NEGATIVE PLEDGE AGREEMENT
Borrower: UTG, INC
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Lender: First Tennessee Bank National
Association
Financial Institutions
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THIS NEGATIVE PLEDGE AGREEMENT dated December
8,
2006, is made and executed between UTG, Inc. (“Borrower”) and First Tennessee
Bank National Association (“Lender”) on the following terms and conditions and
in connection with Lender’s extension of credit to Borrower in the original
principal amount of A) 18,000,000.00 and B) $5,000,000.00 evidenced by the
Notes
and further evidenced by Loan Agreement between Lender and Borrower (“Loan
Agreement”) of even date herewith. Unless otherwise defined in this
Agreement, capitalized terms used herein shall have the meanings ascribed
to
them in the Loan Agreement. Borrower understands and agrees that: (A) in
granting, renewing, or extending any Loans, Lender is relying upon Borrower’s
representations, warranties, and agreements as set forth in this Agreement,
and
(B) all such Loans shall be and remain subject to the terms and conditions
of
this Agreement.
TERM. This Agreement shall be effective as
of
December 8, 2006, and shall continue in full force and effect until such
time as
all of Borrower’s Loans in favor of Lender have been paid in full, including
principal, interest, costs, expenses, attorneys’ fees, and other fees and
charges, or until such time as the parties may agree in writing to terminate
this Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower
represents and warrants to Lender, as of the date of this Agreement, as of
the
date of each disbursement of loan proceeds, as of the date of any renewal,
extension or modification of any Loan, and at all times any Indebtedness
exists:
Organization. Borrower is a corporation for
profit which is, and at all times shall be, duly organized, validly existing,
and in good standing under and by virtue of the laws of the State of Delaware.
Borrower is duly authorized to transact business in all other states in which
Borrower is doing business, having obtained all necessary filings, governmental
licenses and approvals for each state in which Borrower is doing business.
Specifically, Borrower is, and at all times shall be, duly qualified as a
foreign corporation in all states in which the failure to so qualify would
have
a material adverse effect on its business or financial condition. Borrower
has
the full power and authority to own its properties and to transact the business
in which it is presently engaged or presently proposes to engage. Borrower
maintains its principal office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇.
Unless Borrower has designated otherwise in writing, this is the principal
office at which Borrower keeps its books and records including its records
concerning the Collateral. Borrower will notify Lender prior to any change
in
the location of Borrower’s state of organization or any change in Borrower’s
name. Borrower shall do all things necessary to preserve and to keep in full
force and effect its existence, rights and privileges, and shall comply with
all
regulations, rules, ordinances, statutes, orders and decrees of any governmental
or quasi-governmental authority or court applicable to Borrower and Borrower’s
business activities.
Authorization. Borrower’s execution, delivery,
and performance of this Agreement and all the Related Documents have been
duly
authorized by all necessary action by Borrower and do not conflict with,
result
in a violation of, or constitute a default under (1) any provision of (a)
Borrower’s articles of incorporation or organization, or bylaws, or (b) any
agreement or other instrument binding upon Borrower or (2) any law, governmental
regulation, court decree, or order applicable to Borrower or to Borrower’s
properties.
Financial Information. Each of Borrower’s
financial statements supplied to Lender truly and completely disclosed
Borrower’s financial condition as of the date of the statement in accordance
with generally accepted accounting principles, consistently applied (“GAAP”),
and there has been no material adverse change in Borrower’s financial condition
subsequent to the date of the most recent financial statement supplied to
Lender. Borrower has no material contingent obligations required to be disclosed
in accordance with GAAP except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes,
and
any instrument or agreement Borrower is required to give under this Agreement
when delivered will constitute legal, valid, and binding obligations of Borrower
enforceable against Borrower in accordance with their respective terms.
Properties. Except as contemplated by this
Agreement or as previously disclosed in Borrower’s financial statements or in
writing to Lender and as accepted by Lender, and except for property tax
liens
for taxes not presently due and payable, Borrower owns and has good title
to all
of Borrower’s properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such
properties as of the date of this Agreement.
NEGATIVE COVENANTS, Borrower covenants and
agrees with Lender that while this Agreement is in effect, Borrower shall
not,
without the prior written consent of Lender:
Transfer and Liens. Fail to continue to own
all
of Borrower’s assets, except for routine transfers, use or depletion in the
ordinary course of Borrower’s business. Borrower agrees not to create or grant
to any person, except Lender, any lien, security interest, encumbrance, cloud
on
title, mortgage, pledge or similar interest in any of the common stock of
American Capitol Insurance Company owned by Borrower or Borrower’s direct or
indirect subsidiaries.
Agreements. Borrower will not enter into any
agreement containing any provisions which would be violated or breached by
the
performance of Borrower’s obligations under this Agreement or in connection
herewith.
RIGHT OF SETOFF. To the extent permitted by
applicable law, Lender reserves a right of setoff in all Borrower’s accounts
with Lender (whether checking, savings, or some other account). This includes
all accounts Borrower may open in the future. However, this does not include
any
▇▇▇ or ▇▇▇▇▇ accounts, or any trust accounts for which setoff would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and all such accounts, and, at Lender’s option, to administratively freeze
all such accounts to allow Lender to protect Lender’s charge and setoff rights
provided in this paragraph.
Right to Cure. If an Event of Default, other
than a default on Indebtedness, is curable and if Borrower or Grantor, as
the
case may be, has not been given a notice of a similar default within the
preceding twelve (12) months, it may be cured if Borrower or Grantor, as
the
case may be, after receiving written notice from Lender demanding cure of
such
default: (l) cure the default within thirty (30) days; or (2) if the cure
requires more than thirty (30) days, immediately initiate steps which Lender
deems in Lender’s sole discretion to be sufficient to cure the default and
thereafter continues and completes all reasonable and necessary steps sufficient
to produce compliance as soon as reasonably practical.
MISCELLANEOUS PROVISIONS. The following
miscellaneous provisions are a part of this Agreement:
Amendments. This Agreement, together with
any
Related Documents, constitutes the entire understanding and agreement of
the
parties as to the matters set forth in this Agreement. No alteration of or
amendment to this Agreement shall be effective unless given in writing and
signed by the party or parties sought to be charged or bound by the alteration
or amendment.
Governing Law. This Agreement will be governed
by federal law applicable to Lender and, to the extent not preempted by federal
law, the laws of the State of Tennessee without regard to its conflicts of
law
provisions. This Agreement has been accepted by Lender in the State of
Tennessee.
Choice of Venue. If there is a lawsuit, Borrower
agrees upon Lender’s request to submit to the jurisdiction of the courts of
ShelbyCounty, State of Tennessee.
Attorneys’ Fees; Expenses. Borrower agrees to
pay upon demand all of Lender’s costs and expenses, including Lender’s
attorneys’ fees and Lender’s legal expenses, incurred in connection with the
enforcement of this Agreement. Lender may hire or pay someone else to help
enforce this Agreement, and Borrower shall pay the costs and expenses of
such
enforcement. Costs and expenses include Lender’s attorneys’ fees and legal
expenses whether or not there is a lawsuit, including attorneys’ fees and legal
expenses for bankruptcy proceedings (including efforts to modify or vacate
any
automatic stay or injunction), appeals and any anticipated post-judgment
collection services. Borrower also shall pay all court costs and such additional
fees as may be directed by the court.
No Waiver by Lender. Lender shall not be deemed
to have waived any rights under this Agreement unless such waiver is given
in
writing and signed by Lender. No delay or omission on the part of Lender
in
exercising any right shall operate as a waiver of such right or any other
right.
A waiver by Lender of a provision of this Agreement shall not prejudice or
constitute a waiver of Lender’s right otherwise to demand strict compliance with
that provision or any other provision of this Agreement. No prior waiver
by
Lender, nor any course of dealing between Lender and Borrower, shall constitute
a waiver of any of Lender’s rights or of any of Borrower’s obligations as to any
future transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent
is
required and in all cases such consent may be granted or withheld in the
sole
discretion of Lender.
Notices. Any notice required to be given under
this Agreement shall be given in writing, and shall be effective when actually
delivered, when actually received by telefacsimile (unless otherwise required
by
law), when deposited with a nationally recognized overnight courier, or,
if
mailed, when deposited in the United States mail, as first class, certified
or
registered mail postage prepaid, directed to the addresses shown near the
beginning of this Agreement. Any party may change its address for notices
under
this Agreement by giving formal written notice to the other parties, specifying
that the purpose of the notice is to change the party’s address. For notice
purposes, Borrower agrees to keep Lender informed at all times of Borrower’s
current address. Unless otherwise provided or required by law, if there is
more
than one Borrower, any notice given by Lender to any Borrower is deemed to
be
notice given to all Borrowers.
Successors and Assigns. All covenants and
agreements by or on behalf of Borrower contained in this Agreement or any
Related Documents shall bind Borrower’s successors and assigns and shall inure
to the benefit of Lender and its successors and assigns. Borrower shall not,
however, have the right to assign Borrower’s rights under this Agreement or any
interest therein, without the prior written consent of Lender.
DEFINITIONS. The following capitalized words
and
terms shall have the following meanings when used in this Agreement. Unless
specifically stated to the contrary, all references to dollar amounts shall
mean
amounts in lawful money of the United States of America. Words and terms
used in
the singular shall include the plural, and the plural shall include the
singular, as the context may require. Words and terms not otherwise defined
in
this Agreement shall have the meanings attributed to such terms in the Uniform
Commercial Code. Accounting words and terms not otherwise defined in this
Agreement shall have the meanings assigned to them in accordance with generally
accepted accounting principles as in effect on the date of this Agreement:
Agreement. The word “Agreement” means this
Negative Pledge Agreement, as this Negative Pledge Agreement may be amended
or
modified from time to time, together with all exhibits and schedules attached
to
this Negative Pledge Agreement from time to time.
Borrower. The word “Borrower” means UTG, Inc.
and includes all co-signers and co-makers signing the Note.
Collateral. The word “Collateral” means all
property and assets granted as collateral security for the Loans, whether
real
or personal property, whether granted directly or indirectly, whether granted
now or in the future, and whether granted in the form of a security interest,
mortgage, assignment, pledge, or any other security or lien interest
whatsoever, whether created by law, contract, or otherwise.
Event of Default. The words “Event of Default”
have the meaning set forth in the Loan Agreement.
Grantor. The word “Grantor” means each and all
of the persons or entities granting a Security Interest in any Collateral
for
the Loans, including without limitation all Borrowers granting such a Security
Interest.
Guarantor. The word “Guarantor” means any
guarantor, surety, or accommodation party of any or all of the Loans.
Indebtedness. The word “Indebtedness” means the
indebtedness evidenced by the Note or Related Documents, including all principal
and interest together with all other indebtedness and costs and expenses
for
which Borrower is responsible under this Agreement or under any of the Related
Documents.
Lender. The word “Lender” means First Tennessee
Bank National Association, its successors and assigns.
Loans. The word “Loans” means any and all loans
and financial accommodations from Lender to Borrower whether now or hereafter
existing, and however evidenced, including without limitation those loans
and
financial accommodations described herein or described on any exhibit or
schedule attached to this Agreement from time to time.
Related Documents. The words “Related Documents”
mean all promissory notes, loan agreements,
guaranties, security agreements, and
all other instruments, agreements and documents, whether now or hereafter
existing, executed in connection with the Loan.
Security Interest. The words “Security Interest”
mean, without limitation, any and all types
of collateral security, present and
future, whether in the form of a lien, assignment, pledge, or any other security
or lien interest whatsoever whether created by law, contract, or
otherwise.
BORROWER ACKNOWLEDGES HAVING READ ALL THE
PROVISIONS OF THIS NEGATIVE PLEDGE AGREEMENT AND BORROWER AGREES TO ITS TERMS.
BORROWER:
UTG, INC.
By:_/s/ ▇▇▇▇▇▇▇▇ ▇. Miller________
Title:_Sr. Vice President__________
LENDER:
FIRST TENNESSE BANK NATIONAL ASSOCIATION
By:_/s/ ▇. ▇▇▇▇▇▇
Robinson__________
Title:_Sr. Vice
President____________