PAGE
June 30, 1997
Selective Insurance Company of America
Selective Insurance Group, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Re: Loan Facility
Ladies and Gentlemen:
Summit Bank (the "Bank") is pleased to make available to Selective
Insurance Company of America, a corporation organized under the laws of
New Jersey (the "Company") and Selective Insurance Group, Inc., a corpor-
ation organized under the laws of New Jersey (the "Parent") (collectively,
the Company and the Parent are hereinafter referred to as the "Borrower")
an aggregate $25,000,000 revolving line of credit (the "Revolving Line of
Credit") on the following terms and conditions:
1. Term. The Revolving Line of Credit shall commence on the date
hereof and expire on June 30, 1997 (the "Revolving Maturity Date"), unless
extended by mutual agreement.
2. Notice and Manner of Borrowings. Subject to the terms and
conditions hereof, and upon request by either Xxxxxxxx, the Bank agrees to
make revolving loans to such Borrower provided for herein (each, a
"Revolving Loan") not to exceed $25,000,000 in aggregate of all outstanding
Revolving Loans to both Borrowers at any time and provided further that no
more than $20,000,000 of Revolving Loans shall be outstanding to the Parent
at any time.
3. Evidence of Indebtedness. All Revolving Loans will be evidenced
by a promissory note in the form attached hereto as Exhibit A1 as to the
Company and A2 as to the Parent (each a "Note"). Each Borrower hereby
authorizes the Bank to record each Revolving Loan and the corresponding
information on the schedule forming part of the Note, and, absent manifest
error, this record shall be conclusive and binding.
4. Interest Rate. Principal on each outstanding Revolving Loan
shall bear interest as selected by the applicable Borrower at a floating
rate equal to the Adjusted Libor Rate plus 28 basis points per annum.
Revolving Loans may be made for interest periods of 1 or 3 months, the
foregoing interest periods shall be acceptable to the Bank and adjusted
for month-end, weekend and holiday periods. An interest period shall
commence on the first day of each month and end one (1) or three (3)
months thereafter as selected by the Borrower. All borrowings hereunder
during each interest period shall be at the Adjusted Libor Rate as
determined at the beginning of the Interest Period, plus 28 basis points.
Interest on each Revolving Loan shall be calculated on the basis of a 360-
day year for the actual number of days elapsed. Interest shall be payable
monthly in arrears on the first day of each month. All accrued and unpaid
interest on all Revolving Loans shall be due and payable on the same day
when principal is payable, whether upon acceleration following an Event of
Default as defined herein or on the Revolving Maturity Date. Revolving
Loans may be prepaid without penalty. Revolving Loans which are repaid may
be reborrowed subject to the terms hereof.
5. Special Provisions Relating to Libor Rate Loans. All Adjusted
Libor Rates shall be adjusted to reflect deposit requirements, reserves,
capital, taxes and other charges assessed against the Bank in connection
with the Bank's offering such a pricing option and the Borrower agrees to
pay to the Bank upon demand any increase in cost or reduction in the rate
of return
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realized by the Bank as a result of imposition of any of the foregoing
which is not reflected in adjustments to the Adjusted Libor Rate. As of
the date hereof, the Bank is not aware of any adjustments for the foregoing
items which would be required to be made to the Adjusted Libor rates quoted
by the Bank hereunder, and the Bank will endeavor to give prior notice to
the Borrowers before making any adjustment as permitted by this paragraph,
provided however, that failure in good faith by the Bank to give such
notice shall not affect the Bank's rights to make any adjustment or the
obligation of the Borrowers to make any payments to reflect such adjustment
as provided herein. In the event that (a) the Bank is unable to offer an
Adjusted Libor Rate, (b) it is unlawful or impractical for the Bank to
offer such a rate, or (c) the Adjusted Libor Rate does not reflect the cost
to the Bank of offering such rate, then in any such event the Bank shall
have no further obligation to quote Adjusted Libor Rates until such event
ceases to be in effect, and in the event that the making or continuing of
any Revolving Loan with interest based on Adjusted Libor Rate by the Bank
is unlawful, the interest rate on all such Revolving Loans shall be
converted to a per annum interest rate equal to the Bank's Prime Rate in
effect from time to time (a "Prime Rate Loan"), with interest payable on
the first day of each month. the Borrower shall give to the Bank no less
than 3 days' prior notice of its request for the Bank to make, or continue
any maturing, Revolving Loan with interest based on Adjusted Libor Rate and
in the event that the Bank does not receive adequate prior notice as to any
maturing Revolving Loan with interestbased on Adjusted Libor Rate, the Bank
may roll over or continue any such Revolving Loan as a Prime Rate Loan or a
loan of similar type and interest period as the maturing Revolving Loan at
the then prevailing Adjusted Libor Rate plus 28 basis points, as the case
may be.
6. Commitment Fee. For the period from the date hereof through the
Revolving Maturity Date, the Borrower will pay to the Bank a commitment fee
equal to $30,000.00 per annum on the amount of the Revolving Line of Credit
which shall be payable quarterly in arrears commencing on June 30, 1997 and
on any date on which the commitment hereunder is terminated by the
Borrower.
7. Payments. Each Borrower shall pay interest and principal on the
amount of the Revolving Loans which it borrows hereunder as provided herein
and on the Revolving Maturity Date all unpaid Revolving Loans, together
with accrued and unpaid interest, shall be paid in full by such Borrower.
All payments of principal and interest shall be made in immediately avail-
able of United States dollars at the main office of the Bank without setoff
or deduction. The Borrowers and the Bank acknowledge and agree that the
obligations of the Borrowers hereunder are not joint and several, and each
Borrower is responsible solely for payment and performance of those
obligations required to be performed by such Borrower hereunder or in
connection with Loans made to such Borrower hereunder.
8. Covenants. Until all Obligations have been paid in full, each of
the Borrowers covenants and agrees:
a) To, and to ensure that each of its Subsidiaries will, (i) duly
observe and comply with all applicable laws, including without limitation,
those pertaining to environmental matters and the release or threat of
release of hazardous substances, and pension and retirement plans, and pay
all taxes and governmental charges prior to the time they become delinquent
other than those taxes and charges which are being contested in good faith
by appropriate proceedings as long as adequate book reserves required to be
maintained in accordance with generally accepted accounting principles or
statutory accounting principles have been established and maintained,
provided, however, that no reserves shall be required to be maintained by
the borrowers in connection with any amount payable in connection with the
Retaliatory Tax, as hereinafter defined, and so long as the title of the
Borrowers or the Subsidiary, as the case may be, to, and its rights to use,
the affected property is not materially adversely affected thereby, (ii)
maintain in full force and effect all
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licenses and permits necessary in any material respect for the proper
conduct of its business, (iii) keep its properties and assets in good
repair and insured in such amounts as is customary in the industry and as
the Bank may require, (iv) remain engaged substantially in the business in
which it is currently engaged and not engage in any merger or
consolidation, except that any Subsidiary may merge or consolidate with
any Subsidiary or with either Borrower so long s such Borrower is the
surviving entity, or sell substantially all of its assets, or acquire
substantially all of the assets of any other party unless at the time of
such acquisition and after giving effect thereto no Event of Default will
have occurred hereunder, and if such acquisition relates to a business
unrelated to the business in which the Borrower or such Subsidiary shall
have obtained the prior written consent of the Bank, (v) ensure that the
Company maintains a rating of no less favorable than A- or its equivalent
from the A.M. Best Company rating agency and promptly notify the Bank of
any change in any rating given by A.M. Best Company and (vi) comply with
all terms and provisions of all documents evidencing or securing any
Obligations or any Indebtedness other than to the bank, including under
any credit facility with Summit Bank, and immediately notify the Bank of
any default or event of default with respect to such Obligations or
Indebtedness;
b) To permit the Bank to visit and inspect the properties of the
Borrower and make copies or abstracts from the Borrower's books and
records;
c) To pay all fees, costs and expenses incurred or paid by the Bank
in connection with the enforcement of the Borrower's obligations to pay any
amounts payable under this letter agreement and Note or any other documents
executed in connection therewith;
d) Until the Maturity Date, to submit to the Bank: (i) within 45
days of the end of each fiscal quarter of the Borrowers, consolidated
financial statements of the Parent prepared by management, including
balance sheet and income statement, together with financial statements of
each subsidiary of the Parent as required by applicable law together with
a certificate of compliance executed by an authorized officer of the
Borrower in a form acceptable to the bank showing a calculation of the
financial covenants described herein, (ii) within 90 days of the end of
each fiscal year of the Borrowers, annual consolidated financial state-
ments of the Parent audited by a certified public accountant acceptable to
the Bank, which, unless otherwise notified by the Bank shall include any
of the so called "big 6" certified public accountant firms, and (iii) such
other financial statements and information as to either Borrower as the
Bank may reasonably request from time to time; and
e) To execute and deliver such additional instruments and take
further action as the Bank may reasonably request to effect the purpose of
this letter agreement and the Revolving Loans.
The Bank acknowledges that the Borrowers are currently contesting
payment of certain so called "Retaliatory Tax" impositions by the
Commonwealth of Pennsylvania in the amounts and for the years described on
Exhibit B attached hereto (such amounts, the "Retaliatory Tax". In
connection therewith, the Borrowers represent to the Bank that (i) the
Borrowers reasonably believe that they will prevail in this contest, (ii)
in the event that such contest is determined in a manner adverse to the
Borrower, such event will not have a material impact on the ability of the
Borrowers to pay and perform their obligations hereunder or their financial
condition and (iii)) in the event that the Commonwealth of Pennsylvania
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commences any action to foreclose on any lien on any property of either
of the Borrowers arising in its favor with respect to any Retaliatory Tax
amount, the Borrowers will either pay such amount or pay all Revolving
Loans and other amounts payable to the Bank hereunder,
f) Comply with the covenants set forth on the Addendum - Schedule B
annexed hereto with all references therein:
(i) to Company being deemed references to Parent.
(ii) to Notes being deemed references to the Notes to be
delivered to Bank hereunder.
All capitalized terms used in said Addendum shall have the meaning
ascribed to such terms in the $54,000,000.00, 8.77%, Senior Notes dated
August 1, 1998 issued by the Parent, as originally issued, and as may be
modified thereafter with the consent of Bank.
g) The Company and Parent shall pay all costs and expenses incurred
by Bank, including reasonable attorneys fees, in connection with the
preparation and execution of this Letter Agreement, the Notes and the
other documents and agreements to be executed and delivered by Company
and Parent hereunder.
h) The proceeds of the loans hereunder to the Company shall be used
solely for working capital. The proceeds of the loans hereunder to Parent
may be used to purchase capital stock of Parent, for bridge financing for
acquisition of other insurance companies; for arbitrage activity for a
period of no greater than 90 days; or for other general corporate purposes.
i) The parent shall maintain a ratio of Indebtedness to Capital of
not more than .3 to 1.0 at all times.
9. Representations and Warranties. Each Borrower represents and
warrants that:
a) It is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite corporate power and authority to own its property and conduct
its business as is now conducted, is duly qualified and in good standing
as a foreign corporation and is duly authorized to do business in each
jurisdiction where the nature of its properties or business requires such
qualification;
b) The execution, delivery and performance of this letter agreement,
the Note and any related documents (i) are, and will be, within its
corporate power and authority, (ii) have been authorized by all necessary
corporate proceedings, (iii) do not, and will not, require any consents or
approvals other than those which have already been received, (iv) will not
contravene any provision of the charter documents or by-laws of the
Borrower or any law, rule or regulation applicable to the Borrower, and (v)
will not constitute a default under any other agreement, order or under-
taking binding on the Borrower;
c) This Letter Agreement, the Note and related documents constitute
the legal, valid, binding and enforceable obligations of the Borrower,
except as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws
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affecting the enforcement of creditors' rights generally and by general
equitable principles;
d) All financial statements previously furnished to the Bank by it
were prepared in accordance with generally accepted accounting principles
and statutory accounting principles and present fairly and completely the
financial position of the Borrower. Since the date of such statements,
there has been no material, adverse change in the assets, liabilities,
financial condition or business of the Borrower other than in the ordinary
course of business; and
e) Other than with respect to insurance subrogation claims and loss
claims which would not materially and adversely affect the ability of
either Borrower to pay or perform its obligations to the Bank hereunder
and under any related document, there is no litigation, arbitration,
proceeding or investigation pending, or to the best of such Xxxxxxxx's
knowledge threatened, against either Borrower except those previously
disclosed by such Borrower to the Bank in writing.
f) It is not in default under any Indebtedness nor has any person
notified that it is in default under any such Indebtedness.
g) It holds all licenses, permits and approval required for the
conduct of its business.
Each request for a loan hereunder shall be deemed an affirmation
by Xxxxxxxx that the representations and warranties contained herein are
true and accurate as of the date of such request and that as of said date
no Event of Default exists hereunder nor does any event exists which with
the giving of notice or passage of time or both would become an Event of
Default.
10. Events of Default. It will be an Event of Default hereunder and
under the Note if any of the following events occurs:
a) either Xxxxxxxx fails to pay when due any amount of principal,
interest or fees payable hereunder or under the Note; or
b) either Xxxxxxxx fails to perform any terms, covenant or agreement
contained in this letter agreement, the Note or any other agreement or
document executed in connection with this letter agreement; or
c) there shall occur any material adverse change in the assets,
liabilities, financial condition, business or prospects of either Borrower
as determined by the Bank acting in good faith; or
d) any representation or warranty of either Borrower made in this
letter agreement, the Note or any other document executed in connection
with this letter agreement shall prove to have been false in any material
respect upon the date when made or deemed to have been made; or
e) either Borrower fails to pay or perform (i) any Obligation or
(ii) any obligation to any other party with respect to any Indebtedness,
including, in any event the occurrence of a default or event of default
under any credit facility of either Borrower with State Street Bank and
Trust Company or its successors or assigns continuing beyond any applicable
grace period; or
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f) either Borrower (i) applies for or consents to the appointment
of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar official of itself or of all or a substantial part
of its property, (ii) is generally not paying its debts as such debts
become due, (iii) makes a general assignment for the benefit of its
creditors, (iv) commences any case or proceeding under any law relating
to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts, or any other law providing for the relief of debtors,
(v) fails to contest in a timely or appropriate manner, or acquiesces in
writing to, any petition filed against it in an involuntary case under the
Federal Bankruptcy Code or other law, or (vi) takes any action under the
laws of its jurisdiction of incorporation or organization similar to any
of the foregoing; or
g) a proceeding or case shall be commenced, without the application
or consent of either Borrower in any court of competent jurisdiction,
seeking (i) the liquidation, reorganization, dissolution, winding-up, or
composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of it or of all or
any substantial part of its assets, or (iii) similar relief in respect of
it, under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts or any other law provid-
ing for the relief of debtors, and such proceeding or case shall continue
undismissed, or unstayed and in effect, for a period of 30 days; or an
order for relief shall be entered in an involuntary case under the Federal
Bankruptcy Code, against the Borrower or action under the laws of the
jurisdiction of incorporation or organization of the Borrower or similar to
any of the foregoing shall be taken with respect to the Borrower and shall
continue unstayed and in effect for any period of 30 days; or
h) a final judgment or final order for the payment of money is
entered against either Borrower by any court, or an execution or similar
process is issued or levied against property of the Borrower, that in the
aggregate exceeds $2,000,000, not including any judgment or order arising
in connection with the Retaliatory Tax, as defined herein, in value and
which is not fully covered by insurance, other than any applicable
deductible, and such judgment, order, warrant or process shall continue
undischarged or unstayed for 30 days; or
i) The Parent ceases to own 100% of the issued and outstanding shares
of the Company in the aggregate at any time.
11. Remedies. Upon the occurrence of an Event of Default described
in subsections 10(f) and (g), immediately and automatically, and upon the
occurrence of any other Event of Default, at any time thereafter at the
Bank's option and upon the Bank's declaration:
(a) The Revolving Line of Credit shall terminate;
(b) the unpaid principal amount of the Revolving Loans together with
accrued interest shall become immediately due and payable without
presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived, together with any prepayment penalties as
provided herein, if applicable; and
(c) the Bank may exercise any and all rights it has under this
Agreement and the Note and any other document executed in connection
herewith, and proceed to protect and enforce the Bank's rights against
either or both Borrowers by any action at law, in equity or other
appropriate proceeding including appointment of a receiver for the proper-
ties or assets of either Borrower.
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12. Notices. All notices hereunder shall be in writing and shall be
deemed to have been given when delivered by hand, when properly deposited
in the mails postage prepaid, when sent by facsimile or when delivered to
overnight courier. Notice to either Borrower shall be deemed to constitute
notice to the Borrower. Notices to the Bank shall be given to Summit Bank,
000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000, ATTN: Xxxxxxx Xxxxx, Vice
President, and notice to the Borrower shall be deemed to have been given if
given at the address stated at the beginning of this letter agreement,
Attention: Xxxxxxx Xxxxxx, Senior Vice President and Chief Financial
Officer.
13. Miscellaneous. No waivers shall be effective unless in writing.
All amendments hereto must be in writing signed by all parties hereto.
Any amounts owing from the Bank to either Borrower may be set off against
Obligations due and owing of such Borrower to the Bank. This letter and
the Note shall be governed by the laws of the State of New Jersey.
Neither Borrower may assign or transfer or participate any of its rights
hereunder or under the Note without the prior written consent of the Bank.
The Bank may participate or assign its rights hereunder, including as
collateral to any Federal Reserve Bank, without the prior consent of
either Borrower.
14. Definitions. Except as otherwise defined herein, all financial
terms shall be defined in accordance with generally accepted accounting
principles. The following defined terms as used herein shall have the
following meanings:
"Adjusted Libor Rate" shall mean the rate per annum quoted by the
Bank as its applicable rate of interest offered to the Bank by first class
banks for United States dollar deposits in the London interbank market in
which the Bank participates on the day of determination for the amount and
the interest period requested by the Borrower. The Bank expects that the
"Adjusted Libor Rate" as used herein shall be substantially similar to the
Libor Rate as quoted by The Wall Street Journal from time to time for the
applicable period, although the Bank makes no representation that such
rates will at all times be substantially similar interest rates.
"Capital" means the total Stockholders Equity determined in accordance
with GAAP.
"GAAP" means generally accepted accounting principles in effect from
time to time.
"Indebtedness" shall mean all obligations for borrowed money and
other extensions of credit to the Borrower, secured or unsecured, absolute
or contingent, whether or not evidenced by a note, bond or other instrument,
all guarantees, all obligations reflecting the deferred purchase price of
property or other accounts payable, and all obligations of the borrower
secured by a mortgage, lien, pledge or other security interest, together
with any interest, charges and fees payable on any of the foregoing.
"Obligations" means any and all obligations of either Borrower to
the Bank of every kind and description, direct or indirect, absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising, regardless of how they arise or by what agreement or
instrument, if any, and including obligations to perform acts and refrain
from taking action as well as obligations to pay money.
"Prime Rate" shall mean the rate of interest per annum announced from
time to time by Summit Bank as its prime rate.
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If the foregoing satisfactorily sets forth the terms and conditions
of this credit facility, please execute and return the enclosed copy of
this, letter agreement, the Note and such other documents and agreements
as the Bank may request each of which when received will be considered to
be an agreement executed under seal to be governed by the laws of The
State of New Jersey effective when received by the Bank.
EACH BORROWER WAIVES TRIAL BY JURY IN ALL ACTIONS AND PROCEEDINGS
UNDER OR RELATING TO THIS LETTER AGREEMENT AND THE NOTE AND OTHER
DOCUMENTS RELATING HERETO.
Sincerely,
SUMMIT BANK
By: /s/Xxxxxxx X. Xxxxx
----------------------
Name: Xxxxxxx X. Xxxxx
Title:Vice President
Acknowledged and accepted:
SELECTIVE INSURANCE COMPANY OF AMERICA
By:/s/ Xxxxxxx X. Xxxxxx
---------------------------
Title:President and Chief
Operating Officer
By:/s/ Xxxxxx X. Xxxx
---------------------------
Title:Senior Vice President
and Chief Investment
Officer
SELECTIVE INSURANCE GROUP, INC.
By:/s/ Xxxxxxx X. Xxxxxx
---------------------------
Title:President and Chief
Operating Officer
By:/s/ Xxxxxx X. Xxxx
---------------------------
Title:Senior Vice President
and Chief Investment
Officer
DATE:6/30/97
--------
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Exhibit A1
REVOLVING CREDIT MASTER
PROMISSORY NOTE
$20,000,000.00 Cranford, New Jersey
June 30,1997
FOR VALUE RECEIVED, the undersigned SELECTIVE INSURANCE GROUP, INC.
(the "Borrower") promises to pay to the order of SUMMIT BANK (herein
called "Bank") at 000 Xxxxxx Xxxxxx, Xxxxxxxx, XX 00000, such sum up to
Twenty Million and 00/100 Dollars ($20,000,000.00), together with interest
as hereinafter provided, as may be outstanding on loans by Bank to Borrower
under a letter agreement referred to below. The principal amount owing
hereunder shall be paid to the Bank on June 30,1997 (the "Maturity Date")
or as may otherwise be provided for in the letter agreement.
Interest on portions of the daily unpaid principal amount from time to
time outstanding hereunder shall be payable monthly on the first day of
each month during the term hereof and on the Maturity Date, at a fluctuat-
ing interest rate per annum of the Adjusted Libor Rate plus twenty-eight
28) basis points if, in accordance with the terms of the Loan Agreement,
interest on such portion is calculated based on the Adjusted Libor Rate.
This Note is issued in accordance with that certain letter agreement
of even date herewith between Borrower, Selective Insurance Company of
America and Bank (the "Letter Agreement"). Any capitalized term used
herein without definition shall have the definition contained in the Loan
Agreement. All the terms and conditions of the Letter Agreement are
incorporated herein as though fully set forth and the Borrower acknowledges
the reading and execution of said Letter Agreement.
In addition to all remedies provided by law upon default on payment of
this Note or any installment hereof, or upon an Event of Default under the
terms of the Letter Agreement or of any obligation heretofore or hereafter
incurred by the Borrower to Bank, Bank may, at its option:
(1) Declare this note and all other loans and Obligations owing Bank
from the Borrower to be forthwith due and payable;
(2) Collect interest on the principal balance owing hereon at a rate
of two (2%) in excess of the rate provided for above, and if this Note is
referred to an attorney for collection, collect reasonable attorneys' fees;
(3) Set off the amount owing hereunder against any money owed by Bank
in any capacity to the Borrower, whether due or not, and Bank shall be
deemed to have exercised such right of set off, and to have made a charge
against any such money immediately upon the occurrence of any default, even
though the actual book entries may be made at some time subsequent thereto;
and
(4) Exercise any and all remedies provided for in the Letter
Agreement or otherwise available by applicable law.
Bank shall not, by any act, delay, omission or otherwise be deemed to
have waived any of its rights or remedies hereunder and no waiver by Bank
of its rights or remedies hereunder shall be valid against Bank
PAGE
unless in writing, signed by a duly authorized officer of Bank, and then
only to the extent therein set forth. The waiver by Bank of any right or
remedy hereunder upon any one occasion shall not be construed as a bar to
any right or remedy which it would otherwise have had on any future
occasion.
If any payment required hereunder is not paid within 15 days of the
date due, the Borrower shall pay to Bank a late fee of 5% of the past due
amount.
The Borrower shall have the right to make prepayment of this Note, in
whole or in part, without premium or penalty. The Borrower hereby waives
presentment for payment, protest and notice of protest for non-payment of
this Note.
XXXXXXXX WAIVES TRIAL BY JURY IN ANY ACTION UNDER OR RELATING TO THIS
NOTE AND THE LOANS EVIDENCED HEREBY.
SELECTIVE INSURANCE GROUP, INC.
By:/s/ Xxxxxxx X. Xxxxxx
--------------------------
name: Xxxxxxx X. Xxxxxx
title:President and Chief
Operating Officer
By:/s/ Xxxxxx X. Xxxx
--------------------------
name: Xxxxxx X. Xxxx
title:Senior Vice President
and Chief Investment
Officer
PAGE
Exhibit A2
REVOLVING CREDIT MASTER
PROMISSORY NOTE
$25,000,000.00
Cranford, New Jersey
June 30,1997
FOR VALUE RECEIVED, the undersigned SELECTIVE INSURANCE COMPANY OF AMERICA
(the "Borrower") promises to pay to the order of SUMMIT BANK (herein
called "Bank") at 000 Xxxxxx Xxxxxx, Xxxxxxxx, XX 00000, such sum up to
Twenty-Five Million and 00/100 Dollars ($25,000,000.00), together with
interest as hereinafter provided, as may be outstanding on loans by Bank
to Borrower under a letter agreement referred to below. The principal
amount owing hereunder shall be paid to the Bank on June 30,1997 (the
"Maturity Date") or as may otherwise be provided for in the letter
agreement. Interest on portions of the daily unpaid principal amount from
time to time outstanding hereunder shall be payable monthly on the first
day of each month during the term hereof and on the Maturity Date, at a
fluctuating interest rate per annum of the Adjusted Libor Rate plus twenty-
eight (28) basis points if, in accordance with the terms of the Letter
Agreement, interest on such portion is calculated based on the Adjusted
Libor Rate.
This Note is issued in accordance with that certain letter agreement
of even date herewith between Borrower, Selective Insurance Group, Inc.
and Bank (the "Letter Agreement"). Any capitalized term used herein
without definition shall have the definition contained in the Loan Agree-
ment. All the terms and conditions of the Letter Agreement are incorp-
orated herein as though fully set forth and the Borrower acknowledges the
reading and execution of said Letter Agreement.
In addition to all remedies provided by law upon default on payment
of this Note or any installment hereof, or upon an Event of Default under
the terms of the Letter Agreement or of any Obligation heretofore or
hereafter incurred by the Borrower to Bank, Bank may, at its option:
(1) Declare this note and all other loans and Obligations owing Bank
from the Borrower to be forthwith due and payable;
(2) Collect interest on the principal balance owing hereon at a rate
of two (2%) in excess of the rate provided for above, and if this Note is
referred to an attorney for collection, collect reasonable attorneys'
fees;
(3) Set off the amount owing hereunder against any money owed by
Bank in any capacity to the Borrower, whether due or not, and Bank shall
be deemed to have exercised such right of set off, and to have made a
charge against any such money immediately upon the occurrence of any
default, even though the actual book entries may be made at some time
subsequent thereto; and
(4) Exercise any and all remedies provided for in the Letter Agree-
ment or otherwise available by applicable law. Bank shall not, by any
act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies hereunder and no waiver by Bank of its rights or
remedies hereunder shall be valid against Bank
PAGE
unless in writing, signed by a duly authorized officer of Bank, and then
only to the extent therein set forth. The waiver by Bank of any right
or remedy hereunder upon any one occasion shall not be construed as a bar
to any right or remedy which it would otherwise have had on any future
occasion.
If any payment required hereunder is not paid within 15 days of the
date due, the Borrower shall pay to Bank a late fee of 5% of the past due
amount.
The Borrower shall have the right to make prepayment of this Note,
in whole or in part, without premium or penalty. The Borrower hereby
waives presentment for payment, protest and notice of protest for non-pay-
ment of this Note.
XXXXXXXX WAIVES TRIAL BY JURY IN ANY ACTION UNDER OR RELATING TO THIS
NOTE AND THE LOANS EVIDENCED HEREBY.
SELECTIVE INSURANCE COMPANY OF
AMERICA
By:/s/Xxxxxxx X. Xxxxxx
-------------------------------
name: Xxxxxxx X. Xxxxxx
title:President and Chief
Operating Officer
By:/s/ Xxxxxx X. Xxxx
-------------------------------
name: Xxxxxx X. Xxxx
title:Senior Vice President
and Chief Investment
Officer
PAGE
EXHIBIT B
---------
Retaliatory Tax Detail
The Pennsylvania Department of Revenue has notified Selective Way
Insurance Company ("Selective Way") and Selective Insurance Company of
America ("Selective"), Subsidiaries, of the following Retaliatory Tax
impositions on Selective Way and Selective, as applicable, for the following
years, which tax impositions are currently being contested:
Year Company Amount
1991 Selective $ 868,230
Selective Way 10,687
1990 Selective 1,508,362
1989 Selective 507,562
1988 Selective 386,496
1987 Selective 343,981
1986 Selective 223,452
1984 Selective 6,229
---------
$3,854,999
PAGE
as of June 30, 1997
Selective Insurance Company of America
Selective Insurance Group, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000-0000
Re: Letter Loan Agreement dated June 30, 1997 (the "Loan Agreement")
Gentlemen:
This is to confirm our approval of your request for an extension
through May 31, 1998 of the expiration date of the $25,000,000.00
Revolving Line of Credit provided for in the Loan Agreement. Accordingly,
we have agreed to modify the defintion of Revolving Maturity Date to
provide that May 31, 1998 is the Revolving Maturity Date.
Our approval shall not constitute a waiver of any Events of Default,
if any so exist, or any future violation of any provisions of the Loan
Agreement or any other Loan Documents.
Capitalized terms not defined herein but defined in the Loan Agree-
ment shall have the same meaning ascribed to such terms in the Loan
Agreement. Your execution shall also act as your representation that the
execution of this letter agreement has been authorized by all required
corporate action, that this letter agreement constitutes the valid and
binding obligation of the Borrower, is enforceable in accordance with its
terms, that no Event of Default exists and that no material adverse change
of the Borrower has occurred.
Except as herein set forth, the Loan Agreement and all other Loan
Documents shall remain in full force and effect. Our agreement as
aforesaid is subject to your written agreement with the terms hereof by
signing and returning a copy hereof where so indicated below, along with
the enclosed Allonges, where so indicated below.
Summit Bank
By: /S/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
Agreed to:
Selective Insurance Company of America
By: /s/Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title:President and Chief
Operating Officer
By: /s/Xxxxxx X. Xxxx
---------------------
Name: Xxxxxx X. Xxxx
Title:Senior Vice President
and Chief Investment Officer
Selective Insurance Group, Inc.
By: /s/Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title:President and Chief
Operating Officer
By: /s/Xxxxxx X. Xxxx
---------------------
Name: Xxxxxx X. Xxxx
Title:Senior Vice President
and Chief Investment Officer
