLIGOR) HEREBY WAIVE, RELEASE AND AGREE NEVER TO SUE UPON ANY CLAIM FOR ANY
SUCH DAMAGES, WHETHER SUCH CLAIM NOW EXISTS OR HEREAFTER ARISES AND WHETHER OR
NOT IT IS NOW KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR. The undersigned hereby
6
waive presentment, demand for payment, protest, notice of protest, notice of
dishonor, and any and all other notices or demands in connection with the
delivery, acceptance, performance, default, or enforcement of this note,
consents to any and all delays, extensions of time, renewals, releases of any
Obligor and of any available security, waivers or modifications that may be
granted or consented to by the Bank with regard to the time of payment or with
respect to any other provisions of this note and agrees that no such action or
failure to act on the part of the Bank shall in any way affect or impair the
obligations of any Obligor or be construed as a waiver by the Bank of, or
otherwise affect, its right to avail itself of any remedy hereunder with the
same force and effect as if each Obligor had expressly consented to such action
or inaction upon the part of the Bank. The undersigned hereby authorize the Bank
to request its accountant or accountants to furnish such financial information
relating to such Obligor as the Bank shall from time to time desire; each such
accountant is hereby authorized to deliver such financial information to the
Bank and the undersigned hereby agree to promptly provide to the Bank all
information reasonably requested by the Bank. The invalidity or unenforceability
of any portion of this note shall in no way affect the validity or
enforceability of any other portion of this note. The undersigned hereby
authorize the Bank to date this note as of the day when the first loan evidenced
hereby is made and to complete and fill in any blank spaces in this note in
order to conform to the terms upon which any loan is granted. The undersigned
further authorize the Bank to execute and file one or more financing statements
covering the Collateral or any part thereof and the undersigned agree to bear
the cost of such filing(s). The term "Bank" as used herein shall be deemed to
include the Bank and its successors, endorsees and assigns.
The undersigned jointly and severally shall pay on demand all expenses of
the Bank in connection with the preparation, administration, default,
collection, waiver or amendment of loan terms, or in connection with the Bank's
exercise, preservation or enforcement of any of its rights, remedies or options
hereunder, including without limitation, fees of outside legal counsel or the
allocated costs of in-house legal counsel, accounting, consulting, brokerage or
other similar professional fees or expenses, and any fees or expenses associated
with travel or other costs relating to any appraisals or examinations conducted
in connection with the loan or any collateral therefor, and the amount of all
such expenses shall, until paid, bear interest at the rate applicable to
principal hereunder (including any default rate) and be an obligation secured by
any Collateral.
The undersigned agrees that the interest rate(s) specified in this note
shall be the applicable interest rate(s) due (i) on amounts outstanding
hereunder notwithstanding any rate of interest prescribed by statute from time
to time, and (ii) on any amounts outstanding on or after demand, default,
maturity or judgment, the initiation of litigation for collection, or the
initiation of any foreclosure proceeding with respect to any Collateral securing
the Liabilities.
(CONNECTICUT ONLY) COMMERCIAL TRANSACTION. THE UNDERSIGNED ACKNOWLEDGES THAT
THIS NOTE AND EACH TRANSACTIONS RELATED TO IT IS A "COMMERCIAL TRANSACTION"
WITHIN THE MEANING OF CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES, AS
AMENDED. THE UNDERSIGNED HEREBY WAIVES ANY RIGHT WHICH IT MIGHT HAVE TO NOTICE
AND A HEARING OR A PRIOR COURT ORDER, UNDER SAID CHAPTER 903A OR AS OTHERWISE
PROVIDED UNDER ANY APPLICABLE FEDERAL OR STATE LAW, IN THE EVENT THE BANK SEEKS
ANY PREJUDGMENT REMEDY IN CONNECTION WITH THIS NOTE.
7
Special provisions: Not Applicable
Schedule of Specific Possessory Collateral:
IN WITNESS WHEREOF, this instrument has been duly executed as a sealed
instrument by the undersigned on the date first above written.
CORPORATION, PARTNERSHIP, LIMITED LIABILITY COMPANY OF LIMITED LIABILITY
PARTNERSHIP SIGNORS:
Borrower:
KSW, INC.
By: /s/ Floyd Warkol
---------------------------
Name: Floyd Warkol
---------------------------
Title: Chief Executive Officer
---------------------------
8
RIDER TO
LINE OF CREDIT NOTE
This Rider to Line of Credit Note is dated March 14, 2006 and is
incorporated into and shall be deemed to amend and supplement that certain Line
of Credit Note from KSW, INC. with an address at 37-16 23rd Street, Long Island
City, New York 11101 (the "Obligor") in favor of Bank of America, N.A. a
national banking association organized and existing under the laws of the United
States of America with a usual place of business at 300 Broad Hollow Road,
Melville, New York 11747 (the "Note").
The Obligor and the Bank agree that the Note is hereby amended and
supplemented as follows:
1. Prime/LIBOR Pricing Option.
(a) The outstanding principal of all advances under the Note shall accrue
interest, at the Obligor's option, from time to time, at either: at a rate per
annum to be elected by the Obligor in accordance with the notice provisions in
contained in Section 3 below (at the Obligor's option subject to availability)
equal to the following: (y) the Prime Rate, as defined below, plus one (1.0%)
percent (the "Prime Based Loans"), or (z) the LIBOR Rate, as defined below, plus
two and one-half (2.50%) percent per annum (the "LIBOR Based Loans")
(b) LIBOR Based Loans shall be available for an interest period of one
month (the "Interest Period"). In no event shall any LIBOR Based Loan Interest
Period continue beyond the expiration of the Credit Period. Loans shall be in
minimum amounts of $100,000.00 with respect to Prime Based Loans and $250,000.00
with respect to LIBOR Based Loans, or an integral multiple of $100,000 in excess
thereof. The outstanding principal balance of any Loan may be converted from a
Prime Based Loan to a LIBOR Based Loan, or from a LIBOR Based Loan to a Prime
Based Loan, provided that LIBOR Based Loans may only be converted on the last
day of the Interest Period applicable thereto and the required prior notice must
be provided in connection with the conversion of a Prime Based Loan to a LIBOR
Based Loan. Loans under the Line shall be evidenced by a note in an amount equal
to the maximum aggregate amount of Loans hereunder (the "Note"). The Note shall
contain standard provisions with regard to LIBOR Based Loans for illegality,
inability to determine rate, indemnification for break funding, and increased
cost or reduced return.
For any principal amount due under the Note, from time to time, with respect to
which the LIBOR Rate has not been designated in accordance with the provisions
contained herein, interest shall accrue at the Prime Rate, plus the applicable
margin.
For the purposes of this Note, the following terms shall have the following
meaning:
Rider/Page -1-
"Business Day" shall mean any day other than a Saturday, Sunday, or other day on
which commercial banks in the Governing State are authorized or required to
close under the laws of the Governing State and, if the applicable day relates
to a LIBOR Based Loan or an Interest Period for a LIBOR Based Loan, the day on
which dealings in dollar deposits are also carried on in the London interbank
market and banks are open for business in London.
London Interbank Offered Rate ("LIBOR") shall mean, as applicable to any LIBOR
Based Loan, the rate per annum as determined on the basis of the offered rates
for deposits in U.S. Dollars, for a period of time comparable to such LIBOR
Based Loan which appears on the Telerate page 3750 as of 11:00 a.m. London time
on the day that is two London Banking Days preceding the first day of such LIBOR
Based Loan; provided, however, if the rate described above does not appear on
the Telerate System on any applicable interest determination date, the LIBOR
rate shall be the rate (rounded upward, if necessary, to the nearest one
hundred-thousandth of a percentage point), determined on the basis of the
offered rates for deposits in U.S. Dollars for a period of time comparable to
such LIBOR Based Loan which are offered by four major banks in the London
interbank market at approximately 11:00 a.m. London time, on the day that is two
London Banking Days preceding the first day of such LIBOR Based Loan as selected
by the Bank. The principal London office of each of the four major London banks
will be requested to provide a quotation of its U.S. Dollar deposit offered
rate. If at least two such quotations are provided, the rate for that date will
be the arithmetic mean of the quotations. If fewer than two quotations are
provided as requested, the rate for that date will be determined on the basis of
the rates quoted for loans in U.S. dollars to leading European banks for a
period of time comparable to such LIBOR Based Loan offered by major banks in New
York City at approximately 11:00 a.m. New York City time, on the day that is two
London Banking Days preceding the first day of such LIBOR Based Loan. In the
event that the Bank is unable to obtain any such quotation as provided above, it
will be deemed that LIBOR pursuant to a LIBOR Based Loan cannot be determined.
In the event that the Board of Governors of the Federal Reserve System shall
impose a Reserve Percentage with respect to LIBOR deposits of the Bank, then for
any period during which such Reserve Percentage shall apply, LIBOR shall be
equal to the amount determined above divided by an amount equal to 1 minus the
Reserve Percentage. "Reserve Percentage" shall mean the maximum aggregate
reserve requirement (including all basic, supplemental, marginal and other
reserves) which is imposed on member banks of the Federal Reserve System against
"Euro-currency Liabilities" as defined in Regulation D."
"Interest Period" shall mean with respect to any LIBOR Based Loan, any period
commencing on the date such LIBOR Based Loan is made or the date of a subsequent
interest rate selection, as the case may be, and ending one month later,
provided that: (y) any Interest Period which would otherwise end on a day which
is not a Business Day shall end on the next preceding or succeeding Business Day
as is the custom in the London interbank market to which such advance relates;
(z) each Interest Period which commences before and would otherwise end after
the Maturity Date shall end on the Maturity Date.
"Prime Rate" shall mean the variable per annum rate of interest so designated
from time to time by Fleet National Bank as its prime rate. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate being
charged to any customer. Changes in the rate of interest resulting from changes
in the Prime Rate shall take place immediately without notice or demand of any
kind.
Rider/Page -2-
2. Prepayment. Loans may be prepaid in whole or in part in a minimum amount
of $250,000.00 for LIBOR Based Loans and $100,000.00 for Prime Based Loans,
provided however, that any prepayment of any LIBOR Based Loan shall be subject
to the following LIBOR Indemnification Provisions. The Obligor shall pay to the
Bank, upon request of Bank, such amount or amounts as shall be sufficient (in
the reasonable opinion of the Bank) to compensate it for any loss, cost or
expense incurred as a result of: (i) any payment of a LIBOR Based Loan on a date
other than the last day of the Interest Period for such Loan; (ii) any failure
by the Obligor to borrow a LIBOR Based Loan on the date specified by Obligor's
written notice; (iii) any failure by the Obligor to pay a LIBOR Based Loan on
the date for payment specified in the Obligor's written notice. Without limiting
the foregoing, the Obligor shall pay to the Bank a "yield maintenance fee", if
any, in an amount computed as follows: the current rate for United States
Treasury securities (bills on a discounted basis shall be converted to a bond
equivalent) with a maturity date closest to the term chosen pursuant to the
LIBOR Rate Election as to which the prepayment is made, shall be subtracted from
the LIBOR in effect at the time of prepayment. If the result is zero or a
negative number, there shall be no yield maintenance fee. If the result is a
positive number, then the resulting percentage shall be multiplied by the amount
of the principal balance being prepaid. The resulting amount shall be divided by
360 and multiplied by the number of days remaining in the term chosen pursuant
to the LIBOR Rate Election as to which the prepayment is made. Said amount shall
be reduced to present value calculated by using the above referenced United
States Treasury securities rate and the number of days remaining in the term
chosen pursuant to the LIBOR Rate Election as to which prepayment is made. The
resulting amount shall be the yield maintenance fee due to the Bank upon the
payment of a LIBOR Based Loan. Each reference in this paragraph to "LIBOR Rate
Election" shall mean the election by Obligor of the LIBOR Rate. If by reason of
an demand for payment, the Bank elects to declare the Note to be immediately due
and payable, then any yield maintenance fee with respect to a LIBOR Based Loan
shall become due and payable in the same manner as though the Obligor had
exercised such right of prepayment.
3. Request for Advances. Loans shall be extended upon the Obligor's prior
written notice to the Bank (duly executed by an authorized officer of the
Obligor, such notice to be in a form satisfactory to the Bank which may be
accomplished by facsimile transmission. Each such notice shall be accompanied by
detailed information satisfactory in all respects to the Bank regarding (if
applicable) the proposed uses by the Obligor for the proceeds of any Loan then
being requested. Such notice shall be given at least one Business Day prior to
any requested Prime Based Loan, as hereinafter defined, and at least three
Business Days prior to any requested LIBOR Based Loan, as hereinafter defined.
Such notice shall specify whether the requested Loan is a Loan under the secured
portion of this line or the unsecured portion of same. The Bank shall not be
obligated to advance any Loans under this Line while the Obligor is in default
hereunder or the Bank has made demand for payment.
Rider/Page -3-
4. Renewal or Conversion. The Obligor may elect from time to time, to
convert all or a part of one type of loan into another type of loan or to renew
all or part of a loan by giving the Bank notice at least one (1) Business Day
before the conversion to a Prime Based Loan, and at least three (3) Business
Days before the conversion to or renewal of a LIBOR Based Loan, specifying (i)
the renewal or conversion date; (ii) the amount of the loan to be converted or
renewed; and (iii) in the case of conversions, the type of loan to be converted
to; provided that (a) the minimum principal amount of each Loan outstanding
after renewal or conversion shall be Two Hundred Fifty Thousand and 00/100
Dollars ($250,000.00) in the case of a LIBOR Based Loan; and (b) a LIBOR Based
Loan may be converted only on the last day of the Interest Period for such Loan.
At the time a LIBOR Based Loan is renewed, the Bank shall notify the Obligor of
the new interest rate. At the Bank's option, such notification may be by
telephone. All notices under this paragraph to be given by the Obligor shall be
subject to the same provisions applicable to advances and shall be irrevocable
and shall be given not later than 11:00 a.m. (Governing State time) on the day
which is not less than the number of Business Days specified above for such
notice. If the Obligor shall fail to give the Bank the notice as specified above
for the renewal or conversion of a LIBOR Based Loan prior to the end of the
Interest Period with respect thereto, such LIBOR Based Loan shall automatically
be converted to a Prime Based Loan on the last day of the Interest Period for
such Loan.
5. Miscellaneous LIBOR Provisions.
(a) If the Bank determines that the effect of an applicable law or
government regulation, guideline or order or the interpretation thereof by any
governmental authority charged with the administration thereof (such as, for
example, a change in official reserve requirements which the Bank is required to
maintain in respect of loans or deposits or other funds procured for funding
such loans) is to increase the cost to the Bank of making or continuing a LIBOR
Based Loan hereunder or to reduce the amount of any payment of principal or
interest receivable by the Bank thereon, then the Obligor shall pay to the Bank
on demand such additional amounts as the Bank may determine in its sole and
absolute discretion, to be required to compensate the Bank for such additional
costs or reduction. Any additional payment under this section will be computed
from the effective date at which such additional costs have to be borne by the
Bank. A certificate as to any additional amounts payable pursuant to this
section setting forth the basis and method of determining such amounts shall be
conclusive, absent manifest error, as to the determination by the Bank set forth
therein if made reasonably and in good faith. The Obligor shall pay any and all
amounts so certified to it by the Bank within ten (10) days of receipt of such
certificate.
(b) In the event, and on each occasion, that on the day two (2) Business
Days prior to the commencement of any Interest Period for a LIBOR Based Loan,
the Bank shall have determined (i) that dollar deposits in the amount of the
requested principal amount of such LIBOR Based Loan are not generally available
in the London interbank market, (ii) that the rate at which such dollar deposits
are being offered will not adequately and fairly reflect the cost to the Bank of
making or maintaining such LIBOR Based Loan during such Interest Period, or
(iii) that reasonable means do not exist for ascertaining the LIBOR rate, the
Bank shall, as soon as practicable thereafter, give written notice or telex
notice of such determination to the Obligor. In the event of any such
determination, until the circumstances giving rise to such notice no longer
exist, no LIBOR Based Loan will be made hereunder. Each determination by the
Bank hereunder shall be conclusive absent manifest error.
Rider/Page -4-
(c) Notwithstanding anything to the contrary contained herein, if any
change in any law or regulation or with the administration or interpretation
thereof shall make it unlawful for the Bank to make or maintain any LIBOR Based
Loan, then, by written notice to the Obligor, the Bank may: (i) declare that
LIBOR Based Loans will not thereafter be made by the Bank hereunder, whereupon
the Obligor shall be prohibited from requesting LIBOR Based Loans from the Bank
hereunder unless such declaration is subsequently withdrawn; and (ii) require
that all outstanding LIBOR Based Loans made by it be converted to Prime Based
Loans, in which event (x) all such LIBOR Based Loans shall be automatically
converted into Prime Based Loans as of the effective date of such notice as
provided for herein, and (y) all payments and prepayments of principal which
would otherwise be applied to repay the converted LIBOR Based Loans shall
instead be applied to repay the Prime Based Loans resulting from the conversion
of such LIBOR Based Loans. For purposes of this section, a notice to the Obligor
by the Bank shall be effective on the day of receipt by the Obligor.
6. Pricing Options and Interest after Demand for Payment, Maturity,
Judgment. Upon demand or after maturity or after judgment has been rendered on
the Note, the Obligor's right to select pricing options shall cease and the
unpaid principal of all advances shall, at the option of the Bank, accrue
interest at a rate which is equal to the lesser of (i) four (4) percentage
points per annum greater than the Prime Rate or (ii) the maximum interest rate
permitted by law.
This Rider shall amend and supplement the Note. In the event of a conflict
between the terms of the Note and this Rider, the terms of this Rider shall
control. The Bank and the Obligor agree that this Rider shall be annexed to the
Note to evidence the modification of its terms as set forth herein. The Obligor
further acknowledges and agrees that all of the terms and conditions of the Note
shall remain in full force and effect, except as expressly modified herein.
IN WITNESS WHEREOF, this Rider is executed as of the date and year first
above written.
WITNESS(ES): KSW, INC.
/s/ James F. Oliviero
General Counsel By: /s/ Floyd Warkol
------------------------------
Name: Floyd Warkol
Title: Chief Executive Officer
Rider/Page -5-