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EXHIBIT 10.1
000 Xxxxxxxxxx Xxxxxx Date: April 2, 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx
Borrower: National Insurance Group
Subject: CREDIT TERMS AND CONDITIONS ("AGREEMENT")
Gentlemen:
To induce you to make loans to the undersigned (herein called "Borrower"), and
in consideration of any loan or loans you, in your sole discretion, may make to
Borrower, Borrower warrants and agrees as follows:
A. Borrower represents and warrants that:
1. Existence and Rights. Company is a California Corporation.
Borrower is duly organized and existing and in good standing under the laws of
the State of California (without limit as to the duration of its existence) and
is authorized and in good standing to do business in the State of California;
Company has powers and adequate authority, rights and franchises to own its
property and to carry on its business as now conducted, and is duly qualified
and in good standing in each State in which the character of the properties
owned by it therein or the conduct of its business makes such qualification
necessary; and Borrower has the power and adequate authority to make and carry
out this Agreement. Borrower has no investment in any other business entity,
except:
Great Pacific Insurance Company
Pinnacle Data Corporation
Fastrac Systems, Inc. Insurance Agent and Broker; and Fastrac Systems, Inc.
2. AGREEMENT AUTHORIZED. The execution, delivery and performance of this
Agreement are duly authorized and do not require the consent or
approval of any governmental body or other regulatory authority; are
not in contravention of or in conflict with any law or regulation or
any term or provision of Borrower's articles of incorporation,
by-laws, or Articles of Association, as the case may be, and this
Agreement is the valid, binding and legally enforceable obligation of
Borrower in accordance with its terms.
3. NO CONFLICT. The execution, delivery and performance of this Agreement
are not in contravention of or in conflict with any agreement,
indenture or undertaking to which Borrower is a party or by which it
or any of its property may be bound or affected, and do not cause any
lien, charge or other encumbrance to be created or imposed upon any
such property by reason thereof.
4. LITIGATION. To the knowledge of Borrower (i) there is no litigation or
other legal proceedings pending or threatened against Borrower, which
individually or in the aggregate would have a material adverse effect
on the financial condition, operations, or business of Borrower; and
(ii) Borrower is not in default with respect to any order, writ,
injunction, decree or demand of any court or other governmental or
regulatory authority, where such default would have a material adverse
effect to the financial condition, operations or business of Borrower.
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5. FINANCIAL CONDITION. The balance sheet of Borrower as of 12/31/96, and
the related profit and loss statement for the fiscal year ended on
that date, copy of which has heretofore been delivered to you by
Borrower, and all other statements and data submitted in writing by
Borrower to you in connection with this request for credit are true
and correct, and said balance sheet and profit and loss statement
fairly present the financial condition of Borrower as of the date
thereof and the results of the operations of Borrower for the period
covered thereby, and have been prepared in accordance with generally
accepted accounting principles on a basis consistently maintained.
Since such date there have been no materially adverse changes in the
financial condition or business of Borrower.
6. TITLE TO ASSETS. Borrower has good title to its assets.
7. TAX STATUS. Borrower has no liability for any delinquent state, local
or federal taxes, not subject to dispute by Borrower and for which
reasonable reserves have been established and, if Borrower has
contracted with any governmental agency, Borrower has no liability
for renegotiation of profits.
8. TRADEMARKS, PATENTS. Borrower, as of the date hereof, possesses all
necessary trademarks, trade names, copyrights, patents, patent rights,
and licenses to conduct its business as now operated, without any known
conflict with the valid trademarks, trade names, copyrights, patents
and license rights of others.
9. REGULATION U. The collateral for this loan is not margin stock within
the definition of Regulation U of the Board of Governors of the
Federal Reserve system.
B. Borrower agrees that so long as it is indebted to you, it will, unless you
shall otherwise consent in writing:
1. RIGHTS AND FACILITIES. Maintain and preserve all rights, franchises
and other authority adequate for the conduct of its business; maintain
its properties, equipment and facilities in good order and repair;
conduct its business in an orderly manner without voluntary
interruption and, if a corporation or partnership, maintain and
preserve its existence.
2. INSURANCE. Maintain public liability, property damage and workers'
compensation insurance and insurance on all its insurable property
against fire and other hazards with responsible insurance carriers to
the extent usually maintained by similar businesses.
3. TAXES AND OTHER LIABILITIES. Pay and discharge, before the same become
delinquent and before penalties accrue thereon, all taxes, assessments
and governmental charges upon or against it or any of its properties,
and all its other liabilities at any time existing, except to the
extent and so long as:
(a) The same are being contested in good faith and by appropriate
proceedings in such manner as not to cause any materially adverse
effect upon its financial condition or the loss of any right of
redemption from any sale thereunder; and
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(b) It shall have set aside on its books reserves (segregated to the
extent required by generally accepted accounting practice) deemed
adequate with respect thereto.
4. NET WORTH. Maintain a tangible net worth (meaning the excess of all
assets, excluding any value for good will, trademarks, patents,
copyrights, leaseholds, organization expense and other similar
intangible items, over its liabilities) of not less than $22,500,000.
5. PROFITABILITY. Borrower to be profitable on a fiscal year basis and
shall not have losses for any two consecutive quarters.
6. CASH FLOW COVERAGE. Commencing with fiscal year 1997 and thereafter on
an annual basis, the sum of Borrower's net profit plus period
depreciation divided by the current portion of long term debt and
capitalized leases shall not be less than 1.4.
7. RECORDS AND REPORTS. Maintain a standard and modern system of
accounting in accordance with generally accepted accounting principles
on a basis consistently maintained; permit your representatives to
have access to, and to examine its properties, books and records at
all reasonable times; and furnish you:
(a) As soon as available, and in any event within 50 days after the
close of each quarter of each fiscal year of Borrower, commencing
with the quarter next ending, a balance sheet, profit and loss
statement and reconciliation of Borrower's capital accounts as of
the close of such period and covering operations for the portion of
Borrower's fiscal year ending on the last day of such period, all
in reasonable detail and stating in comparative form the figures
for the corresponding date and period in the previous fiscal year,
prepared in accordance with generally accepted accounting
principles on a basis consistently maintained by Borrower and
certified by an appropriate officer of Borrower, subject, however,
to year-end audit adjustments.
(b) As soon as available, and in any event within 100 days after the
close of each fiscal year of Borrower, a report of audit of
Company as of the close of and for such fiscal year, all in
reasonable detail and stating in comparative form the figures as
of the close of and for the previous fiscal year, with the
unqualified opinion of accountants satisfactory to you, or no
third party opinion required.
(c) Within 100 days after the end of each fiscal year of Borrower, a
certificate of chief financial officer of Borrower, stating that
to the best knowledge of such officer, Borrower has performed and
observed all material covenants on its part required to be
performed by it except where the failure to so perform or observe
would have a material adverse effect on the financial condition,
operations or business of Borrower;
(d) Promptly after the receipt thereof by Borrower shall send to its
stockholders, if any, and copies of all reports which Borrower may
file with the Securities and Exchange Commission or any
governmental authority at any time substituted therefor; and
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(e) Such other information relating to the affairs of Borrower as you
reasonably may request from time to time.
(f) Notice of Default. Promptly notify the Bank in writing of the
occurrence of any event of default hereunder or any event which
upon notice and lapse of time would be an event of default.
C. Borrower agrees that so long as it is indebted to you, it will not, without
your written consent:
Type of Business: Management. Make any substantial change in its business
or operations or make any change in incumbency of Xxxx X. Xxxxxxx as
chairman and Chief Executive Officer of Borrower or of Xxxxx X. Xxxx as
President of Borrower.
D. The occurrence of any one of the following events of default shall, at your
option, terminate your commitment to lend and make all sums of principal
and interest then remaining unpaid on all Borrower's indebtedness to you
immediately due and payable, all without demand, presentment or notice, all
of which are hereby expressly waived:
1. FAILURE TO PAY NOTE. Failure to pay any installment of principal or of
interest on any indebtedness of Borrower to you within 10 days of the
date when due.
2. BREACH OF COVENANT. Failure of Borrower to perform any other term or
condition of this Agreement binding upon Borrower, which failure
continues and is not cured within thirty days after written notice from
Bank to Borrower.
3. BREACH OF WARRANTY. Any of Borrower's representations or warranties
made herein or any statement or certificate at any time given in
writing pursuant hereto or in connection herewith shall be false or
misleading in any material respect.
4. INSOLVENCY; RECEIVER OR TRUSTEE. Borrower shall become insolvent; or
admits its inability to pay its debts as the mature; or make an
assignment for the benefit of creditors; or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part
of its property or business.
5. JUDGMENTS, ATTACHMENTS. Any money judgment, writ or warrant of
attachment, or similar process shall be entered or filed against
Borrower or any of its assets, which judgment, writ or warrant of
attachment or similar process will have a material adverse effect on
the financial condition, operations and business of Borrower and which
remains unvacated, unbonded, or unstayed for a period of 30 days or in
any event later than five days prior to the day of any proposed sale or
execution under such judgment, writ, warrant of attachment or similar
process.
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6. BANKRUPTCY. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or
any law for the relief of debtors shall be instituted by or against
Borrower and, if instituted against it, shall be consented to.
E. Miscellaneous Provisions.
1. FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of
your Bank or any holder of Notes issued hereunder, in the exercise of
any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any
other right, power or privilege. All rights and remedies existing under
this agreement of any note issued in connection with a loan that your
Bank may make hereunder, are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
2. TERMINATION. Upon thirty days written notice to Lender, Borrower may
terminate this agreement in full, provided that, upon such time of
notice and upon the effective termination date, the Borrower has no
outstanding principal, interest, penalties, or any other amounts due
under this agreement. Upon termination, Lender's interest in all
Collateral of Borrower shall cease.
3. NOTICES. All notices, demands, requests or other communications that
may be or are required to be given, served, or sent by any party to any
other party pursuant to this agreement shall be in writing and shall be
mailed by first-class registered or certified mail, return receipt
requested, postage prepaid, or transmitted by hand delivery, with
signature required by recipient, addressed as follows:
4. AMENDED AND RESTATED CREDIT TERMS AND CONDITIONS. This Agreement
amends and restates in full that Credit Terms and Conditions dated
September 10, 1996 executed by Borrower in favor of Bank. That
Promissory Note dated September 10, 1996 and that Promissory Note dated
April 2, 1997, both executed by the Borrower in favor of Bank are
subject to the terms and conditions of this Agreement.
Notices to Borrower:
Xxxxxxx X. Xxxxxxxx
Chief Financial Officer
National Insurance Group
000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
With a copy (which shall
not constitute notice) to:
Xxxxxx X. Xxxxxxxxxxx
Executive Vice President and General Counsel
000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
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Notices to Bank:
Xxxxxx X. XxXxxxxx, Vice President
Imperial Bank
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request or communication that is mailed shall be deemed
sufficiently given, served, sent, and received for all purposes at such time as
it is delivered to the addressees (with the return receipt, the delivery
receipt, the affidavit of messenger being conclusive evidence of such delivery)
or at such time as delivery refused by the addressees upon presentation.
Agreed to and Accepted:
National Insurance Group Imperial Bank
By /s/ Xxxxxx X. Xxxxxxxxxxx Date 4-25-97 By /s/ Xxxxxx X. XxXxxxxx Date 4/25/97
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Xxxxxx X. Xxxxxxxxxxx, Vice President
Executive Vice President (Signature and Title)
(Signature and Title)
By Date
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(Signature and Title)
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AMENDMENT NO. 1 TO CREDIT TERMS AND CONDITIONS
This Amendment No 1 dated as of September 17, 1997 ("Amendment") to that
certain Credit Terms and Agreement dated April 2, 1997 ("Agreement") by and
between Imperial Bank ("Bank") and National Insurance Group ("Borrower"). All
capitalized terms used herein, and not defined herein shall have the same
meaning as set forth in the Agreement.
1. The following Sections B.4, B.5 and B.6 of the Agreement are hereby each
amended in full to read as follows:
"4. NET WORTH. Maintain on a consolidated basis a tangible net worth
(meaning the excess of all assets, excluding any value for good will,
provided that goodwill for New Arts Acquisition, Inc. will be included,
trademarks, patents, copyrights, leaseholds, organization expense and other
similar intangible items, over its liabilities) of not less than
$25,000,000 to increase each fiscal year end, commencing with fiscal year
end 1998, by Borrower's net income minus dividends paid.
5. PROFITABILITY. Borrower to be profitable on a consolidated basis on a
fiscal year basis and shall not have losses for any two consecutive
quarters.
6. CASH FLOW COVERAGE. Commencing with fiscal year 1997 and thereafter on a
consolidated and annual basis, the sum of Borrower's net profit plus period
depreciation divided by the current portion of long term debt and
capitalized leases shall not be less than 1.4."
2. The following Sections B. 7(a) and B.7(b) of the Agreement are hereby each
amended in full to read as follows:
"(a) As soon as available, and in any event within 50 days after the
close of each quarter of each fiscal year of Borrower, commencing with
the quarter next ending, a consolidated balance sheet, profit and loss
statement and reconciliation of Borrower's capital accounts as of the
close of such period and covering operations for the portion of
Borrower's fiscal year ending on the last day of such period, all in
reasonable detail and stating in comparative form the figures for the
corresponding date and period in the previous fiscal year, prepared in
accordance with generally accepted accounting principles on a basis
consistently maintained by Borrower and certified by an appropriate
officer of Borrower, subject, however, to year-end audit adjustments.
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(b) As soon as available, and in any event within 100 days after the
close of each fiscal year of Borrower, a report of audit of Company on a
consolidated basis as of the close of and for such fiscal year, all in
reasonable detail and stating in comparative form the figures as of the
close of and for the previous fiscal year, with the unqualified opinion
of accountants satisfactory to you, or no third party opinion required."
3. The following Sub-sections 7 and 8 are hereby added to section D of the
agreement.
"7. GUARANTEE. Borrower shall default in its obligations under any
guarantee it executed in your favor guaranteeing the obligations of New
Arts Acquisition, Inc. ("New Arts").
8. NEW ARTS CREDIT AGREEMENT. A default shall occur, and such default is
not cured within any applicable cure period, in that Credit Terms and
Conditions executed by New Arts and the Bank dated September 11, 1997, as
such may be amended, modified, superseded, replaced, restated or amended
and restated ("New Arts Credit Agreement").
4. The following Section F is hereby added to the Agreement.
F. Applicable Law and Reference Provisions.
1. APPLICABLE LAW. This Agreement and all other agreements and
instruments required by Bank in connection therewith shall be governed
by and construed according to the laws of the State of California, to
the jurisdiction of which the parties hereby agree to submit.
2. Reference Provisions.
(a). Other than (i) non-judicial foreclosure and all matters in
connection therewith regarding security interests in real or personal
property; or (ii) the appointment of a receiver, or the exercise of
other provisional remedies (any and all of which may be initiated
pursuant to applicable law), each controversy, dispute or claim
between the parties arising out of or relating to this Agreement which
controversy, dispute or claim is not settled in writing within thirty
(30) days after the "Claim Date" (defined as the date on which a party
subject to the Agreement gives written notice to all other parties
that a controversy, dispute or claim exists), will be settled by a
reference proceeding in California in accordance with the provisions
of Section 638 et seq of the California Code of Civil Procedure, or
their successor section ("CCP"), which shall constitute the exclusive
remedy for the settlement of any controversy, dispute or claim
concerning this Agreement, including whether such controversy, dispute
or claim is subject to the reference proceeding and except as set
forth above, the parties waive their rights to initiate any legal
proceedings against each other in any court or jurisdiction other than
the Superior Court in the County where the real property securing this
Agreement, if
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any, is located or Los Angeles County if none (the "Court"). The
referee shall be a retired Judge of the Court selected by mutual
agreement of the parties, and if they cannot so agree within
forty-five (45) days after the Claim Date, the referee shall be
promptly selected by the Presiding Judge of the Court (or his
representative). The referee shall be appointed to sit as a temporary
judge, with all of the powers of a temporary judge, as authorized by
law, and upon selection should take and subscribe to the oath of
office as provided for in Rule 244 of the California Rules of Court
(or any subsequently enacted Rule). Each party shall have one
peremptory challenge pursuant to CCP Section 170.6. The referee shall
(a) be requested to set the matter for hearing within sixty (60) days
after the Claim Date and (b) try any and all issues of law or fact and
report a statement of decision upon them, if possible, within ninety
(90) days of the Claim Date. Any decision rendered by the referee will
be final, binding and conclusive and judgment shall be entered
pursuant to CCP Section 644.90 in any court in the State of California
having jurisdiction. Any party may apply for a reference proceeding at
any time after thirty (30) days following notice to any other party of
the nature of the controversy, dispute or claim, by filing a petition
for a hearing and/or trial. All discovery permitted by this Agreement
shall be completed no later than fifteen (15) days before the first
hearing date established by the referee. The referee may extend such
period in the event of a party's refusal to provide requested
discovery for any reason whatsoever, including, without limitation,
legal objections raised to such discovery or unavailability of a
witness due to absence or illness. No party shall be entitled to
"priority" in conducting discovery. Depositions may be taken by either
party upon seven (7) days written notice, and request for production
or inspection of documents shall be responded to within ten (10) days
after service. All disputes relating to discovery which cannot be
resolved by the parties shall be submitted to the referee whose
decision shall be final and binding upon the parties. Pending
appointment of the referee as provided herein, the Superior Court is
empowered to issue temporary and/or provisional remedies, as
appropriate.
(b). Except as expressly set forth in this Agreement, the referee
shall determine the manner in which the reference proceeding is
conducted including the time and place of all hearings, the order of
presentation of evidence, and all other questions that arise with
respect to the course of the reference proceeding. All proceedings and
hearings conducted before the referee, except for trial, shall be
conducted without a court reporter, except that when any party so
requests, a court reporter will be used at any hearing conducted
before the referee. The party making such a request shall have the
obligation to arrange for and pay for the court reporter. The costs of
the court reporter at the trial shall be borne equally by the parties.
(c). The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the State
of California. The rules of evidence applicable to proceedings at law
in the State of California will be applicable to the reference
proceeding. The referee shall be empowered to enter equitable as well
as legal relief, to provide all temporary and/or provisional remedies
and to enter equitable orders that will be binding upon the parties.
The referee shall issue a single judgment at
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the close of the reference proceeding which shall dispose of all of
the claims of the parties that are the subject of the reference. The
parties hereto expressly reserve the right to contest or appeal from
the final judgment or any appealable order or appealable judgment
entered by the referee. The parties hereto expressly reserve the right
to findings of fact, conclusions of law, a written statement of
decision, and the right to move for a new trial or a different
judgment, which new trial, if granted, is also to be a reference
proceeding under this provision.
(d). In the event that the enabling legislation which provides for
appointment of a referee is repealed (and no successor statute is
enacted), any dispute between the parties that would otherwise be
determined by the reference procedure herein described will be
resolved and determined by arbitration. The arbitration will be
conducted by a retired judge of the Court, in accordance with the
California Arbitration Act, Section 1280 through Section 1294.2 of the
CCP as amended from time to time. The limitations with respect to
discovery as set forth hereinabove shall apply to any such arbitration
proceeding.
5. The Borrower hereby agrees that as long as New Arts remains obligated
to the Bank the provisions of Sections B.4, B.5, B.6, and B.7 of the
Agreement shall remain in full force and effect and shall survive
repayment if full of all obligations of Borrower to Bank or the
termination of the Agreement or if the Agreement is no longer in
effect for any reason. Any breach of this provision shall result in a
default in the New Arts Credit Agreement.
6. Except as provided above, the Agreement remains unchanged.
National Insurance Group
By: /s/ XXXX XXXXXXXX
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Title: EVP, CFO
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Imperial Bank
By: /s/ XXXXXX X. XXXXXXXX
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Title: Vice President
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