EXHIBIT 10.2
LOAN AGREEMENT
This LOAN AGREEMENT, dated as of September 17, 1999, is among MILLERS
AMERICAN GROUP, INC., a Texas corporation ("Borrower") and LASALLE BANK NATIONAL
ASSOCIATION, a national banking association ("LaSalle"), as a Lender and as
agent for all Lenders (this and all other capitalized terms used herein are
defined in Section 1.1 below).
PRELIMINARY STATEMENT:
A. Borrower has requested Lenders to make available to Borrower up to
$30,000,000 in the form of a revolving line of credit, the proceeds of which
will be used for the purposes described herein.
B. Lenders are willing to provide such revolving line of credit to Borrower
on the terms and subject to the conditions set forth in this Loan Agreement.
NOW THEREFORE, it is agreed as follows:
ARTICLE I
DEFINITIONS AND DETERMINATIONS
1.1 DEFINITIONS. As used in this Loan Agreement and in the other Loan
Instruments, unless otherwise expressly indicated herein or therein, the
following terms shall have the following meanings (such meanings to be
applicable equally to both the singular and plural forms of the terms defined):
ACCOUNTANTS: Deloitte & Touche LLP or any other independent
certified public accounting firm selected by Borrower and reasonably
satisfactory to Agent.
ACCOUNTING CHANGES: as defined in Section 1.3.
ACQUISITION: any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of all or substantially all
of any business or division of a Person, (b) the acquisition of in excess of 50%
of the voting common stock, general partnership interests, common membership
interests or other common voting equity of any Person, or otherwise causing any
Person to become a Subsidiary, or (c) a merger or consolidation or any other
combination with another Person (other than a Person that is a Subsidiary).
ADMITTED ASSETS: those assets prescribed or permitted to be reflected on
the financial statements of a Texas property and casualty insurance company (and
with respect to Phoenix, an Arizona property and casualty insurance company)
pursuant to Statutory Accounting Practices.
AFFILIATE: any Person that directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control with
another Person. The term "control" means possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or equity interests,
by contract or otherwise. For the purposes hereof, any Person which owns or
controls, directly or indirectly, 25% or more of the securities or equity
interests, as applicable, whether voting or non-voting, of any other Person
shall be deemed to "control" such Person.
AGENT: LaSalle, as agent for the Lenders.
ANNUALIZED NET WRITTEN PREMIUMS: as of the end of any quarter, the sum
of the Net Written Premiums for such quarter and the preceding three quarters.
APPLICABLE MARGIN: the respective LIBOR Rate Margin, Prime Rate Margin and
Non-Use Fee Rate from time to time established at any time based on the
Consolidated Leverage Ratio in accordance with the following table:
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Consolidated LIBOR Rate Margin Prime Rate Margin Non-Use Fee Rate
Leverage Ratio
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<= .20 : 1.0 1.50% 0% .20%
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> .20 : 1.0 but
<= .25 : 1.0 1.75% .25% .25%
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> .25 : 1.0 but
<= .30 : 1.0 2.00% .50% .30%
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> .30 : 1.0 but
<= .35 : 1.0 2.25% .75% .35%
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> .35 : 1.0 2.50% 1.00% .40%
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Notwithstanding anything to the contrary in this Loan Agreement, from the
Closing Date to the first Adjustment Date (as defined below), the
Borrower's Consolidated Leverage Ratio shall be deemed to be greater than
0.25 to 1.00 but less than or equal to 0.30 to 1.00. Changes in the
Applicable Margin resulting from changes in Borrower's Consolidated
Leverage Ratio shall become effective after September 30, 1999 on the date
(the "Adjustment Date") on which financial statements, attached to the
Compliance Certificate, are received by the Agent and LaSalle pursuant to
Section 6.3.1 and Section 6.3.2 (but in any event no later than the 60th
day after the end of each of the first three quarterly periods of each
fiscal year beginning for purposes hereof with the quarter ending
September 30, 1999 or the 120th day after the end of each fiscal year, as
the case may be) and shall remain in effect until the next change to be
effected pursuant to this paragraph. If any financial statements referred
to above are not delivered within the time periods specified above, then,
until such financial statements are delivered, Borrower's Consolidated
Leverage Ratio as at the end of the fiscal period that would have been
covered thereby shall for the purpose of this definition be deemed to be
greater than 0.35 to 1.00.
ARIZONA HOLDING COMPANY ACT: as defined in Section 5.9.
ASSIGNEE: any Person reasonably acceptable to Borrower to which a
Loan Assignment is made in compliance with the provisions of subsection 9.1.1.
BANK OF AMERICA: Bank of America.
BANK OF AMERICA AGREEMENT: that certain Loan Agreement, dated as of
July 1, 1996, by and between NationsBank of Texas, N.A., and Millers, as
amended, modified, supplemented, restated, extended or replaced (including
replacement after the termination of such agreement).
BANKRUPTCY CODE: the United States Bankruptcy Code and any successor
statute thereto, and the rules and regulations issued thereunder, as in
effect from time to time.
BORROWER: see PREAMBLE.
BORROWER CAPITAL STOCK: all of the issued and outstanding shares of
capital stock of Borrower.
BORROWER'S OBLIGATIONS: (i) any and all Indebtedness due or to become due,
now existing or hereafter arising, of Borrower to Lenders and/or Agent pursuant
to the terms of this Loan Agreement or any other Loan Instrument and (ii) the
performance of the covenants of Borrower contained in the Loan Instruments.
BUSINESS: the business of marketing, underwriting and issuing property and
casualty insurance and related business and other businesses that can reasonably
be expected to enhance or provide synergies with the business of marketing,
underwriting and issuing property and casualty insurance and related businesses.
BUSINESS DAY: (i) except as provided in clause (ii), any day other than a
Saturday, Sunday or other day on which banks in Chicago, Illinois are required
to close, and (ii) with respect to all notices, determinations, fundings and
payments in connection with a LIBOR Loan, any day which is a Business Day
described in clause (i) and which is also a day for trading by and between banks
in Dollar deposits in the applicable interbank Eurodollar market.
CAPITAL EXPENDITURES: payments that are made or liabilities that are
incurred by Borrower or any Subsidiary for the lease, purchase, improvement,
construction or use of any Property, the value or cost of which under GAAP is
required to be capitalized and appear on Borrower's consolidated balance sheet
in the category of property, plant or equipment, without regard to the manner in
which such payments or the instruments pursuant to which they are made are
characterized by Borrower or any other Person. A Capital Expenditure shall be
deemed to be made as of the time the Property which is the subject thereof is
put into service by Borrower or any Subsidiary.
CAPITALIZED LEASE: any lease of Property, the obligations for the
rental of which are required to be capitalized in accordance with GAAP.
CERTIFICATE OF AUTHORITY: a License issued by a U.S. state
authorizing the licensee to conduct a property and casualty insurance
business in such state and describing the lines or types of insurance
authorized.
CERTIFICATE OF AUTHORIZATION AND DEPOSIT: a certificate issued by the
Arizona Department of Insurance (i) setting forth the lines or types of
insurance which Phoenix is authorized to transact in such state at the time of
issuance of the Certificate of Authorization and Deposit, (ii) stating that
Phoenix is, at the time of issuance of the Certificate of Authorization and
Deposit authorized to transact such lines or types of insurance in Arizona and
(iii) the amount of securities that Phoenix has deposited with the Department of
Insurance.
CERTIFICATE OF COMPLIANCE: a certificate issued by state insurance
regulatory officials (i) setting forth the license of each of Millers and its
Subsidiaries and (ii) stating that such license is valid.
CHIEF FINANCIAL OFFICER: the duly elected and acting treasurer or
chief financial officer of Borrower.
CLOSING: the disbursement of the initial Loan.
CLOSING DATE: the date the initial Loan is disbursed.
CLOSING CERTIFICATE: a Closing Certificate in form and substance
acceptable to Agent.
CLOSING FEE: as defined in subsection 2.7.1.
CODE: the Internal Revenue Code of 1986, as amended, and any successor
statute thereto, and the rules and regulations issued thereunder, as in
effect from time to time.
COLLATERAL: as defined in the Pledge Agreements and in the Security
Agreement.
COMMITMENT: at any time with respect to a Lender, the principal amount set
forth beside such Lender's name under the heading "Commitment" on the signature
page of this Loan Agreement or on the signature page of the Lender Addition
Agreement pursuant to which such lender became a Lender hereunder.
COMMITMENTS: the aggregate amount of the Commitments of all
Lenders.
COMPANY ACTION LEVEL OR COMPANY ACTION LEVEL EVENT: as defined in any
risk-based capital law in effect in Texas or Arizona with respect to property
and casualty insurance companies, or, if no such law is in effect, as defined in
the NAIC's Risk-Based Capital for Property/Casualty Insurers Model Act.
COMPLIANCE CERTIFICATE: a Compliance Certificate in the form of Exhibit
1.1A.
COMPUTATION PERIOD: means each period of four consecutive Fiscal
Quarters ending on the last day of a Fiscal Quarter.
CONSOLIDATED EBITDA: for any period, Consolidated Net Income for such
period plus, without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of (a) total
income tax expense, (b) interest expense, amortization or write-off of debt
discount and debt issuance costs and commissions, discounts and other fees and
charges associated with Indebtedness for Borrowed Money (including the Loan),
(c) depreciation expense, (d) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (e) any extraordinary, unusual or
non-recurring cash expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, losses on sales of assets outside of the ordinary course of
business), net of income tax effect therefrom, and (f) any other non-cash
charges, all as determined on a consolidated basis for Borrower and its
Subsidiaries in accordance with GAAP; and minus, to the extent included in the
statement of such Consolidated Net Income for such period, (g) any extraordinary
income or gains (including, whether or not otherwise includable as a separate
item in the statement of such Consolidated Net Income for such period, gains on
the sales of assets outside of the ordinary course of business), net of income
tax effect therefrom.
CONSOLIDATED FIXED CHARGE RATIO: For any period the sum of (x) Dividend
Capability of Millers and Phoenix PLUS Consolidated Non-Insurance EBITDA LESS
cash taxes paid and Capital Expenditures of Borrower and its Non-Insurance
Subsidiaries divided by (y) anticipated Consolidated Fixed Charges for the
ensuing 12 months.
CONSOLIDATED FIXED CHARGES: means for any period the Fixed Charges of
Borrower and its Non-Insurance Subsidiaries on a consolidated basis.
CONSOLIDATED LEVERAGE RATIO: The Leverage Ratio of Borrower and its
Subsidiaries on a consolidated basis.
CONSOLIDATED NET INCOME: for any period, the consolidated net
income (or loss) of the Borrower and each Subsidiary determined on a
consolidated basis in a manner acceptable to Lenders in accordance with GAAP
and Statutory Accounting Practices.
CONSOLIDATED NET WORTH: net worth of Borrower and its Subsidiaries
computed in accordance with GAAP on a consolidated basis without regard to
SFAS 130 and 133.
CONSOLIDATED NON-INSURANCE EBITDA: for any period, Consolidated Net Income
for such period plus, without duplication and to the extent reflected as a
charge in the statement of such Consolidated Net Income for such period, the sum
of (a) total income tax expense, (b) interest expense, amortization or write-off
of debt discount and debt issuance costs and commissions, discounts and other
fees and charges associated with Indebtedness for Borrowed Money (including the
Loan), (c) depreciation expense, (d) amortization of intangibles (including, but
not limited to, goodwill) and organization costs, (e) any extraordinary, unusual
or non-recurring cash expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, losses on sales of assets outside of the ordinary course of
business), net of income tax effect therefrom, and (f) any other non-cash
charges, all as determined on a consolidated basis for Borrower and its
Non-Insurance Subsidiaries in accordance with GAAP; and MINUS, to the extent
included in the statement of such Consolidated Net Income for such period, the
sum of (g) interest income, and (h) any extraordinary income or gains
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, gains on the sales of
assets outside of the ordinary course of business), net of income tax effect
therefrom, all as determined on a consolidated basis for Borrower and
Non-Insurance subsidiaries in accordance with GAAP.
CONTINGENT LIABILITIES: any agreement, undertaking or arrangement by which
any Person guarantees, endorses or otherwise becomes or is contingently liable
upon (by direct or indirect agreement, contingent or otherwise, to provide funds
for payment, to supply funds to or otherwise to invest in a debtor, or otherwise
to assure a creditor against loss) any indebtedness, obligation or other
liability of any other Person (other than by endorsements of instruments in the
course of collection), or guarantees the payment of dividends or other
distributions upon the shares of any other Person. The amount of any Person's
obligation in respect of any Contingent Liability shall (subject to any
limitation set forth therein) be deemed to be the principal amount of the debt,
obligation or other liability supported thereby. The amount shall not include
the Outstanding Letters of Credit so long as they are not amended, modified,
drawn against or extended.
DEFAULT RATE: a per annum rate equal to 2.0% plus (i) the Prime
Rate on the Prime Rate Portion and (ii) the applicable LIBOR Rate on each
LIBOR Rate Loan.
DEFAULT RATE PERIOD: a period of time commencing on the date that an
Event of Default has occurred and ending on the date that such Event of
Default is cured or waived.
DIVIDEND CAPABILITY: the amount of dividends which Millers, Phoenix or any
Insurance Subsidiary is permitted to declare and pay pursuant to the insurance
laws and regulations of the States of Texas or Arizona, as appropriate (as such
laws and regulations may be amended from time to time), and which do not
constitute "extraordinary dividends" as defined in Article 21.49-1, Section 4(c)
of the Texas Insurance Code or Section 20-481.19 of the Arizona Insurance Code
(or any successor statutory sections thereto).
DOLLARS AND "$": lawful currency of the United States of America.
EBITDA: means earnings before interest expense, taxes, depreciation
and amortization, as calculated in accordance with GAAP.
EMPLOYEE BENEFIT PLAN: any employee benefit plan within the meaning of
Section 3(3) of ERISA which (i) is maintained for employees of Borrower or any
ERISA Affiliate, or (ii) has at any time within the preceding six years been
maintained for the employees of Borrower or any current or former ERISA
Affiliate.
ENVIRONMENTAL LAWS: any and all federal, state and local laws that
relate to or impose liability or standards of conduct concerning public or
occupational health and safety or protection of the environment, as now or
hereafter in effect and as have been or hereafter may be amended including,
without limitation, the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C.ss.9601 ET SEQ.), the Hazardous Materials
Transportation Act (42 U.S.C.ss.1802 ET SEQ.), the Resources Conservation and
Recovery Act (42 U.S.C.ss.6901 ET SEQ.), the Federal Water Pollution Control
Act (33 U.S.C.ss.1251 ET SEQ.), the Toxic Substances Control Act (15 U.S.C.
ss.2601 ET SEQ.), the Clean Air Act (42 U.S.C.ss.7901 ET SEQ.), the National
Environmental Policy Act (42 U.S.C.ss.4231 ET SEQ.), the Refuse Act (33 U.S.C.
ss.407 ET SEQ.), the Safe Drinking Water Act (42 U.S.C.ss.300(f) ET SEQ.), the
Occupational Safety and Health Act (29 U.S.C.ss.651 ET SEQ.), and all rules,
regulations, codes, ordinances and guidance documents promulgated or
published thereunder, and the provisions of any licenses, permits, orders and
decrees issued pursuant to any of the foregoing.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto, and the rules and regulations
issued thereunder, as in effect from time to time.
ERISA AFFILIATE: any Person who is a member of a group which is under
common control with Borrower, who together with Borrower is treated as a single
employer within the meaning of Section 414(b), (c), (m) and (o) of the Code.
EVENT OF DEFAULT: any of the Events of Default set forth in Section 8.1.
EXCESS INTEREST: as defined in subsection 2.3.3.
EXISTING INDEBTEDNESS: the obligations of Borrower and each of its
Subsidiaries described in Exhibit 5.16.
FEE LETTER: that certain letter agreement dated of even date between
the Borrower and the Agent, as amended from time to time, or any letter
agreements executed in substitution or replacement therefor.
FHLB: Federal Home Loan Bank of Dallas.
FHLB AGREEMENT: that certain Advances, Specific Collateral Pledge and
Security Agreement, dated as of December 20, 1995, between the FHLB and Millers,
as amended, modified, supplemented, restated, extended or replaced (including
replacement after the termination of such agreement).
FISCAL QUARTER: any fiscal quarter of Borrower for financial
accounting purposes.
FISCAL YEAR: the fiscal year of Borrower and each Subsidiary for
financial accounting purposes, which fiscal year ends on the last day of
December.
FIXED CHARGES: for any Computation Period, without duplication, the sum of
(i) Interest Expenses of the Borrower and its Non-Insurance Subsidiaries for
such Computation Period, PLUS (ii) scheduled amortization of Indebtedness for
Borrowed Money of the Borrower and its Non-Insurance Subsidiaries for such
Computation Period.
FUNDING DATE: the date of disbursement of a Loan.
GAAP: generally accepted accounting principles in the United States of
America as in effect from time to time, which shall include but shall not be
limited to the official interpretations thereof by the Financial Accounting
Standards Board or any successor thereto.
GOOD FUNDS: Dollars available in Federal funds to LaSalle at or before
12:00 noon, Chicago, Illinois time, on a Business Day.
GOVERNMENTAL BODY: any foreign, federal, state, municipal or other
government, or any department, commission, board, bureau, agency, public
authority or instrumentality thereof, any court of any of the aforementioned
entities or any arbitrator.
GUARANTOR: Trilogy.
GUARANTY: that certain Guaranty executed by Trilogy.
HAZARDOUS MATERIALS: any hazardous, toxic, dangerous or other waste,
substance or material defined as such in, regulated by or for purposes of any
Environmental Law.
HEDGING AGREEMENT: any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest
rates, currency exchange rates or commodity prices.
HEDGING OBLIGATIONS: with respect to any Person, any liability of
such Person under any Hedging Agreement.
HOLDING COMPANY: as defined in Section 5.9.
INCIPIENT DEFAULT: any event or condition which, with the giving
of notice or the lapse of time, or both, would become an Event of Default.
INDEBTEDNESS: all liabilities, obligations and reserves, contingent or
otherwise, which, in accordance with GAAP, would be reflected as a liability on
a balance sheet or would be required to be disclosed in a financial statement,
including, without duplication: (i) Indebtedness for Borrowed Money, (ii)
obligations secured by any Lien upon Property, (iii) letter of credit
obligations and Contingent Liabilities, (iv) all Hedging Obligations, and (v)
liabilities in respect of unfunded vested benefits under any Pension Plan or in
respect of withdrawal liabilities incurred under ERISA by Borrower or any ERISA
Affiliate, to any Multiemployer Plan.
INDEBTEDNESS FOR BORROWED MONEY: without duplication, all Indebtedness (i)
in respect of money borrowed, (ii) evidenced by a note, debenture or other like
written obligation to pay money (iii) in respect of rent or hire of Property
under Capitalized Leases or for the deferred purchase price of Property, (iv) in
respect of obligations under conditional sales or other title retention
agreements, and (v) all guaranties of any or all of the foregoing.
INSPIRE: INSpire Insurance Solutions, Inc., a Texas corporation.
INSURANCE SUBSIDIARIES: as to any Person, a corporation, partnership,
limited liability company or partnership or other entity the ability of which to
pay dividends is regulated by a state insurance department or other Governmental
Body that regulates insurance companies or that is otherwise required to be
regulated thereby in accordance with the statutes of its state of domicile of
which 50% of the voting common stock, general partnership interests, common
membership interests or other common voting equity is at the time owned directly
or indirectly through one or more intermediaries by such Person. Unless
otherwise qualified, all references to an "Insurance Subsidiary" or to
"Insurance Subsidiaries" in this Agreement shall refer to an Insurance
Subsidiary or Insurance Subsidiaries of the Borrower.
INTEREST EXPENSES: for any Computation Period for any Person, the
consolidated net interest payable for such Computation Period for such Person
determined in accordance with GAAP, excluding, however, any interest not
required to be paid in cash.
INTEREST RATE DETERMINATION DATE: the date for calculating a LIBOR
Rate, which date shall be two Business Days prior to the date of commencement
of the applicable LIBOR Interest Period.
INVESTMENT POLICY: the Millers and the Millers Casualty Insurance
Company Investment Policy Statement and Investment Portfolio Guidelines
attached hereto as Exhibit 1.1B., as such may be amended from time to time
by, as applicable, the Borrower or any of its Insurance Subsidiaries in their
sole discretion so long as notice of such amendments are provided to Agent
within ten (10) days of the last day of each quarter.
IRIS: as defined in Section 6.3.10.
LASALLE: see PREAMBLE.
LEASEHOLD PROPERTY: any real estate which is the subject of a lease
under which Borrower or any Subsidiary is the lessee.
LENDER ADDITION AGREEMENT: an agreement executed by a Lender and an
Assignee pursuant to which a Loan Assignment is made.
LENDERS: LaSalle and each Assignee.
LENDERS' DECISIONS: all determinations to be made by the Lenders pursuant
to the terms of the Loan Instruments, including, without limitation, any
amendment or modification of any of the Loan Instruments, determinations with
respect to the declaration of Events of Default and acceleration of Borrower's
Obligations, or any other obligation of Borrower, waivers of affirmative or
negative covenants or other provisions of the Loan Instruments, advancement of
funds pursuant to any of the Loan Instruments or the exercise of any rights or
remedies granted to the Lenders or the Agent pursuant to the terms of any of the
Loan Instruments.
LEVERAGE RATIO: For any Person the result obtained when (A) the sum of
Indebtedness for Borrowed Money plus Contingent Liabilities as of the last day
of a fiscal quarter is divided by (B) the sum of (i) Indebtedness for Borrowed
Money of such Person plus (ii) Consolidated Net Worth of such Person, as of such
day.
LIBOR ELECTION: an election by Borrower pursuant to subsection 2.4.1 to
borrow at the LIBOR Rate or to have a portion of the Principal Balance bear or
continue to bear interest at the LIBOR Rate.
LIBOR INTEREST PERIOD: (i) a period commencing (A) on the applicable
Funding Date, if Borrower prior thereto has elected pursuant to subsection 2.4.1
to have all or a portion of the Loan to be disbursed on such date bear interest
from such date at a LIBOR Rate, (B) with respect to the conversion of all or a
portion of the Prime Rate Portion to a LIBOR Loan, on the Business Day specified
by Borrower in the applicable Notice of Borrowing and (C) with respect to the
continuation as a LIBOR Loan of all or a portion of a then existing LIBOR Loan
after the expiration of the LIBOR Interest Period applicable to such existing
LIBOR Loan, on the last day of the LIBOR Interest Period applicable to such
existing LIBOR Loan, and (ii) ending one, two, three or six months thereafter,
as selected by Borrower in its Notice of Borrowing; provided, however:
(1) if any LIBOR Interest Period otherwise would end on a day that
is not a Business Day, such LIBOR Interest Period shall end on the next
succeeding Business Day, unless the result of such extension would be to
carry such LIBOR Interest Period into another calendar month, in which
event such LIBOR Interest Period shall end on the immediately preceding
Business Day; and
(2) any LIBOR Interest Period that otherwise would extend beyond the
Maturity Date shall end on the Maturity Date.
LIBOR LOAN: each portion of the Principal Balance which bears interest
at a LIBOR Rate.
LIBOR RATE: for each LIBOR Interest Period a rate of interest equal to
(i)(A) the rate per annum determined by Agent (rounded to the nearest 1/100th of
1%) at which Dollar deposits for the relevant LIBOR Interest Period and in an
amount comparable to the amount of the applicable LIBOR Loan are offered by
first class banks in immediately available funds in the London Interbank Market
as quoted at approximately 11:00 A.M. (London time) on the applicable Interest
Rate Determination Date, divided by (B) 1.00 minus the LIBOR Reserve
Requirements in effect on the applicable Interest Rate Determination Date plus
(ii) the applicable LIBOR Rate Margin.
LIBOR RATE MARGIN: the rate per annum applicable to LIBOR Loans as
established by the Applicable Margin.
LIBOR RESERVE REQUIREMENTS: for any day as applied to a LIBOR Loan, the
aggregate (without duplication) of the rates (expressed as a decimal fraction)
of reserve requirements in effect on such day (including, without limitation,
basic, supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve System of the United States or
other Governmental Body having jurisdiction with respect thereto) prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of said Board) maintained by a member bank of the Federal Reserve
System.
LICENSES: all licenses, permits, consents, approvals and
authorizations issued by any Governmental Body in connection with the
operation of the Business, including any Certificates of Authority.
LIEN: any mortgage, pledge, assignment, lien, charge, encumbrance or
security interest of any kind, or the interest of a vendor or lessor under
any conditional sale agreement, Capitalized Lease or other title retention
agreement.
LOAN: individually, any advance to be made by Lenders to Borrower under
Section 2.1, and collectively, all advances to be made by Lenders to Borrower
pursuant to Section 2.1.
LOAN AGREEMENT: this Loan Agreement and any amendments or supplements
LOAN ASSIGNMENT: the assignment by a Lender to an Assignee of (i) any
portion of such Lender's interest in Borrower's Obligations and (ii) any of
such Lender's other rights under any of the Loan Instruments.
LOAN INSTRUMENTS: collectively, the following documents:
(i) Loan Agreement;
(ii) Notes;
(iii) Pledge Agreement;
(iv) Security Agreement;
(v) Guaranty;
(vi) UCC Financing Statements;
(vii) Closing Certificate;
(viii) Solvency Certificate;
(ix) such other instruments and documents as Lenders, Agent
and/or Borrower have executed; and
(x) such other instruments and documents as Lenders reasonably
may require.
MATERIAL ADVERSE EFFECT: (i) a material adverse effect upon the Business,
operations, Property, profits or financial condition of Borrower and its
Subsidiaries taken as a whole or (ii) a material impairment of the ability of
Borrower to perform its obligations under any Loan Instrument listed in clauses
(i) through (ix) of the definition thereof or of Agent to enforce or collect
Borrower's Obligations taken as a whole.
MATURITY DATE: the earlier of (i) July 1, 2005, or (ii) the date on
which Borrower's Obligations are accelerated pursuant to this Loan Agreement.
MAXIMUM AMOUNT OF THE COMMITMENTS: as defined in Section 2.1.
MAXIMUM RATE: as defined in subsection 2.3.3.
MILLERS: The Millers Insurance Company, a Texas stock property and
casualty insurance company and a wholly owned Insurance Subsidiary of
Guarantor.
MILLERS CAPITAL STOCK: all of the issued and outstanding shares of
capital stock of Millers and any subordinated surplus debt instrument issued
by Millers.
MULTIEMPLOYER PLAN: any multiemployer plan as defined pursuant to
Section 3(37) of ERISA to which Borrower or any ERISA Affiliate makes, or
accrues an obligation to make contributions, or has made, or been obligated
to make, contributions within the preceding six years.
NAIC: the National Association of Insurance Commissioners.
NET INCOME: for any period, the consolidated net income (or loss) of
Borrower and its Subsidiaries after provision for, or benefit from, income
taxes, determined in accordance with GAAP.
NET WRITTEN PREMIUMS: the total premiums on all policies written by
Millers and Phoenix during a specified period, including premiums for
reinsurance assumed by Millers and Phoenix, but net of (not including) premiums
for reinsurance ceded to other insurers or reinsurers by Millers and Phoenix.
NON-INSURANCE SUBSIDIARIES: as to any Person, a corporation, partnership,
limited liability company or partnership or other entity engaged in a business
other than a business in the insurance industry of which 50% of the voting
common stock, general partnership interests, common membership interests or
other common voting equity is at the time owned directly or indirectly through
one or more intermediaries by such Person. Unless otherwise qualified, all
references to a "Non-Insurance Subsidiary" or to "Non-Insurance Subsidiaries" in
this Agreement shall refer to a Non-Insurance Subsidiary or Non-Insurance
Subsidiaries of the Borrower.
NON-USE FEE RATE: means the rate per annum as established by the
Applicable Margin.
NOTE: collectively, the promissory notes executed by Borrower to
evidence the Loan, in form and substance acceptable to Lenders.
NOTICE OF BORROWING: a notice of borrowing by Borrower to Agent, in
the form of Exhibit 1.1C.
OPERATING AGREEMENTS: all office leases, equipment leases, and
similar agreements relating to the operation of the Business conducted by
Borrower and each Subsidiary.
OPERATING LEASE: any lease which, under GAAP, is not required to be
capitalized.
OUTSTANDING LETTERS OF CREDIT: collectively, that certain
Irrevocable Standby Letter of Credit, No. 127006944, effective as of February
8, 1999, of the FHLB in favor of The Connecticut Indemnity Company and/or The
Fire and Casualty Insurance of Connecticut on the account of Millers and that
certain Irrevocable Standby Letter of Credit, No. 934291, effective on
December 31, 1998 and dated February 19, 1999, of NationsBank, N.A. in favor
of The Connecticut Indemnity Company and/or The Fire and Casualty Insurance
of Connecticut on the account of Millers.
PARTICIPANT: any Person to which a Lender sells a Participation.
PARTICIPATION: a sale by a Lender of a participating interest in (i)
any portion of such Lender's interest in Borrower's Obligations and (ii) any
of such Lender's other rights under any of the Loan Instruments.
PARTICIPATION AGREEMENT: an agreement executed by a Lender and a
Participant pursuant to Section 9.2.
PBGC: the Pension Benefit Guaranty Corporation established pursuant to
ERISA or any Governmental Body succeeding to the functions thereof.
PENSION PLAN: a "pension plan" within the meaning of Section 3(2) of ERISA
that is subject to Section 302 or Part IV of ERISA or Section 412 of the Code
and that is, or at any time within the preceding six years was, maintained for
employees of Borrower or any ERISA Affiliate.
PERMITTED LIENS: any of the following Liens:
(i) the Security Interests;
(ii) the Permitted Senior Indebtedness Liens;
(iii) Liens for taxes or assessments and similar charges, which either are
(A) not delinquent or (B) being contested diligently and in good
faith by appropriate proceedings, and as to which Borrower or any
Subsidiary, as applicable, has set aside reserves on its books which
are satisfactory to the Agent;
(iv) statutory and non-material contractual Liens, such as landlord's,
mechanic's, material-man's, warehouseman's, carrier's or other like
Liens, incurred in good faith in the ordinary course of business,
provided that the underlying obligations relating to such Liens are
paid in the ordinary course of business, or are being contested
diligently and in good faith by appropriate proceedings and as to
which Borrower or any Subsidiary, as applicable, has set aside
reserves on its books satisfactory to the Agent, or the payment of
which obligations are otherwise secured in a manner satisfactory to
the Requisite Lenders;
(v) zoning ordinances, easements, licenses, reservations, provisions,
covenants, conditions, waivers or restrictions on the use of
Property and other title exceptions, in each case, that do not
interfere in any material respect with the ordinary conduct of the
business of Borrower;
(vi) Liens in respect of judgments or awards with respect to which no
Event of Default would exist pursuant to subsection 8.1.6;
(vii) Liens to secure payment of insurance premiums;
(viii) Liens encumbering deposits required to be maintained by each
Insurance Subsidiary for the protection of policyholders pursuant to
applicable insurance laws and regulations;
(ix) Liens incurred in connection with security posted for reinsurance
assumed by each Insurance Subsidiary;
(x) Liens incurred in connection with the maintenance of investment
accounts by Borrower and each Subsidiary to secure margin
obligations and the payment of customary fees and charges;
(xi) Liens incurred or deposits made in the ordinary course of business
in, connection with workers' compensation unemployment insurance and
other types of social security, or to secure the payment or
performance of tenders, statutory or regulatory obligations, surety
and appeal bonds, bids, leases, government contracts and leases,
performance and return of money bonds and other similar obligations;
(xii) Liens in favor of the FHLB on qualified assets in connection with
the FHLB Agreement; and
(xiii) bankers' liens, rights of setoff and similar interests.
PERMITTED PRIOR LIENS: the following:
(i) the Permitted Senior Indebtedness Liens;
(ii) the Permitted Liens described in clauses (iii) and (iv) of the
definition of Permitted Liens that are accorded priority to the
Security Interests by law;
(iii) the Permitted Liens described in clauses (v) and (vii) of the
definition of Permitted Liens, subject to the limitations set forth
therein.
(iv) Liens encumbering deposits required to be maintained by each
Insurance Subsidiary for the protection of policyholders pursuant to
applicable insurance laws and regulations;
(v) Liens incurred in connection with security posted for reinsurance
assumed by each Insurance Subsidiary;
(vi) Liens incurred in connection with the maintenance of investment
accounts by Borrower and each Subsidiary to secure margin
obligations and the payment of customary fees and charges; and
(vii) Liens in favor of the FHLB on qualified assets in connection with
the FHLB Agreement.
PERMITTED SENIOR INDEBTEDNESS: Indebtedness, other than Borrower's
Obligations, incurred to purchase tangible personal property, or to lease
tangible personal property pursuant to Capitalized Leases, provided that except
as set forth on Exhibit A (i) no such Indebtedness shall exist as of the Closing
Date, (ii) the amount of such Indebtedness at any one time outstanding during
such year shall not exceed $1,000,000, and (iii) no Event of Default exists at
the time or will be caused as a result of the incurrence of any Indebtedness
described in clause (ii).
PERMITTED SENIOR INDEBTEDNESS LIENS: Liens that secure Permitted Senior
Indebtedness and refundings and refinancings thereof, provided that such Liens
attach only to the Property purchased or leased with the proceeds of such
Permitted Senior Indebtedness and improvements, additions and accessions thereto
and proceeds of any of the foregoing.
PERSON: any individual, firm, corporation, business enterprise,
trust, association, joint venture, partnership, Governmental Body or other
entity, whether acting in an individual, fiduciary or other capacity.
PHOENIX: Phoenix Indemnity Insurance Company, an Arizona stock
property and casualty insurance company.
PHOENIX CAPITAL STOCK: all of the issued and outstanding shares of
capital stock of Phoenix and any subordinated surplus debt instrument issued
by Phoenix.
PLEDGE AGREEMENT: the pledge agreements executed by Borrower and
Guarantor, respectively, in favor of Agent covering the Collateral, in form
and substance satisfactory to Agent.
PRIME RATE: (i) the per annum rate of interest announced or published
publicly from time to time by LaSalle in Chicago, Illinois as its corporate base
(or equivalent) rate of interest, which rate of interest is a reference rate and
does not necessarily represent the lowest or best rate actually charged to any
customer by LaSalle in Chicago, Illinois plus (ii) the applicable Prime Rate
Margin.
PRIME RATE MARGIN: means the rate per annum applicable to the
Prime Rate Portion as established by the Applicable Margin.
PRIME RATE PORTION: the Principal Balance other than the portion
thereof consisting of LIBOR Loans.
PRINCIPAL BALANCE: the unpaid principal balance of the Loan or any
specified portion thereof outstanding from time to time.
PROPERTY: all types of real, personal or mixed property and all types
of tangible or intangible property
PRO RATA SHARE: with respect to a Lender, a fraction (expressed as a
percentage), the numerator of which is the amount of such Lender's Commitment
and the denominator of which is the sum of all Commitments.
REQUISITE LENDERS: Lenders having sixty-six and two-thirds percent
(662/3%) or more of the total Commitments then in effect.
RIGHT OF FIRST REFUSAL: Borrower's right of first refusal pursuant to that
certain Plan of Conversion, dated as of January 8, 1999, of The Millers Mutual
Fire Insurance Company.
RISK-BASED CAPITAL: as defined in any risk-based capital laws in effect in
Texas and Arizona with respect to property and casualty insurance companies, or,
if no such law is in effect, as defined in the NAIC's Risk-Based Capital for
Property/Casualty Insurers Model Act.
SECURITIES ACT: the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations promulgated
thereunder, as in effect from time to time.
SECURITY AGREEMENT: the security agreements to be executed by
Borrower and Guarantor and any other Non-Insurance Subsidiaries of Borrower
or Guarantor, in favor of Agent covering the Collateral, pursuant to the
terms of this Loan Agreement in form and substance satisfactory to Agent.
SECURITY INTERESTS: the Liens in the Collateral granted to Agent
pursuant to the Loan Instruments.
SETTLEMENT DATE: as defined in Section 9.4.
SFAS: Statement of Financial Accounting Standards.
SOLVENCY CERTIFICATE: a solvency certificate executed by Borrower in
form and substance acceptable to Agent.
STATED RATE: as defined in subsection 2.3.3.
STATUTORY ACCOUNTING PRACTICES: the applicable accounting practices
prescribed or permitted for property and casualty insurance companies by the
Texas and Arizona Commissioners of Insurance and by the insurance laws and
regulations of the States of Texas and Arizona, as such laws and regulations may
be amended from time to time.
STATUTORY SURPLUS: the consolidated surplus of Millers and Phoenix
(total Admitted Assets less Total Liabilities), as the case may be,
determined in accordance with Statutory Accounting Practices.
SUBSIDIARY: each Insurance Subsidiary and each Non-Insurance Subsidiary.
TERMINATION EVENT: (i) a "Reportable Event" described in Section 4043 of
ERISA and the regulations issued thereunder; or (ii) the withdrawal of Borrower
or any ERISA Affiliate from a Pension Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2); or (iii) the
termination of a Pension Plan, the filing of a notice of intent to terminate a
Pension Plan or the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or (iv) the institution of proceedings to terminate, or
the appointment of a trustee with respect to, any Pension Plan by the PBGC; or
(v) any other event or condition which would constitute grounds under Section
4042(a) of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; or (vi) the partial or complete withdrawal of any
Borrower or any ERISA Affiliate from a Multiemployer Plan; or (vii) the
imposition of a lien pursuant to Section 412 of the Code or Section 302 of
ERISA; or (viii) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA; or (ix)
any event or condition which results in the termination of a Multiemployer Plan
under Section 4041A of ERISA or the institution by the PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.
TEXAS HOLDING COMPANY ACT: as defined in Section 5.9.
TOTAL LIABILITIES: for any Person all liabilities established on
the balance sheet of such Person, as determined in accordance with Statutory
Accounting Practices or GAAP, as applicable.
TRILOGY: Trilogy Holdings, Inc., a Nevada corporation.
UCC FINANCING STATEMENTS: Uniform Commercial Code financing
statements as defined in the Uniform Commercial Code.
UNIFORM COMMERCIAL CODE: the Uniform Commercial Code in effect in
the State of Illinois on the Closing Date.
YEAR 2000 PROBLEM: means the risk that computer applications used by
Borrower and any Subsidiary may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date on or
after December 31, 1999.
1.2 TIME PERIODS. In this Loan Agreement and the other Loan Instruments,
in the computation of periods of time from a specified date to a later specified
date, (i) the word "from" means "from and including," (ii) the words "to" and
"until" each mean "to, but excluding" and (iii) the words "through," "end of"
and "expiration" each mean "through and including." Unless otherwise specified,
all references in this Loan Agreement and the other Loan Instruments to (i) a
"month" shall be deemed to refer to a calendar month, (ii) a "quarter" shall be
deemed to refer to a calendar quarter and (iii) a "year" shall be deemed to
refer to a calendar year.
1.3 ACCOUNTING TERMS AND DETERMINATIONS. Except as otherwise expressly
indicated herein, all accounting terms not specifically defined herein shall be
construed, all accounting determinations hereunder shall be made and all
financial statements required to be delivered pursuant hereto shall be prepared
in accordance with GAAP (with respect to Borrower and any Non-Insurance
Subsidiaries) or Statutory Accounting Practices (with respect to Millers,
Phoenix and any other Insurance Subsidiary) as in effect at the time of such
interpretation, determination or preparation, as applicable. In the event that
any Accounting Changes (as hereinafter defined) occur and such changes result in
a material change in the method of calculation of financial covenants, standards
or terms contained in this Loan Agreement, then Borrower and Lenders agree to
enter into negotiations to amend such provisions of this Loan Agreement so as to
reflect such Accounting Changes with the desired result that the criteria for
evaluating the financial condition of Borrower shall be the same after such
Accounting Changes as if such Accounting Changes had not been made. For purposes
hereof, "Accounting Changes" shall mean (i) changes in generally accepted
accounting principles required by the promulgation or amendment of any rule,
regulation, pronouncement or opinion by the Financial Accounting Standards Board
of the American Institute of Certified Public Accountants (or any successor
thereto) or other appropriate authoritative body, (ii) changes in accounting
principles as approved by the Accountants and (iii) changes in Statutory
Accounting Practices required by the promulgation or amendment of any rule,
regulation, pronouncement or opinion of the NAIC or the Texas or Arizona
Commissioners of Insurance or pursuant to the laws of the States of Texas and
Arizona.
1.4 REFERENCES. All references in this Loan Agreement to "Article,"
"Section," "subsection," "subparagraph," "clause" or "Exhibit," unless otherwise
indicated, shall be deemed to refer to an Article, Section, subsection,
subparagraph, clause or Exhibit, as applicable, of this Loan Agreement.
1.5 LENDERS' OR AGENT'S DISCRETION. Whenever the terms "satisfactory to
Lenders or Agent," "determined by Lenders or Agent," "acceptable to Lenders or
Agent," "Lenders or Agent shall elect," "Lenders or Agent shall request," "at
the option or election of Lenders or Agent," or similar terms are used in the
Loan Instruments, except as otherwise specifically provided therein, such terms
shall mean satisfactory to, at the election or option of, determined by,
acceptable to or requested by Lenders or Agent in their or its sole and
unlimited discretion, as applicable.
1.6 BORROWER'S BEST KNOWLEDGE. Any statements, representations or
warranties that are based upon the best knowledge of Borrower or an officer
thereof shall be deemed to have been made after due inquiry by Borrower or an
officer, as applicable, with respect to the matter in question.
ARTICLE II
LOAN COMMITMENT; BORROWING PROCEDURES; TERMS OF PAYMENT
2.1 LOAN.
2.1.1. COMMITMENT AMOUNT AND DISBURSEMENT OF INITIAL LOAN. On the
terms and subject to the conditions set forth in this Loan Agreement, each
Lender agrees to make loans to Borrower from time to time before the
Maturity Date on a revolving basis in such amounts as Borrower may request
up to such Lender's Pro Rata Share of the Maximum Amount of the
Commitments then in effect. As used herein, the term "Maximum Amount of
the Commitments" shall mean, for any period, the amount set forth below
opposite such period:
PERIOD AMOUNT
------ ------
Closing Date through June 30, 2001 $30,000,000
July 1, 2001 through June 30, 2002 $26,000,000
July 1, 2002 through June 30, 2003 $21,000,000
July 1, 2003 through June 30, 2004 $15,000,000
July 1, 2004 through June 30, 2005 $9,000,000
July 1, 2005 and thereafter $0
The initial Loan may be disbursed upon or at the Borrower's election after
the satisfaction or waiver of all of the terms and conditions set forth in
Section 4.1 and 4.2; subsequent Loans shall be disbursed provided the
conditions set forth in Section 4.2 have been satisfied as of the
requested Funding Date.
2.1.2. USE OF PROCEEDS. The proceeds of the Loan shall be used to
provide funds to (i) acquire one hundred percent (100%) of the Phoenix
Capital Stock and pay transaction costs in connection therewith, and (ii)
provide for general corporate purposes of Borrower, including, without
limitation, Acquisitions.
2.1.3. REBORROWING. Subject to the terms and conditions
set forth in this Section 2 and in Article IV, Borrower may (i) repay
all or any portion of the Principal Balance at any time and (ii)
reborrow all or any portion of the Principal Balance which is prepaid.
2.1.4. NOTE. The Loan shall be evidenced by the Note.
2.2 BORROWING PROCEDURES. Borrower shall give Agent irrevocable written
notice of each proposed borrowing by telecopy no later than 10:00 a.m., Chicago,
Illinois time, (i) on the proposed Funding Date with respect to such borrowing
for all borrowings other than borrowings which constitute LIBOR Loans and (ii)
two Business Days prior to the commencement of the applicable LIBOR Interest
Period for all borrowings which constitute LIBOR Loans by delivery of a
completed and executed Notice of Borrowing to Agent c/o LaSalle Bank National
Association, Attention: Xxxxxx X. Xxxxx, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000, Telecopy: (000) 000-0000. Each such Notice of Borrowing shall be
effective upon receipt by Agent, and subject to the provisions of this Article
II, Lenders shall make a revolving loan to Borrower on the date specified in
such Notice of Borrowing. Each borrowing of a Loan shall be (i) in increments of
$500,000 or integral multiples of $100,000 in excess thereof and (ii) made on a
Business Day. There shall be no more than one such borrowing in any week.
2.3 INTEREST.
2.3.1. INTEREST RATE. The Prime Rate Portion shall bear interest at
the Prime Rate and each LIBOR Loan shall bear interest at the applicable
LIBOR Rate, except that during a Default Rate Period the Principal Balance
shall bear interest at the applicable Default Rates.
2.3.2. INTEREST COMPUTATION. Interest shall be computed on
the basis of a year consisting of 360 days and charged for the actual
number of days during the period for which interest is being charged.
In computing interest, the date of funding of each Loan shall be
included and the date of payment shall be excluded.
2.3.3. MAXIMUM INTEREST. Notwithstanding any provision to the
contrary contained herein or in any other Loan Instrument, Lenders shall
not collect a rate of interest on any obligation or liability due and
owing by Borrower to Lenders in excess of the maximum contract rate of
interest permitted by applicable law ("Excess Interest"). Lenders and
Borrower agree that the interest laws of the State of Illinois shall
govern the relationship among them, but in the event of a final
adjudication to the contrary, Borrower shall be obligated to pay, to
Lenders only such interest as then shall be permitted by the laws of the
state found to govern the contract relationship among Lenders and
Borrower.
If any Excess Interest is provided for or determined by a court of
competent jurisdiction to have been provided for in this Loan Agreement or
any other Loan Instrument, then in such event (i) Borrower shall not be
obligated to pay such Excess Interest, (ii) any Excess Interest collected
by Lenders shall be, at Lenders' option, (A) applied to the Principal
Balance or to accrued and unpaid interest not in excess of the maximum
rate permitted by applicable law or (B) refunded to the payor thereof,
(iii) the interest rates provided for herein (collectively, the "Stated
Rate") shall be automatically reduced to the maximum rate allowed from
time to time under applicable law (the "Maximum Rate") and this Loan
Agreement and the other Loan Instruments, as applicable, shall be deemed
to have been, and shall be, modified to reflect such reduction, and (iv)
Borrower shall not have any action against Lenders for any damages arising
out of the payment or collection of such Excess Interest; provided,
however, that if at any time thereafter the Stated Rate is less than the
Maximum Rate, Borrower shall, to the extent permitted by law, continue to
pay interest at the Maximum Rate until such time as the total interest
received by Lenders is equal to the total interest which Lenders would
have received had the Stated Rate been (but for the operation of this
provision) the interest rate payable. Thereafter, the interest rate
payable shall be the Stated Rate unless and until the Stated Rate again
exceeds the Maximum Rate, in which event the provisions contained in this
subsection 2.3.3 shall again apply.
2.4 LIBOR LOANS.
2.4.1. ELECTION BY BORROWER. Subject to the provisions of subsection
2.4.2 and provided no Incipient Default or Event of Default then exists,
Borrower from time to time may borrow at the LIBOR Rate or elect to have
all or a portion of the Principal Balance bear or continue to bear
interest at a LIBOR Rate by delivery of an appropriately completed and
executed Notice of Borrowing pursuant to Section 2.2 not less than two
Business Days prior to the commencement of the applicable LIBOR Interest
Period. Agent shall determine (which determination shall, absent manifest
error, be presumptively correct) the LIBOR Rate applicable to the relevant
LIBOR Loan on the applicable Interest Rate Determination Date and shall
promptly give notice thereof to Borrower. Agent and Lenders shall have the
right without further confirmation to assume that any Notice of Borrowing
received by Agent has been given by a person duly authorized to act on
behalf of Borrower. Any Notice of Borrowing received by Agent shall be
irrevocable. Upon the expiration of a LIBOR Interest Period the applicable
LIBOR Loan shall be converted to and become part of the Prime Rate Portion
unless such LIBOR Loan has been continued as a LIBOR Loan in accordance
with this subsection 2.4.1.
2.4.2. LIBOR LIMITATIONS. Each LIBOR Loan shall be in
the amount of not less than $500,000 or in integral multiples of
$100,000 in excess thereof. At no time shall more than six (6) LIBOR
Loans be in effect.
2.4.3. EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
UNASCERTAINABLE. If, prior to the commencement of any LIBOR Interest
Period, Agent determines in good faith that Dollar deposits of the
relevant amount for the relevant LIBOR Interest Period are not available
in the London Interbank Market, or that by reason of circumstances
affecting such market, adequate and reasonable means do not exist for
ascertaining the LIBOR Rate applicable to such LIBOR Interest Period,
Agent promptly shall give notice of such determination to Borrower and any
LIBOR Election previously given by Borrower which has not yet become
effective shall be deemed to be canceled.
2.4.4. TAX AND OTHER LAWS. In the event that by reason of any law,
regulation or requirement or interpretation thereof by any Governmental
Body, or the imposition of any requirement of any such Governmental Body,
whether or not having the force of law, including the imposition of any
reserve and/or special deposit requirement (other than reserves included
in the LIBOR Reserve Requirements), any Lender shall be subjected to any
tax, levy, impost, charge, fee, duty, deduction or withholding of any kind
whatsoever (other than any tax imposed upon the total net income of such
Lender) and if any such measures or any other similar measure shall result
in an increase in the cost to any Lender of maintaining its share of any
LIBOR Loan or in a reduction in the amount of principal or interest
receivable by any Lender in respect thereof, then Borrower shall pay to
the affected Lender within 10 days after receipt of a notice from such
Lender (which notice shall be accompanied by a statement in reasonable
detail setting forth the basis for the calculation thereof, which
calculation, in the absence of demonstrable error, shall be conclusive and
binding), an amount equal to such increased cost or reduced amount. At any
time after receipt of such notice Borrower may convert all LIBOR Loans to
the Prime Rate Portion, and such conversion shall be effective three
Business Days after the Lenders have received notice from Borrower of such
conversion.
2.4.5. CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any time
any law, treaty or regulation, or any interpretation thereof by any
Governmental Body, shall make it unlawful for any Lender to fund or
maintain its share of any LIBOR Loan with monies obtained in the London
Interbank Market, such Lender, upon the occurrence of such event, shall
notify Borrower thereof and thereupon (i) the right of Borrower to make
any LIBOR Election shall be suspended for the duration of such illegality
and (ii) if required by such law, regulation or interpretation, on such
date as shall be specified in such notice all LIBOR Interest Periods then
in effect shall be terminated, and thereafter all LIBOR Loans shall be
deemed converted to the Prime Rate Portion.
2.4.6. INDEMNITY. In addition to any other payments payable by
Borrower to the Lenders pursuant to the Loan Instruments, Borrower shall
indemnify and reimburse each Lender on demand for any loss or expense
which such Lender may sustain as a consequence of any prepayment of a
LIBOR Loan prior to the expiration of the LIBOR Interest Period applicable
thereto and of any failure by Borrower to (i) make any payment when due of
any amount payable with respect to any LIBOR Loan or (ii) borrow the
amount set forth in any Notice of Borrowing on the date specified
therefor.
2.4.7. FUNDING. Any Lender may, but shall not be required
to, make any Loan or any portion thereof which bears interest at a
LIBOR Rate with funds obtained outside of the United States.
2.5 SCHEDULED PRINCIPAL AND INTEREST PAYMENTS.
2.5.1 INTEREST. Except as otherwise provided in subsection 2.8.4,
interest on (i) the Prime Rate Portion shall be payable monthly in arrears
on the first Business Day of each month following the month in which the
Closing Date occurs and on the Maturity Date and (ii) each LIBOR Loan
shall be payable on the last day of the applicable LIBOR Interest Period
thereto and on the Maturity Date, except that for each LIBOR Loan having a
LIBOR Interest Period longer than three months, interest accrued on such
LIBOR Loan shall be payable on the last day of each three month interval
during such LIBOR Interest Period.
2.5.2 PRINCIPAL. The Principal Balance shall be payable in full
on the Maturity Date.
2.6 FEES.
2.6.1 CLOSING FEE. On the Closing Date Borrower shall pay to
LaSalle, for its benefit and the benefit of all other Lenders, a closing
fee of $100,000 (the "Closing Fee"). The Closing Fee shall be deemed to be
fully earned upon the Closing Date.
2.6.2 NON-USE FEE. On the first Business Day of each quarter
following the quarter in which the Closing Date occurs, Borrower shall pay
to Agent, for the ratable benefit of Lenders, a fee in an amount equal to
(w) the Non-Use Fee Rate in effect for the immediately preceding quarter
multiplied by (x) the average daily Maximum Amount of the Commitments less
the sum of the average daily Principal Balance during such preceding
quarter multiplied by (y) a fraction, the numerator of which is the number
of calendar days in such preceding quarter (except in the case of the
initial payment where the number of days shall equal the number of days
between the Closing Date and the end of the quarter during which the
Closing Date occurs and in the case of the last payment where the number
of days shall equal the number of days between the first day of the
quarter during which the final payment of principal is made and the date
on which the final payment of principal is made) and the denominator of
which is 360 days.
2.6.3 AGENT'S FEE. On the Closing Date and each anniversary of the
Closing Date, Borrower shall pay to LaSalle, individually, fees as are
provided for the Fee Letter. Such fees shall be deemed to be fully earned
on the Closing Date and each anniversary of the Closing Date.
2.7 TERMINATION OF THE COMMITMENTS; PREPAYMENTS.
2.7.1 TERMINATION OF THE COMMITMENTS. Borrower may terminate the
Commitments at any time upon repayment in full of Borrower's Obligations
(including any obligations arising under subsection 2.4.6) or may reduce
the amount of the Commitments at any time or from time to time so long as
Borrower's Obligations are less than the amount of the Commitments after
such reduction, subject to the following conditions: not less than five
days prior to the date upon which Borrower desires to terminate or reduce
the Commitments, Borrower shall deliver to Agent notice of its intention
so to terminate and to repay Borrower's Obligations in full or so to
reduce, which notice shall state the payment date or the reduction date
along with the amount of reduced Commitment. If Borrower delivers to Agent
a notice of termination and fails to repay Borrower's Obligations in full
on the stated payment date, Borrower shall reimburse Lenders on demand in
the amount of any loss, cost and/or expense incurred by Lenders as a
result of Lenders' reliance on such notice, including without limitation,
any reasonable loss, cost or expense resulting from Lenders' contractual
obligations in connection with the reinvestment of the amount of the
Principal Balance.
2.7.2 VOLUNTARY PREPAYMENTS OF THE LOAN. Borrower at any time and
from time to time may make payments on account of the Principal Balance.
Each such voluntary prepayment shall be without premium or penalty,
provided that Borrower shall pay to Lenders the amounts due, if any, under
subsection 2.4.6.
2.7.3 MANDATORY PREPAYMENTS OF THE LOAN. If at any time the
Principal Balance exceeds the Maximum Amount of the Commitments, Borrower
immediately shall make a mandatory prepayment of the Principal Balance in
an amount equal to such excess. Each such mandatory prepayment shall be
without premium or penalty.
2.7.4 ADDITIONAL PAYMENTS. Concurrently with any termination or
reduction of the Commitments or any voluntary or mandatory prepayment of
the Principal Balance pursuant to this Section 2.8, Borrower shall pay to
Lenders accrued and unpaid interest on the portion of the Principal
Balance which is being prepaid to the date on which Lenders are in receipt
of Good Funds, and any other sums which are due and payable pursuant to
the terms of any of the Loan Instruments.
2.8 PAYMENTS AFTER EVENT OF DEFAULT. All payments received by Lenders
during the existence of an Event of Default shall be applied in accordance with
Section 8.4.
2.9 METHOD OF PAYMENT; GOOD FUNDS. Borrower shall make all
payments to be made pursuant to the Loan Instruments by wire transfer of Good
Funds to the account of Agent at LaSalle Bank National Association, 000 Xxxxx
XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, 00000, ABA No. 000-000-000, Credit:
Commercial Loans 1378018, Reference: Millers American Group, Inc., or to
such other account as Agent shall notify Borrower of such in writing.
2.10 INCREASED COSTS; CAPITAL ADEQUACY.
2.10.1 INCREASED COSTS. Without taking into account any factor that
increases the LIBOR Rate pursuant to the definition thereof, and without
duplication of subsection 2.4.4, if (i) Regulation D of the Board of
Governors of the Federal Reserve System, or (ii) after the date hereof,
the adoption of any applicable law, rule or regulation, or any change
therein, 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, or compliance by any lender
with any request or directive (whether or not having the force of law) of
any such authority, central bank or comparable agency issued after the
date hereof,
(a) shall subject such Lender to any tax, duty or other
charger with respect to any Loan, the Note or its obligation to make
or maintain any Loan, or shall change the basis or taxation or
payments to such Lender of the principal of or interest on any Loan
or any other amounts due under this Loan Agreement in respect of any
Loan or its obligation to make or maintain any Loan (except for
changes in the rate of tax on the income, receipts or capital of
such Lender imposed by any Governmental Body); or
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System), special deposit or similar
requirement against assets of, deposits with or for the account of,
or credit extended by, such Lender; or
(c) shall impose on such Lender any other condition
affecting any Loan, the Note or its obligation to make or
maintain any Loan;
and such Lender shall determine in good faith that the result of any
of the foregoing is to increase the cost to (or to impose a cost on)
such Lender of making or maintaining any Loan, or to reduce the
amount of any sum received or receivable by such Lender under this
Loan Agreement or under any Note with respect thereto, then within
30 days after demand by such Lender (which demand shall be
accompanied by a certified statement setting forth the basis of such
demand), Borrower shall pay directly to such Lender such additional
amount or amounts as will compensate such Lender for such increased
cost or such reduction.
2.10.2 CAPITAL ADEQUACY. If either (i) the introduction of or any
change in or in the interpretation of any law or regulation or (ii)
compliance by any Lender with any guideline or request from any central
bank or other governmental authority (whether or not having the force of
law) affects or would affect the amount of capital required or expected to
be maintained by such Lender or any corporation controlling such Lender
and such Lender determines in good faith that the amount of such capital
is increased by or based upon the existence of such Lender's commitment to
lend hereunder and other commitments of this type, then within 30 days
after demand by such Lender, Borrower shall pay to such Lender, from time
to time as specified by such Lender, additional amounts sufficient to
compensate such Lender in the light of such circumstances, to the extent
that such Lender reasonably determines such increase in capital to be
allocable to the existence of such Lender's commitment to lend hereunder.
2.11 LIMITATION ON ADDITIONAL CHARGES; SUBSTITUTE LENDERS;
NON-DISCRIMINATION. Anything in Sections 2.4.4. and 2.10 notwithstanding.
(a) Borrower shall not be required to pay to any Lender
reimbursement with regard to any costs or expenses, unless such Lender
notifies Borrower of such costs or expenses within 90 days after the date
paid or incurred;
(b) none of the Lenders shall be permitted to pass through to
Borrower charges and costs under Sections 2.4.4. or 2.10 on a
discriminatory basis (i.e., which are not also passed through by such
Lender to other customers of such Lender similarly situated where such
customer is subject to documents providing for such pass through); and
(c) if any Lender elects to pass through to Borrower any material
charge or cost under Sections 2.4.4. or 2.10 or elects to terminate the
availability of LIBOR Loans for any material period of time, Borrower may,
within 60 days after the date of such event and so long as no Event of
Default shall have occurred and be continuing, elect to terminate such
Lender as a party to this Agreement; provided that, concurrently with such
termination Borrower shall (i) if the Agent and each of the other Lenders
shall consent, pay that Lender all principal, interest and fees and other
amounts owed to such Lender through such date of termination or (ii) have
arranged for another financial institution approved by the Agent (such
approval not to be unreasonably withheld) as of such date, to become a
substitute Lender for all purposes under this Agreement in the manner
provided in Article IX; provided, further that, prior to substitution for
any Lender, Borrower shall have given written notice to the Agent of such
intention and the Lenders shall have the option, but no obligation, for a
period of 60 days after receipt of such notice, to increase their
Commitments in order to replace the affected Lender in lieu of such
substitution.
ARTICLE III
SECURITY; MAINTENANCE OF ACCOUNTS; SET OFF
3.1 SECURITY. Borrower's Obligations shall be secured by a Lien upon
all of the Collateral, which at all times shall be superior and prior to
all other Liens, except Permitted Prior Liens.
3.2 ACCOUNTS; SETOFF.
3.2.1 PAYMENT OF CHARGES. Borrower acknowledges that LaSalle
will charge Borrower monthly service charges for various services
performed by LaSalle in connection with cash management services
provided by LaSalle, and Borrower hereby agrees that if such service
charges arising in any month exceed the credit to Borrower in that
month arising from earnings attributable to funds on deposit with
LaSalle in Borrower's accounts, such service charge deficiency shall
be deducted, on a monthly basis, by LaSalle from Borrower's
accounts.
3.2.2 DEPOSITS TO BORROWER'S ACCOUNTS. Agent shall have the
right to deposit all proceeds of the Loans to Borrower's accounts
with LaSalle, and shall have the right to charge such account (or
any other account in Borrower's name) for all other Borrower's
Obligations due from and payable by Borrower.
3.2.3 SETOFF.
(a) If at any time (i) any amount owing by Borrower under any
Loan Instrument is then due and payable to Lenders or (ii) any Event
of Default shall have occurred and be continuing, then each Lender,
in its discretion, may apply to the payment of such amount any and
all balances, credits, deposits, accounts or moneys of Borrower then
or thereafter on deposit with such Lender.
(b) Without limitation of subsection 3.2.3(a), Borrower agrees
that, upon and after the occurrence of any Event of Default, each
Lender is hereby authorized, at any time and from time to time,
without notice to Borrower, (i) to set off against and to
appropriate and apply to the payment of Borrower's Obligations
(whether matured or unmatured, fixed or contingent or liquidated or
unliquidated) any and all amounts which such Lender is obligated to
pay over to Borrower (whether matured or unmatured, and, in the case
of deposits, whether general or special, time or demand and however
evidenced, but excluding deposit accounts held by Borrower for the
benefit of others in a fiduciary capacity) and (ii) pending any such
action, to the extent necessary, to hold such amounts as Collateral
to secure Borrower's Obligations and to dishonor any and all checks
and other items drawn against any deposits so held as such Lender in
its sole discretion may elect.
ARTICLE IV
CONDITIONS OF LEND
4.1 INITIAL LOAN. The obligation of Lenders to make the initial
Loan shall be subject to the satisfaction of all of the following conditions
in a manner, form and substance satisfactory to Lenders:
4.1.1 DELIVERY OF DOCUMENTS. The following shall have been delivered
to Agent, each duly authorized and executed, where applicable:
(a) the Loan Instruments;
(b) a good standing certificate for Borrower from the State of Texas
and each other state in which the laws thereof require Borrower to be
qualified to transact business, each dated a recent date prior to the
Closing Date;
(c) a good standing certificate for Trilogy from the State of
Nevada, dated a recent date prior to the Closing Date;
(d) a Certificate of Compliance for Millers and a Certificate of
Authorization and Deposit for Phoenix issued by insurance regulatory
officials of Texas and Arizona, respectively, each dated a recent date
prior to the Closing Date;
(e) certified copies of (i) the articles of incorporation of
Borrower, Trilogy, Phoenix and Millers, together with all amendments
thereto, certified by the Secretary of State from their respective states
of formation as of a recent date prior to the Closing Date; and (ii) the
by-laws of Borrower, Trilogy, Phoenix and Millers, together with all
amendments thereto, certified as of the Closing Date by the respective
assistant secretaries of Borrower, Trilogy, Phoenix and Millers;
(f) certified copies of resolutions adopted by the board of
directors of Borrower and Trilogy authorizing the execution and delivery
of the Loan Instrument to which Borrower and/or Trilogy is a party;
(g) signature and incumbency certificates of the officers of
Borrower and Trilogy executing the Loan Instruments;
(h) the consummation of the Acquisition of Phoenix; and
(i) such other instruments, documents, certificates, consents,
waivers and opinions as Agent reasonably may request.
4.1.2 MILLERS CAPITAL STOCK AND PHOENIX CAPITAL STOCK. Agent shall
have received the original certificates representing the Millers Capital
Stock and Phoenix Capital Stock, together with assignments separate from
certificate relating thereto duly endorsed in blank. If Millers Direct
Insurance Company, a Texas insurance company becomes a wholly-owned
subsidiary of Trilogy subsequent to the Closing of this Agreement, Agent
shall receive the original certificates of Millers Direct Insurance
Company, together with assignments separate from certificate relating
thereto duly endorsed in blank.
4.1.3 OPINIONS OF COUNSEL. Agent shall have received an opinion
dated the Closing Date from Akin Gump Xxxxxxx Xxxxx & Xxxx, L.L.P.,
general, counsel to Borrower, addressed to LaSalle, as a Lender and as
Agent, in such form and covering such matters as Lenders reasonably may
require.
4.1.4 APPROVAL OF INSTRUMENTS AND SECURITY INTERESTS. Agent shall
have received evidence that the approval or consent shall have been
obtained from all Governmental Bodies, including, without limitation,
insurance regulatory officials, and all other Persons whose approval or
consent is required to enable Borrower to (i) enter into and perform
Borrower's obligations under the Loan Instruments and (ii) grant to Agent
the Security Interests contemplated in the Loan Instruments.
4.1.5 SECURITY INTERESTS. All filings of Uniform Commercial Code
financing statements and all other filings and actions necessary to
perfect and maintain the Security Interests as first, valid and perfected
Liens in the Property covered thereby, subject only to Permitted Prior
Liens, shall have been filed or taken and Agent shall have received such
UCC, state and federal tax Lien, pending suit, judgment and other Lien
searches as it deems necessary to confirm the foregoing.
4.1.6 FINANCIAL STATEMENTS, REPORTS AND PROJECTIONS. Lenders shall
have received (i) the consolidated statements of income and balance sheet
for Borrower for the period ended June 30, 1999, accompanied by a
certificate of the Chief Financial Officer certifying that such statements
of income and balance sheets present fairly in all material respects the
financial condition of such Persons for such quarter, (ii) the Annual
Statements of Millers and Phoenix for 1998, on the form promulgated by the
NAIC and as filed with the Texas Commissioner of Insurance and the Arizona
Commissioner of Insurance, respectively, prepared in accordance with
Statutory Accounting Practices, (iii) quarterly financial statements of
Millers and Phoenix for the quarter ending June 30, 1999, as filed with
insurance regulatory officials, prepared in accordance with Statutory
Accounting Practices, (iv) such other financial statements prepared in the
normal course relating to the operations of Borrower and each Subsidiary
as Lenders reasonably shall request, and (v) operating projections for
Borrower and each Subsidiary for the years 1999 through 2002.
4.1.7 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated by the Loan Instruments
and all documents and instruments incident to such transactions shall be
satisfactory to Lenders, and Agent shall have received all such
counterpart originals or certified or other copies as Lenders may request.
4.1.8 USE OF ASSETS. Lenders shall be satisfied that Borrower,
Trilogy, Millers and Phoenix at all times shall be entitled to the use and
quiet enjoyment of all Property necessary for the continued ownership and
operation of the Business conducted by Borrower, Trilogy, Millers and
Phoenix, including, without limitation, the use of equipment, fixtures,
Licenses and offices.
4.1.9 PAYMENT OF FEES AND EXPENSES. Borrowers shall have paid the
Closing Fee and all fees and expenses described in subsection 11.1.1
incurred in connection with the Loan.
4.2 ALL LOANS. The obligation of Lenders to make the initial Loan and each
subsequent Loan is subject to the satisfaction of all of the following
conditions in a manner, form and substance satisfactory to the Requisite
Lenders:
4.2.1 REPRESENTATIONS AND WARRANTIES. On the Funding Date of such
Loan the representations and warranties of Borrower set forth in the Loan
Instruments shall be true and correct.
4.2.2 PERFORMANCE; NO DEFAULT. Borrower shall have performed and
complied with all agreements and conditions contained in the Loan
Instruments to be performed by or complied with by Borrower prior to or at
the Funding Date of such Loan, and no Event of Default or Incipient
Default shall then exist or result from the making of such Loan.
4.2.3 MAXIMUM AMOUNT OF THE COMMITMENTS. The Principal Balance
outstanding on the Funding Date of such requested Loan (after giving
effect to such Loan) shall not exceed the Maximum Amount of the
Commitments then in effect.
4.2.4 MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change with respect to the Business, credit, operations or
financial condition of Borrower and its Subsidiaries (taken as a whole)
since the date of the most recent Loan made.
4.2.5 LITIGATION. (i) Borrower shall have disclosed in writing to
Lenders all existing or overtly threatened litigation (including, without
limitation, derivative actions), arbitration proceedings or governmental
proceedings not previously disclosed in writing to Lenders before the date
of the most recent Loan which Borrower reasonably believes could
materially and adversely affect the business, properties, financial
condition or results of operations of Borrower and its Subsidiaries (taken
as a whole), (ii) Borrower shall have disclosed any and all material
developments that have occurred with respect to any previously disclosed
litigation (including, without limitation, derivative actions),
arbitration proceedings or governmental proceedings, and (iii) the
Requisite Lenders shall not have determined, in the exercise of their
reasonable discretion, that any existing or threatened litigation
(including, without limitation, derivative actions), arbitration
proceedings or governmental proceedings (or any material development in
connection therewith) is likely to have a Material Adverse Effect on
Borrower's and its Subsidiaries (taken as a whole) business, properties,
financial condition or results of operations or on Borrower's ability to
perform its obligations under the Loan Instruments (taken as a whole).
4.2.6 CERTIFICATE. Agent shall have received a certificate signed by
the Chief Financial Officer and dated the Funding Date of such requested
Loan certifying satisfaction of the conditions specified in this Section
4.2.
4.2.7 ADDITIONAL DOCUMENTS. Agent shall have received such
other documents as the Requisite Lenders reasonably may request in
support of such requested Loan.
ARTICLE V
REPRESENTATIONS AND WARRANTEES
Borrower represents and warrants to Agent and Lenders as follows:
5.1 EXISTENCE AND POWER. Borrower, Trilogy, Millers and Phoenix are each a
corporation duly formed, validly existing and in good standing under the laws of
the state of its organization. Borrower is in good standing and each of
Borrower, Trilogy, Millers and Phoenix are authorized to do business, in each
jurisdiction in which the failure to be in good standing (if applicable) or to
be so authorized would have a Material Adverse Effect.
5.2 AUTHORITY. Borrower has the corporate power and authority to enter
into, execute, deliver and carry out the terms of the Loan Instruments to which
it is a party and to incur the obligations provided for therein, all of which
have been duly authorized by all proper and necessary action and are not
prohibited by the organizational instruments of Borrower.
5.3 CAPITAL STOCK AND RELATED MATTERS.
5.3.1 CAPITALIZATION O MILLERS. The Millers Capital Stock consists
of 103,267 shares of $40.00 par value common stock. The Millers Capital
Stock is validly issued, fully paid and non-assessable, and has been
issued and sold in compliance with all applicable insurance, federal and
state laws, rules and regulations, including, without limitation, all
so-called "Blue-Sky" laws. The Millers Capital Stock is owned beneficially
and of record by Trilogy. The Millers Capital Stock is free and clear of
all Liens except the Security Interests.
5.3.2 RESTRICTIONS. Except as set forth in Exhibit 5.3.2, (i)
neither Borrower nor any Subsidiary is a party to or has knowledge of any
agreements restricting the transfer of the Millers Capital Stock, except
the Loan Instruments, (ii) Millers has not issued any rights which can be
convertible into or exchangeable or exercisable for any of its capital
stock, or any rights to subscribe for or to purchase, or any options for
the purchase of, or any agreements providing for the issuance (contingent
or otherwise) of, or any calls, commitments or claims of any character
relating to, any of its capital stock or any securities convertible into
or exchangeable or exercisable for any of its capital stock, (iii) neither
Borrower nor any Subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any of its capital
stock or any convertible rights or options and (iv) neither Borrower nor
any Subsidiary is required to file or has filed, pursuant to the
Securities Act of 1933 or Section 12 of the Securities Exchange Act of
1934, as amended, a registration statement relating to any class of debt
or equity securities.
5.3.3 CAPITALIZATION OF PHOENIX. The Phoenix Capital Stock consists
of 500,000 shares of $6.00 par value common stock. The Phoenix Capital
Stock is validly issued, fully paid and non-assessable, and has been
issued and sold in compliance with all applicable insurance, federal and
state laws, rules and regulations, including, without limitation, all
so-called "Blue-Sky" laws. The Phoenix Capital Stock is owned beneficially
and of record by Trilogy. The Phoenix Capital Stock is free and clear of
all Liens except the Security Interests.
5.3.4 RESTRICTIONS. Except as set forth in Exhibit 5.3.2, (i)
neither Borrower nor any Subsidiary is a party to or has knowledge of any
agreements restricting the transfer of the Phoenix Capital Stock, except
the Loan Instruments, (ii) Phoenix has not issued any rights which can be
convertible into or exchangeable or exercisable for any of its capital
stock, or any rights to subscribe for or to purchase, or any options for
the purchase of, or any agreements providing for the issuance (contingent
or otherwise) of, or any calls, commitments or claims of any character
relating to, any of its capital stock or any securities convertible into
or exchangeable or exercisable for any of its capital stock.
5.4 BINDING AGREEMENTS. This Loan Agreement and the other Loan
Instruments, when executed and delivered, will constitute the valid and legally
binding obligations of Borrower, enforceable against Borrower in accordance with
their respective terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect affecting the enforcement of creditors' rights
generally and (ii) equitable principles (whether or not any action to enforce
such document is brought at law or in equity).
5.5 BUSINESS, PROPERTY AND LICENSES OF BORROWER AND EACH SUBSIDIARY.
5.5.1 BUSINESS AND PROPERTY. Borrower and each Subsidiary is or will
be upon the Closing the owner of or holder of a valid lease for all
Property necessary to conduct the Business where it is presently conducted
by Borrower and each Subsidiary. Neither Borrower nor any Subsidiary
engages in or proposes to engage in any business or activity other than
the Business.
5.5.2 CERTIFICATES OF AUTHORITY. There is set forth in Exhibit 5.5.2
a list of all states for which Certificates of Authority have been issued
or assigned to Millers, Phoenix and each Insurance Subsidiary. All of such
Certificates of Authority are in full force and effect and have been duly
issued in the name of, or validly assigned to Millers, Phoenix and each
Insurance Subsidiary, as applicable, no default or breach exists
thereunder and Borrower or each Subsidiary, as applicable, has full power
and authority thereunder to operate the Business as and where it is
presently conducted by Millers, Phoenix and each Subsidiary.
5.5.3 OPERATING AGREEMENTS. There is set forth in Exhibit 5.5.3 a
list of all Operating Agreements involving payment obligations in excess
of $50,000 in any year. All of the Operating Agreements listed in Exhibit
5.5.3 are in full force and effect and no event has occurred which could
reasonably be expected to result in the cancellation or termination of any
such Operating Agreement or the imposition thereunder of any liability
upon Borrower or any of its Subsidiaries which could have a Material
Adverse Effect.
5.5.4 BUSINESS LOCATIONS. There is set forth in Exhibit 5.5.4 the
location of Borrower's and each Subsidiary's chief executive office, the
locations of all of Borrower's and each Subsidiary's Property, the places
where Borrower's and each Subsidiary's books and records are kept, the
locations of all offices leased or owned by Borrower or a Subsidiary and
used in the operation of the Business of Borrower and each Subsidiary and
all other locations leased or owned by Borrower or a Subsidiary and where
Borrower or each Subsidiary conducts Business.
5.5.5 REAL PROPERTY; LEASES. Neither Borrower nor any Subsidiary
owns any real property. There is set forth in Exhibit 5.5.5 a list of all
leases of real property under which Borrower and any Subsidiary is a
lessee. Each Lease is in full force and effect, there has been no material
default in the performance of any of its terms or conditions by any party
thereto, and no claims of default have been asserted with respect thereto.
The present and contemplated use of the Leasehold Property is in
compliance with all material applicable zoning ordinances and regulations
and other laws and regulations.
5.5.6 OPERATION AND MAINTENANCE OF EQUIPMENT. All of the equipment
and other tangible personal property owned by Borrower or any Subsidiary
is in good operating condition and repair (subject to normal wear and
tear) and has been used, operated and maintained in substantial compliance
with all applicable laws, rules and regulations.
5.6 TITLE TO PROPERTY; LIENS. Borrower and each Subsidiary has (i) good
and indefeasible title to all of its Property, except (A) any License which
cannot be transferred without the consent of a Governmental Body and (B) the
portion thereof consisting of a leasehold estate and (ii) a valid leasehold
estate in each portion of its Property which consists of a leasehold estate. All
of such Property is, or upon the Closing Date will be, free and clear of all
Liens, except Permitted Liens. The applicable Loan Instruments create valid
first Liens on the Collateral described therein, subject only to Permitted Prior
Liens.
5.7 PROJECTIONS AND FINANCIAL STATEMENTS.
5.7.1 FINANCIAL STATEMENTS. Borrower has delivered to Agent the
financial statements and reports described in Exhibit 5.7.1. Such
financial statements present fairly in all material respects the results
of operations of the Business of Borrower and Phoenix for the periods
covered thereby and the financial condition of Borrower and Phoenix as of
the dates indicated therein. All of the financial statements have been
prepared in conformity with GAAP or Statutory Accounting Practices, as
applicable. Since December 31, 1998, there has been no change which has
had a Material Adverse Effect. Borrower has also delivered to Agent a
pro-forma balance sheet as of the Closing Date. Such pro-forma balance
sheet, which assumes the consummation of the transactions contemplated by
the Loan Instruments, presents fairly in all material respects the
anticipated financial condition of Guarantor, Borrower, Millers and
Phoenix as of the Closing Date based on the assumptions set forth therein.
5.7.2 PROJECTIONS. Borrower has delivered to Agent the projections
described in Exhibit 5.7.2 of the future operations of Borrower and its
Subsidiaries. Such projections are based on assumptions that Borrower in
good faith considered reasonable at the time such assumptions were made,
as set forth therein.
5.8 LITIGATION. There is set forth in Exhibit 5.8 a description of all
actions, suits and arbitration proceedings pending or, to the best knowledge of
Borrower, threatened against Borrower or any Subsidiary or maintained by
Borrower or any Subsidiary at law or in equity or before any Governmental Body
which, if adversely determined, could have a Material Adverse Effect.
5.9 DEFAULTS IN OTHER AGREEMENTS; CONSENTS; CONFLICTING AGREEMENTS.
Neither Borrower nor any Subsidiary is in default under any agreement to which
Borrower or any Subsidiary is a party or by which Borrower or any Subsidiary or
any of their respective Property is bound, the effect of which default could
have a Material Adverse Effect. No authorization, consent, approval or other
action by, and no notice to or filing with, any Governmental Body or any other
Person which has not already been obtained, taken or filed, as applicable, is
required (i) for the due execution, delivery or performance by Borrower of any
of the Loan Instruments or (ii) as a condition to the validity or enforceability
of any of the Loan Instruments or any of the transactions contemplated thereby
or the priority of the Security Interests, except for (A) certain filings to
establish and perfect the Security Interests, (B) filings and approvals required
pursuant to Article 21.49-1 of the Texas Insurance Code (the "Texas Holding
Company Act") and Article 8, Sections 20-481 through 20-481.23 of the Arizona
Insurance Code (the "Arizona Holding Company Act," the Texas Holding Company Act
and the Arizona Holding Company Act hereinafter collectively referred to as the
"Holding Company Acts") pertaining to the acquisition of control of domestic
insurance companies, which filings and approvals are necessary as a condition to
the acquisition of the Millers Capital Stock or the Phoenix Capital Stock upon
foreclosure of the Security Interests therein, and (C) disclosures required
pursuant to the Holding Company Acts subsequent to the initial Loan, with
respect to the pledge of the Millers Capital Stock or the Phoenix Capital Stock.
No provision of any material mortgage, indenture, contract, agreement, statute,
rule, regulation, judgment, decree or order binding on Borrower or Trilogy or
affecting the Property of Borrower or any Subsidiary conflicts with, or requires
any consent which has not already been obtained under, or would in any way
prevent the execution, delivery or performance of the terms of any of the Loan
Instruments or affect the validity or priority of the Security Interests, other
than the requirements of the Holding Company Acts described in (B) and (C) of
this Section 5.9. The execution, delivery or performance of the terms of the
Loan Instruments will not constitute a default under, or result in the creation
or imposition of, or obligation to create, any Lien upon the Property of
Borrower or any Subsidiary pursuant to the terms of any such material mortgage,
indenture, contract or agreement.
5.10 TAXES. Borrower and each Subsidiary has filed all tax returns
required to be filed, and have paid, or made adequate provision for the payment
of, all material taxes shown to be due and payable on such returns or in any
assessments made against Borrower and each Subsidiary, and no tax liens have
been filed and, to the knowledge of Borrower, no claims are being asserted in
respect of such taxes which are required by GAAP or Statutory Accounting
Practices, as applicable, to be reflected in the financial statements of
Borrower and each Subsidiary and are not so reflected therein. The charges,
accruals and reserves on the books of Borrower and each Subsidiary with respect
to all federal, state, local and other taxes are considered by the management of
Borrower to be adequate, and Borrower does not know of any unpaid assessment
which is or might be due and payable against Borrower or any Subsidiary or any
of their respective Property, except such assessments as are being contested in
good faith and by appropriate proceedings diligently conducted, and for which
adequate reserves have been set aside in accordance with GAAP. None of the
federal or state tax returns of Borrower or any Subsidiary are under audit.
5.11 COMPLIANCE WITH APPLICABLE LAW. Neither Borrower nor any Subsidiary
is in default in respect of any judgment, order, writ, injunction, decree or
decision of any Governmental Body, which default would have a Material Adverse
Effect. Borrower and each Subsidiary are in compliance in all material respects
with all applicable statutes and regulations, including, without limitation, all
insurance laws and regulations of the State of Texas and of each other state in
which any Insurance Subsidiary conducts an insurance business, all Environmental
Laws, ERISA, and all laws and regulations relating to unfair labor practices,
equal employment opportunity and employee safety, of all Governmental Bodies, a
violation of which would have a Material Adverse Effect.
5.12 PATENTS, TRADEMARKS AND FRANCHISES. Borrower and each Subsidiary
owns, possesses or has the right to use all patents, trademarks, service marks,
tradenames, copyrights, franchises and rights with respect thereto, necessary
for the conduct of the Business as proposed to be conducted by Borrower and each
Subsidiary after the Closing Date, without any known conflict with the rights of
others and, in each case, free of any Liens other than Permitted Liens.
5.13 REGULATORY MATTERS. Millers, Phoenix and each Insurance Subsidiary
(i) has duly and timely filed all reports, financial information and other
filings which are required to be filed under the insurance laws or regulations
of the States of Texas and Arizona or any other state in which Millers, Phoenix
and any Insurance Subsidiary conduct an insurance business (including laws
relating to transactions within Borrower's holding company system) or any other
applicable law, rule or regulation of any Governmental Body, the non-filing of
which would have a Material Adverse Effect, and (ii) is in compliance with all
such laws, rules and regulations, the noncompliance with which would have a
Material Adverse Effect. All information provided by or on behalf of Borrower in
any material filing with insurance regulatory officials, the NAIC or any other
Governmental Body was, at the time of filing, true, complete and correct in all
material respects when made, and all appropriate Governmental Bodies have been
notified of any substantial or significant changes in such information as may be
required in accordance with applicable laws, rules and regulations. Except as
set forth in Exhibit 5.13, as at December 31, 1998 all IRIS ratios of Millers
and Phoenix were within the usual range.
5.14 APPLICATION OF CERTAIN LAWS AND REGULATIONS. Neither Borrower
nor any Subsidiary is:
5.14.1 INVESTMENT COMPANY. An "investment company," or a
company "controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended.
5.14.2 PUBLIC UTILITY HOLDING COMPANY ACT. 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.
5.14.3 REGULATIONS AS TO BORROWING. Except for laws related to
regulating insurance companies and insurance holding companies, subject to
any statute or regulation which regulates the incurrence of any
Indebtedness for Borrowed Money, including, without limitation, statutes
or regulations relative to common or interstate carriers or to the sale of
electricity, gas, steam, water, telephone, telegraph or other public
utility services.
5.15 MARGIN REGULATIONS. None of the transactions contemplated by this
Loan Agreement or any of the other Loan Instruments, including the use of the
proceeds of the Loans, will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulations issued pursuant
thereto, including, without limitation, Regulations T, U and X, and Borrower
does not own or intend to carry or purchase any "margin security" within the
meaning of such Regulation U.
5.16 OTHER INDEBTEDNESS. Upon the Closing neither Borrower nor any
Subsidiary will have any Indebtedness for Borrowed Money, except for (i)
Borrower's Obligations, (ii) the Permitted Senior Indebtedness, and (iii)
Existing Indebtedness as described on Exhibit 5.16.
5.17 NO MISREPRESENTATION. Neither this Loan Agreement nor any other Loan
Instrument or certified information furnished or to be furnished by or on behalf
of Borrower to any Lender or Agent in connection with any of the transactions
contemplated hereby or thereby, contains or will contain a misstatement of
material fact, or omits or will omit to state a material fact required to be
stated in order to make the statements contained herein or therein, taken as a
whole, not misleading in the light of the circumstances under which such
statements were made. There is no fact, other than information known to the
public generally, and other than general economic or industry conditions known
to Borrower that would be expected to have a Material Adverse Effect that has
not expressly been disclosed to Agent in writing.
5.18 EMPLOYEE BENEFIT P1ANS.
5.18.1 NO OTHER PLANS. Neither Borrower nor any ERISA Affiliate
maintains or contributes to, or has any obligation under, any Employee
Benefit Plan other than those identified on Exhibit 5.18.1. Borrower has
provided Agent accurate and complete copies of all contracts, agreements
and documents described on Exhibit 5.18.1.
5.18.2 ERISA AND CODE COMPLIANCE AND LIABILITY. Borrower and each
ERISA Affiliate is in compliance with all applicable provisions of ERISA
and the regulations and published interpretations thereunder with respect
to all Employee Benefit Plans except where failure to comply would not
result in a material liability to Borrower and except for any required
amendments for which the remedial amendment period as defined in Section
401(b) of the Code has not yet expired. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and each
trust related to such plan has been determined to be exempt under Section
401(a) of the Code. No material liability for any taxes or penalties has
been incurred by Borrower or any ERISA Affiliate which remains unsatisfied
with respect to any Employee Benefit Plan or any Multiemployer Plan.
5.18.3 FUNDING. No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code)
been incurred (without regard to any waiver granted under Section 412 of
the Code), nor has any funding waiver from the IRS been received or
requested with respect to any Pension Plan, nor has Borrower or any ERISA
Affiliate failed to make any contributions or to pay any amounts due and
owing as required by Section 412 of the Code, Section 302 of ERISA or the
terms of any Pension Plan by the due dates of such contributions under
Section 412 of the Code or Section 302 of ERISA, nor has there been any
event requiring any disclosure under Section 4041(c)(3)(C), 4063(a) or
4068 of ERISA with respect to any Pension Plan.
5.18.4 PROHIBITED TRANSACTIONS AND PAYMENTS. Except for cases in
which no material liability (including liability for indemnification) to
Borrower or an ERISA Affiliate has arisen, neither Borrower nor any ERISA
Affiliate has: (i) engaged in a nonexempt "prohibited transaction" as such
term is defined in Section 406 of ERISA or Section 4975 of the Code; (ii)
incurred any liability to the PBGC which remains outstanding other than
the payment of premiums and there are no premium payments which are due
and unpaid; (iii) failed to make a required contribution or payment to a
Multiemployer Plan; or (iv) failed to make a required installment or other
required payment under Section 412 of the Code.
5.18.5 NO TERMINATION EVENT. No Termination Event has
occurred or is reasonably expected to occur.
5.18.6 ERISA LITIGATION. No material proceeding, claim, lawsuit
and/or investigation is existing or, to the best knowledge of Borrower,
threatened concerning or involving any (i) employee welfare benefit plan
(as defined in Section 3(1) of ERISA) currently maintained or contributed
to by Borrower or any ERISA Affiliate, (ii) Pension Plan or (iii)
Multiemployer Plan.
5.19 EMPLOYEE MATTERS.
5.19.1 COLLECTIVE BARGAINING AGREEMENTS; GRIEVANCES. (i) None of the
employees of Borrower or any Subsidiary is subject to any collective
bargaining agreement, (ii) no petition for certification or union election
is pending with respect to the employees of Borrower or any Subsidiary and
no union or collective bargaining unit has sought such certification or
recognition with respect to the employees of Borrower or any Subsidiary,
and (iii) there are no strikes, slowdowns, work stoppages, unfair labor
practice complaints, grievances, arbitration proceedings or controversies
pending or, to the best knowledge of Borrower, threatened against Borrower
or any Subsidiary by any of employees, other than employee grievances or
controversies arising in the ordinary course of business that would not in
the aggregate be expected to have a Material Adverse Effect.
5.19.2 CLAIMS RELATING TO EMPLOYMENT. Neither Borrower nor any
Subsidiary is subject to any employment agreement or non-competition
agreement with any former employer or any other Person which agreement
would have a Material Adverse Effect due to (i) any information which
Borrower or any Subsidiary would be prohibited from using under the terms
of such agreement or (ii) any legal considerations relating to unfair
competition, trade secrets or proprietary information.
5.20 BURDENSOME OBLIGATIONS. After giving effect to the transactions
contemplated by the Loan Instruments, (i) neither Borrower nor any Subsidiary
(A) will be a party to or be bound by any franchise, agreement, deed, lease or
other instrument, or be subject to any restriction, which is so unusual or
burdensome so as to cause, in the foreseeable future, a Material Adverse Effect,
or (B) intends to incur, or believes that it will incur, debts beyond its
ability to pay such debts as they become due, and (ii) each of Borrower and each
Subsidiary (A) owns and will own Property, the fair saleable value of which is
(I) greater than the total amount of its liabilities (including contingent
liabilities), and (II) greater than the amount that will be required to pay the
probable liabilities of its then existing debts as they become absolute and
matured, and (B) has and will have capital that is not unreasonably small in
relation to its business as presently conducted and as proposed to be conducted.
Neither Borrower nor any Subsidiary presently has knowledge of any future
expenditures needed to meet the provisions of federal or state statutes, orders,
rules or regulations will be so burdensome so as to have a Material Adverse
Effect.
5.21 INSURANCE. There is set forth in Exhibit 5.21 a description of all
policies of insurance that are in effect as of the Closing Date with respect to
which Borrower and any Subsidiary is the insured. All premiums on such policies
have been paid when due, no written notice of cancellation has been received
with respect to any such policies, to the knowledge of Borrower such policies
are in full force and effect and Borrower is in compliance with all material
conditions contained in such policies.
5.22 YEAR 2000 COMPLIANCE. Borrower and each Subsidiary have reviewed the
areas within their business and operations which could reasonably be expected to
be adversely affected by, and have developed or are developing a program to
address on a timely basis, the Year 2000 Problem, and have made related
appropriate inquiry of material suppliers and vendors. Based on such review and
program, Borrower believes that the Year 2000 Problem will not have a Material
Adverse Effect. From time to time, at the request of Bank, Borrower and each
Subsidiary shall provide to Bank such updated information or documentation as is
requested regarding the status of their efforts to address the Year 2000
Problem.
ARTICLE VI
AFFIRMATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in full,
Borrower agrees that it will, and will cause each Subsidiary to:
6.1 LEGAL EXISTENCE; GOOD STANDING. Maintain its existence and its good
standing (if applicable) in the jurisdiction of its formation and its
qualification or authorization in each jurisdiction in which the failure to be
so qualified or authorized would have a Material Adverse Effect, and in any
event in each jurisdiction in which Borrower or any Subsidiary transacts
Business.
6.2 INSPECTION. Permit representatives of each Lender at reasonable times
to (i) visit its offices, (ii) examine its books and records and Accountants'
reports relating thereto, (iii) make copies or extracts therefrom, (iv) discuss
its affairs with its officers, (v) examine and inspect its Property and (vi)
meet and discuss its affairs with the Accountants, and upon the occurrence and
during the continuance of an Incipient Default or Event of Default, such
Accountants, as a condition to their retention by Borrower, are hereby
irrevocably authorized by Borrower to fully discuss and disclose all such
affairs with each Lender.
6.3 FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain internal
accounting policies and procedures reasonably satisfactory to Lenders and a
standard system of accounting in accordance with GAAP, or, with respect to each
Insurance Subsidiary, in accordance with Statutory Accounting Practices, and
furnish to Agent and LaSalle:
6.3.1 QUARTERLY STATEMENTS. As soon as available and in any
event within 60 days after the close of the first three quarters of
each year:
(a) the unaudited consolidated balance sheet of Borrower
and its Subsidiaries as of the end of such quarter, prepared in
accordance with GAAP;
(b) unaudited consolidated statements of operations,
shareholders' equity and, if prepared in the normal course, cash
flows, of Borrower, and its Subsidiaries for such quarter and for
the period from the beginning of the then current year to the end of
such quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period in the preceding
year, prepared in accordance with GAAP;
(c) quarterly financial statements of each Insurance
Subsidiary as filed with insurance regulatory officials, prepared in
accordance with Statutory Accounting Practices; and
(d) INSpire's quarterly reports as filed on Form 10-Q;
all in reasonable detail, containing such information as any Lender
reasonably may require, and, except in the case of INSpire, certified by
the Chief Financial Officer as prepared in accordance with GAAP or
Statutory Accounting Practices, as applicable, on a basis consistent with
prior years, subject to normal year-end adjustments and absence of
footnotes.
6.3.2 ANNUAL STATEMENTS. Assoon as available and in any event within
120 days (75 days in the case of Subsections 6.3.2(c) and 6.3.2(g) and 150
days in the case of Subsection 6.3.2(f)) after the close of each year:
(a) the consolidated balance sheet of Borrower and its
Subsidiaries as of the end of such year, prepared in accordance
with GAAP;
(b) the consolidated statements of operations, shareholders'
equity and cash flows of Borrower and its Subsidiaries for such year
setting forth in each case in comparative form showing the
corresponding figures for the preceding year, prepared in accordance
with GAAP;
(c) the Annual Statement of each Insurance Subsidiary, on the
form promulgated by the NAIC and as filed with the Texas and Arizona
Commissioners of Insurance, as applicable, or any other state in
which Millers, Phoenix or any other Insurance Subsidiary conducts an
insurance business, prepared in accordance with Statutory Accounting
Practices, including Management's Discussion and Analysis with
respect to each Insurance Subsidiary, prepared in conformity with
the standards developed by the NAIC;
(d) INSpire's annual report as filed on Form 10-K;
(e) an opinion of the Accountants which shall accompany the
financial statements described in subsection 6.3.2(a) and subsection
6.3.2(b) above, which opinion shall be unqualified as to going
concern and scope of audit, stating that (i) the examination by the
Accountants in connection with such financial statements has been
made in accordance with generally accepted auditing standards, (ii)
such financial statements have been prepared in conformity with GAAP
and/or Statutory Accounting Practices, as appropriate, and in a
manner consistent with prior periods, and (iii) such financial
statements fairly present in all material respects the financial
position and results of operations of Borrower and each Subsidiary;
(f) an opinion of the Accountants with respect to the Admitted
Assets, Total Liabilities and Statutory Surplus of each Insurance
Subsidiary as of the end of such year, and the results of its
operations and its cash flows for such year, which opinion shall be
unqualified as to going concern and scope of audit, stating that (i)
the examination by the Accountants in connection with such financial
statements has been made in accordance with generally accepted
auditing standards, (ii) such financial statements have been
prepared in conformity with Statutory Accounting Practices and in a
manner consistent with prior periods, and (iii) such financial
statements fairly present in all material respects the financial
position and results of operations of each Insurance Subsidiary; and
(g) the Statement of Actuarial Opinion of each Insurance
Subsidiary's loss reserve and loss reserves and loss adjustment
expense reserves prepared by a Qualified Actuary as such term is
defined in the Annual Statement Instructions for Property and
Casualty Companies and prepared in accordance with standards
established by the Casualty Actuarial Society and the American
Academy of Actuaries. The actuary's opinion must opine as to the
adequacy of each Insurance Subsidiary's reserves for reported and
"incurred but not reported" claims.
6.3.3 OFFICER'S CERTIFICATES. The financial statements described
in subsections 6.3.1 and 6.3.2 shall be accompanied by a Compliance
Certificate signed by the Chief Financial Officer.
6.3.4 AUDIT REPORTS. Promptly upon receipt thereof, a copy of each
report, other than the reports referred to in subsection 6.3.2, including
any so-called "Management Letter" or similar report, submitted to Borrower
by the Accountants in connection with any annual, interim or special audit
made by the Accountants of the books of Borrower.
6.3.5 FINANCIAL PROJECTIONS. As soon as practicable, and in any
event no later than 45 days after the commencement of each Fiscal Year,
financial projections and a budget for the Borrower and its Subsidiaries
for such Fiscal Year in reasonable detail.
6.3.6 NOTICE OF DEFAULTS; LOSS. Prompt written notice if: (i) any
Indebtedness of Borrower or any Subsidiary is declared or shall become due
and payable prior to its declared or stated maturity, or called and not
paid when due, (ii) an event has occurred that enables the holder of any
note, or other evidence of such Indebtedness, certificate or security
evidencing any such Indebtedness of Borrower or any Subsidiary to declare
such Indebtedness due and payable prior to its stated maturity, (iii)
there shall occur and be continuing an Incipient Default or Event of
Default, accompanied by a statement of the Chief Financial Officer setting
forth what action Borrower proposes to take in respect thereof, or (iv)
any event shall occur which has a Material Adverse Effect, including the
amount or the estimated amount of any loss or depreciation or adverse
effect.
6.3.7 NOTICE OF SUITS, ADVERSE EVENTS. Prompt written notice of: (i)
any judgment or any citation, summons, subpoena, order to show cause or
other order naming Borrower or any Subsidiary a party to any proceeding
before any Governmental Body which might reasonably be expected to have a
Material Adverse Effect and include with such notice a copy of such
judgment, citation, summons, subpoena, order to show cause or other order,
(ii) any restriction, suspension, lapse or termination of any License,
permit, franchise, agreement or other authorization issued to Borrower or
any Subsidiary by any Governmental Body or any other Person that is
material to the operation of the Business of Borrower or any Subsidiary,
which restriction, suspension, lapse or termination might reasonably be
expected to have a Material Adverse Effect, and (iii) any refusal by any
Governmental Body or any other Person to renew or extend any such License,
permit, franchise, agreement or other authorization, which refusal might
reasonably be expected to have a Material Adverse Effect.
6.3.8 REPORTS TO SHAREHOLDERS, CREDITORS AND GOVERNMENTAL BODIES.
(a) Promptly upon becoming available, copies of all annual
financial statements and annual reports sent or made available
generally by Borrower to its shareholders, of all regular and
periodic reports and all registration statements and prospectuses
filed by Borrower with any securities exchange or with the SEC, and
of all statements generally made available by Borrower or others
concerning material developments in Borrower's or any Subsidiary's
Business.
(b) Promptly upon becoming available, copies of any periodic
or special reports filed by Borrower or any Subsidiary with any
Governmental Body or Person other than those described in subsection
6.3.10, if such reports indicate any material change in the
business, operations, affairs or condition of Borrower or any
Subsidiary, or if copies thereof are requested by any Lender, and
copies of any material notices and other communications from any
Governmental Body or Person, other than those described in
subsection 6.3.10, which specifically relate to Borrower or any
Subsidiary.
6.3.9 ERISA NOTICES AND REQUESTS.
(a) With reasonable promptness, and in any event within 30
days after occurrence of any of the following, Borrower will give
notice of and/or deliver to Agent copies of (i) the establishment of
any new Pension Plan or Multiemployer Plan; (ii) the commencement of
contributions to any Pension Plan or Multiemployer Plan to which
Borrower or any of its ERISA Affiliates was not previously
contributing or any increase in the benefits of any existing Pension
Plan or Multiemployer Plan; (iii) each funding waiver request filed
with respect to any Pension Plan and all communications received or
sent by Borrower or any ERISA Affiliate with respect to such
request; and (iv) the failure of Borrower or any ERISA Affiliate to
make a required installment or payment under Section 302 of ERISA or
Section 412 of the Code by the due date.
(b) Promptly and in any event within 10 days of becoming aware
of the occurrence of or forthcoming occurrence of any (i)
Termination Event or (ii) It prohibited transaction", as such term
is defined in Section 406 of ERISA or Section 4975 of the Code, in
connection with any Pension Plan or any trust created thereunder, a
notice specifying the nature thereof, what action Borrower has
taken, is taking or proposes to take with respect thereto and, when
known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto.
(c) With reasonable promptness but in any event within 10 days
after the occurrence of any of the following (or with respect to (i)
and (iii) below, upon written request), copies of. (i) any favorable
or unfavorable determination letter from the Internal Revenue
Service regarding the qualification of an Employee Benefit Plan
under Section 401(a) of the Code; (ii) all notices received by
Borrower or any ERISA Affiliate of the PBGC's intent to terminate
any Pension Plan or to have a trustee appointed to administer any
Pension Plan; (iii) each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) filed by Borrower or any ERISA
Affiliate with the Internal Revenue Service with respect to each
Pension Plan; and (iv) all notices received by Borrower or any ERISA
Affiliate from a Multiemployer Plan sponsor concerning the
imposition or amount of withdrawal liability pursuant to Section
4202 of ERISA. Borrower will notify Agent promptly in writing if
Borrower or any ERISA Affiliate has filed or intends to file a
notice of intent to terminate any Pension Plan under a distress
termination within the me i g of Section 4041(c) of ERISA.
6.3.10 INSURANCE REGULATORY REPORTS AND FILING. Within 10
days after receipt or filing, copies of each of the following received
or filed, as applicable:
(a) all final examination reports prepared with respect to
each Insurance Subsidiary by the insurance regulatory officials of
any state (including reports of financial examinations and so-called
"market conduct" examinations);
(b) notice of any proposed payment of any extraordinary
dividend by each Insurance Subsidiary, as defined in Article
21.49-1, Section 4(c) of the Texas Insurance Code;
(c) all other financial reporting filings, including but not
limited to Form B and C filings, made by or with respect to each
Insurance Subsidiary pursuant to the Holding Company Act;
(d) all reports, corrective orders, notices or filings made or
issued with respect to each Insurance Subsidiary's Risk-Based
Capital;
(e) all reports generated by the NAIC with respect to each
Insurance Subsidiary's Insurance Regulatory Information Systems
("IRIS") ratios or results, and all notices of the placement of each
Insurance Subsidiary on any NAIC "watch list";
(f) all reports or filings made by or with respect to each
Insurance Subsidiary concerning the issuance of additional capital
stock or any other increase in the capital of each Insurance
Subsidiary, and any permits or other regulatory authorizations
issued in connection therewith;
(g) notice of any pending investigation of the operations of
each Insurance Subsidiary by insurance regulatory officials which
might reasonably be expected to have a Material Adverse Effect; and
(h) all reports, evaluations, appraisals, summaries and
similar correspondence prepared by any reinsurers of any Insurance
Subsidiary as reasonably requested by Lenders.
6.3.11 OTHER INFORMATION.
(a) Immediate notice of any change in the name of Borrower or
any Subsidiary, any material sale or purchase of Property outside
the regular course of business of Borrower or any Subsidiary, and
any change in the business or financial affairs of Borrower or any
Subsidiary, which change would have a Material Adverse Effect.
(b) Promptly upon request therefor, such other financial
reports prepared in the normal course and other information relating
to the past, present or future financial condition, operations,
plans and projections of Borrower or any Subsidiary as any Lender
reasonably may request from time to time.
6.4 REPORTS TO GOVERNMENTAL BODIES AND OTHER PERSONS. Timely file all
material reports, applications, documents, instruments and information required
to be filed pursuant to all rules, regulations or requests of any Governmental
Body or other Person having jurisdiction over the operation of the business of
Borrower or any Subsidiary, including, but not limited to, all filings required
under the Holding Company Act in connection with the Loans or the pledge of the
Millers Capital Stock or the Phoenix Capital Stock in connection therewith.
6.5 MAINTENANCE OF LICENSES AND OTHER AGREEMENTS. Maintain in full force
and effect at all times, and apply in a timely manner for renewal of, all
Licenses, trademarks, tradenames and agreements necessary for the operation of
the Business, the loss of any of which would have a Material Adverse Effect.
6.6 INSURANCE. Maintain in full force and effect at all times such
liability, property and casualty insurance and fidelity and other bonds as may
be customarily maintained by similarly situated companies, in such amounts, with
such companies, under such policies and in such form as shall be reasonably
satisfactory to Agent.
6.7 COMPLIANCE WITH LAWS. Comply with all federal, state and local laws,
ordinances, requirements and regulations (including all insurance laws and
regulations, ERISA and all Environmental Laws) and all judgments, orders,
injunctions and decrees applicable to Borrower or any Subsidiary and their
respective operations, the failure to comply with which would have a Material
Adverse Effect.
6.8 TAXES AND CLAIMS. Pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any capital or Property belonging to it, or upon or with respect to
insurance policies issued by it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a Lien (other than
a Permitted Lien) upon the Property of Borrower, provided that neither Borrower
nor any Subsidiary shall be required by this Section 6.8 to pay any such amount
if the same is being contested diligently and in good faith by appropriate
proceedings and as to which Borrower or such Subsidiary, as applicable, has set
aside reserves on its books satisfactory to Lenders in their reasonable
discretion.
6.9 MAINTENANCE OF PROPERTIES. Maintain all of its Property necessary in
the operation of its Business in good working order and condition, ordinary wear
and tear excepted.
6.10 ADDITIONAL NON-INSURANCE SUBSIDIARIES. Each Non-Insurance Subsidiary
shall timely execute a certificate from the secretary of such Non-Insurance
Subsidiary certifying (i) the Articles of Incorporation, together with all
amendments thereto, certified by the Secretary of State from their respective
states of formation, (ii) the Bylaws, together with all amendments thereto and
(iii) a good standing certificate from their respective states of formation and
deliver such other instruments and documents as Lenders reasonably may require.
Any Non-Insurance Subsidiary not a Non-Insurance Subsidiary as of the initial
Closing, shall execute a set of Loan Instruments, which were required to be
executed by any Non-Insurance Subsidiaries which were a party to the Security
Agreement, as deemed necessary by the Lenders.
ARTICLE VII
NEGATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in full,
without the prior written consent of the Requisite Lenders Borrower shall not,
and shall not permit any Subsidiary to:
7.1 BORROWING. Create, incur, assume or suffer to exist any liability for
Indebtedness for Borrowed Money, except (i) Borrower's Obligations, (ii)
Permitted Senior Indebtedness, (iii) Indebtedness owed to the FHLB pursuant to
the FHLB Agreement, (iv) Indebtedness owed to Bank of America pursuant to the
Bank of America Agreement, (v) the Outstanding Letters of Credit and (vi)
Indebtedness incurred or assumed in connection with acquisitions permitted under
Section 7.3.
7.2 LIENS. Create, incur, assume or suffer to exist any Lien upon any of
its Property, whether now owned or hereafter acquired, except Permitted Liens
and liens securing indebtedness incurred or assumed in connection with
acquisitions permitted under Section 7.3.
7.3 MERGER AND ACQUISITION. Except for Borrower's acquisition of Phoenix,
engage in an Acquisition of any Person (a) unless the entity to be acquired is
engaged in the insurance industry, (b) the total cash and cash equivalents paid
and indebtedness assumed in connection with the acquisition is equal to or less
than $10,000,000, (c) to the extent permitted by applicable law, all stock and
assets of the acquired entity are pledged to Lenders, and (d) before and after
giving effect to the acquisition no Incipient Default or Event of Default exists
or would exist.
7.4 CONTINGENT LIABILITIES. Assume, guarantee, endorse, contingently agree
to purchase, become liable in respect of any letter of credit, or otherwise
become liable upon the obligation of any Person, except (i) the Outstanding
Letters of Credit, (ii) liabilities arising from the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business, (iii) the issuance of insurance policies or surety bonds in
connection with the Business and (iv) guaranties of Indebtedness for Borrowed
Money permitted under Section 7.1.
7.5 DISTRIBUTIONS. Except for payments made in connection with the Right
of First Refusal (and only if no Event of Default or Incipient Default exists),
make any dividends, distributions or other shareholder expenditures with respect
to the Borrower Capital Stock or apply any of its Property to the purchase,
redemption or other retirement of, or set apart any sum for the payment of, or
make any other distribution by reduction of capital or otherwise in respect of,
all or any portion of the Borrower Capital Stock, except that (i) Borrower may
declare and pay quarterly cash dividends in any year in an aggregate amount for
all such dividends paid during such year not to exceed 50% of its Net Income for
the preceding year, provided no Incipient Default or Event of Default then
exists or would be created by the payment of such dividends and (ii) Borrower
may pay dividends by issuance of additional Borrower Capital Stock.
7.6 CAPITAL EXPENDITURES. Make or incur any Capital Expenditures in
any year in excess of $3,000,000 in the aggregate for Borrower and
Subsidiaries.
7.7 OBLIGATIONS AS LESSEE UNDER OPERATING LEASE. Except as set forth on
Exhibit 5.5.3, enter into any arrangement as lessee of Property under any
Operating Lease if the aggregate rentals for Borrower and each Subsidiary for
all such Operating Leases during any year would exceed $2,000,000.
7.8 INVESTMENTS, ACQUISITIONS AND LOANS. At any time purchase or otherwise
acquire, hold or invest in the capital stock of, or any other interest in, any
Person, or make any loan or advance to, or enter into any arrangement for the
purpose of providing funds or credit to, or make any other investment, whether
by way of capital contribution or otherwise, in or with any Person, including,
without limitation, any Affiliate (each an "Investment"), except (i) with
respect to any Insurance Subsidiary, for investments made in accordance with the
Investment Policy and the insurance laws and regulations of the State of Texas
and the State of Arizona and (ii) that Borrower may from time to time make
Investments in any of its wholly-owned Subsidiaries and any of the Subsidiaries
may at any time make Investments in any other of such Subsidiaries and make
Acquisitions permitted under Section 7.3 but only to the extent that Lender has
a first priority perfected security interest in 100% of the Borrower's stock
ownership with respect to the Insurance Subsidiaries and a first priority
perfected security interest with respect to 100% of the assets of the
Non-insurance Subsidiaries.
7.9 FUNDAMENTAL BUSINESS CHANGES. Materially change the nature of its
business or engage in any business other than the Business.
7.10 SALE OR TRANSFER OF ASSETS. Sell, lease, assign, transfer or
otherwise dispose of any Property (other than in the ordinary course of
business) except for the sale or disposition of (i) Property which is not
material to or necessary for the continued operation of its Business and (ii)
obsolete or unusable items of equipment.
7.11 AMENDMENT OF CERTAIN INSTRUMENTS. Amend, modify or waive any
term or provision of any of its articles of incorporation or by-laws.
7.12 ISSUANCE OF CAPITAL. Issue or sell or permit, to be issued or sold
any additional capital stock or any interests convertible into or exercisable
for any such additional capital stock, except that Borrower may (i) issue and
sell capital stock or any interest convertible into or exercisable for capital
stock and (ii) permit any Subsidiary of Borrower to issue and sell additional
capital stock to Borrower or any wholly-owned Subsidiary of Borrower, provided
that such stock is issued in accordance with applicable insurance laws and
regulations and pledged to Agent pursuant to the Pledge Agreement.
7.13 TRANSACTIONS WITH AFFILIATES. Sell, lease, assign, transfer or
otherwise dispose of any Property to any Affiliate of Borrower, lease Property,
render or receive services or purchase assets from any such Affiliate, or
otherwise enter into any contractual relationship with any Affiliate of
Borrower, except for (i) dividends payable by an Insurance Subsidiary to
Borrower, (ii) transactions or agreements between Borrower and any Insurance
Subsidiary which comply in all respects with the Holding Company Act (including
dividends payable by any Insurance Subsidiary to Borrower in respect of the
Millers Capital Stock or the Phoenix Capital Stock), (iii) any transaction the
terms of which are no less favorable to Borrower or any of its wholly-owned
Subsidiaries, as the case may be, than those that might be obtained at the time
from unrelated Persons or (iv) any transaction between Borrower and any of its
direct or indirect wholly-owned Subsidiaries or between any of its direct or
indirect wholly-owned Subsidiaries.
7.14 COMPLIANCE WITH ERISA.
(i) permit the occurrence of any Termination Event which would
result in a liability to Borrower or any ERISA Affiliate in excess of
$100,000;
(ii) permit the present value of all benefit liabilities under all
Pension Plans to exceed the current value of the assets of such Pension
Plans allocable to such benefit liabilities by more than $100,000;
(iii) permit any accumulated funding deficiency in excess of
$100,000 (as defined in Section 302 of ERISA and Section 412 of the Code)
with respect to any Pension Plan, whether or not waived;
(iv) fail to make any contribution or payment to any Multiemployer
Plan which Borrower or any ERISA Affiliate may be required to make under
any agreement relating to such Multiemployer Plan, or any law pertaining
thereto which results in or is likely to result in a liability in excess
of $100,000;
(v) engage, or permit Borrower or any ERISA Affiliate to engage, in
any "prohibited transaction" as such term is defined in Section 406 of
ERISA or Section 4975 of the Code for which a civil penalty pursuant to
Section 502(i) of ERISA or a tax pursuant to Section 4975 of the Code in
excess of $100,000 is imposed;
(vi) permit the establishment of any post-retirement welfare
benefits (except such benefits as mandated by federal or state law) or,
except for employment agreements, establish or amend any Employee Benefit
Plan which establishment or amendment could result in liability to
Borrower or any ERISA Affiliate in excess of $500,000 on an annual basis
or increase the obligation of Borrower or any ERISA Affiliate to a
Multiemployer Plan which establishment, liability or increase,
individually or together with all similar liabilities and increases, is
material to Borrower or any ERISA Affiliate; or
(vii) fail, or permit any ERISA Affiliate to fail, to establish,
maintain and operate each Employee Benefit Plan in compliance in all
material respects with ERISA, the Code and all other applicable laws and
regulations and interpretations thereof
7.15 BUSINESS LOCATIONS. Change the location of its chief executive
office, any of its Property or the place where its books and records are kept
unless (i) Lenders shall receive written notice thereof within 30 days
thereafter, (ii) Borrower and each Subsidiary shall have complied with all
material applicable laws, rules and regulations and shall have received all
required consents and approvals from any Governmental Body, including, without
limitation, the insurance regulatory officials of the State of Texas, and (iii)
Borrower shall have executed and delivered to Lenders any documents Lenders may
reasonably require in order to maintain the validity and priority of the
Security Interests.
7.16 MINIMUM CONSOLIDATED NET WORTH. Permit the Consolidated Net
Worth as of the last day of any quarter to be less than $55,000,000 plus 50%
of cumulative annual positive Net Income since the Closing Date.
7.17 MAXIMUM CONSOLIDATED LEVERAGE RATIO. Permit the Consolidated
Leverage Ratio to exceed .40 to 1.0 tested quarterly at the end of each
fiscal quarter.
7.18 CONSOLIDATED FIXED CHARGE RATIO. Permit the Consolidated Fixed Charge
Ratio to be less than 1.25 to 1.0 in any year tested quarterly at the end of
each fiscal quarter and calculated on a rolling four quarters basis.
7.19 MINIMUM STATUTORY SURPLUS OF XXXXXX. Permit the Statutory Surplus of
Millers (after excluding all unrealized gains since December 31, 1998 in
investments in INSpire and excluding unrealized losses since December 31, 1998
in investments in INSpire up to $20,000,000) as of the last day of any fiscal
quarter to be less than $80,000,000.
7.20 MINIMUM STATUTORY SURPLUS OF PHOENIX. Permit the Statutory
Surplus of Phoenix as of the last day of any fiscal quarter to be less than
$12,000,000.
7.21 NET LEVERAGE RATIO. Permit the ratio of (i) the sum of
Annualized Net Written Premiums as of the end of any fiscal quarter, to (ii)
Statutory Surplus as of the end of such quarter to be greater than 3.0 to 1.0.
7.22 MINIMUM COMPANY ACTION LEVEL. Permit the Statutory Surplus of all
Insurance Subsidiaries to be less than 125% of the Company Action Level for any
year beginning with 1999 or permit a Company Action Level Event to occur.
7.23 A.M. BEST RATING. Permit the A.M. Best rating of Millers to be
less than " B + and of Phoenix to be less than "B + + " at any time.
7.24 REINSURANCE. Permit Millers, Phoenix or other Insurance Subsidiary to
cede risks to (reinsure with) any (i) company having an A.M. Best rating lower
than "A-," or (ii) any other company not rated by A.M. Best so long as Millers,
Phoenix or such other Insurance Subsidiary is entitled under applicable
insurance laws and regulations to receive credit for reinsurance with such
company; provided, however, that Millers, Phoenix or other Insurance
Subsidiaries may cede risks to (reinsure with) an Affiliate without the prior
written consent of the Requisite Lenders so long as Borrower provides notice of
such to Agent within ten (10) days after such cession. Attached as Exhibit 7.23
is the Order of Pooling issued by the Texas Department of Insurance. Any
subsequent Orders of Pooling shall be provided to the Lender.
ARTICLE VIII
DEFAULT AND REMEDIES
8.1 EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute an Event of Default under the Loan Instruments:
8.1.1 DEFAULT IN PAYMENT. If Borrower shall fail to pay all or any
portion of Borrower's Obligations when the same become due and payable.
8.1.2 BREACH OF COVENANTS.
(a) If Borrower shall fail to observe or perform any covenant or
agreement made by Borrower contained in Section 6.1, 6.2 or 6.5 or in
Article VII;
(b) If Borrower or a Subsidiary shall fail to observe or perform any
covenant or agreement (other than those referred to in subparagraph (a)
above or specifically addressed elsewhere in this Section 8.1) made by
Borrower or a Subsidiary in any of the Loan Instruments to which Borrower
or a Subsidiary is a party, and such failure shall continue for a period
of 30 days after written notice of such failure is given by LaSalle.
8.1.3 BREACH OF WARRANTY. If any representation or warranty made by or on
behalf of Borrower in or pursuant to any of the Loan Instruments or in any
instrument or document furnished in compliance with the Loan Instruments shall
prove to be false or misleading in any material respect on the date made.
8.1.4 DEFAULT UNDER OTHER INDEBTEDNESS FOR BORROWED MONEY. If (i) Borrower
at any time shall be in default (as principal or guarantor or other surety) in
the payment of any principal of or premium or interest on any Indebtedness for
Borrowed Money (other than Borrower's Obligations) beyond the grace period, if
any, applicable thereto and the aggregate amount of such payments then in
default beyond such grace period shall exceed $1,000,000, or (ii) any default
shall occur in respect of any issue of Indebtedness for Borrowed Money of
Borrower (other than Borrower's Obligations) outstanding in a principal amount
of at least $1,000,000, or in respect of any agreement or instrument relating to
any such issue of Indebtedness for Borrowed Money, and such default shall
continue beyond the grace period, if any, applicable thereto.
8.1.5 BANKRUPTCY; INSOLVENCY.
(a) If Borrower or any Subsidiary shall (i) generally not be paying
its debts as they become due, (ii) file, or consent, by answer or
otherwise, to the filing against it of a petition for relief or
reorganization or arrangement or any other petition in bankruptcy or
insolvency under the laws of any jurisdiction (including the filing of a
liquidation order with respect to any Insurance Subsidiary), (iii) make an
assignment for the benefit of creditors, (iv) consent to the appointment
of a custodian, receiver, trustee or other officer with similar powers for
Borrower or any Subsidiary, or for any substantial part of the Property of
Borrower or any Subsidiary, or (v) be adjudicated insolvent.
(b) If any Governmental Body of competent jurisdiction shall enter
an order appointing, without consent of Borrower or any Subsidiary, a
custodian, rehabilitator, conservator, receiver, trustee or other officer
with similar powers with respect to Borrower or any Subsidiary, or with
respect to any substantial part of the Property belonging to Borrower or
any Subsidiary, or if an order for relief shall be entered in any case or
proceeding for liquidation or reorganization or otherwise to take
advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of Borrower or any
Subsidiary, or if any petition for any such relief shall be filed against
Borrower or any Subsidiary and such petition shall not be dismissed or
stayed within 60 days.
8.1.6 JUDGMENTS. If the aggregate amount of all judgments or awards
against Borrower or any Subsidiary on a consolidated basis which shall
have been outstanding for a period of 30 days or more from the date of the
entry thereof and shall not have been discharged in full or stayed pending
appeal exceeds $1,000,000 in excess of insured amounts.
8.1.7 IMPAIRMENT OF LICENSES; OTHER AGREEMENTS. If (i) any
Governmental Body shall revoke, terminate, restrict, suspend, materially
adversely modify or fail to renew any License of Borrower or any
Subsidiary, the continuation of which is material to the continuation of
the Business of Borrower or any Subsidiary and such revocation,
termination, restriction, suspension, material adverse modification or
failure to renew is not cured within 30 days of notice thereof, or (ii)
there shall exist any violation or default in the performance of, or a
material failure to comply with any agreement, or condition or term of any
License, which violation, default or failure has a Material Adverse
Effect, or (iii) any agreement which is necessary to the operation of such
Business shall be revoked or terminated and not replaced by a reasonable
substitute within 30 days after the date of such revocation or
termination, and such revocation or termination and non-replacement could
reasonably be expected to have a Material Adverse Effect.
8.1.8 COLLATERAL. If any material portion of the Collateral shall be
seized or taken by a Governmental Body or Person, or Borrower shall fail
to maintain or cause to be maintained the Security Interests and priority
of the Loan Instruments as against any Person, or the title and rights of
Borrower to any material portion of the Collateral shall have become the
subject matter of litigation which could reasonably be expected to result
in impairment or loss of the security provided by the Loan Instruments.
8.1.9 ERISA - PENSION PLANS. If (i) Borrower or any ERISA Affiliate
fails to make full payment when due of all amounts which, under the
provisions of any Pension Plan or Section 412 of the Code, Borrower or any
ERISA Affiliate is required to pay as contributions thereto and such
failure results in or is likely to result in a Material Adverse Effect; or
(ii) an accumulated funding deficiency in excess of $100,000 occurs or
exists, whether or not waived, with respect to any Pension Plan; or (iii)
a Termination Event occurs which results in or is likely to result in a
Material Adverse Effect.
8.1.10 ERISA - MULTIEMPLOYER PLANS. If Borrower or any ERISA
Affiliate as employers under one or more Multiemployer Plans makes a
complete or partial withdrawal from such Multiemployer Plans and the plan
sponsor of such Multiemployer Plans notifies such withdrawing employer
that such employer has incurred a withdrawal liability requiring payments
in an amount exceeding $100,000.
8.2 ACCELERATION OF BORROWER'S OBLIGATIONS. Upon the occurrence of:
(a) any Event of Default described in clauses (ii), (iii), (iv) and
(v) of subsection 8.1.5(a) or in 8.1.5(b), all of Borrower's Obligations
at that time outstanding automatically shall mature and become due, and
(b) any other Event of Default, the Requisite Lenders, at any time
(unless such Event of Default shall have been waived in writing or
remedied), at their option, without further notice or demand, may declare
all of Borrower's Obligations due and payable, whereupon Borrower's
Obligations immediately shall mature and become due and payable, all
without presentment, demand, protest or notice (other than the declaration
referred to in this clause (b)), notice of intent to accelerate and notice
of acceleration, all of which hereby are waived.
8.3 REMEDIES ON DEFAULT. If Borrower's Obligations have been accelerated
pursuant to Section 8.2, Agent and/or Lenders, at their option, may:
8.3.1 ENFORCEMENT OF SECURITY INTEREST. Enforce their rights
and remedies under the Loan Instruments in accordance with their
respective terms.
8.3.2 OTHER REMEDIES. Enforce any of the rights or remedies
accorded to Lenders and/or Agent at equity or law, by virtue of statute
or otherwise.
8.4 APPLICATION OF FUNDS. Any funds received by Lenders and/or Agent
pursuant to the exercise of any rights accorded to Agent and/or Lenders pursuant
to, or by the operation of any of the terms of, any of the Loan Instruments,
including, without limitation, insurance proceeds, condemnation proceeds or
proceeds from the sale of Collateral, shall be applied to Borrower's Obligations
in the following order of priority:
8.4.1 EXPENSES. First, to the payment of (i) all reasonable fees and
expenses, including, without limitation, court costs, fees of appraisers,
title charges, costs of maintaining and preserving the Collateral, costs
of sale, and all other costs incurred by Agent and/or Lenders in
exercising any rights accorded to such Persons pursuant to the Loan
Instruments or by applicable law, including, without limitation,
attorneys' fees, and (ii) all Liens superior to the Liens of Agent and/or
Lenders except such superior Liens subject to which any sale of the
Collateral may have been made.
8.4.2 BORROWER'S OBLIGATIONS. Next, to the payment of the
remaining portion of Borrower's Obligations in such order as Lenders
may determine.
8.4.3 SURPLUS. Any surplus, to the Person or Persons entitled
thereto.
8.5 PERFORMANCE OF BORROWER'S OBLIGATION. If Borrower fails to (i)
maintain in force and pay for any insurance policy or bond which Borrower is
required to provide pursuant to any of the Loan Instruments, (ii) keep the
Collateral free from all Liens except for Permitted Liens, (iii) pay when due
all taxes, levies and assessments on or in respect of the Collateral, except as
otherwise permitted pursuant to the terms hereof, (iv) perform any other of the
obligations of Borrower hereunder or under any of the other Loan Instruments,
and (v) perform the obligations of Borrower with respect to any issue of
Indebtedness for Borrowed Money secured by a Permitted Lien, then after notice
to Borrower, Agent may (but shall, not be required to) procure and pay for such
insurance policy or bond, pay, contest or settle such Liens or taxes or any
judgments based thereon or otherwise make good any other aforesaid failure of
Borrower. Borrower shall reimburse Lenders immediately upon demand for all
reasonable sums paid or advanced on behalf of Borrower for any such purpose,
together with reasonable and/or necessary costs and expenses (including
reasonable attorneys' fees) paid or incurred by Lenders in connection therewith
and interest on all sums advanced from the date of advancement until repaid to
Lenders at the Prime Rate, and after demand therefor, at the applicable Default
Rate. All such sums advanced by Lenders, with interest thereon, immediately upon
advancement thereof, shall be deemed to be part of Borrower's Obligations.
ARTICLE IX
ADDITIONAL LENDERS AND PARTICIPANTS
9.1 ASSIGNMENT TO OTHER LENDERS.
9.1.1 ASSIGNMENT. Upon prior written notice to Agent, subject to
Borrower's consent, which shall not be unreasonably withheld (but no such
consent shall be required if an Event of Default is continuing), LaSalle
may make one or more Loan Assignments, and each Assignee, with the prior
written consent of the Requisite Lenders (which may be given or denied in
the sole discretion of the Requisite Lenders) the consent of Borrower (as
described and limited above) and upon prior written notice to Agent, may
make a Loan Assignment of the rights and obligations which were assigned
to such Assignee. Each Person making a Loan Assignment shall give prompt
written notice thereof to Borrower.
9.1.2 Assignment. Each Assignee to which LaSalle makes a Loan
Assignment, and each subsequent Assignee, to the extent of such Loan
Assignment, shall have the same rights, benefits and obligations under the
Loan Instruments as such Assignee would have had if such Assignee were an
original party to the Loan Instruments. No Loan Assignment shall impose
additional obligations upon Borrower or any Subsidiary.
9.1.3 SUBSTITUTION OF NOTES. Simultaneously with the delivery by any
Lender to Borrower of any promissory note which is the subject of a Loan
Assignment and which is marked "canceled," Borrower shall execute and
deliver to such Lender for delivery to (i) the Assignee to which such Loan
Assignment is made, a promissory note payable to the order of such
Assignee in an amount equal to the amount assigned to such Assignee, and
(ii) such Lender making such Loan Assignment, a promissory note payable to
the order of such assigning Lender in an amount equal to the amount
retained by such Lender, each such promissory note to be substantially in
the form of the canceled promissory note.
9.1.4 INSPECTIONS. Any action which any Assignee shall desire to
undertake pursuant to Section 6.2 of the Loan Agreement shall be
coordinated by such Assignee through Agent, and Agent shall accompany each
such Assignee which desires to undertake any such action pursuant to such
Section 6.2.
9.2 PARTICIPATIONS. Each Lender shall have the right to sell
Participations. In the event of the sale of a Participation, the obligations of
the Lender selling such a Participation shall remain unchanged, such Lender
shall remain solely responsible for the performance thereof, such Lender shall
remain the holder of any promissory note which previously has been delivered to
such Lender pursuant to the terms of this Loan Agreement, such Lender shall
notify Borrower of the sale of such Participation, and Borrower shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Loan Agreement. Notwithstanding the sale of
any Participation, all amounts payable by Borrower pursuant to the terms of the
Loan Instruments shall be determined as if no such Participation had been sold.
No Participant shall be entitled to require a Lender to take or omit to take any
action pursuant to the Loan Instruments except as provided in the Participation
Agreement executed by and between the Participant and such Lender.
9.3 ASSIGNMENT AND FUNCTION OF AGENT. LaSalle is hereby appointed as Agent
hereunder to act in such capacity on behalf of all Lenders under this Loan
Agreement and the other Loan Instruments. LaSalle agrees that it shall continue
to act as Agent throughout the term of the Loan. In performing its functions and
duties under this Agreement, Agent shall act solely as an agent of Lenders and
does not assume and shall not be deemed to have assumed any obligation towards
or relationship of agency or trust with or for any other Person. Notwithstanding
the appointment of LaSalle as Agent hereunder, LaSalle shall have the same
rights hereunder as any other Lender, and may exercise such rights as though
LaSalle had not been appointed as Agent hereunder.
9.4 SETTLEMENT PROCEDURES. Agent shall advise each Lender by telephone or
telecopy on each Business Day (the "Settlement Date") of the amount of such
Lender's (i) Pro Rata Share of all Loans made by Agent, for the benefit of
Lenders, since the preceding Business Day; (ii) Pro Rata Share of any payments
of principal with respect to the Loan since the preceding Business Day; and
(iii) Pro Rata Share of the amount of any payments of interest, fees and other
amounts with respect to the Loan since the preceding Business Day. On the next
Business Day following each Settlement Date, the party from whom payment is due
shall make the amount due available to the other, in same day funds, by wire
transfer to the other's account, not later than 11:00 a.m. (Chicago, Illinois
time). If such payment is not in fact made by the party from whom payment is
due, the other party shall be entitled to recover such corresponding amount on
demand (which demand shall be promptly made), together with interest thereon at
the Federal Funds Rate (as determined by Agent), for each day from the
Settlement Date on which such amount was due until such amount is paid. Whenever
Agent is asked to make an advance with respect to the Loan, not less than one
Business Day prior to the proposed Funding Date Agent may elect to advise each
Lender by telephone or telecopy of the requested Funding Date, the amount of
such advance and the amount of such Lender's Pro Rata Share thereof. In such
case, each Lender shall pay to Agent the amount of such Lender's Pro Rata Share
of such advance prior to 11:00 a.m. (Chicago, Illinois time) on the proposed
Funding Date.
9.5 SET OFF AND SHARING OF PAYMENTS. Upon the occurrence of any Event of
Default and the acceleration of Borrower's Obligations, each Lender is
authorized by Borrower, at any time or from time to time thereafter, without
notice to Borrower or to any other Person, to set off and to appropriate and
apply any and all balances held by such Lender for the account of Borrower, and
any other Property at any time held or owing by such Lender to or for the credit
or for the account of Borrower, against and on account of any of Borrower's
Obligations which are not paid when due. Borrower agrees that (i) each Lender
may exercise its right to set off with respect to amounts in excess of such
Lender's share of Borrower's Obligations and may sell Participations in such
excess to other Lenders and (ii) any Lender so purchasing a Participation in the
Loans made or other of Borrower's Obligations held by other Lenders may exercise
all rights of set-off, bankers' lien, counterclaim or similar rights with
respect to such Participation as fully as if such Lender were a direct holder of
the Loans and other of Borrower's Obligations in the amount of such
Participation.
9.6 LENDER'S DECISIONS. All Lender's Decisions shall be made by the
Requisite Lenders, except that notices under subsection 8.1.2(b) and waivers of
any Event of Default arising thereunder shall be given and made only by LaSalle
in its sole discretion.
9.7 CONFIDENTIALITY. Each Lender agrees to exercise its best efforts to
keep any non-public information delivered or made available to such Lender
pursuant to the Loan Instruments confidential from any Person other than Persons
employed or retained by such Lender who are or are expected to become engaged in
evaluating, approving, structuring or administering the Loan; provided that
nothing herein shall prevent any Lender from disclosing such information to any
Assignee or, after notice to Borrower, as required or requested by any
Governmental Body or to the extent required by legal process or as required in
connection with the exercise of any remedy under the Loan Instruments.
ARTICLE X
CLOSING
The Closing Date shall be such date as the parties shall determine, and
the Closing shall take place on the date agreed upon, provided all conditions
for the Closing as set forth in this Loan Agreement have been satisfied or
otherwise waived. The Closing shall take place at the office of Akin, Gump,
Strauss, Xxxxx & Xxxx, L.L.P., 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx
00000, or such other place as the parties hereto shall agree. Unless the Closing
occurs on or before September 26, 1999, this Loan Agreement shall terminate and
be of no further force or effect and, except for any obligation of Borrower to
Lenders pursuant to Article XI, none of the parties hereto shall have any
further obligation to any other party.
ARTICLE XI
EXPENSES AND INDEMNITY
11.1 ATTORNEYS' FEES AND OTHER FEES AND EXPENSES. Whether or not any of
the transactions contemplated by this Loan Agreement shall be consummated,
Borrower agrees to pay to Lenders on demand all reasonable expenses incurred by
Agent and/or Lenders in connection with the transactions contemplated hereby
(including, without limitation, any appraisal fees, environmental audit fees and
title and recording charges) and in connection with any amendments,
modifications or waivers (whether or not the same become effective) under or in
respect of any of the Loan Instruments, including, without limitation:
11.1.1 FEES AND EXPENSES FOR PREPARATION OF LOAN Instruments. All
reasonable expenses, disbursements and attorneys' fees (including, without
limitation, charges for required mortgagee's title insurance, lien
searches, reproduction of documents, long distance telephone calls and
overnight express carriers) of special counsel and other counsel retained
by Agent and/or Lenders in connection with the preparation and negotiation
of the Loan Instruments or any amendments, modifications or waivers hereto
or thereto, but excluding any Loan Assignments or Participations or other
documents to which Borrower is not a party.
11.1.2 FEES AND EXPENSES IN ENFORCEMENT OF RIGHTS OR DEFENSE OF LOAN
INSTRUMENTS. Any reasonable expenses or other costs, including attorneys'
fees and expert witness fees, incurred by Agent and/or Lenders in
connection with the enforcement or collection against any Borrower of any
provision of any of the Loan Instruments, and in connection with or
arising out of any litigation, investigation or proceeding instituted by
any Governmental Body or any other Person with respect to any of the Loan
Instruments, whether or not suit is instituted, including, but not limited
to, such costs or expenses arising from the enforcement or collection
against any Borrower of any provision of any of the Loan Instruments in
any state or federal bankruptcy or reorganization proceeding.
11.2 INDEMNITY. Borrower agrees to indemnify and save Agent and
Lenders harmless of and from the following:
11.2.1 BROKERAGE FEES. The fees, if any, of brokers and
finders engaged by Borrower.
11.2.2 GENERAL. Any loss, liability, damage or reasonable cost or
expense (including reasonable attorneys' fees and expenses) incurred by
Agent and/or Lenders in investigating, preparing for, defending against,
providing evidence, producing documents or taking other action in respect
of any commenced or threatened litigation, administrative proceeding, suit
instituted by any Person or investigation under any law, including any
federal securities law, the Bankruptcy Code, any relevant state corporate
statute or any other securities law, bankruptcy law or law affecting
creditors generally of any jurisdiction, or any regulation pertaining to
any of the foregoing, or at common law or otherwise, relating, directly or
indirectly, to the transactions contemplated by or referred to in, or any
other matter related to, the Loan Instruments, whether or not Agent and/or
Lenders are parties to such litigation, proceeding or suit, or is subject
to such investigation; provided, however, Borrower shall not be liable for
any such loss, cost, liability, damage or expense that is the proximate
result of Agent's or any Lender's negligence or willful misconduct.
11.2.3 OPERATION OF COLLATERAL; JOINT VENTURERS. Any loss, cost,
liability, damage or expense (including reasonable attorneys' fees and
expenses) incurred in connection with the ownership, operation or
maintenance of the Collateral, the construction of Agent and/or Lenders
and Borrower as having the relationship of joint venturers or partners or
the determination that Agent or any Lender has acted as agent for
Borrower; provided, however, Borrower shall not be liable for any such
loss, cost, liability, damage or expense that is the proximate result of
Agent's or any Lender's negligence or willful misconduct.
11.2.4 ENVIRONMENTAL INDEMNITY. Any and all claims, losses, damages,
response costs, clean-up costs and expenses suffered and/or incurred at
any time by Agent or any Lender arising out of or in any way relating to
the existence at any time of any Hazardous Materials in, on, under, at,
transported to or from, or used in the construction and/or renovation of,
any of the Leasehold Property, or otherwise with respect to any
Environmental Law, and/or the failure of Borrower to perform its
obligations and covenants hereunder with respect to environmental matters,
including, but not limited to: (i) claims of any Persons for damages,
penalties, response costs, clean-up costs, injunctive or other relief,
(ii) costs of removal and restoration, including fees of attorneys and
experts, and costs of reporting the existence of Hazardous Materials to
any Governmental Body, and (iii) any expenses or obligations, including
attorneys' fees and expert witness fees, incurred at, before and after any
trial or other proceeding before any Governmental Body or appeal therefrom
whether or not taxable as costs, including, without limitation, witness
fees, deposition costs, copying and telephone charges and other expenses,
all of which shall be paid by Borrower to Lenders when incurred by Agent
and/or Lenders.
ARTICLE XII
MISCELLANEOUS
12.1 NOTICES. All notices and communications under this Loan Agreement
shall be in writing and shall be (i) delivered in person, or (ii) mailed,
postage prepaid, either by registered or certified mail, return receipt
requested, or by overnight express carrier, addressed in each case as follows:
To Borrower: Millers American Group, Inc.
000 Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxx X. Xxxxxx
Copy to: Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx, P.C.
To Agent or LaSalle: LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Copy to: Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
or to any other address, as to any of the parties hereto, as such party shall
designate in a written notice to the other parties hereto. All notices sent
pursuant to the terms of this Section 12.1 shall be deemed received (i) if
personally delivered, then on the Business Day of delivery, (ii) if sent by
overnight, express carrier, on the next Business Day immediately following the
day sent, or (iii) if sent by registered or certified mail, on the earlier of
the fifth Business Day following the day sent or when actually received.
12.2 SURVIVAL OF LOAN AGREEMENT; INDEMNITIES. All covenants, agreements,
representations and warranties made in this Loan Agreement and in the
certificates delivered pursuant hereto shall survive the making by Lenders of
the Loans and the execution and delivery to Lenders of the Note and of all other
Loan Instruments, and shall continue in full force and effect so long as any of
Borrower's Obligations remain outstanding, unperformed or unpaid.
Notwithstanding the repayment of all amounts due under the Loan Instruments, the
cancellation of the Note and the release and/or cancellation of any and all of
the Loan Instruments or the foreclosure of any Liens on the Collateral, the
obligations of Borrower to indemnify Agent or Lenders with respect to the
expenses, damages, losses, costs and liabilities described in Section 11.2 shall
survive until all applicable statute of limitations periods with respect to
actions which may be brought against Agent or any Lender have run.
12.3 FURTHER ASSURANCE. From time to time, Borrower shall execute and
deliver to Lenders such additional documents as Lenders may reasonably require
to carry out the purposes of the Loan Instruments and to protect Lenders' rights
thereunder, including, without limitation, using commercially reasonable efforts
in the event any Collateral is to be sold to secure the approval by any
Governmental Body of any application required by such Governmental Body in
connection with such sale, and not take any action inconsistent with such sale
or the purposes of the Loan Instruments (it being understood, that the
provisions of this Section 12.3 shall not be construed to permit any sale of
Collateral not previously approved by Lenders or otherwise permitted by the Loan
Instruments).
12.4 TAXES AND FEES. Should any recording or filing fees become payable in
respect of any of the Loan Instruments, or any amendment, modification or
supplement thereof, Borrower agrees to pay the same on demand, together with any
interest or penalties thereon attributable to any delay by Borrower in meeting
Lenders' demand, and agrees to hold Lenders harmless with respect thereto.
12.5 SEVERABILITY. In the event that any provision of this Loan Agreement
is deemed to be invalid by reason of the operation of any law or by reason of
the interpretation placed thereon by any court or any other Governmental Body,
as applicable, this Loan Agreement shall be construed as not containing such
provision and the invalidity of such provision shall not affect the validity of
any other provisions hereof, and any and all other provisions hereof which
otherwise are lawful and valid shall remain in full force and effect.
12.6 WAIVER. No delay on the part of Agent and/or Lenders in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, and
no single or partial exercise of any right, power or privilege hereunder shall
preclude other or further exercise thereof, or be deemed to establish a custom
or course of dealing or performance between the parties hereto, or preclude the
exercise of any other right, power or privilege.
12.7 MODIFICATION OF LOAN INSTRUMENTS. No modification or waiver of any
provision of any of the Loan Instruments shall be effective unless the same
shall be in writing, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand on Borrower in any case shall entitle Borrower to any other or further
notice or demand in the same, similar or other circumstances.
12.8 CAPTIONS. The headings in this Loan Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
12.9 SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective permitted
successors and assigns of the parties hereto. Borrower may not assign its rights
or obligations hereunder without the prior written consent of Lenders.
12.10 REMEDIES CUMULATIVE. All rights and remedies of Agent and Leaders
pursuant to this Loan Agreement, any other Loan Instruments or otherwise, shall
be cumulative and non-exclusive, and may be exercised singularly or
concurrently. Neither Agent nor any Lender shall be required to prosecute
collection, enforcement or other remedies against Borrower before proceeding
against any other Person or to enforce or resort to any security, lien
collateral or other rights of Agent or Lenders. One or more successive actions
may be brought against Borrower, either in the same action or in separate
actions, as often as Lenders deem advisable, until all of Borrower's Obligations
are paid and performed in full.
12.11 ENTIRE AGREEMENT; CONFLICT. This Loan Agreement and the other Loan
Instruments executed prior or pursuant hereto constitute the entire agreement
among the parties hereto with respect to the transactions contemplated hereby or
thereby and supersede any prior agreements, whether written or oral, relating to
the subject matter hereof. In the event of a conflict between the terms and
conditions set forth herein and the terms and conditions set forth in any other
Loan Instrument, the terms and conditions set forth herein shall govern.
12.12 APPLICABLE LAW. THE LOAN INSTRUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS AND DECISIONS OF THE STATE OF ILLINOIS
WITHOUT REGARD TO PRINCIPLES, OF CONFLICTS OF LAW. FOR PURPOSES OF THIS SECTION
12.12 THE LOAN INSTRUMENTS SHALL BE DEEMED TO BE PERFORMED AND MADE IN THE STATE
OF ILLINOIS.
12.13 JURISDICTION AND VENUE. BORROWER HEREBY AGREES THAT ALL ACTIONS OR
PROCEEDINGS INITIATED BY BORROWER AND ARISING DIRECTLY OR INDIRECTLY OUT OF THE
LOAN INSTRUMENTS SHALL BE LITIGATED IN THE COURTS HAVING A SITUS WITHIN THE
COUNTY OF XXXX, STATE OF ILLINOIS, OR THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS OR, IF AGENT OR LENDERS INITIATE OR REMOVE SUCH
ACTION, IN ADDITION TO THE FOREGOING COURTS, ANY COURT IN WHICH AGENT OR LENDERS
SHALL INITIATE OR TO WHICH AGENT OR LENDERS SHALL REMOVE SUCH ACTIONS TO THE
EXTENT SUCH COURT HAS JURISDICTION. BORROWER HEREBY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED
BY AGENT OR LENDERS IN, OR REMOVED BY AGENT OR LENDERS TO, ANY OF SUCH COURTS,
AND HEREBY AGREES THAT PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER
PROCESS OR PAPERS ISSUED THEREIN MAY BE SERVED IN THE MANNER PROVIDED FOR
NOTICES HEREIN, AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER
PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO
BORROWER AT THE ADDRESS TO WHICH NOTICES ARE TO BE SENT PURSUANT TO SECTION
12.1. BORROWER WAIVES ANY CLAIM THAT XXXX COUNTY, ILLINOIS IS AN INCONVENIENT
FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE. TO THE EXTENT PROVIDED BY
LAW, SHOULD BORROWER, AFTER BEING SO SERVED, FAIL TO APPEAR OR ANSWER TO ANY
SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS
PRESCRIBED BY LAW AFTER THE MAILING THEREOF, BORROWER SHALL BE DEEMED IN DEFAULT
AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED BY THE COURT AGAINST BORROWER AS
DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE
EXCLUSIVE CHOICE OF FORUM FOR BORROWER SET FORTH IN THIS SECTION 12.13 SHALL NOT
BE DEEMED TO PRECLUDE THE ENFORCEMENT, BY AGENT AND/OR LENDERS, OF ANY JUDGMENT
OBTAINED IN ANY OTHER FORUM OR THE TAKING, BY AGENT AND/OR LENDERS, OF ANY
ACTION TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE JURISDICTION, AND BORROWER
HEREBY WAIVES THE RIGHT TO COLLATERALLY ATTACK ANY SUCH JUDGMENT OR ACTION.
12.14 WAIVER OF RIGHT TO JURY TRIAL. LENDERS AND BORROWER ACKNOWLEDGE AND
AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER ANY OF THE LOAN INSTRUMENTS OR
WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED THEREBY WOULD BE BASED UPON
DIFFICULT AND COMPLEX ISSUES AND THEREFORE THE PARTIES AGREE THAT ANY LAWSUIT
ARISING OUT OF ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
12.15 TIME OF ESSENCE. TIME IS OF THE ESSENCE FOR THE PERFORMANCE BY
BORROWER OF THE OBLIGATIONS SET FORTH IN THIS LOAN AGREEMENT AND THE OTHER
LOAN INSTRUMENTS.
12.16 ESTOPPEL CERTIFICATE. Within 15 days after Agent requests Borrower
to do so, Borrower will execute and deliver to Lenders a statement certifying
(i) that this Loan Agreement is in full force and effect and has not been
modified except as described in such statement, (ii) the date to which interest
on the Note has been paid, (iii) the Principal Balance, (iv) whether or not to
its knowledge an Incipient Default or Event of Default has occurred and is
continuing, and, if so, specifying in reasonable detail each such Incipient
Default or Event of Default of which it has knowledge, (v) whether to its
knowledge it has any defense, setoff or counterclaim to the payment of the Note
in accordance with its terms, and, if so, specifying each defense, setoff or
counterclaim of which it has knowledge in reasonable detail (including where
applicable the amount thereof), and (vi) as to any other matter reasonably
requested by the Lenders.
12.17 COUNTERPARTS. This Loan Agreement and the other Loan Instruments may
be executed by the parties hereto in several counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute one and the same agreement.
12.18 NO FIDUCIARY RELATIONSHIP. No provision in this Loan Agreement or in
any other Loan Instrument, and no course of dealing among the parties hereto,
shall be deemed to create any fiduciary duty by any Lender to Borrower.
[remainder of this page intentionally left blank]
IN WITNESS WIIEREOF, this Loan Agreement has been executed and delivered
by each of the parties hereto on the date first set forth above.
MILLERS AMERICAN GROUP, INC.,
a Texas corporation
By: /s/ XXXXX X. XXXXXXXX
----------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer
Commitment: $20,000,000 LASALLE BANK NATIONAL ASSOCIATION,
a national banking association, in its
individual capacity as a Lender and as Agent
for all Lenders
By: /s/ XXXXXX X. XXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
EXHIBITS
NUMBER TITLE
------ -----
1.1A Form of Compliance Certificate
1.1B Investment Policy Statement and
Investment Portfolio Guidelines
1.1C Notice of Borrowing
5.3.2 Restrictions on Capital Stock
5.5.2 Certificates of Authority
5.5.3 Operating Agreements
5.5.4 Business Locations
5.5.5 Leases of Real Property
5.7.1 Financial Statements
5.7.2 Projections
5.8 Litigation
5.13 IRIS Ratios
5.16 Existing Indebtedness
5.18.1 Employee Benefit Plans
5.21 Insurance
7.23 Order of Pooling
