(10.3)
CREDIT AGREEMENT
dated as of
July 1, 1999
between
ATLANTIC AMERICAN CORPORATION
and
WACHOVIA BANK, N.A.
TABLE OF CONTENTS
CREDIT AGREEMENT
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions...................................................1
SECTION 1.02. Accounting Terms and Determinations..........................12
SECTION 1.03. Use of Defined Terms.........................................13
SECTION 1.04. Terminology..................................................13
SECTION 1.05. References...................................................13
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Make Loans....................................13
SECTION 2.02. Method of Borrowing Tranche B Loan...........................13
SECTION 2.03. Notes........................................................14
SECTION 2.04. Repayment of the Loans.......................................14
SECTION 2.05. Interest Rates...............................................15
SECTION 2.06. Fees.........................................................15
SECTION 2.07. Optional Prepayments.........................................16
SECTION 2.08. General Provisions as to Payments............................16
SECTION 2.09. Computation of Interest......................................17
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to Funding on Closing Date........................17
SECTION 3.02. Other Conditions to Funding Tranche B Loan...................18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power................................19
SECTION 4.02. Corporate and Governmental Authorization; No Contravention...19
SECTION 4.03. Binding Effect...............................................19
SECTION 4.04. Financial Information........................................19
SECTION 4.05. Litigation...................................................20
SECTION 4.06. Compliance with ERISA........................................20
SECTION 4.07. Taxes........................................................20
SECTION 4.08. Subsidiaries.................................................20
SECTION 4.09. Not an Investment Company....................................21
SECTION 4.10 Public Utility Holding Company Act............................21
SECTION 4.11. Ownership of Property; Liens.................................21
SECTION 4.12. No Default...................................................21
SECTION 4.13. Full Disclosure..............................................21
SECTION 4.14. Environmental Matters.......................................21
SECTION 4.15. Compliance with Laws.........................................22
SECTION 4.16. Capital Stock................................................22
SECTION 4.17. Margin Stock.................................................22
SECTION 4.18. Insolvency...................................................22
SECTION 4.19. Shareholder Debt.............................................22
ARTICLE V
COVENANTS
SECTION 5.01. Information..................................................23
SECTION 5.02. Inspection of Property, Books and Records....................24
SECTION 5.03. Ratio of Funded Debt to Consolidated Total Capitalization....25
SECTION 5.04. Restricted Payments.........................................25
SECTION 5.05. Ratio of Cash Flow to Debt Service...........................25
SECTION 5.06. Capital Expenditures.........................................25
SECTION 5.07. Loans or Advances............................................25
SECTION 5.08. Investments..................................................26
SECTION 5.09. Negative Pledge..............................................26
SECTION 5.10. Maintenance of Existence.....................................26
SECTION 5.11. Dissolution..................................................26
SECTION 5.12. Consolidations, Mergers and Sales of Assets..................26
SECTION 5.13. Use of Proceeds..............................................27
SECTION 5.14. Compliance with Laws; Payment of Taxes.......................27
SECTION 5.15. Insurance....................................................27
SECTION 5.16. Change in Fiscal Year........................................27
SECTION 5.17. Maintenance of Property......................................27
SECTION 5.18. Environmental Notices........................................28
SECTION 5.19. Environmental Matters........................................28
SECTION 5.20. Environmental Release........................................28
SECTION 5.21 Additional Covenants, Etc.....................................28
SECTION 5.22. Transactions with Affiliates.................................29
SECTION 5.23. Modification of Shareholder Debt.............................29
SECTION 5.24. Maintenance of Authorized Control Level Risk-Based Capital...29
SECTION 5.25. Maintenance of Statutory Surplus.............................29
SECTION 5.26. Limitation on Debt...........................................29
SECTION 5.27. Minimum Investment in NAIC Rated Bonds; Maximum Investment in
Investment Properties.................................................30
SECTION 5.28. Debt Conversion Documents....................................30
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default............................................30
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Notices......................................................33
SECTION 7.02. No Waivers...................................................34
SECTION 7.03. Expenses; Documentary Taxes; Indemnification; Increased Cost
and Reduced Return....................................................34
SECTION 7.04. CONSEQUENTIAL DAMAGES........................................35
SECTION 7.05. Setoffs......................................................35
SECTION 7.06. Amendments and Waivers.......................................35
SECTION 7.07. Successors and Assigns.......................................35
SECTION 7.08. Confidentiality..............................................37
SECTION 7.09. Survival of Certain Obligations..............................37
SECTION 7.10. Georgia Law..................................................37
SECTION 7.11. Severability.................................................37
SECTION 7.12. Interest.....................................................37
SECTION 7.13. Interpretation...............................................38
SECTION 7.14. Consent to Jurisdiction......................................38
SECTION 7.15. Counterparts.................................................38
EXHIBIT A... Tranche A Note
EXHIBIT B Form of Opinion of Counsel for the Borrower and the
Debt Holders
EXHIBIT C... Form of Closing Certificate of Borrower
EXHIBIT D... Form of Secretary's Certificate
EXHIBIT E... Form of Compliance Certificate
EXHIBIT F... Form of Assignment and Acceptance
EXHIBIT G... Form of Notice of Borrowing
CREDIT AGREEMENT
AGREEMENT dated as of July 1, 1999 between ATLANTIC AMERICAN
CORPORATION and WACHOVIA BANK, N.A.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this Section 1.01
shall, for all purposes of this Agreement and any amendment hereto (except as
herein otherwise expressly provided or unless the context otherwise requires),
have the meanings set forth herein:
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Schedule 2.05(c).
"Affiliate" of any Person means (i) any other Person which directly,
or indirectly through one or more intermediaries, controls such Person, (ii) any
other Person which directly, or indirectly through one or more intermediaries,
is controlled by or is under common control with such Person, or (iii) any other
Person of which such Person owns, directly or indirectly, 20% or more of the
common stock or equivalent equity interests. As used herein, the term "control"
means possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Aggregate Value of NAIC Rated Bonds" shall mean the aggregate cost,
without duplication, of all bonds rated "2" or better by NAIC, owned by the
Borrower or any Consolidated Subsidiary and held as investments, as shown on the
books and records of the Borrower or such Consolidated Subsidiary and as
determined in accordance with GAAP.
"Aggregate Value of Total Investments" shall mean the aggregate
cost, without duplication, of all bonds, redeemable preferred stocks,
non-redeemable preferred stocks, common stocks, mortgage loans, loans to policy
holders, other long term investments, short term investments and other
properties of the Borrower or any Consolidated Subsidiary held for investment
purposes, as shown on the books and records of the Borrower or such Consolidated
Subsidiary and as determined in accordance with GAAP.
"Agreement" means this Credit Agreement, together with all
amendments and supplements hereto.
"Amortization" means for any period the sum of all amortization
expenses of the Borrower and its Consolidated Subsidiaries for such period,
determined in accordance with GAAP.
"Annual Statement" means, with respect to any Insurance Subsidiary,
the annual report, statement or other filing made by such Insurance Subsidiary
with the insurance department or other governmental authority of the state in
which such Insurance Subsidiary is formed or incorporated which regulates,
supervises or otherwise has jurisdiction over such Insurance Subsidiary, all in
accordance with statutory accounting principles.
"Applicable Commitment Fee Rate" has the meaning set forth in
Section 2.06(a).
"Applicable Margin" has the meaning set forth in Section 2.05(a).
"Assignee" has the meaning set forth in Section 8.07(c).
"Assignment and Acceptance" means an Assignment and Acceptance
executed in accordance with Section 8.07(c) in the form attached hereto as
Exhibit F.
"Authorized Control Level Risk-Based Capital" means, at any time and
as to any Insurance Subsidiary, the amount of "Authorized Control Level
Risk-Based Capital" as set forth or reflected on the most recent Annual
Statement or Quarterly Statement of such Insurance Subsidiary, prepared in
accordance with statutory accounting principles.
"Authority" has the meaning set forth in Section 7.02.
"Bank" means Wachovia Bank, N.A., a national banking association,
and its successors and assigns.
"Base Rate" means for any day, the rate per annum equal to the
higher as of such day of (i) the Prime Rate, and (ii) one-half of one percent
above the Federal Funds Rate for such day. For purposes of determining the Base
Rate for any day, changes in the Prime Rate and the Federal Funds Rate shall be
effective on the date of each such change.
"Base Rate Loan" means a Loan which bears or is to bear interest at
a rate based upon the Base Rate.
"Book Value" means with respect to any asset, the cost of such
asset, minus accumulated depreciation or amortization, if any, with respect to
such asset.
"Borrower" means Atlantic American Corporation, a Georgia
corporation, and its successors and permitted assigns.
"Borrowing" means a borrowing hereunder consisting of a Loan made to
the Borrower by the Bank. A Borrowing is a "Base Rate Borrowing" if such Loan is
a Base Rate Loan and a "Euro-Dollar Borrowing" if such Loan is a Euro-Dollar
Loan.
"Capital Expenditures" means for any period the sum of all capital
expenditures incurred during such period by the Borrower and its Consolidated
Subsidiaries, as determined in accordance with GAAP.
"Capital Stock" means any redeemable or nonredeemable capital stock
of the Borrower or any Consolidated Subsidiary (to the extent issued to a Person
other than the Borrower), whether common or preferred.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. ss.9601 et seq. and its implementing
regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Information System established pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in Section 7.02.
"Closing Certificate" has the meaning set forth in Section
3.01(d).
"Closing Date" means July 1, 1999.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code. Any reference to any provision of the Code shall
also be deemed to be a reference to any successor provision or provisions
thereof.
"Commitment" means $30,000,000, as such amount may be reduced from
time to time pursuant to Section 2.07.
"Commitment Fee Determination Date" has the meaning set forth in
Section 2.06(a).
"Commitment Fee Payment Date" means each March 31, June 30,
September 30 and December 31.
"Compliance Certificate" has the meaning set forth in Section
5.01(c).
"Consolidated Interest Expense" for any period means interest,
whether expensed or capitalized, in respect of Debt of the Borrower and any of
its Consolidated Subsidiaries outstanding during such period.
"Consolidated Net Income" means, for any period, the Net Income of
the Borrower and its Consolidated Subsidiaries determined on a consolidated
basis, but excluding (i) extraordinary gains and (ii) any equity interests of
the Borrower or any Subsidiary in the unremitted earnings of any Person that is
not a Subsidiary.
"Consolidated Subsidiary" means at any date with respect to any
Person, any Subsidiary or other entity the accounts of which, in accordance with
GAAP, would be consolidated with those of such Person in its consolidated
financial statements as of such date; provided, that for purposes of this
Agreement, American Southern Insurance Company and its Subsidiaries shall be
deemed to be "Consolidated Subsidiaries" of the Borrower as of the Closing Date.
"Consolidated Tangible Net Worth" means, at any time, Stockholders'
Equity, less the sum of the value, as set forth or reflected on the most recent
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries,
prepared in accordance with GAAP, of
(A) Any surplus resulting from any write-up of assets
subsequent to December 31, 1998 (other than the usual and customary valuation of
the investment portfolio of the Borrower or any Consolidated Subsidiary from
time to time);
(B) All assets which would be treated as intangible assets for
balance sheet presentation purposes under GAAP, including without limitation
goodwill (whether representing the excess of cost over book value of assets
acquired, or otherwise), trademarks, tradenames, copyrights, patents and
technologies, and unamortized debt discount and expense; provided, however,
deferred acquisition costs, as determined in accordance with GAAP, shall not be
deducted from Stockholders Equity;
(C) To the extent not included in (B) of this definition, any
amount at which shares of capital stock of the Borrower appear as an asset on
the balance sheet of the Borrower and its Consolidated Subsidiaries;
(D) To the extent not included in (B) of this definition,
deferred expenses, other than deferred acquisition costs, as determined in
accordance with GAAP; and
(E) Loans or advances to stockholders, directors, officers or
employees.
"Consolidated Total Assets" means, at any time, the total assets of
the Borrower and its Consolidated Subsidiaries, determined on a consolidated
basis, as set forth or reflected on the most recent consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries, prepared in accordance with
GAAP.
"Consolidated Total Capitalization" means, at any time, the sum of
(i) Consolidated Tangible Net Worth, and (ii) Funded Debt.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under capital leases,
(v) all obligations of such Person to reimburse any bank or other Person in
respect of amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a corporation),
(vii) all obligations (absolute or contingent) of such Person to reimburse any
bank or other Person in respect of amounts paid under a letter of credit or
similar instrument, (viii) all Debt of others secured by a Lien on any asset of
such Person, whether or not such Debt is assumed by such Person, and (ix) all
Debt of others Guaranteed by such Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived in writing, become an Event of Default.
"Default Rate" means, on any day, the sum of 2% plus the then
highest interest rate (including the Applicable Margin) which may be applicable
to any Loans hereunder (irrespective of whether any such type of Loans are
actually outstanding hereunder).
"Depreciation" means for any period the sum of all depreciation
expenses of the Borrower and its Consolidated Subsidiaries for such period, as
determined in accordance with GAAP.
"Dividends" means for any period the sum of all dividends paid or
declared during such period in respect of any Capital Stock and Redeemable
Preferred Stock (other than dividends paid or payable in the form of additional
Capital Stock).
"Dollars" or "$" means dollars in lawful currency of the United
States of America.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Georgia are authorized or required by law
to close.
"EBITDA" for any period means the sum of (i) Consolidated Net
Income, (ii) taxes on income, (iii) Consolidated Interest Expense, (iv)
Depreciation and (v) Amortization, all determined with respect to the Borrower
and its Consolidated Subsidiaries on a consolidated basis for such period and in
accordance with GAAP. In determining EBITDA for any period, (i) any Consolidated
Subsidiary acquired during such period by the Borrower or any other Consolidated
Subsidiary shall be included on a pro forma, historical basis as if it had been
a Consolidated Subsidiary during such entire period and (ii) any amounts which
would be included in a determination of EBITDA for such period with respect to
assets acquired during such period by the Borrower or any Consolidated
Subsidiary shall be included in the determination of EBITDA for such period and
the amount thereof shall be calculated on a pro forma, historical basis as if
such assets had been acquired by the Borrower or such Consolidated Subsidiary
prior to the first day of such period.
"Environmental Authority" means any foreign, federal, state, local
or regional government that exercises any form of jurisdiction or authority
under any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for conducting
the business of the Borrower or any Subsidiary required by any Environmental
Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment, including, without limitation, ambient air, surface water,
groundwater or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"Environmental Liabilities" means any liabilities, whether accrued,
contingent or otherwise, arising from and in any way associated with any
Environmental Requirements.
"Environmental Notices" means written notice from any Environmental
Authority of possible or alleged noncompliance with or liability under any
Environmental Requirement, including without limitation any complaints,
citations, demands or requests from any Environmental Authority for correction
of any violation of any Environmental Requirement or any investigations
concerning any violation of any Environmental Requirement.
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or
under any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to the Borrower, any Subsidiary
or the Properties, including but not limited to any such requirement under
CERCLA or similar state legislation and all federal, state and local laws,
ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, or any successor law. Any reference to any
provision of ERISA shall also be deemed to be a reference to any successor
provision or provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business Day on which
dealings in Dollar deposits are carried out in the London interbank market.
"Euro-Dollar Loan" means a Loan which bears or is to bear interest
at a rate based upon the London Interbank Offered Rate.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.05(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Fair Market Value" means, with respect to any asset, the greater
of: (i) the Gross Proceeds received by the Borrower or any Subsidiary in
connection with the sale, transfer or other disposition by the Borrower or such
Subsidiary (as the case may be) of such asset, or (ii) the Book Value of such
asset.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next higher 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if the day for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate charged to the Bank on such day on such transactions as determined by the
Bank.
"Financing" shall mean (i) any transaction or series of transactions
for the incurrence by the Borrower of any Debt or for the establishment of a
commitment to make advances which would constitute Debt of the Borrower, which
Debt is not by its terms subordinate and junior to other Debt of the Borrower,
(ii) an obligation incurred in a transaction or series of transactions in which
assets of the Borrower are sold and leased back, or (iii) a sale of accounts or
other receivables or any interest therein, other than a sale or transfer of
accounts or receivables attendant to a sale permitted hereunder of an operating
division.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"Forfeiture Proceeding" means any action, proceeding or
investigation affecting the Borrower or any of its Subsidiaries before any
court, governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, if such action, proceeding or
investigation could result in (i) the seizure or forfeiture of any of their
assets, revenues or share capital, which when the Fair Market Value of such
assets, revenues or share capital subject to such seizure or forfeiture when
aggregated with the Fair Market Value of all other assets, revenues and share
capital of the Borrower and its Subsidiaries seized or forfeited since the
Closing Date exceeds $1,000,000, or (ii) a Material Adverse Effect.
"Funded Debt" means, at any date, the total Debt of the Borrower and
its Subsidiaries determined on a consolidated basis.
"GAAP" means generally accepted accounting principles applied on a
basis consistent with those which, in accordance with Section 1.02, are to be
used in making the calculations for purposes of determining compliance with the
terms of this Agreement.
"Gross Proceeds" means any and all cash, plus the face amount of any
and all notes, bonds, debentures, instruments and evidences of indebtedness, and
the value of any other property, of whatever kind or nature, received by the
Borrower or any Subsidiary in connection with the sale, transfer or other
disposition by the Borrower or such Subsidiary (as the case may be) of any of
its assets.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to provide collateral security, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Materials" includes, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. ss.6901 et seq. and its implementing regulations and amendments,
or in any applicable state or local law or regulation, (b) any "hazardous
substance", "pollutant" or "contaminant", as defined in CERCLA, or in any
applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including crude oil or any fraction thereof,
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976, or
in any applicable state or local law or regulation and (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"Insurance Subsidiaries" means those Persons set forth on Schedule
4.08A attached hereto, together with their respective successors, and any other
Subsidiary which at any time after the Closing Date is engaged principally in
the property and casualty insurance business, the accident and health insurance
business or the life insurance business or any combination thereof.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the first, second, third or sixth month
thereafter, as the Borrower may elect in the applicable Notice of Borrowing;
provided that:
(a) any Interest Period (subject to clause (c) below) which would
otherwise end on a day which is not a Euro-Dollar Business Day shall be extended
to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall, subject
to clause (c) below, end on the last Euro-Dollar Business Day of the appropriate
subsequent calendar month; and
(c) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
(2) with respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing and ending 30 days thereafter; provided that:
(a) any Interest Period (subject to clause (b) below) which would
otherwise end on a day which is not a Domestic Business Day shall be extended to
the next succeeding Domestic Business Day; and
(b) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
"Investment" means any investment in any Person, whether by means of
purchase or acquisition of obligations or securities of such Person, capital
contribution to such Person, loan or advance to such Person, making of a time
deposit with such Person, Guarantee or assumption of any obligation of such
Person or otherwise.
"Investment Properties" for any period means all real property owned
by the Borrower and its Consolidated Subsidiaries during the applicable period;
provided, however, the definition of Investment Properties shall exclude any
real property if: (i) at least fifty percent (50%) of the net leasable area with
respect to such real property is occupied by the Borrower and/or its
Subsidiaries; and (ii) the primary use of such real property is the operation of
the Borrower's and/or Subsidiaries' respective businesses.
"Lending Office" means, as to the Bank, its office located at its
address set forth on the signature pages hereof (or identified on the signature
pages hereof as its Lending Office) or such other office as the Bank may
hereafter designate as its Lending Office by notice to the Borrower.
"Lien" means, with respect to any asset, any mortgage, deed to
secure debt, deed of trust, lien, pledge, charge, security interest, security
title, preferential arrangement which has the practical effect of constituting a
security interest or encumbrance, servitude or encumbrance of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law, or by
any agreement, contingent or otherwise, to provide any of the foregoing. For the
purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Loan" means a Base Rate Loan or a Euro-Dollar Loan and "Loans"
means Base Rate Loans or Euro-Dollar Loans, or any or all of them, as the
context shall require.
"Loan Documents" means this Agreement, the Note, the Pledge
Agreement, any other document evidencing, relating to or securing the Loans, and
any other document or instrument delivered from time to time in connection with
this Agreement, the Notes or the Loans, as such documents and instruments may be
amended or supplemented from time to time.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.05(c).
"Margin Stock" means "margin stock" as defined in Regulation T, U or
X of the Board of Governors of the Federal Reserve System, as in effect from
time to time, together with all official rulings and interpretations issued
thereunder.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of (a) the
financial condition, operations, business or properties of the Borrower and its
Consolidated Subsidiaries taken as a whole, (b) the rights and remedies of the
Bank under the Loan Documents, or the ability of the Borrower to perform its
obligations under the Loan Documents to which it is a party, as applicable, or
(c) the legality, validity or enforceability of any Loan Document.
"Mission Critical Equipment" means equipment of the Borrower and its
Subsidiaries which, if such systems failed to operate, would cause a Material
Adverse Effect.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"NAIC" means the National Association of Insurance Commissioners.
"Net Income" means, as applied to any Person for any period, the
aggregate amount of net income of such Person, after taxes, for such period, as
determined in accordance with GAAP.
"Note" means the promissory note of the Borrower, substantially in
the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay
the Loans.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Officer's Certificate" has the meaning set forth in Section
3.01(e).
"Participant" has the meaning set forth in Section 8.07(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means the acquisition by the Borrower or any
Subsidiary of shares of capital stock of any Person or assets from any Person,
if: (A) in the case of the acquisition of shares of capital stock of any Person,
immediately after giving effect to such acquisition (i) such Person is a
Consolidated Subsidiary; (ii) the Borrower controls such Person directly or
indirectly through a Subsidiary; (iii) no Default shall have occurred and be
continuing; (iv) the line or lines of business engaged in by such Person are the
same or substantially the same as the lines of business engaged in by the
Borrower and its Subsidiaries on the Closing Date; and (v) such acquisition is
made on a negotiated basis with the approval of the Board of Directors of the
Person to be acquired and, if necessary, the shareholders of the Person to be
acquired; and (B) in the case of the acquisition of assets from any Person,
immediately after giving effect to such acquisition: (i) the assets acquired by
the Borrower or such Subsidiary shall be used by the Borrower or such Subsidiary
in a line of business the same or substantially the same as the lines of
business engaged in by the Borrower and its Subsidiaries on the Closing Date;
and (ii) no Default shall have occurred and be continuing.
"Person" means an individual, a corporation, a partnership
(including without limitation, a joint venture), an unincorporated association,
a trust or any other entity or organization, including, but not limited to, a
government or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding 5 plan years made contributions.
"Pledge Agreement" means the Pledge Agreement dated as of June 24,
1999 executed by the Borrower for the benefit of the Bank, as the same may be
amended, restated, supplemented or otherwise modified from time to time,
pursuant to which the Borrower has pledged to the Bank the stock or other equity
interests it holds in the following Subsidiaries: Georgia Casualty & Surety
Company and Bankers Fidelity Life Insurance Company, and agrees to pledge any
stock or equity interests it obtains in the future with respect to existing
Subsidiaries or Persons which become Subsidiaries, as more fully set forth
therein.
"Prime Rate" refers to that interest rate so denominated and set by
the Bank from time to time as an interest rate basis for borrowings. The Prime
Rate is but one of several interest rate bases used by the Bank. The Bank lends
at interest rates above and below the Prime Rate.
"Properties" means all real property owned, leased or otherwise used
or occupied by the Borrower or any Subsidiary, wherever located.
"Quarterly Statement" means, with respect to any Insurance
Subsidiary, the quarterly report, statement or other filing made by such
Insurance Subsidiary with the insurance department or other governmental
authority of the state in which such Insurance Subsidiary is formed or
incorporated which regulates, supervises or otherwise has jurisdiction over such
Insurance Subsidiary, all in accordance with statutory accounting principles.
"Rate Determination Date" has the meaning set forth in Section
2.05(a).
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Termination Date either
(i) mandatorily redeemable (by sinking fund or similar payments or otherwise) or
(ii) redeemable at the option of the holder thereof.
"Reimbursement Agreement" means the Reimbursement and Security
Agreement dated as of June 1, 1999, between the Borrower and the Bank, as
amended, restated, supplemented or otherwise modified from time to time.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the Borrower's capital stock (except dividends payable solely in
shares of its capital stock) or (ii) any payment on account of the purchase,
redemption, retirement or acquisition of (a) any shares of the Borrower's
capital stock (except shares acquired upon the conversion thereof into other
shares of its capital stock) or (b) any option, warrant or other right to
acquire shares of the Borrower's capital stock.
"Risk-Based Capital" means, at any time and for any Insurance
Subsidiary, the amount of "Risk-Based Capital" as set forth or reflected on the
most recent Annual Statement or Quarterly Statement of such Insurance
Subsidiary, prepared in accordance with statutory accounting principles.
"Statutory Surplus" means, at any time for any Insurance Subsidiary,
the "Statutory Surplus" of such Insurance Subsidiary as set forth or reflected
on the most recent Annual Statement or Quarterly Statement of such Insurance
Subsidiary, prepared in accordance with statutory accounting principles.
"Stockholders' Equity" means, at any time, the shareholders' equity
of the Borrower and its Consolidated Subsidiaries, as set forth or reflected on
the most recent consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries prepared in accordance with GAAP, but excluding any Redeemable
Preferred Stock of the Borrower or any of its Consolidated Subsidiaries.
Shareholders' equity generally would include, but not be limited to (i) the par
or stated value of all outstanding Capital Stock, (ii) capital surplus, (iii)
retained earnings, and (iv) various deductions such as (A) purchases of treasury
stock, (B) valuation allowances, (C) receivables due from an employee stock
ownership plan, (D) employee stock ownership plan debt guarantees, and (E)
translation adjustments for foreign currency transactions.
"Subsidiary" means as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person; provided,
that, for purposes of this Agreement, Association Casualty Insurance Company and
its Subsidiaries shall be deemed to be "Subsidiaries" of the Borrower as of the
Closing Date.
"Taxes" has the meaning set forth in Section 2.11(c).
"Termination Date" means July 1, 2004.
"Third Parties" means all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the ordinary
course of the Borrower's or any Subsidiary's business and on a temporary basis.
"Transferee" has the meaning set forth in Section 8.07(d).
"Unused Commitment" means at any date an amount equal to the
Commitment less the aggregate outstanding principal amount of the Loans.
"Wholly Owned Subsidiary" means any Subsidiary all of the shares of
capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the Borrower.
"Y2K Plan" has the meaning set forth in Section 4.19.
"Year 2000 Compliant and Ready" as used herein means that (a) the
Borrower's and its Subsidiaries' Mission Critical Equipment with respect to the
operation of its business and its general business plan will: (i) handle date
information involving any and all dates before, during and/or after January 1,
2000, including accepting input, providing output and performing date
calculations in whole or in part; (ii) operate, accurately without interruption
on and in respect of any and all dates before, during and/or after January 1,
2000 and without any change in performance; and (iii) store and provide date
input information without creating any ambiguity as to the century, and (b) the
Borrower has developed alternative plans to ensure business continuity in the
event of the failure of any or all of items (i) through (iii) above.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all terms of an accounting character used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with (a) in the case of the Borrower and each Subsidiary that is not
an Insurance Subsidiary, GAAP, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants or otherwise
required by a change in GAAP) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Bank, unless with respect to any such change concurred in by the
Borrower's independent public accountants or required by GAAP, in determining
compliance with any of the provisions of this Agreement or any of the other Loan
Documents: (i) the Borrower shall have objected to determining such compliance
on such basis at the time of delivery of such financial statements, or (ii) the
Bank shall so object in writing within 30 days after the delivery of such
financial statements, in either of which events such calculations shall be made
on a basis consistent with those used in the preparation of the latest financial
statements as to which such objection shall not have been made (which, if
objection is made in respect of the first financial statements delivered under
Section 5.01 hereof, shall mean the financial statements referred to in Section
4.04), and (b) in the case of any Insurance Subsidiary, statutory accounting
principles as in effect from time to time, applied on a consistent basis.
SECTION 1.03. Use of Defined Terms. All terms defined in this
Agreement shall have the same meanings when used in any of the other Loan
Documents, unless otherwise defined therein or unless the context shall
otherwise require.
SECTION 1.04. Terminology. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural and the plural
shall include the singular. Titles of Articles and Sections in this Agreement
are for convenience only, and neither limit nor amplify the provisions of this
Agreement.
SECTION 1.05. References. Unless otherwise indicated,
references in this Agreement to "Articles", "Exhibits", "Schedules", and
"Sections" are references to articles, exhibits, schedules and sections
hereof.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Make Loans. The Bank hereby agrees, on
the terms and conditions set forth herein, to make Loans to the Borrower from
time to time before the Termination Date; provided that, immediately after each
such Loan is made, the aggregate outstanding principal amount of the Loans will
not exceed the Commitment. Each Borrowing shall be in an aggregate principal
amount of $500,000 or any larger multiple of $100,000 (except that any Borrowing
may be in the amount of the Unused Commitment). Within the foregoing limits, the
Borrower may borrow under this Section, repay or, to the extent permitted by
Section 2.09, prepay Loans and reborrow under this Section at any time before
the Termination Date.
SECTION 2.02. Method of Borrowing Loans. (a) The Borrower shall give
the Bank notice in the form attached hereto as Exhibit G (a "Notice of
Borrowing") prior to 11:00 A.M. (Atlanta, Georgia time) on or before the date of
each Base Rate Borrowing and at least 3 Euro-Dollar Business Days before each
Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Base Rate Borrowing and a Euro-Dollar Business Day in the
case of a Euro-Dollar Borrowing;
(ii) the aggregate amount of each Borrowing;
(iii) whether the Loan comprising such Borrowing is a Base Rate Loan
or a Euro-Dollar Loan; and
(iv) in the case of a Euro-Dollar Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the definition
of Interest Period.
(b) If the Bank makes a new Loan hereunder on a day on which the
Borrower is to repay all or any part of an outstanding Loan, the Bank shall
apply the proceeds of the new Loan to make such repayment and only an amount
equal to the difference (if any) between the amount being borrowed and the
amount being repaid shall be made available by the Bank to the Borrower or
remitted by the Borrower to the Bank as provided in Section 2.11, as the case
may be.
(c) Notwithstanding anything to the contrary contained in this
Agreement, no Euro-Dollar Borrowing may be made if there shall have occurred a
Default or an Event of Default, which Default or Event of Default shall not have
been cured or waived in writing.
(d) In the event that a Notice of Borrowing fails to specify whether
the Loan comprising such Borrowing is to be a Base Rate Loan or a Euro-Dollar
Loan, such Loan shall be made as a Base Rate Loan. If the Borrower is otherwise
entitled under this Agreement to repay any Loan maturing at the end of an
Interest Period applicable thereto with the proceeds of a new Borrowing, and the
Borrower fails to repay such Loan using its own moneys and fails to give a
Notice of Borrowing in connection with such new Borrowing, a new Borrowing shall
be deemed to be made on the date such Loan matures in an amount equal to the
principal amount of the Loan so maturing, and the Loan comprising such new
Borrowing shall be a Base Rate Loan.
(e) Notwithstanding anything to the contrary contained herein, (i)
there shall not be more than [7] different Interest Periods outstanding at the
same time (for which purpose Interest Periods described in different numbered
clauses of the definition of the term "Interest Period" shall be deemed to be
different Interest Periods even if they are coterminous) and (ii) the proceeds
of any Base Rate Borrowing shall be applied first to repay the unpaid principal
amount of all Base Rate Loans (if any) outstanding immediately before such Base
Rate Borrowing.
SECTION 2.03. Notes. (a) The Loans shall be evidenced by the
Note payable to the order of the Bank for the account of its Lending Office
in an amount equal to the original principal amount of the Commitment.
(b) The Bank shall record, and prior to any transfer of the Note
shall endorse on the schedule forming a part thereof appropriate notations to
evidence, the date, amount and maturity of the Loans made by it, the interest
rates from time to time applicable thereto and the date and amount of each
payment of principal made by the Borrower with respect thereto and such schedule
shall constitute rebuttable presumptive evidence of the principal amount owing
and unpaid on the Bank's Note; provided that the failure of the Bank to make, or
any error in making, any such recordation or endorsement shall not affect the
obligation of the Borrower hereunder or under the Note or the ability of the
Bank to assign its Note. The Bank is hereby irrevocably authorized by the
Borrower so to endorse the Note and to attach to and make a part of the Note a
continuation of any such schedule as and when required.
SECTION 2.04. Maturity of Loans. Each Loan included in a Borrowing
shall mature, and the principal amount thereof shall be due and payable, on the
last day of the Interest Period applicable to such Borrowing.
SECTION 2.05. Interest Rates. (a) "Applicable Margin" shall be
determined quarterly based upon the ratio of Funded Debt to Consolidated
Total Capitalization (calculated as of the last day of each Fiscal Quarter),
as follows:
-------------------------------------------------------------------------------
Ratio of Funded Debt to
Consolidated Total Capitalization Base Rate Loans Euro-Dollar Loans
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Greater than or equal to 30% 0% 2.25%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Greater than or equal to 25% but 0% 2.00%
less than 30%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Greater than or equal to 20% but 0% 1.75%
less than 25%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Less than 20% 0% 1.50%
-------------------------------------------------------------------------------
The Applicable Margin shall be determined effective as of the date (herein, the
"Rate Determination Date") which is 60 days after the last day of the Fiscal
Quarter as of the end of which the foregoing ratio is being determined, based on
the quarterly financial statements of the Borrower for such Fiscal Quarter, and
the Applicable Margin so determined shall remain effective from such Rate
Determination Date until the date which is 60 days after the last day of the
Fiscal Quarter in which such Rate Determination Date falls (which latter date
shall be a new Rate Determination Date); provided that (i) for the period from
and including the Closing Date to but excluding the Rate Determination Date next
following the Closing Date, the Applicable Margin shall be 0% for Base Rate
Loans and 2.00% for Euro-Dollar Loans (ii) in the case of any Applicable Margin
determined for the fourth and final Fiscal Quarter of a Fiscal Year, the Rate
Determination Date shall be the date which is 120 days after the last day of
such final Fiscal Quarter and such Applicable Margin shall be determined based
upon the annual audited financial statements of the Borrower for the Fiscal Year
ended on the last day of such final Fiscal Quarter, and (iii) if on any Rate
Determination Date the Borrower shall have failed to deliver to the Banks the
financial statements required to be delivered pursuant to Section 5.01(a) or
Section 5.01(b) with respect to the Fiscal Year or Fiscal Quarter, as the case
may be, most recently ended prior to such Rate Determination Date, then for the
period beginning on such Rate Determination Date and ending on the immediately
succeeding Rate Determination Date, the Applicable Margin shall be determined as
if the ratio of Funded Debt to Consolidated Total Capitalization was more than
30% at all times during such period. Any change in the Applicable Margin on any
Rate Determination Date shall result in a corresponding change, effective on and
as of such Rate Determination Date, in the interest rate applicable to each Loan
outstanding on such Rate Determination Date, provided that no Applicable Margin
shall be decreased pursuant to this Section 2.05 if a Default is in existence on
the Rate Determination Date.
(b) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the Base Rate for such day plus the
Applicable Margin. Such interest shall be payable for each Interest Period on
the last day thereof. Any overdue principal of and, to the extent permitted by
applicable law, overdue interest on any Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the
Default Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of the Applicable Margin plus the applicable Adjusted
London Interbank Offered Rate for such Interest Period; provided that if any
Euro-Dollar Loan shall, as a result of clause (1)(c) of the definition of
Interest Period, have an Interest Period of less than one month, such
Euro-Dollar Loan shall bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period. Such interest shall be payable
for each Interest Period on the last day thereof and, if such Interest Period is
longer than 3 months, at intervals of 3 months after the first day thereof. Any
overdue principal of and, to the extent permitted by applicable law, overdue
interest on any Euro-Dollar Loan shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to the Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100th of 1%) by dividing (i) the
applicable London Interbank Offered Rate for such Interest Period by (ii) 1.00
minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Euro-Dollar
Loan means for the Interest Period of such Euro-Dollar Loan the rate per annum
determined on the basis of the rate for deposits in Dollars of amounts equal or
comparable to the principal amount of such Euro-Dollar Loan offered for a term
comparable to such Interest Period, which rate appears on the display designated
as Page "3750" of the Telerate Service (or such other page as may replace page
3750 of that service or such other service or services as may be nominated by
the British Banker's Association for the purpose of displaying London Interbank
Offered Rates for U.S. dollar deposits) determined as of 1:00 p.m. New York City
time, 2 Euro-Dollar Business Days prior to the first day of such Interest
Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the applicable reserve requirement for the Bank in respect of
"Eurocurrency liabilities" (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on Euro-Dollar
Loans is determined or any category of extensions of credit or other assets
which includes loans by a non-United States office of the Bank to United States
residents). The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.
(d) The Bank shall determine the interest rates applicable to the
Loans hereunder. The Bank shall give prompt notice to the Borrower by telecopy
of each rate of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
(e) After the occurrence and during the continuance of a Default,
the principal amount of the Loans (and, to the extent permitted by applicable
law, all accrued interest thereon) may, at the election of the Bank, bear
interest at the Default Rate.
SECTION 2.06. Commitment Fees. (a) The Borrower shall pay to the
Bank a commitment fee equal to the product of: (i) the daily average amount of
the Bank's Unused Commitment, times (ii) a per annum percentage equal to the
Applicable Commitment Fee Rate. Such commitment fee shall accrue from and
including the Closing Date to and including the Termination Date. Commitment
fees shall be payable quarterly in arrears on the first Commitment Fee Payment
Date following each Commitment Fee Determination Date and on the Termination
Date; provided that should the Commitment be terminated at any time prior to the
Termination Date for any reason, the entire accrued and unpaid commitment fee
shall be paid on the date of such termination. The "Applicable Commitment Fee
Rate" shall be determined quarterly based upon the ratio of Funded Debt to
Consolidated Total Capitalization (calculated as of the last day of each Fiscal
Quarter) as follows:
-------------------------------------------------------------------------------
Ratio of Funded Debt to Consolidated Total Applicable Commitment Fee
Capitalization Rate
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Greater than or equal to .30% .375%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Greater than or equal to 25% but less than 30% .375%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Greater than or equal to 20% but less than 25% .250%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Less than 20% .250%
-------------------------------------------------------------------------------
The Applicable Commitment Fee Rate shall be determined effective as of the date
(herein, the "Commitment Fee Determination Date") which is 60 days after the
last day of the Fiscal Quarter as of the end of which the foregoing ratio is
being determined, based on the quarterly financial statements for such Fiscal
Quarter, and the Applicable Commitment Fee Rate so determined shall remain
effective from such Commitment Fee Determination Date until the date which is 60
days after the last day of the Fiscal Quarter in which such Commitment Fee
Determination Date falls (which latter date shall be a new Commitment Fee
Determination Date); provided that (i) for the period from and including the
Closing Date to but excluding the Commitment Fee Determination Date next
following the Closing Date, the Applicable Commitment Fee Rate shall be .375%;
(ii) in the case of any Applicable Commitment Fee Rate determined for the fourth
and final Fiscal Quarter of a Fiscal Year, the Commitment Fee Determination Date
shall be the date which is 120 days after the last day of such final Fiscal
Quarter and such Applicable Commitment Fee Rate shall be determined based upon
the annual audited financial statements for the Fiscal Year ended on the last
day of such final Fiscal Quarter, and (iii) if on any Commitment Fee
Determination Date the Borrower shall have failed to deliver to the Bank the
financial statements required to be delivered pursuant to Section 5.01(a) or
Section 5.01(b) with respect to the Fiscal Year or Fiscal Quarter, as the case
may be, most recently ended prior to such Commitment Fee Determination Date,
then for the period beginning on such Commitment Fee Determination Date and
ending on the earlier of (A) the date on which the Borrower shall deliver to the
Bank the financial statements to be delivered pursuant to Section 5.01(b) with
respect to such Fiscal Quarter or any subsequent Fiscal Quarter, and (B) the
date on which the Borrower shall deliver to the Bank annual financial statements
required to be delivered pursuant to Section 5.01(a) with respect to the Fiscal
Year which includes such Fiscal Quarter or any subsequent Fiscal Year, the
Applicable Commitment Fee Rate shall be determined as if the ratio of Funded
Debt to Consolidated Total Capitalization was more than 30% at all times during
such period.
(b) On the Closing Date the Borrower shall pay to the Bank an
underwriting fee equal to $50,000.
SECTION 2.07. Optional Termination or Reduction of Commitments. The
Borrower may, upon at least 3 Domestic Business Days' notice to the Bank,
terminate at any time, or proportionately reduce from time to time by an
aggregate amount of at least $500,000 or any larger multiple of $100,000, the
Commitment; provided, however, no such termination or reduction shall be in an
amount greater than the Unused Commitment on the date of such termination or
reduction. If the Commitment is terminated in its entirety, all accrued fees (as
provided under Section 2.06(a)) shall be payable on the effective date of such
termination.
SECTION 2.08. Mandatory Termination of Commitment. The Commitment
shall terminate on the Termination Date and any Loans then outstanding (together
with accrued interest thereon) shall be due and payable on such date.
SECTION 2.09. Optional Prepayments. (a) The Borrower may, upon at
least 1 Domestic Business Day's notice to the Bank, prepay any Base Rate Loan in
whole at any time, or from time to time in part in amounts aggregating at least
$500,000, or any larger multiple of $100,000, by paying the principal amount to
be prepaid together with accrued interest thereon to the date of prepayment.
(b) The Borrower may not prepay all or any portion of the principal
amount of any Euro-Dollar Loan prior to the last day of an Interest Period
applicable thereto, unless the Borrower complies with Section 7.05.
SECTION 2.10. Mandatory Prepayments. On each date on which the
Commitment is reduced or terminated pursuant to Section 2.07 or Section 2.08,
the Borrower shall repay or prepay such principal amount of the outstanding
Loans, if any (together with interest accrued thereon and any amounts due under
Section 7.05(a)), as may be necessary so that after such payment the aggregate
unpaid principal amount of the Loans does not exceed the amount of the
Commitment as then reduced.
SECTION 2.11. General Provisions as to Payments. (a) The Borrower
shall make each payment of principal of, and interest on, the Bank's Loans and
of fees hereunder, not later than 11:00 A.M. (Atlanta, Georgia time) on the date
when due, in Federal or other funds immediately available at the place where
payment is due, to the Bank at its address set forth on the signature pages
hereof.
(b) Whenever any payment of principal of, or interest on, the Base
Rate Loans or of fees shall be due on a day which is not a Domestic Business
Day, the date for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal of or interest on the
Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business Day,
the date for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall be payable for
such extended time.
(c) All payments of principal, interest and fees and all other
amounts to be made by the Borrower pursuant to this Agreement with respect to
any Loan or fee relating thereto shall be paid without deduction for, and free
from, any tax, imposts, levies, duties, deductions, or withholdings of any
nature now or at anytime hereafter imposed by any governmental authority or by
any taxing authority thereof or therein excluding in the case of the Bank, taxes
imposed on or measured by its net income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which the Bank is organized or any political
subdivision thereof and, in the case of the Bank, taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction of the Bank's applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, imposts, levies, duties, deductions or withholdings of any nature being
"Taxes"). In the event that the Borrower is required by applicable law to make
any such withholding or deduction of Taxes with respect to any Loan or fee or
other amount, the Borrower shall pay such deduction or withholding to the
applicable taxing authority, shall promptly furnish to the Bank in respect of
which such deduction or withholding is made all receipts and other documents
evidencing such payment and shall pay to the Bank additional amounts as may be
necessary in order that the amount received by the Bank after the required
withholding or other payment shall equal the amount the Bank would have received
had no such withholding or other payment been made. If no withholding or
deduction of Taxes are payable in respect of any Loan or fee relating thereto,
the Borrower shall furnish the Bank, at the Bank's request, a certificate from
each applicable taxing authority or an opinion of counsel acceptable to the
Bank, in either case stating that such payments are exempt from or not subject
to withholding or deduction of Taxes. If the Borrower fails to provide such
original or certified copy of a receipt evidencing payment of Taxes or
certificate(s) or opinion of counsel of exemption, the Borrower hereby agrees to
compensate the Bank for, and indemnify it with respect to, the tax consequences
of the Borrower's failure to provide evidence of tax payments or tax exemption.
In the event the Bank receives a refund of any Taxes paid by the
Borrower pursuant to this Section 2.11, it will pay to the Borrower the amount
of such refund promptly upon receipt thereof; provided, however, it at any time
thereafter it is required to return such refund, the Borrower shall promptly
repay to it the amount of such refund.
Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.11 shall be applicable with respect to any Participant, Assignee
or other Transferee, and any calculations required by such provisions (i) shall
be made based upon the circumstances of such Participant, Assignee or other
Transferee (provided that each Participant shall not be entitled to any
compensation greater than that which would have been received by the Bank under
similar circumstances), and (ii) constitute a continuing agreement and shall
survive the termination of this Agreement and the payment in full or
cancellation of the Notes.
SECTION 2.12. Computation of Interest. Interest on Base Rate Loans
and the commitment fee shall be computed on the basis of a year of 365 days and
paid for the actual number of days elapsed (including the first day but
excluding the last day). Interest on Euro-Dollar Loans shall be computed on the
basis of a year of 360 days and paid for the actual number of days elapsed,
calculated as to each Interest Period from and including the first day thereof
to but excluding the last day thereof.
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to First Borrowing. The obligation of
the Bank to make a Loan on the occasion of the first Borrowing is subject to
the following conditions:
(a) receipt by the Bank from the Borrower of a duly executed
counterpart of this Agreement signed by the Borrower;
(b) receipt by the Bank of the duly executed Note for the account of
the Bank complying with the provisions of Section 2.03;
(c) receipt by the Bank of an opinion (together with any opinions of
local counsel relied on therein) of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel
for the Borrower, dated as of the Closing Date, substantially in the form
of Exhibit B hereto and covering such additional matters relating to the
transactions contemplated hereby as the Bank may reasonably request;
(d) receipt by the Bank of a certificate (the "Closing
Certificate"), dated the Closing Date, substantially in the form of
Exhibit C hereto, signed by a principal financial officer of the Borrower,
to the effect that (i) no Default has occurred and is continuing on the
Closing Date and (ii) the representations and warranties of the Borrower
contained in Article IV are true on and as of the Closing Date;
(e) receipt by the Bank of all documents which the Bank may
reasonably request relating to the existence of the Borrower, the
corporate authority for and the validity of this Agreement, the Note, and
any other matters relevant hereto, all in form and substance satisfactory
to the Bank, including without limitation a certificate of incumbency from
the Borrower (the "Officer's Certificate"), signed by the Secretary or an
Assistant Secretary of the Borrower substantially in the form of Exhibit D
hereto, certifying as to the names, true signatures and incumbency of the
officer or officers of the Borrower authorized to execute and deliver the
Loan Documents to which it is a party, and certified copies of the
following items with respect to the Borrower: (i) Certificate of
Incorporation, (ii) Bylaws, (iii) a certificate of the Secretary of State
of the state of organization of the Borrower as to the good standing of
the Borrower as a corporation organized under the laws of such state, and
(iv) the action taken by the Boards of Directors of the Borrower
authorizing the Borrower's execution, delivery and performance of the Loan
Documents to which it is a party;
(f) receipt by the Bank of the Pledge Agreement and UCC Financing
Statements in form and substance satisfactory to the Bank in its sole
discretion, duly executed by the Borrower, granting to the Bank a first
priority security interest in the stock or other equity interests held by
the Borrower in all Subsidiaries of the Borrower, and receipt of any stock
certificates or evidence of the registration of the Bank's security
interest in the corporate records of such Subsidiaries all as required by
the Pledge Agreement;
(g) receipt by the Bank from each Insurance Subsidiary of a
certificate signed by the Chief Actuary or Chief Financial Officer of such
Insurance Subsidiary to the effect that the reserves of such Insurance
Subsidiary are adequate under statutory accounting principles and the
applicable laws of the state under the laws of which such Insurance
Subsidiary was organized or incorporated as of December 31, 1998; and
(h) such other items as the Bank or its counsel may reasonably
request.
SECTION 3.02. Conditions to All Borrowings. The obligation of
the Bank to make a Loan on the occasion of each Borrowing is subject to the
satisfaction of the following conditions:
(a) receipt by the Bank of Notice of Borrowing as required by
Section 2.02;
(b) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing;
(c) (other than with respect to a Loan the proceeds of which shall
be used exclusively to repay maturing Loans) the fact that the representations
and warranties of the Borrower contained in Article IV of this Agreement shall
be true on and as of the date of such Borrowing; and
(d) the fact that, immediately after such Borrowing, the aggregate
outstanding principal amount of the Loans will not exceed the amount of the
Commitment.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the truth and accuracy of the
facts specified in clauses (b), (c) and (d) of this Section; provided that (i)
such Borrowing shall not be deemed to be such a representation and warranty to
the effect set forth in Section 4.04(d) as to any event, act or condition having
a Material Adverse Effect which has theretofore been disclosed in writing by the
Borrower to the Bank and (ii) such Borrowing shall not be deemed to be a
representation and warranty by the Borrower as to the truth and accuracy of the
fact specified in clause (c) of this Section, if in either case the aggregate
outstanding principal amount of the Loans immediately after such Borrowing will
not exceed the aggregate outstanding principal amount thereof immediately before
such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, is duly qualified to transact business
in every jurisdiction where, by the nature of its business, such qualification
is necessary, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, if the failure to be so qualified or to have such powers, licenses,
authorizations, consents or approvals could reasonably be expected, alone or in
the aggregate, to have or cause a Material Adverse Effect.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement, the Note and the other Loan Documents (i) are within the Borrower's
corporate powers, (ii) have been duly authorized by all necessary corporate
action, (iii) require no action by or in respect of, or filing with, any
governmental body, agency or official, except that the Borrower's execution and
delivery of the Pledge Agreement requires the approval of the Departments of
Insurance of the States of Georgia and Texas, which approval has been obtained,
(iv) do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or by-laws
of the Borrower or of any material agreement, judgment, injunction, order,
decree or other instrument binding upon the Borrower or any of its Subsidiaries,
and (v) do not result in the creation or imposition of any Lien on any asset of
the Borrower or any of its Subsidiaries other than as provided therein.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower enforceable in accordance with its terms, and
the Notes and the other Loan Documents, when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations of
the Borrower enforceable in accordance with their respective terms, provided
that the enforceability hereof and thereof is subject in each case to general
principles of equity and to bankruptcy, insolvency and similar laws affecting
the enforcement of creditors' rights generally.
SECTION 4.04. Financial Information. (a) As of the Closing Date, the
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of December 31, 1998 and the related consolidated statements of income,
shareholders' equity and cash flows for the Fiscal Year then ended, reported on
by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, copies of which have been delivered to the Bank, and the
unaudited consolidated financial statements of the Borrower for the interim
period ended March 31, 1999, copies of which have been delivered to the Bank,
fairly present, in conformity with GAAP, the consolidated financial position of
the Borrower and its Consolidated Subsidiaries as of such dates and their
consolidated results of operations and cash flows for such periods stated.
(b) As of the Closing Date, the statutory and annual statements of
Association Casualty Insurance Company as of December 31, 1998, reported on by
Ernst & Young, LLP, copies of which have been delivered to the Bank, fairly
present, in all material respects, the statutory financial condition of
Association Casualty Insurance Company, taken as a whole, at December 31, 1998,
and the statutory results of its operations and other data contained therein for
1998, and were prepared in conformity with statutory accounting practices
prescribed or permitted by the Texas Department of Insurance (which have been
applied on a consistent basis). As of the Closing Date, the unaudited balance
sheet of Association Risk Management General Agency, Inc. as of December 31,
1998 and the related unaudited G/L profit and loss statement for the year then
ended, copies of which have been delivered to the Bank, have been prepared from
and are in complete accordance with the books and records of Association Risk
Management General Agency, Inc., and fairly present, in all material respects,
the financial position and results of operation of Association Risk Management
General Agency, Inc., taken as a whole as of the date thereof.
(c) The Annual Statements of the Insurance Subsidiaries together
with supplemental schedules thereto, dated as of December 31, 1998, and the
Quarterly Statements of the Insurance Subsidiaries together with supplemental
schedules thereto, dated as of March 31, 1999, copies of which have been
delivered to the Bank, fairly present the respective financial positions of the
Insurance Subsidiaries as of such dates.
(d) Since March 31, 1999 there has been no event, act, condition or
occurrence having a Material Adverse Effect.
SECTION 4.05. Litigation. There is no action, suit or proceeding
pending, or to the knowledge of the Borrower threatened, against or affecting
the Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official which could have a Material Adverse Effect
or which in any manner draws into question the validity or enforceability of, or
could impair the ability of the Borrower to perform its obligations under, this
Agreement, the Note or any of the other Loan Documents.
SECTION 4.06. Compliance with ERISA. (a) The Borrower and each
member of the Controlled Group have fulfilled their obligations under the
minimum funding standards of ERISA and the Code with respect to each Plan and
are in compliance in all material respects with the presently applicable
provisions of ERISA and the Code, and have not incurred any material liability
to the PBGC or a Plan under Title IV of ERISA.
(b) Neither the Borrower nor any member of the Controlled Group is
or ever has been obligated to contribute to any Multiemployer Plan.
SECTION 4.07. Taxes. There have been filed on behalf of the Borrower
and its Subsidiaries all Federal, state and local income, excise, property and
other tax returns which are required to be filed by them and all taxes due
pursuant to such returns or pursuant to any assessment received by or on behalf
of the Borrower or any Subsidiary have been paid. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of taxes
or other governmental charges are, in the opinion of the Borrower, adequate.
United States income tax returns of the Borrower and its Subsidiaries have been
examined and closed through the Fiscal Year ended December 31, 1983.
SECTION 4.08. Subsidiaries. (a) Each of the Borrower's Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, is duly qualified to transact
business in every jurisdiction where, by the nature of its business, such
qualification is necessary, and has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted, if the failure to be so qualified, or to have such
powers, licenses, authorizations, consents or approvals could reasonably be
expected, alone or in the aggregate, to have or cause a Material Adverse Effect.
(b) As of the Closing Date, the Borrower has no Insurance
Subsidiaries except those Subsidiaries listed on Schedule 4.08A, which
accurately sets forth each such Insurance Subsidiary's complete name and
jurisdiction of incorporation.
(c) Schedule 4.08B accurately sets forth the complete name of each
Subsidiary of the Borrower as of the Closing Date which is not an Insurance
Subsidiary, as well as its jurisdiction of incorporation.
SECTION 4.09. Not an Investment Company. Neither the Borrower
nor any of its Subsidiaries is an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
SECTION 4.10 Public Utility Holding Company Act. Neither the
Borrower nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
SECTION 4.11. Ownership of Property; Liens. Each of the Borrower and
its Consolidated Subsidiaries has title to its properties sufficient for the
conduct of its business, and none of such property is subject to any Lien except
as permitted in Section 5.10.
SECTION 4.12. No Default. Neither the Borrower nor any of its
Consolidated Subsidiaries is in default under or with respect to any agreement,
instrument or undertaking to which it is a party or by which it or any of its
property is bound which could have or cause a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
SECTION 4.13. Full Disclosure. All information heretofore furnished
by the Borrower to the Bank for purposes of or in connection with this Agreement
or any transaction contemplated hereby is, and all such information hereafter
furnished by the Borrower to the Bank will be, true, accurate and complete in
every material respect or based on reasonable estimates on the date as of which
such information is stated or certified. As of the Closing Date, the Borrower
has disclosed to the Bank in writing any and all facts specific to the
Borrower's business and finances and known to the Borrower which could
reasonably be expected to have or cause a Material Adverse Effect and are not
generally known by or available to the Bank.
SECTION 4.14. Environmental Matters. (a) Neither the Borrower nor
any Subsidiary is subject to any Environmental Liability which could have or
cause a Material Adverse Effect and neither the Borrower nor any Subsidiary has
been designated as a potentially responsible party under CERCLA or under any
state statute similar to CERCLA. None of the Properties has been identified on
any current or proposed (i) National Priorities List under 40 C.F.R. ss. 300,
(ii) CERCLIS list or (iii) any list arising from a state statute similar to
CERCLA.
(b) No Hazardous Materials have been or are being used, produced,
manufactured, processed, treated, recycled, generated, stored, disposed of,
managed or otherwise handled at, or shipped or transported to or from the
Properties or are otherwise present at, on, in or under the Properties, or, to
the best of the knowledge of the Borrower, at or from any adjacent site or
facility, except for Hazardous Materials, such as cleaning solvents, pesticides
and other materials used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed of, and managed or otherwise handled in minimal
amounts in the ordinary course of business in compliance with all applicable
Environmental Requirements.
(c) The Borrower, and each of its Subsidiaries and Affiliates, has
procured all Environmental Authorizations necessary for the conduct of its
business, and is in compliance with all Environmental Requirements in connection
with the operation of the Properties and the Borrower's, and each of its
Subsidiary's and Affiliate's, respective businesses.
SECTION 4.15. Compliance with Laws. The Borrower and each Subsidiary
is in compliance with all applicable laws, including, without limitation, all
Environmental Laws, except where any failure to comply with any such laws would
not, alone or in the aggregate, have a Material Adverse Effect.
SECTION 4.16. Capital Stock. All Capital Stock, debentures, bonds,
notes and all other securities of the Borrower and its Subsidiaries presently
issued and outstanding are validly and properly issued in accordance with all
applicable laws, including, but not limited to, the "Blue Sky" laws of all
applicable states and the federal securities laws. The issued shares of Capital
Stock of the Borrower's Wholly Owned Subsidiaries are owned by the Borrower free
and clear of any Lien or adverse claim. At least a majority of the issued shares
of capital stock of each of the Borrower's other Subsidiaries (other than Wholly
Owned Subsidiaries) is owned by the Borrower free and clear of any Lien or
adverse claim.
SECTION 4.17. Margin Stock. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of purchasing or carrying any Margin Stock, and no part of the
proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock, or be used for any purpose which violates, or which is inconsistent with,
the provisions of Regulation X.
SECTION 4.18. Insolvency. After giving effect to the execution and
delivery of the Loan Documents and the making of the Loans under this Agreement,
the Borrower will not be "insolvent," within the meaning of such term as used in
O.C.G.A. ss. 18-2-22 or as defined in ss. 101 of Title 11 of the United States
Code or Section 2 of the Uniform Fraudulent Transfer Act, or any other
applicable state law pertaining to fraudulent transfers, as each may be amended
from time to time, or be unable to pay its debts generally as such debts become
due, or have an unreasonably small capital to engage in any business or
transaction, whether current or contemplated.
SECTION 4.19. Compliance with Year 2000 Plan. The Borrower has
developed and has delivered to the Bank a comprehensive plan (the "Y2K Plan")
for insuring that the Borrower's and its Subsidiaries' Mission Critical
Equipment which impact or affect in any way the business operations of the
Borrower and its Subsidiaries will be Year 2000 Compliant and Ready. The
Borrower and its Subsidiaries have met the Y2K Plan milestones such that all
Mission Critical Equipment be Year 2000 Compliant and Ready in accordance with
the Y2K Plan.
SECTION 4.20 Insurance. The Borrower maintains and each Subsidiary
maintains (either in the name of the Borrower or in such Subsidiary's own name),
with financially secure and reputable insurance companies, insurance on all its
Properties in at least such amounts and against at least such risks as are
usually insured against in the same general area by companies of established
repute engaged in the same or similar business.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as the Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to the
Bank:
(a) (i) as soon as available and in any event within 90 days after
the end of each Fiscal Year, a consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of the end of such Fiscal Year and
the related consolidated statements of income, shareholders' equity and
cash flows for such Fiscal Year, setting forth in each case in comparative
form the figures for the previous fiscal year, all certified by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP or other independent public accountants of nationally
recognized standing, with such certification to be free of exceptions and
qualifications not acceptable to the Bank, and (ii) as soon as available
and in any event within 60 days after the end of each fiscal year of each
Insurance Subsidiary, a copy of the Annual Statement of each such
Insurance Subsidiary, together with all supplemental schedules thereto, as
of the end of such Fiscal Year, all prepared in accordance with statutory
accounting principles;
(b) (i) as soon as available and in any event within 45 days after
the end of each of the first 3 Fiscal Quarters of each Fiscal Year, a
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such Fiscal Quarter and the related
statement of income and statement of cash flows for such Fiscal Quarter
and for the portion of the Fiscal Year ended at the end of such Fiscal
Quarter, setting forth in each case in comparative form the figures for
the corresponding Fiscal Quarter and the corresponding portion of the
previous Fiscal Year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, GAAP and consistency by the
chief financial officer or the chief accounting officer of the Borrower,
and (ii) as soon as available and in any event within 45 days after the
end of each fiscal quarter of each fiscal year of each Insurance
Subsidiary, a copy of the Quarterly Statement of each such Insurance
Subsidiary, together with all supplement schedules thereto, as of the end
of such fiscal quarter, all prepared in accordance with statutory
accounting principles;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate,
substantially in the form of Exhibit E (a "Compliance Certificate"), of
the chief financial officer or the chief accounting officer of the
Borrower (i) setting forth in reasonable detail the calculations required
to establish whether the Borrower was in compliance with the requirements
of Sections 5.03 through 5.07, inclusive, 5.10, 5.25, 5.26 and 5.28 on the
date of such financial statements and (ii) stating whether any Default
exists on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of annual financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements to the
effect that nothing has come to their attention to cause them to believe
that any Default existed on the date of such financial statements;
(e) within 5 Domestic Business Days after the Borrower becomes aware
of the occurrence of any Default, a certificate of the chief financial
officer or the chief accounting officer of the Borrower setting forth the
details thereof and the action which the Borrower is taking or proposes to
take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and annual, quarterly or monthly
reports which the Borrower shall have filed with the Securities and
Exchange Commission;
(h) if and when the Borrower or any member of the Controlled Group
(i) gives or is required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination of such Plan under Title
IV of ERISA, or knows that the plan administrator of any Plan has given or
is required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the PBGC;
(ii) receives notice of complete or partial withdrawal liability under
Title IV of ERISA, a copy of such notice; or (iii) receives notice from
the PBGC under Title IV of ERISA of an intent to terminate or appoint a
trustee to administer any Plan, a copy of such notice;
(i) promptly after the Borrower knows of the commencement thereof,
notice of any litigation, dispute or proceeding involving a claim against
the Borrower and/or any Subsidiary for $100,000 or more in excess of
amounts covered in full by applicable insurance;
(j) promptly after the Borrower knows of the commencement, notice
of any Forfeiture Proceeding;
(k) simultaneously with the delivery of each set of annual and
quarterly financial statements referred to in clauses (a) and (b) above, a
statement of the chief executive officer, chief financial officer, or
chief technology officer of the Borrower to the effect that nothing has
come to his/her attention to cause him/her to believe that the Y2K Plan
milestones have not been met in a manner such that the Borrower's and its
Subsidiaries' Mission Critical Equipment will not be Year 2000 Compliant
and Ready in accordance with the Y2K Plan;
(l) within five (5) Domestic Business Days after the Borrower
becomes aware of any material deviations from the Y2K Plan which would
cause compliance with the Y2K Plan to be substantially delayed or not
achieved, a statement of the chief executive officer, chief financial
officer, or chief technology officer of the Borrower setting forth the
details thereof and the action which the Borrower is taking or proposes to
take with respect thereto;
(m) promptly upon the receipt thereof, a copy of any third party
assessments of the Borrower's Y2K Plan together with any recommendations
made by such third party with respect to Year 2000 compliance; and
(n) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Bank may reasonably request.
SECTION 5.02. Inspection of Property, Books and Records. The
Borrower will (i) keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries in conformity with
GAAP (or, in the case of Insurance Subsidiaries, statutory accounting
principles) shall be made of all dealings and transactions in relation to its
business and activities; and (ii) permit, and will cause each Subsidiary to
permit, representatives of the Bank at the Bank's expense prior to the
occurrence of an Event of Default and at the Borrower's expense after the
occurrence of an Event of Default to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants. The
Borrower agrees to cooperate and assist in such visits and inspections, in each
case at such reasonable times and as often as may reasonably be desired.
SECTION 5.03. Ratio of Funded Debt to Consolidated Total
Capitalization. The ratio of Funded Debt to Consolidated Total Capitalization
will not at any time exceed (i) for the period from and including the Closing
Date to and including December 31, 2000, 40%; and (ii) for any period on or
after January 1, 2001, 35%.
SECTION 5.04. Restricted Payments. The Borrower will not declare or
make any Restricted Payment during any Fiscal Year; provided that: (1) the
Borrower may redeem shares of the Borrower's capital stock for the purpose of
satisfying the Borrower's obligations under its 401K plan and stock options
provided by the Borrower to its executive officers, in the ordinary course of
business and consistently with practices existing on the Closing Date; (2) the
total number of shares of the Borrower's capital stock redeemed pursuant to the
preceding subsection (1) shall not exceed five hundred thousand in the aggregate
in any Fiscal Year; and (3) the aggregate amount expended by the Borrower in
connection with the redemptions made pursuant to the preceding subsection (1)
shall not exceed $2,000,000 in the aggregate in any Fiscal Year.
SECTION 5.05. Ratio of Funded Debt to EBITDA. As of the end of each
Fiscal Quarter beginning with the Fiscal Quarter ending June 30, 1999, the ratio
of Funded Debt as of the end of such Fiscal Quarter to EBITDA for the period of
4 consecutive Fiscal Quarters then ended shall be less than (a) 4.5 to 1.0 for
each Fiscal Quarter ending on or before December 31, 1999, (b) 4.0 to 1.0 for
each Fiscal Quarter ending after December 31, 1999, and on or before December
31, 2000 and (c) 3.5 to 1.0 for each Fiscal Quarter thereafter.
SECTION 5.06. Ratio of EBITDA to Consolidated Interest Expense. At
the end of each Fiscal Quarter beginning with the Fiscal Quarter ending June 30,
1999, the ratio of EBITDA for the period of 4 consecutive Fiscal Quarters then
ended to Consolidated Interest Expense for the period of 4 consecutive Fiscal
Quarters then ended shall be greater than (a) 3.0 to 1.0 for each Fiscal Quarter
ending on or before December 31, 2000 and (b) 4.0 to 1.0 for each Fiscal Quarter
thereafter.
SECTION 5.07. Capital Expenditures. Capital Expenditures will not
exceed in the aggregate in any Fiscal Year the sum of $1,000,000; provided that
after giving effect to the incurrence of any Capital Expenditures permitted by
this Section, no Default shall have occurred and be continuing.
SECTION 5.08. Loans or Advances. Neither the Borrower nor any of its
Subsidiaries shall make loans or advances to any Person except: (i) advances
made to insurance agents of the Borrower's Subsidiaries, with respect to such
agent's commissions, made in the ordinary course of business and consistently
with practices existing on the Closing Date; and (ii) deposits required by
government agencies or public utilities; provided that after giving effect to
the making of any loans, advances or deposits permitted by clause (i) or (ii) of
this Section, no Default shall have occurred and be continuing.
SECTION 5.09. Investments. Neither the Borrower nor any of its
Subsidiaries shall make Investments in any Person except as permitted by Section
5.08 and except Investments (i) in direct obligations of the United States
Government maturing within one year, (ii) in certificates of deposit issued by a
commercial bank whose credit is satisfactory to the Bank, (iii) in commercial
paper rated A-1 or the equivalent thereof by Standard & Poor's Corporation or
P-1 or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc. and in either
case maturing within 6 months after the date of acquisition, (iv) in tender
bonds the payment of the principal of and interest on which is fully supported
by a letter of credit issued by a United States bank whose long-term
certificates of deposit are rated at least AA or the equivalent thereof by
Standard & Poor's Corporation and Aa or the equivalent thereof by ▇▇▇▇▇'▇
Investors Service, Inc., (v) contemplated by Section 5.14(b) and/or (vi)
constituting Permitted Acquisitions in an aggregate amount not exceeding
$5,000,000; provided, however, that this Section 5.09 shall not prohibit
Investments made in the ordinary course of business involving the investment
portfolio of any Insurance Subsidiary.
SECTION 5.10. Negative Pledge. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal amount not
exceeding $25,000,000;
(b) any Lien existing on any specific fixed asset of any corporation
at the time such corporation becomes a Consolidated Subsidiary and not created
in contemplation of such event;
(c) any Lien on any specific fixed asset securing Debt incurred or
assumed for the purpose of financing all or any part of the cost of acquiring or
constructing such asset, provided that such Lien attaches to such asset
concurrently with or within 18 months after the acquisition or completion of
construction thereof;
(d) any Lien on any specific fixed asset of any corporation existing
at the time such corporation is merged or consolidated with or into the Borrower
or a Consolidated Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any specific fixed asset prior to the
acquisition thereof by the Borrower or a Consolidated Subsidiary and not created
in contemplation of such acquisition;
(f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
paragraphs of this Section, provided that (i) such Debt is not secured by any
additional assets, and (ii) the amount of such Debt secured by any such Lien is
not increased;
(g) Liens incidental to the conduct of its business or the ownership
of its assets which (i) do not secure Debt and (ii) do not in the aggregate
materially detract from the value of its assets or materially impair the use
thereof in the operation of its business;
(h) any Lien on Margin Stock;
(i) Debt owing to the Borrower or another Subsidiary;
(j) Liens created under the Reimbursement Agreement;
(k) Liens created under the Pledge Agreement; and
(l) Liens not otherwise permitted by the foregoing clauses of this
Section securing Debt (other than indebtedness represented by the Note) in an
aggregate principal amount at any time outstanding not to exceed $100,000.
SECTION 5.11. Maintenance of Existence. The Borrower shall, and
shall cause each Subsidiary to (a) maintain its corporate existence and carry on
its business in substantially the same manner and in substantially the same
fields as such business is now carried on and maintained; and (b) preserve,
renew and keep in full force and effect their respective rights, privileges,
licenses (including, without limitation, insurance licenses) and franchises
necessary or desirable in the normal conduct of business.
SECTION 5.12. Dissolution. Neither the Borrower nor any of its
Subsidiaries shall suffer or permit dissolution or liquidation either in whole
or in part or redeem or retire any shares of its own stock or that of any
Subsidiary, except through corporate reorganization to the extent permitted by
Section 5.13.
SECTION 5.13. Consolidations, Mergers and Sales of Assets. (a)
The Borrower will not, nor will it permit any Subsidiary to, consolidate or
merge with or into any other Person, provided that:
(i) the Borrower may merge with another Person if (i) such Person
was organized under the laws of the United States of America or one of its
states, (ii) the Borrower is the corporation surviving such merger and (iii)
immediately after giving effect to such merger, no Default shall have occurred
and be continuing; and
(ii) Subsidiaries of the Borrower may merge with one another.
(b) The Borrower will not, and will not permit any Subsidiary to,
sell, lease, transfer, or otherwise dispose of in any one transaction or series
of transactions (excluding sales in the ordinary course of business of
investment securities that are part of a Subsidiary's investment portfolio) any
assets, if the Book Value of such assets when aggregated with the Book Value of
all assets sold, leased, transferred or otherwise disposed of after the Closing
Date exceeds 10% of Consolidated Total Assets of the Borrower and its
Consolidated Subsidiaries as of the last day of the Fiscal Quarter immediately
preceding the date of such sale, lease, transfer or other disposition without
the prior written consent of the Bank (which consent shall not be unreasonably
withheld).
SECTION 5.14. Use of Proceeds. (a) No portion of the proceeds of the
Loans will be used by the Borrower or any Subsidiary (i) in connection with any
tender offer for, or other acquisition of, stock of any corporation with a view
toward obtaining control of such other corporation (other than any Permitted
Acquisition and the acquisition contemplated in Section 5.14(b)), (ii) directly
or indirectly, for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any Margin Stock, or (iii) for any purpose in violation
of any applicable law or regulation.
(b) A portion of the proceeds of the Loans may be used to acquire
Association Casualty Insurance Company.
SECTION 5.15. Compliance with Laws; Payment of Taxes. The Borrower
will, and will cause each of its Subsidiaries and each member of the Controlled
Group to, comply with applicable laws (including but not limited to ERISA),
regulations and similar requirements of governmental authorities (including but
not limited to PBGC), except where the necessity of such compliance is being
contested in good faith through appropriate proceedings diligently pursued. The
Borrower will, and will cause each of its Subsidiaries to, pay promptly when due
all taxes, assessments, governmental charges, claims for labor, supplies, rent
and other obligations which, if unpaid, might become a lien against the property
of the Borrower or any Subsidiary, except liabilities being contested in good
faith by appropriate proceedings diligently pursued and against which, if
requested by the Bank, the Borrower shall have set up reserves in accordance
with GAAP.
SECTION 5.16. Insurance. The Borrower will maintain, and will cause
each of its Subsidiaries to maintain (either in the name of the Borrower or in
such Subsidiary's own name), with financially sound and reputable insurance
companies, insurance on all its Property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
companies of established repute engaged in the same or similar business.
SECTION 5.17. Change in Fiscal Year. The Borrower will not
change its Fiscal Year without the consent of the Bank.
SECTION 5.18. Maintenance of Property. The Borrower shall, and shall
cause each Subsidiary to, maintain all of its properties and assets in good
condition, repair and working order, ordinary wear and tear excepted.
SECTION 5.19. Environmental Notices. The Borrower shall furnish to
the Bank prompt written notice of all material Environmental Liabilities,
pending, threatened or anticipated Environmental Proceedings, Environmental
Notices, Environmental Judgments and Orders, and Environmental Releases at, on,
in, under or in any way affecting the Properties or any adjacent property, and
all facts, events, or conditions that could reasonably be expected to lead to
any of the foregoing.
SECTION 5.20. Environmental Matters. The Borrower and its
Subsidiaries will not, and will not permit any Third Party to, use, produce,
manufacture, process, treat, recycle, generate, store, dispose of, manage at, or
otherwise handle or ship or transport to or from the Properties any Hazardous
Materials except for Hazardous Materials such as cleaning solvents, pesticides
and other similar materials used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed, managed or otherwise handled in minimal
amounts in the ordinary course of business in compliance with all applicable
Environmental Requirements.
SECTION 5.21. Environmental Release. The Borrower agrees that upon
the occurrence of a material Environmental Release at or on any of the
Properties it will act immediately to investigate the extent of, and to take
appropriate remedial action to eliminate, such Environmental Release, whether or
not ordered or otherwise directed to do so by any Environmental Authority.
SECTION 5.22. Additional Covenants, Etc. In the event that at any
time this Agreement is in effect or the Note remains unpaid the Borrower shall
enter into any agreement, guarantee, indenture or other instrument governing,
relating to, providing for commitments to advance, guaranteeing, providing for
security interests or liens to secure, or otherwise affording any credit support
or credit enhancement for, any Financing or to amend any terms and conditions
applicable to any Financing, which agreement, guarantee, indenture or other
instrument includes covenants, warranties, representations, defaults or events
of default (or any other type of restriction which would have the practical
effect of any of the foregoing, including, without limitation, any "put" or
mandatory prepayment of such debt) or other terms or conditions or provides for
security interests, liens or guarantees, credit support or credit enhancement
(whether provided by the Borrower or any other Person) not substantially as, or
in addition to those, provided in this Agreement or any other Loan Document, or
more favorable to the lender or other counterparty thereunder than those
provided in this Agreement or any other Loan Document, the Borrower shall
promptly so notify the Bank. Thereupon, if the Bank shall request by written
notice to the Borrower, the Borrower and the Bank shall enter into an amendment
to this Agreement and if requested by the Bank, the Borrower shall cause any
Person providing such other guarantees, credit support or credit enhancement to
deliver such documentation as the Bank may reasonably request, all providing for
substantially the same such covenants, warranties, representations, defaults or
events of default, security interests, liens or other guarantees, credit support
or credit enhancement (in which the Bank shall participate on a pari passu basis
with such other lender), or other terms or conditions as those provided for in
such agreement, guarantee, indenture or other instrument, to the extent required
and as may be selected by the Bank, such amendment and other documentation to
remain in effect, unless otherwise specified in writing by the Bank, for the
entire duration of the stated term to maturity of such Financing (to and
including the date to which the same may be extended at the Borrower's option),
notwithstanding that such Financing might be earlier terminated by prepayment,
refinancing, acceleration or otherwise, provided that if any such agreement,
guarantee, indenture or other instrument shall be modified, supplemented,
amended or restated so as to modify, amend or eliminate from such agreement,
guarantee, indenture or other instrument any such covenant, warranty,
representation, default or event of default, security interest, lien, or other
credit support or enhancement or other term or condition so made a part of this
Agreement, then unless required by the Bank pursuant to this Section, such
modification, supplement or amendment shall not operate to modify, amend or
eliminate such covenant, warranty, representation, default or event of default,
security interest, lien or other credit support or enhancement or other term or
condition as so made a part of this Agreement.
SECTION 5.23. Transactions with Affiliates. Neither the Borrower nor
any of its Subsidiaries shall enter into, or be a party to, any transaction with
any Affiliate of the Borrower or such Subsidiary (which Affiliate is not the
Borrower or a Subsidiary), except as permitted by law and in the ordinary course
of business and pursuant to reasonable terms, and are no less favorable to the
Borrower or such Subsidiary than would be obtained in a comparable arm's length
transaction with a Person which is not an Affiliate.
SECTION 5.24. Y2K Plan. The Borrower will meet the milestones
contained in the Y2K Plan and will have all Mission Critical Equipment Year 2000
Compliant and Ready (including all internal and external testing) on or before
August 1, 1999.
SECTION 5.25. Maintenance of Authorized Control Level Risk-Based
Capital. The Borrower shall maintain, or cause to be maintained, at all times
the Authorized Control Level Risk-Based Capital for each Insurance Subsidiary in
an amount equal to or greater than 400% of the Authorized Control Level
Risk-Based Capital for such Insurance Subsidiary.
SECTION 5.26. Maintenance of Statutory Surplus. The Borrower shall
maintain or cause to be maintained at all times the Statutory Surplus of each of
its Insurance Subsidiaries in an amount equal to or greater than the sum of (i)
the Statutory Surplus required under applicable law for such Insurance
Subsidiary, plus (ii) $1,000,000.
SECTION 5.27. Limitation on Debt. The Borrower shall not, nor shall
it permit any Subsidiary to, create, incur or permit to exist at any time any
Debt (other than Debt arising under this Agreement) without the prior written
consent of the Bank, except:
(a) Debt in existence on the Closing Date and more particularly
described on Schedule 5.27 attached hereto, together with any extension or
renewal of such Debt, if the payment terms and interest applicable to such Debt
as extended or renewed are at least as favorable to the Borrower or such
Subsidiary, as the case may be, as the payment terms and interest rate
applicable to such Debt on the date of extension or renewal thereof;
(b) Trade indebtedness incurred in the ordinary course of business;
(c) The Borrower may enter into a transaction or series of
transactions pursuant to which the Borrower sells and leases back computer
equipment provided that the total aggregate Debt incurred by the Borrower in
such transaction or transactions shall not exceed $2,000,000; and
(d) Debt not otherwise permitted by the foregoing clauses of this
Section in an aggregate principal amount at any time outstanding not to exceed
$5,000,000.
SECTION 5.28. Minimum Investment in NAIC Rated Bonds; Maximum
Investment in Investment Properties. The Borrower will not at any time permit:
(i) the Aggregate Value of NAIC Rated Bonds to be less than 70% of the Aggregate
Value of Total Investments; or (ii) the aggregate value of Investment Properties
to exceed 5% of the Aggregate Value of Total Investments.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any
Loan or shall fail to pay any interest on any Loan within 5 Business Days
after such interest shall become due, or shall fail to pay any fee or
other amount payable hereunder within 5 Business Days after such fee or
other amount becomes due; or
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.02(ii), 5.03 to 5.14, inclusive, Section 5.17,
Section 5.22 or Sections 5.25 to 5.28, inclusive; or
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained or incorporated by reference in this Agreement (other
than those covered by clause (a) or (b) above or clause (n) below) for
thirty days after the earlier of (i) the first day on which the Borrower
has knowledge of such failure or (ii) written notice thereof has been
given to the Borrower by the Bank; or
(d) any representation, warranty, certification or statement made or
deemed made by the Borrower in Article IV of this Agreement, the Loan
Documents or in any certificate, financial statement or other document
delivered pursuant to this Agreement shall prove to have been incorrect or
misleading in any material respect when made (or deemed made); or
(e) the Borrower or any Subsidiary shall fail to make any payment in
respect of Debt outstanding in an aggregate amount equal to or in excess
of $1,000,000 (other than the Notes) when due or within any applicable
grace period; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt outstanding in an aggregate amount
equal to or in excess of $1,000,000 of the Borrower or any Subsidiary or
the mandatory prepayment or purchase of such Debt by the Borrower (or its
designee) or such Subsidiary (or its designee) prior to the scheduled
maturity thereof, or enables the holders of such Debt or any Person acting
on such holders' behalf to accelerate the maturity thereof or require the
mandatory prepayment or purchase thereof prior to the scheduled maturity
thereof, without regard to whether such holders or other Person shall have
exercised or waived their right to do so; or
(g) the Borrower or any Subsidiary shall commence a voluntary case
or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally, or shall admit in writing its inability, to pay its debts as
they become due, or shall take any corporate action to authorize any of
the foregoing; or
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against
the Borrower or any Subsidiary under the federal bankruptcy laws as now or
hereafter in effect; or
(i) the Borrower or any member of the Controlled Group shall fail to
pay when due any material amount which it shall have become liable to pay
to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to
terminate a Plan or Plans shall be filed under Title IV of ERISA by the
Borrower, any member of the Controlled Group, any plan administrator or
any combination of the foregoing and such filing could reasonably be
expected to have or cause a Material Adverse Effect; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any such Plan or Plans or a
proceeding shall be instituted by a fiduciary of any such Plan or Plans to
enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not
have been dismissed within 30 days thereafter; or a condition shall exist
by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any such Plan or Plans must be terminated; or the
Borrower or any other member of the Controlled Group shall enter into,
contribute or be obligated to contribute to, terminate or incur any
withdrawal liability with respect to, a Multiemployer Plan; or
(j) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $500,000 shall be rendered against the
Borrower or any Subsidiary and such judgment or order shall continue
unsatisfied and unstayed for a period of 30 days; or
(k) a federal tax lien shall be filed against the Borrower under
Section 6323 of the Code or a lien of the PBGC shall be filed against the
Borrower or any Subsidiary under Section 4068 of ERISA and in either case
such lien shall remain undischarged for a period of 25 days after the date
of filing; or
(l) (i) any Person or two or more Persons (other than J. ▇▇▇▇
▇▇▇▇▇▇▇▇ and members of his family) acting in concert shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934) of 20%
or more of the outstanding shares of the voting stock of the Borrower; or
(ii) as of any date a majority of the Board of Directors of the Borrower
consists of individuals who were not either (A) directors of the Borrower
as of the corresponding date of the previous year, (B) selected or
nominated to become directors by the Board of Directors of the Borrower of
which a majority consisted of individuals described in clause (A), or (C)
selected or nominated to become directors by the Board of Directors of the
Borrower of which a majority consisted of individuals described in clause
(A) and individuals described in clause (B); or
(m) the occurrence of any event, act or condition which the Bank
determines either does cause or has a reasonable probability of causing a
Material Adverse Effect and failure by the Borrower to cure the same
within 60 days following notice from the Bank to the Borrower identifying
such event, act or condition; or
(n) the Borrower shall fail to observe or perform any obligation
under the Pledge Agreement or the Bank shall cease to have a first
priority perfected security interest in the Collateral (as defined in the
Pledge Agreement); or
(o) Georgia Casualty & Surety Company or Bankers Fidelity Life
Insurance Company shall fail to maintain an AM Best rating of "B+" or
better, or American Southern Insurance Company or any Subsidiary of
American Southern Insurance Company shall fail to maintain an AM Best
rating of "A-" or better; or
(p) the Borrower shall at any time or times and for any reason cease
to own (either directly or indirectly through a Wholly Owned Subsidiary)
at least 80% of the Capital Stock and other ownership interests of each of
American Southern Insurance Company, Atlantic American Life Insurance
Company, Georgia Casualty & Surety Company, Bankers Fidelity Life
Insurance Company and, after its acquisition by the Borrower as
contemplated by this Agreement, Associated Casualty Insurance Company; or
(q) either (i) any Forfeiture Proceeding shall have been commenced
or the Borrower shall have given the Bank written notice of the
commencement or threatened commencement of any Forfeiture Proceeding as
provided in Section 5.01(j); or (ii) the Bank has a good faith basis to
believe that a Forfeiture Proceeding has been threatened or commenced;
then, and in every such event, the Bank may (i) terminate the Commitment and it
shall thereupon terminate, and (ii) by notice to the Borrower declare the Note
(together with accrued interest thereon) and all other amounts payable hereunder
and under the other Loan Documents to be, and the Note (together will all
accrued interest thereon) and all other amounts payable hereunder and under the
other Loan Documents shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; provided that if any Event of Default specified
in clause (g) or (h) above occurs with respect to the Borrower or any
Subsidiary, without any notice to the Borrower or any other act by the Bank, the
Commitment shall thereupon automatically terminate and the Note (together with
accrued interest thereon) and all other amounts payable hereunder and under the
other Loan Documents shall automatically become immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower. Notwithstanding the foregoing, the Bank shall
have available to it all other remedies at law or equity.
ARTICLE VII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 7.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period:
(a) the Bank determines that deposits in Dollars (in the applicable
amounts) are not being offered in the relevant market for such Interest Period,
or
(b) the Bank determines that the London Interbank Offered Rate as
determined by the Bank will not adequately and fairly reflect the cost to the
Bank of funding any Euro-Dollar Loan for such Interest Period,
the Bank shall forthwith give notice thereof to the Borrower, whereupon until
the Bank notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, the obligations of the Bank to make the Euro-Dollar
Loans specified in such notice shall be suspended. Unless the Borrower notifies
the Bank at least 2 Domestic Business Days before the date of any Borrowing of a
Euro-Dollar Loan for which a Notice of Borrowing has previously been given that
it elects not to borrow on such date, such Borrowing shall instead be made as a
Base Rate Borrowing.
SECTION 7.02. Illegality. If, after the date hereof, the adoption of
any applicable law, rule or regulation, or any change in any existing or future
law, rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof (any such authority, bank or
agency being referred to as an "Authority" and any such event being referred to
as a "Change of Law"), or compliance by the Bank (or its Lending Office) with
any request or directive (whether or not having the force of law) of any
Authority shall make it unlawful or impossible for the Bank (or its Lending
Office) to make, maintain or fund the Euro-Dollar Loans and the Bank shall so
notify the Borrower, whereupon until the Bank notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, the obligation of
the Bank to make Euro-Dollar Loans shall be suspended. Before giving any notice
to the Borrower pursuant to this Section, the Bank shall designate a different
Lending Office if such designation will avoid the need for giving such notice
and will not, in the judgment of the Bank, be otherwise disadvantageous to the
Bank. If the Bank shall determine that it may not lawfully continue to maintain
and fund any outstanding Euro-Dollar Loans to maturity and shall so specify in
such notice, the Borrower shall immediately prepay in full the then outstanding
principal amount of each Euro-Dollar Loan, together with accrued interest
thereon and any amount due the Bank pursuant to Section 7.05(a). Concurrently
with prepaying each such Euro-Dollar Loan, the Borrower shall borrow a Base Rate
Loan in an equal principal amount from the Bank, and the Bank shall make such a
Base Rate Loan.
. (a) If after the date hereof, a Change of Law or compliance by the Bank
(or its Lending Office) with any request or directive (whether or not having
the force of law) of any Authority:
(i) shall subject the Bank (or its Lending Office) to any tax,
duty or other charge with respect to Euro-Dollar Loans, the Note or
its obligation to make Euro-Dollar Loans, or shall change the basis
of taxation of payments to the Bank (or its Lending Office) of the
principal of or interest on Euro-Dollar Loans or any other amounts
due under this Agreement in respect of Euro-Dollar Loans or its
obligation to make Euro-Dollar Loans (except for changes in the rate
of tax on the overall net income of the Bank or its Lending Office
imposed by the jurisdiction in which the Bank's principal executive
office or Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors
of the Federal Reserve System, but excluding with respect to any
Euro-Dollar Loan any such requirement included in an applicable
Euro-Dollar Reserve Percentage) against assets of, deposits with or
for the account of, or credit extended by, the Bank (or its Lending
Office); or
(iii) shall impose on the Bank (or its Lending Office) or the
London interbank market any other condition affecting Euro-Dollar
Loans, the Note or its obligation to make Euro-Dollar Loans;
and the result of any of the foregoing is to increase the cost to the Bank (or
its Lending Office) of making or maintaining any Euro-Dollar Loan, or to reduce
the amount of any sum received or receivable by the Bank (or its Lending Office)
under this Agreement or under the Note with respect thereto, by an amount deemed
by the Bank to be material, then, within 15 days after demand by the Bank, the
Borrower shall pay to the Bank such additional amount or amounts as will
compensate the Bank for such increased cost or reduction which accrued within 90
days immediately prior to such notice.
(b) If the Bank shall have determined that after the date hereof the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any existing or future law, rule or regulation, or any change
in the interpretation or administration thereof, or compliance by the Bank (or
its Lending Office) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any Authority, has or would have the
effect of reducing the rate of return on the Bank's capital as a consequence of
its obligations hereunder to a level below that which the Bank could have
achieved but for such adoption, change or compliance (taking into consideration
the Bank's policies with respect to capital adequacy) by an amount deemed by the
Bank to be material, then from time to time, within 15 days after demand by the
Bank, the Borrower shall pay to the Bank such additional amount or amounts as
will compensate the Bank for such reduction which accrued or occurred within 90
days immediately prior to such notice.
(c) The Bank will promptly notify the Borrower of any event of which
it has knowledge, occurring after the date hereof, which will entitle the Bank
to compensation pursuant to this Section and will designate a different Lending
Office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the judgment of the Bank, be otherwise
disadvantageous to the Bank. A certificate of the Bank claiming compensation
under this Section and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, the Bank may use any reasonable averaging and
attribution methods.
(d) The provisions of this Section 7.03 shall be applicable with
respect to any Participant, Assignee or other Transferee, and any calculations
required by such provisions shall be made based upon the circumstances of such
Participant, Assignee or other Transferee.
SECTION 7.04. Base Rate Loans Substituted for Affected Euro-Dollar
Loans. If (i)the obligation of the Bank to make or maintain Euro-Dollar Loans
has been suspended pursuant to Section 7.02 or (ii) any Bank has demanded
compensation under Section 7.03, and the Borrower shall, by at least 5
Euro-Dollar Business Days' prior notice to the Bank, have elected that the
provisions of this Section shall apply to the Bank, then, unless and until the
Bank notifies the Borrower that the circumstances giving rise to such suspension
or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by the Bank as
Euro-Dollar Loans shall be made instead as Base Rate Loans, and
(b) after each Euro-Dollar Loan has been repaid, all payments of
principal which would otherwise be applied to repay Euro-Dollar Loans shall be
applied to repay Base Rate Loans instead.
In the event that the Borrower shall elect that the provisions of this Section
shall apply to the Bank, the Borrower shall remain liable for, and shall pay to
the Bank as provided herein, all amounts due the Bank under Section 7.03 in
respect of the period preceding the date of conversion of the Loans resulting
from the Borrower's election.
SECTION 7.05. Compensation. Upon the request of the Bank, delivered
to the Borrower, the Borrower shall pay to the Bank such amount or amounts as
shall compensate the Bank for any actual loss, cost or expense incurred by the
Bank as a result of:
(a) any payment or prepayment (pursuant to Section 2.09, Section
2.10, Section 7.02 or otherwise) of a Euro-Dollar Loan on a date other than the
last day of an Interest Period for such Euro-Dollar Loan;
(b) any failure by the Borrower to prepay a Euro-Dollar Loan on the
date for such prepayment specified in the relevant notice of prepayment
hereunder; or
(c) any failure by the Borrower to borrow a Euro-Dollar Loan on the
date for the Euro-Dollar Borrowing of which such Euro-Dollar Loan is a part
specified in the applicable Notice of Borrowing delivered pursuant to Section
2.02;
such compensation to include, without limitation, an amount equal to the excess,
if any, of (x) the amount of interest which would have accrued on the amount so
paid or prepaid or not prepaid or borrowed for the period from the date of such
payment, prepayment or failure to prepay or borrow to the last day of the then
current Interest Period for such Euro-Dollar Loan (or, in the case of a failure
to prepay or borrow, the Interest Period for such Euro-Dollar Loan which would
have commenced on the date of such failure to prepay or borrow) at the
applicable rate of interest for such Euro-Dollar Loan provided for herein
(excluding, however, the Applicable Margin) over (y) the amount of interest (as
reasonably determined by the Bank) the Bank would have paid on deposits in
Dollars of comparable amounts having terms comparable to such period placed with
it by leading banks in the London interbank market (if such Loan is a
Euro-Dollar Loan).
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission or similar writing) and shall be given to such party at its address
or telecopy number set forth on the signature pages hereof or such other address
or telecopy number as such party may hereafter specify for the purpose by notice
to each other party. Each such notice, request or other communication shall be
effective (i) if given by telecopier, when such telecopy is transmitted to the
telecopy number specified in this Section and the telecopy machine used by the
sender provides a written confirmation that such telecopy has been so
transmitted or receipt of such telecopy transmission is otherwise confirmed,
(ii) if given by mail, 72 hours after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid, and (iii) if
given by any other means, when delivered at the address specified in this
Section; provided that notices to the Bank under Article II shall not be
effective until received.
SECTION 8.02. No Waivers. No failure or delay by the Bank in
exercising any right, power or privilege hereunder or under the Note or other
Loan Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 8.03. Expenses; Documentary Taxes; Indemnification;
Increased Cost and Reduced Return. (a) The Borrower shall pay (i) all
out-of-pocket expenses of the Bank, including reasonable fees and disbursements
of counsel for the Bank actually incurred, in connection with the preparation of
this Agreement and the other Loan Documents, any waiver or consent hereunder or
thereunder or any amendment hereof or thereof or any Default or alleged Default
hereunder or thereunder and (ii) if a Default occurs, all out-of-pocket expenses
incurred by the Bank, including reasonable fees and disbursements of counsel
actually incurred, in connection with such Default and collection and other
enforcement proceedings resulting therefrom, including out-of-pocket expenses
incurred in enforcing this Agreement and the other Loan Documents.
(b) The Borrower shall indemnify the Bank against any transfer
taxes, documentary taxes, assessments or charges made by any Authority by reason
of the execution and delivery of this Agreement or the other Loan Documents.
(c) The Borrower shall indemnify the Bank and each Affiliate thereof
and their respective directors, officers, employees and agents from, and hold
each of them harmless against, any and all losses, liabilities, claims or
damages to which any of them may become subject, insofar as such losses,
liabilities, claims or damages arise out of or result from any actual or
proposed use by the Borrower of the proceeds of any extension of credit by the
Bank hereunder or breach by the Borrower of this Agreement or any other Loan
Document or from investigation, litigation (including, without limitation, any
actions taken by the Bank to enforce this Agreement or any of the other Loan
Documents) or other proceeding (including, without limitation, any threatened
investigation or proceeding) relating to the foregoing, and the Borrower shall
reimburse the Bank, and each Affiliate thereof and their respective directors,
officers, employees and agents, upon demand for any expenses (including, without
limitation, legal fees) incurred in connection with any such investigation or
proceeding; but excluding any such losses, liabilities, claims, damages or
expenses incurred by reason of the gross negligence or willful misconduct of the
Person to be indemnified.
SECTION 8.04. CONSEQUENTIAL DAMAGES. THE BANK SHALL NOT BE
RESPONSIBLE OR LIABLE TO THE BORROWER OR ANY OTHER PERSON OR ENTITY FOR ANY
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
SECTION 8.05. Setoffs. (a) The Borrower hereby grants to the Bank,
as security for the full and punctual payment and performance of the obligations
of the Borrower under this Agreement, a continuing lien on and security interest
in all deposits and other sums credited by or due from the Bank to the Borrower
or subject to withdrawal by the Borrower; and regardless of the adequacy of any
collateral or other means of obtaining repayment of such obligations, the Bank
may at any time upon or after the occurrence of any Event of Default, and
without notice to the Borrower, set off the whole or any portion or portions of
any or all such deposits and other sums against such obligations, whether or not
any other Person or Persons could also withdraw money therefrom.
(b) The Borrower agrees, to the fullest extent it may effectively do
so under applicable law, that any holder of a participation in a Note may
exercise rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
SECTION 8.06. Amendments and Waivers. Any provision of this
Agreement, the Note or any other Loan Documents may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by the Borrower
and the Bank.
SECTION 8.07. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement.
(b) The Bank may at any time sell to one or more Persons (each a
"Participant") participating interests in any Loan owing to the Bank, any Note
held by the Bank, any Commitment hereunder or any other interest of the Bank
hereunder. In the event of the sale by the Bank of a participating interest to a
Participant, the Bank's obligations under this Agreement shall remain unchanged,
the Bank shall remain solely responsible for the performance thereof, the Bank
shall remain the holder of any such Note for all purposes under this Agreement,
and the Borrower shall continue to deal solely and directly with the Bank in
connection with the Bank's rights and obligations under this Agreement. In no
event shall the Bank be obligated to the Participant to take or refrain from
taking any action hereunder except that the Bank may agree that it will not
(except as provided below), without the consent of the Participant, agree to (i)
the change of any date fixed for the payment of principal of or interest on the
related Loan or Loans, (ii) the change of the amount of any principal, interest
or fees due on any date fixed for the payment thereof with respect to the
related Loan or Loans, (iii) the change of the principal of the related Loan or
Loans, (iv) any change in the rate at which either interest is payable thereon
or (if the Participant is entitled to any part thereof) commitment fee is
payable hereunder from the rate at which the Participant is entitled to receive
interest or commitment fee (as the case may be) in respect of such
participation, (v) the release or substitution of all or any substantial part of
the collateral (if any) held as security for the Loans, or (vi) the release of
any guaranty given to support payment of the Loans. If the Bank sells a
participating interest in any Loan, Note, Commitment or other interest under
this Agreement, it shall within 10 Domestic Business Days of such sale, provide
the Borrower with written notification stating that such sale has occurred and
identifying the Participant and the interest purchased by such Participant.
(c) The Bank may at any time assign to one or more banks or
financial institutions (each an "Assignee") all, or a proportionate part of all,
of its rights and obligations under this Agreement, the Note and the other Loan
Documents, and such Assignee shall assume all such rights and obligations,
pursuant to an Assignment and Acceptance in the form attached hereto as Exhibit
F, executed by such Assignee and the Bank (and, in the case of an Assignee that
is not an Affiliate of the Bank, by the Borrower); provided that (i) the amount
of the Loans or Commitment subject to such assignment (determined as of the
effective date of the assignment) shall be equal to or greater than $5,000,000,
and (ii) unless a Default shall have occurred and be continuing, no interest may
be sold by the Bank pursuant to this paragraph (c) to any Assignee that is not
then an Affiliate of the Bank without the consent of the Borrower, which consent
shall not be unreasonably withheld. Upon (A) execution of the Assignment and
Acceptance by the Bank, such Assignee and (if applicable) the Borrower, (B)
delivery of an executed copy of the Assignment and Acceptance to the Borrower,
(C) payment by such Assignee to the Bank of an amount equal to the purchase
price agreed between the Bank and such Assignee, such Assignee shall for all
purposes be the party to this Agreement and shall have pro rata share of all the
rights and obligations of the Bank under this Agreement to the same extent as if
it were an original party hereto with a Commitment as set forth in such
instrument of assumption, and the Bank shall be released from its obligations
hereunder to a corresponding extent, and no further consent or action by the
Borrower or the Bank shall be required. Upon the consummation of any transfer to
an Assignee pursuant to this paragraph (c), the Bank and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to each of
such Assignee and the Bank.
(d) Subject to the provisions of Section 8.08, the Borrower
authorizes the Bank to disclose to any Participant, Assignee or other transferee
(each a "Transferee") and any prospective Transferee any and all financial and
other information in the Bank's possession concerning the Borrower which has
been delivered to the Bank by the Borrower pursuant to this Agreement or which
has been delivered to the Bank by the Borrower in connection with the Bank's
credit evaluation prior to entering into this Agreement.
(e) Anything in this Section 8.07 to the contrary notwithstanding,
the Bank may assign and pledge all or any portion of the Loans and/or
obligations owing to it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and Operating Circular issued by such
Federal Reserve Bank, provided that any payment in respect of such assigned
Loans and/or obligations made by the Borrower to the assigning and/or pledging
Bank in accordance with the terms of this Agreement shall satisfy the Borrower's
obligations hereunder in respect of such assigned Loans and/or obligations to
the extent of such payment. No such assignment shall release the assigning
and/or pledging Bank from its obligations hereunder.
SECTION 8.08. Confidentiality. The Bank agrees to exercise its best
efforts to keep any information delivered or made available by the Borrower to
it which is clearly indicated to be confidential information, confidential from
anyone other than persons employed or retained by such Bank who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided, however, that nothing herein shall prevent
the Bank from disclosing such information (i) upon the order of any court or
administrative agency, (ii) upon the request or demand of any regulatory agency
or authority having jurisdiction over the Bank, (iii) which has been publicly
disclosed, (iv) to the extent reasonably required in connection with any
litigation to which the Bank or its respective Affiliates may be a party, (v) to
the extent reasonably required in connection with the exercise of any remedy
hereunder, (vi) to the Bank's legal counsel and independent auditors and (vii)
to any actual or proposed Participant, Assignee or other Transferee of all or
part of its rights hereunder which has agreed in writing to be bound by the
provisions of this Section 8.08; provided, further, that to the extent
practicable under the circumstances, prior to disclosing such information
pursuant to clause (i) or (ii) of this Section, the Bank will provide notice to
the Borrower of such disclosure and, if reasonably requested by the Borrower,
shall cooperate with any attempt by the Borrower to overturn or invalidate any
request for such information (provided that the Bank shall not be required to
cooperate with any such attempt if the Bank determines, in its sole discretion,
that it would be materially prejudicial to the Bank or its interests to so
cooperate).
SECTION 8.09. Survival of Certain Obligations. Section 8.03 and the
obligations of the Borrower thereunder, shall survive, and shall continue to be
enforceable notwithstanding, the termination of this Agreement and the
Commitment and the payment in full of the principal of and interest on all
Loans.
SECTION 8.10. Georgia Law. This Agreement and the Note shall be
construed in accordance with and governed by the law of the State of Georgia.
SECTION 8.11. Severability. In case any one or more of the
provisions contained in this Agreement, the Note or any of the other Loan
Documents should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby and
shall be enforced to the greatest extent permitted by law.
SECTION 8.12. Interest. In no event shall the amount of interest due
or payable hereunder or under the Note exceed the maximum rate of interest
allowed by applicable law, and in the event any such payment is inadvertently
made to the Bank by the Borrower or inadvertently received by the Bank, then
such excess sum shall be credited as a payment of principal, unless the Borrower
shall notify the Bank in writing that it elects to have such excess sum returned
forthwith. It is the express intent hereof that the Borrower not pay and the
Bank not receive, directly or indirectly in any manner whatsoever, interest in
excess of that which may legally be paid by the Borrower under applicable law.
SECTION 8.13. Interpretation. No provision of this Agreement or any
of the other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
SECTION 8.14. Consent to Jurisdiction. The Borrower (a) submits to
personal jurisdiction in the State of Georgia, the courts thereof and the United
States District Courts sitting therein, for the enforcement of this Agreement,
the Note and the other Loan Documents, (b) waives any and all personal rights
under the law of any jurisdiction to object on any basis (including, without
limitation, inconvenience of forum) to jurisdiction or venue within the State of
Georgia for the purpose of litigation to enforce this Agreement, the Note or the
other Loan Documents, and (c) agrees that service of process may be made upon it
in the manner prescribed in Section 8.01 for the giving of notice to the
Borrower. Nothing herein contained, however, shall prevent the Bank from
bringing any action or exercising any rights against any security and against
the Borrower personally, and against any assets of the Borrower, within any
other state or jurisdiction.
SECTION 8.15. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
[The remainder of this page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, under seal, by their respective authorized officers as of the
day and year first above written.
ATLANTIC AMERICAN CORPORATION
ATTEST:
__________________________ By: ___________________________(SEAL)
________, Secretary Title:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
[CORPORATE SEAL] ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Hilton ▇. ▇▇▇▇▇▇, ▇▇.,
President and Chief Executive
Officer
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone number: (▇▇▇) ▇▇▇-▇▇▇▇
WACHOVIA BANK, N.A.
By: ___________________________(SEAL)
Title:
Lending Office
Wachovia Bank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone number: (▇▇▇) ▇▇▇-▇▇▇▇
A#
SCHEDULE 4.08A
EXISTING INSURANCE SUBSIDIARIES
Name of Subsidiary Jurisdiction of
Incorporation
American Southern Insurance Company Georgia
Bankers Fidelity Life Insurance Company Georgia
Georgia Casualty and Surety Company Georgia
SCHEDULE 4.08B
EXISTING SUBSIDIARIES WHICH
ARE NOT INSURANCE SUBSIDIARIES
Name of Subsidiary Jurisdiction of
Incorporation
Self-Insurance Administrators, Inc. Georgia
SCHEDULE 5.27
DEBT EXISTING ON CLOSING DATE
-------------------------------------------------------------------------------
Principal Amount
Holder Outstanding Interest Maturity Date Amortization
Rate
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Publicly held $25,000,000(1) Variable July 1, 2009 None
rate
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
J. ▇▇▇▇ ▇▇▇▇▇▇▇▇ $13,4000,000 of 9.00% Not None
and Family Series B redeemable(2)
Preferred Stock
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Atlantic American $11,375,000 7.25% Perpetual None
Corporation(3)
-------------------------------------------------------------------------------
EXHIBIT A
NOTE
$30,000,000 Atlanta, Georgia
July 1, 1999
For value received, ATLANTIC AMERICAN CORPORATION, a Georgia
corporation (the "Borrower"), promises to pay to the order of WACHOVIA BANK,
N.A. (the "Bank"), for the account of its Lending Office, the principal sum of
Thirty Million and No/100 Dollars ($30,000,000), or such lesser amount as shall
equal the unpaid principal amount of the Loans made by the Bank to the Borrower
pursuant to the Credit Agreement referred to below, on the dates and in the
amounts provided in the Credit Agreement. The Borrower promises to pay interest
on the unpaid principal amount of this Note on the dates and at the rate or
rates provided for in the Credit Agreement. Interest on any overdue principal of
and, to the extent permitted by law, overdue interest on the principal amount
hereof shall bear interest at the Default Rate, as provided for in the Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds at
the office of the Bank located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, or such other address as may be specified from time to time pursuant to
the Credit Agreement.
The Loans made by the Bank, the respective maturities thereof, the
interest rates from time to time applicable thereto and all repayments of the
principal thereof shall be recorded by the Bank and, prior to any transfer
hereof, endorsed by the Bank on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof; provided, that
the failure of the Bank to make, or any error of the Bank in making, any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This Note is the Note referred to in the Credit Agreement dated as
of July 1, 1999 between the Borrower and the Bank (as the same may be amended or
modified from time to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the prepayment and the repayment hereof and
the acceleration of the maturity hereof.
The Borrower hereby waives presentment, demand, protest, notice of
demand, protest and nonpayment and any other notice required by law relative
hereto, except to the extent as otherwise may be expressly provided for in the
Credit Agreement.
The Borrower agrees, in the event that this Note or any portion
hereof is collected by law or through an attorney at law, to pay all reasonable
costs of collection, including, without limitation, reasonable attorneys' fees.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed under seal, by its duly authorized officer as of the day and year first
above written.
ATLANTIC AMERICAN CORPORATION
By: __________________________(SEAL)
Title:
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
-------------------------------------------------------------------------------
Amount Amount of
Type of Interest of Principal Maturity Notation
Date Loan(4) Rate Loan Repaid Date Made
By
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EXHIBIT B
OPINION OF COUNSEL FOR THE BORROWER
[Dated as provided in Section 3.01 of the Credit Agreement]
[To be furnished by Counsel to Borrower]
EXHIBIT C
CLOSING CERTIFICATE
OF
ATLANTIC AMERICAN CORPORATION
Reference is made to the Credit Agreement (the "Credit Agreement")
dated as of July 1, 1999, between Atlantic American Corporation (the "Borrower")
and Wachovia Bank, N.A. (the "Bank"). Capitalized terms used herein have the
meanings ascribed thereto in the Credit Agreement.
Pursuant to Section 3.01(e) of the Credit Agreement,
___________________, the duly authorized ____________________ of the Borrower,
hereby certifies to the Bank that: (i) no Default has occurred and is continuing
on the date hereof; and (ii) the representations and warranties of the Borrower
contained in Article IV of the Credit Agreement are true on and as of the date
hereof.
Certified as of the 1st day of July, 1999.
ATLANTIC AMERICAN CORPORATION
By: ________________________________
Name:
Title:
EXHIBIT D
ATLANTIC AMERICAN CORPORATION
SECRETARY'S CERTIFICATE
The undersigned, _____________, _______ Secretary of Atlantic American
Corporation, a Georgia corporation (the "Borrower"), hereby certifies that he
has been duly elected, qualified and is acting in such capacity and that, as
such, he is familiar with the facts herein certified and is duly authorized to
certify the same, and hereby further certifies, in connection with the Credit
Agreement dated as of July 1, 1999 (the "Credit Agreement") between the Borrower
and Wachovia Bank, N.A. that:
1. Attached hereto as Exhibit A is a complete and correct copy of the
Certificate of Incorporation of the Borrower as in full force and effect on the
date hereof as certified by the Secretary of State of the State of Georgia, the
Borrower's state of incorporation.
2. Attached hereto as Exhibit B is a complete and correct copy of the
Bylaws of the Borrower as in full force and effect on the date hereof.
3. Attached hereto as Exhibit C is a complete and correct copy of the
resolutions duly adopted by the Board of Directors of the Borrower on
___________ __, 19__ approving, and authorizing the execution and delivery of,
the Credit Agreement, the Note (as such term is defined in the Credit Agreement)
and the other Loan Documents (as such term is defined in the Credit Agreement)
to which the Borrower is a party. Such resolutions have not been repealed or
amended and are in full force and effect, and no other resolutions or consents
have been adopted by the Board of Directors of the Borrower in connection
therewith.
4. ____________, who as ________________________ of the Borrower signed
the Credit Agreement, the Note and the other Loan Documents to which the
Borrower is a party, was duly elected, qualified and acting as such at the time
he signed the Credit Agreement, the Note and other Loan Documents to which the
Borrower is a party, and his signature appearing on the Credit Agreement, the
Note and the other Loan Documents to which the Borrower is a party is his
genuine signature.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
1st day of July, 1999.
--------------------------------
Name:
Title:
EXHIBIT E
FORM OF COMPLIANCE CERTIFICATE
To be provided by the Borrower prior to the Closing Date.
3
A#
EXHIBIT F
ASSIGNMENT AND ACCEPTANCE
Dated ________________ __, ____
Reference is made to the Credit Agreement dated as of July 1, 1999
(together with all amendments and modifications thereto, the "Credit Agreement")
between Atlantic American Corporation, a Georgia corporation (the "Borrower")
and Wachovia Bank, N.A. (the "Bank"). Terms defined in the Credit Agreement are
used herein with the same meaning.
Wachovia Bank, N.A. (the "Assignor") and ____________________ (the
"Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, without recourse to
the Assignor, and the Assignee hereby purchases and assumes from the Assignor, a
______% interest in and to all of the Assignor's rights and obligations under
the Credit Agreement as of the Effective Date (as defined below) (including,
without limitation, a ______% interest (which on the Effective Date hereof is
$_______________) in the Assignor's Commitment and a ______% interest (which on
the Effective Date hereof is $_______________) in the Loans owing to the
Assignor and a ______% interest in the Note held by the Assignor (which on the
Effective Date hereof is $__________________).
2. The Assignor (i) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement, any other instrument or
document furnished pursuant thereto or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement, any
other Loan Document or any other instrument or document furnished pursuant
thereto, other than that it is the legal and beneficial owner of the interest
being assigned by it hereunder, that such interest is free and clear of any
adverse claim and that as of the date hereof the Commitment (without giving
effect to assignments thereof which have not yet become effective) is
$_________________ and the aggregate outstanding principal amount of the Loans
owing to it (without giving effect to assignments thereof which have not yet
become effective) is $_________________; (ii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or the performance or observance by the Borrower of any of its
obligations under the Credit Agreement, any other Loan Document or any other
instrument or document furnished pursuant thereto; and (iii) attaches the Note
referred to in paragraph 1 above and requests that the Bank exchange such Note
as follows: [a new Note dated _______________, ____ in the principal amount of
$________________ payable to the order of the Assignee] [new Notes as follows: a
Note dated _________________, ____ in the principal amount of $_______________
payable to the order of the Assignor and a Note dated ______________, ____ in
the principal amount of $______________ payable to the order of the Assignee].
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.04(a) thereof (or any more recent financial statements of the Borrower
delivered pursuant to Section 5.01(a) or (b) thereof) and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement;
(iii) confirms that it is a bank or financial institution; (iv) agrees that it
will perform in accordance with their terms all of the obligations which by the
terms of the Credit Agreement are required to be performed by it as an assignee
of the Bank; (v) specifies as its Lending Office (and address for notices) the
office set forth beneath its name on the signature pages hereof, (vi) represents
and warrants that the execution, delivery and performance of this Assignment and
Acceptance are within its corporate powers and have been duly authorized by all
necessary corporate action[, and (vii) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying as to the Assignee's
status for purposes of determining exemption from United States withholding
taxes with respect to all payments to be made to the Assignee under the Credit
Agreement and the Note or such other documents as are necessary to indicate that
all such payments are subject to such taxes at a rate reduced by an applicable
tax treaty].(5)
4. The Effective Date for this Assignment and Acceptance shall be
_______________ (the "Effective Date"). [Following the execution of this
Assignment and Acceptance, it will be delivered to the Borrower for execution by
the Borrower](6).
5. [Upon such execution by the Borrower](2), [F]rom and after the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent rights and obligations have been transferred to it by this
Assignment and Acceptance, have the rights and obligations of an assignee of the
Bank thereunder and (ii) the Assignor shall, to the extent its rights and
obligations have been transferred to the Assignee by this Assignment and
Acceptance, relinquish its rights (other than under Section 8.03 of the Credit
Agreement) and be released from its obligations under the Credit Agreement.
6. [Upon such execution by the Borrower](2), [F]rom and after the
Effective Date, the Borrower shall make all payments in respect of the interest
assigned hereby to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments for periods prior to such acceptance by the
Borrower directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of Georgia.
WACHOVIA BANK, N.A.
By:____________________________________
Title:
[NAME OF ASSIGNEE]
By:____________________________________
Title:
Lending Office:
[Address]
ATLANTIC AMERICAN CORPORATION(1)
By:____________________________________
Title:
A#
EXHIBIT G
NOTICE OF BORROWING
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Wachovia Bank, N.A.
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Attention:_________________
Re: Credit Agreement (as amended and modified from time to time,
the "Credit Agreement") dated as of July 1, 1999 between
Atlantic American Corporation and Wachovia Bank, N.A.
Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings attributable thereto in the Credit Agreement.
This Notice of Borrowing is delivered to you pursuant to Section 2.02
of the Credit Agreement.
The Borrower hereby requests a [Euro-Dollar Borrowing][Base Rate
Borrowing] in the aggregate principal amount of $___________ to be made on
________, ____ and for interest to accrue thereon at the rate established by the
Credit Agreement for [Euro-Dollar Loans][Base Rate Loans]. The duration of the
Interest Period with respect thereto shall be [1 month][2 months][3months][6
months][30 days].
The Borrower has caused this Notice of Borrowing to be executed and
delivered by its duly authorized officer this ___ day of ____, ____.
ATLANTIC AMERICAN CORPORATION
By:______________________
Title:
--------
(1) Publicly traded bond backed by letter of credit from Wachovia Bank,
N.A.
(2) Series B preferred stock is redeemable only by the Borrower (3)
Atlantic American Corporation will hold a surplus note issued by
Association Casualty Insurance Company ("ACIC") in connection with the
acquisition of ACIC and its affiliated entity. This note eliminates in
the consolidation of Atlantic American Corporation and its
subsidiaries.
(4) I.e., a Base Rate or Euro-Dollar Loan
(5) If the Assignee is organized under the laws of a jurisdiction outside
the United States.
(6) If the Assignee is not an Affiliate of the Bank and a Default has not
occurred and is continuing..