THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Exhibit 10.1
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) is entered into as of December 28, 2010, by and between EMPLOYERS HOLDINGS, INC., a Nevada corporation (“Borrower”), and XXXXX FARGO BANK, NATIONAL ASSOCIATION (“Bank”).
WHEREAS, Borrower is indebted to Bank pursuant to the terms and conditions of that certain Second Amended and Restated Credit Agreement, dated as of September 30, 2008 (as amended, modified or supplemented prior to the date hereof, the “Existing Credit Agreement”), by and between Borrower and Bank.
WHEREAS, the Bank has previously extended a credit facility to Borrower more particularly described in the Existing Credit Agreement, including, but not limited to a line of credit in the current maximum principal amount of One Hundred Million Dollars ($100,000,000.00) (the “Existing Line of Credit”), which is evidenced by that certain Second Amended and Restated Revolving Line of Credit Note, dated September 30, 2008, in the original principal amount of One Hundred Fifty Million Dollars ($150,000,000.00), as amended or modified from time to time.
WHEREAS, Borrower has requested that Bank provide the credit accommodations described below, the proceeds of which shall repay in full Borrower’s outstanding revolving advances under and in respect of the Existing Credit Agreement and the Existing Line of Credit, if any, and for such other purposes as described below, and Bank has agreed to provide such credit to Borrower on the terms and conditions contained herein.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree that the Existing Credit Agreement is hereby amended and restated in its entirety as follows:
ARTICLE I
proceeds of which shall be used to repay outstanding advances under the Existing Line of Credit, if any, and to finance Borrower’s working capital requirements. Borrower’s obligation to repay advances under the Line of Credit shall be evidenced by that certain Third Amended and Restated Revolving Line of Credit Note, dated December 28, 2010, executed by Borrower and payable to the order of Bank (“Line of Credit Note”), all terms of which are incorporated herein by this reference.
(b) Letter of Credit Subfeature. As a subfeature under the Line of Credit, Bank agrees from time to time during the term thereof to issue or cause an affiliate to issue standby letters of credit for the account of Borrower (each, a “Letter of Credit” and collectively, “Letters of Credit”); provided however, that the aggregate undrawn amount of all outstanding Letters of Credit shall not at any time exceed Five Million Dollars ($5,000,000.00). The form and substance of each Letter of Credit shall be subject to approval by Bank, in its sole discretion. Each Letter of Credit shall be issued for a term not to exceed three hundred sixty (360) days, as designated by Borrower; provided however, that no Letter of Credit shall have an expiration date subsequent to the maturity date of the Line of Credit. The undrawn amount of all Letters of Credit shall be reserved under the Line of Credit and shall not be available for borrowings thereunder. Each Letter of Credit shall be subject to the additional terms and conditions of the Letter of Credit agreements, applications and any related documents required by Bank in connection with the issuance thereof. Each drawing paid under a Letter of Credit shall be deemed an advance under the Line of Credit and shall be repaid by Borrower in accordance with the terms and conditions of this Agreement applicable to such advances; provided however, that if advances under the Line of Credit are not available, for any reason, at the time any drawing is paid, then Borrower shall immediately pay to Bank the full amount drawn, together with interest thereon from the date such drawing is paid to the date such amount is fully repaid by Borrower, at the rate of interest applicable to advances under the Line of Credit. In such event Borrower agrees that Bank, in its sole discretion, may first debit the Collection Account (as defined below), and if there are insufficient funds therein, may then debit any other deposit account maintained by Borrower with Bank, for the amount of any such drawing.
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As security for all indebtedness and other obligations of Borrower to Bank pursuant to the Loan Documents, Borrower previously granted, and hereby reaffirms its prior grant, to Bank of security interests of first priority in Borrower’s custody account number 00000000 maintained with Xxxxx Fargo Bank, N.A. Institutional Trust Services (“Custody Account”), which Custody Account shall at all times have deposited to it securities having an aggregate Collateral Value (as defined in that certain Third Amended and Restated Security Agreement: Securities Account, executed as of December 28, 2010, by Borrower) not less than the maximum principal amount available to be advanced to Borrower under the Line of Credit, as set forth in Section 1.1(a) hereof.
The foregoing shall be evidenced by and subject to the terms of such security agreements, financing statements, deeds or mortgages, control agreements and other documents as Bank shall
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reasonably require, all in form and substance satisfactory to Bank. Borrower shall pay to Bank immediately upon demand the full amount of all charges, costs and expenses (to include fees paid to third parties and all allocated costs of Bank personnel), expended or incurred by Bank in connection with any of the foregoing security, including without limitation, filing and recording fees and costs of appraisals, audits and title insurance.
ARTICLE II
Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the execution of this Agreement and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to this Agreement.
SECTION 2.1. LEGAL STATUS. Borrower is a corporation, duly organized and existing and in good standing under the laws of Nevada, and is qualified or licensed to do business (and is in good standing as a foreign corporation, if applicable) in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed could have a material adverse effect on Borrower.
SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement and each promissory note, contract, instrument and other document required hereby or at any time hereafter delivered to Bank in connection herewith (collectively, the “Loan Documents”) have been duly authorized, and upon their execution and delivery in accordance with the provisions hereof will constitute legal, valid and binding agreements and obligations of Borrower or the party which executes the same, enforceable in accordance with their respective terms.
SECTION 2.3. NO VIOLATION. The execution, delivery and performance by Borrower of each of the Loan Documents do not violate any provision of any law or regulation (including, without limitation, any insurance laws or regulations), or contravene any provision of the Articles of Incorporation or By-Laws of Borrower, or result in any breach of or default under any contract, obligation, indenture or other instrument to which Borrower is a party or by which Borrower may be bound.
SECTION 2.4. LITIGATION. There are no pending, or to the best of Borrower’s knowledge threatened, actions, claims, investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency which could have a material adverse effect on the financial condition or operation of Borrower other than those disclosed by Borrower to Bank in writing prior to the date hereof.
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or contingent, and (c) have been prepared in accordance with generally accepted accounting principles consistently applied. Since the dates of such financial statements there has been no material adverse change in the financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in favor of Bank or as otherwise permitted by Bank in writing.
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ARTICLE III
(i)
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This Agreement and each promissory note or other instrument or document required hereby.
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(ii)
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Certificate of Incumbency.
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(iii)
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Secretary’s Certificate attaching board resolutions authorizing transaction.
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(iv)
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Third Amended and Restated Security Agreement: Securities Account.
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(v)
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Addendum to Third Amended and Restated Security Agreement: Securities Account.
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(vi)
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Securities Account Control Agreement.
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(vii)
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Statement of Purpose.
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(viii)
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(ix)
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Institutional Trust Services Account Set Up and Disclosures Custody Account Management Information for Employers Holdings, Inc. Custody Account (to include an amended authorization allowing internal Xxxxx Fargo Bank, N.A. disclosure of custody account information).
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(x)
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Custody Agreement For Non-ERISA Assets.
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(xi)
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Institutional Trust Services Custody Fee Schedule for Employers Holdings, Inc.
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(xii)
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Service Agreement Trust Portfolio Reporting Service.
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(xiii)
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Authorized Signers List of Employers Holdings, Inc.
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(xiv)
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Such other documents as Bank may require under any other Section of this Agreement.
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ARTICLE IV
Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower shall, and shall cause each of Borrower’s subsidiaries to, unless Bank otherwise consents in writing:
(a) not later than 100 days after and as of the end of each fiscal year, a consolidated financial statement of Borrower, prepared by a certified public accountant acceptable to Bank, to include balance sheets, statements of income, retained earnings, cash flow and 10-K filing.
(b) not later than 60 days after and as of the end of each fiscal quarter, a consolidated financial statement of Borrower, prepared by a certified public accountant acceptable to Bank, to include balance sheets, statements of income, retained earnings, cash flow and 10-Q filing;
(c) not later than 60 days after and as of the end of the preceding fiscal year, a projection of consolidated financial statements of Borrower; prepared by Borrower;
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(d) [intentionally omitted];
(e) not later than 90 days after and as of the end of each fiscal year, an annual statutory statement for each subsidiary of Borrower that is a regulated insurance company;
(f) not later than 60 days after and as of the end of each fiscal quarter, a quarterly statutory statement for all regulated insurance companies;
(g) promptly upon becoming available, copies of all registration statements and annual, quarterly, monthly or other regular reports which Borrower files with the United States Securities and Exchange Commission;
(h) upon Bank’s request, Borrower shall furnish independent actuarial reserve adequacy reports for Borrower’s insurance company subsidiaries in the form and substance utilized by Borrower and its subsidiaries in the ordinary course of their businesses, and issued by the actuarial consultant designated by such insurance company subsidiaries;
(i) not later than 15 days after and as of the end of each month, a trust and custody account statement covering the Custody Account, to be delivered by either Borrower or, at the direction of Borrower, Xxxxx Fargo Bank, N.A.’s Institutional Trust Service Group; and
(j) from time to time such other information as Bank may reasonably request.
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except (a) such as Borrower may in good faith contest or as to which a bona fide dispute may arise, and (b) for which Borrower has made provision, to Bank’s satisfaction, for eventual payment thereof in the event Borrower or a subsidiary of Borrower is obligated to make such payment.
ARTICLE V
Borrower further covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower will not, and, if specified below, shall cause each of Borrower’s subsidiaries to not, without Bank’s prior written consent (which consent or denial thereof, shall not be unreasonably delayed under the circumstances):
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exceed an aggregate amount outstanding of up to, prior to January 1, 2011, $150,000,000.00, and from and after January 1, 2011, $250,000,000.00.
For purposes of this Agreement:
“Acquisition” means 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 an entity, or of any business or division of an entity, (b) the acquisition of in excess of 50% of the capital stock, partnership interests, membership interests or equity of any entity, or (c) a merger or consolidation or any other combination with another entity provided that Borrower is the surviving entity.
“Permitted Acquisition” means any Acquisition with respect to which all of the following conditions shall have been satisfied: (a) the acquired business is in line of business similar or related to Borrower’s line of business as of the date of this Agreement; (b) the Acquisition shall not be a hostile acquisition (i.e., an Acquisition where the board of directors of the person or entity to be acquired has not approved such Acquisition or as to which approval has been withdrawn); (c) the total consideration paid for the acquired business shall not exceed twenty (20%) percent of the market capitalization of Borrower immediately prior to the announcement of such Acquisition and, when aggregated with the total consideration for all acquired businesses acquired after the date of this Agreement, shall not exceed $250,000,000 in the aggregate; (d) after giving effect to the Acquisition, no Event of Default as defined herein, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such an Event of Default shall exist, including with respect to the financial covenants contained in Section 4.10 hereof on a pro forma basis; and (e) the Acquisition shall have been approved by Borrower’s board of directors and (if necessary) owners, and all necessary legal and regulatory approvals with respect to the Acquisition shall have been obtained.
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loans or advances to or investments in any person or entity, except (a) investments made pursuant to Permitted Acquisitions, (b) investments made by Borrower and its subsidiaries pursuant to such persons’ written investment policies and in compliance with applicable state statutes and regulations, and (c) any of the foregoing existing as of, and disclosed to Bank, prior to, the date hereof.
ARTICLE VI
SECTION 6.1. The occurrence of any of the following shall constitute an “Event of Default” under this Agreement:
(a) Borrower shall fail to pay when due any principal, interest, fees or other amounts payable under any of the Loan Documents.
(b) Any financial statement or certificate furnished to Bank in connection with, or any representation or warranty made by Borrower or any other party under this Agreement or any other Loan Document shall prove to be incorrect, false or misleading in any material respect when furnished or made.
(c) Any default in the performance of or compliance with any obligation, agreement or other provision contained herein or in any other Loan Document (other than those referred to in subsections (a) and (b) above), and with respect to any such default which by its nature can be cured, such default shall continue for a period of twenty (20) days from its occurrence.
(d) Any default in the payment or performance of any obligation, or any defined event of default, under the terms of any contract or instrument (other than any of the Loan Documents) pursuant to which Borrower has incurred any debt or other liability to any person or entity, including Bank, having an outstanding principal balance greater than $1,000,000.00.
(e) The filing of a notice of judgment lien against Borrower; or the recording of any abstract of judgment against Borrower or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, or the entry of a final judgment against Borrower, in each case, against a material portion of the assets of Borrower.
(f) Borrower shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts as they become due, or shall make a general assignment for the
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benefit of creditors; Borrower shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time (“Bankruptcy Code”), or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower, or Borrower shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or Borrower shall be adjudicated a bankrupt, or an order for relief shall be entered against Borrower by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors.
(g) [Reserved].
(h) The dissolution or liquidation of Borrower if a corporation, partnership, joint venture or other type of entity; or Borrower, or any of its directors, stockholders or members, shall take action seeking to effect the dissolution or liquidation of Borrower.
(i) Any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of twenty-five percent or more of the equity securities of Borrower entitled to vote for members of the board of directors of Borrower on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right).
ARTICLE VII
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exercise of any other right, power or remedy. Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under any of the Loan Documents must be in writing and shall be effective only to the extent set forth in such writing.
BORROWER:
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00000 Xxxxxxxxxxxx Xxxxxx
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Xxxx, XX 00000
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BANK:
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XXXXX FARGO BANK, NATIONAL ASSOCIATION
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San Xxxxxxx Valley Regional Commercial Banking Xxxxxx
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0000 Xxxxx Xxxxx, Xxxxx 000
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Xxxx Xxxxxx, XX 00000
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or to such other address as any party may designate by written notice to all other parties. Each such notice, request and demand shall be deemed given or made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or five (5) days after deposit in the United States mail, first class and postage prepaid; (c) if sent by telecopy, upon receipt; and (d) if sent via overnight courier, upon delivery.
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hereunder to any prospective assignee so long as such person has executed a nondisclosure agreement in form and substance reasonably satisfactory to Bank and Borrower.
SECTION 7.10. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada.
SECTION 7.11. NO NOVATION. This Agreement amends and restates the Existing Credit Agreement in its entirety and is not intended to constitute a novation of the obligations thereunder. Nothing contained herein shall terminate any security interests, liens, guaranties or subordinations in favor of Bank and all such security interests, guaranties and subordinations shall continue in full force and effect.
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(b) Governing Rules. Any arbitration proceeding will (i) proceed in a location in Nevada selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”). If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.
(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in the State of Nevada or a neutral retired judge of the state or federal judiciary of Nevada, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator’s discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of Nevada and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the Nevada Rules of Civil Procedure or other applicable law. Judgment upon the
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award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.
(h) Real Property Collateral. Notwithstanding anything herein to the contrary, no dispute shall be submitted to arbitration if the dispute concerns indebtedness secured directly or indirectly, in whole or in part, by any real property unless (i) the holder of the mortgage, lien or security interest specifically elects in writing to proceed with the arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue to them by virtue of the single action rule statute of Nevada, thereby agreeing that all indebtedness and obligations of the parties, and all mortgages, liens and security interests securing such indebtedness and obligations, shall remain fully valid and enforceable.
[Signatures to follow on next page]
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XXXXX FARGO BANK,
NATIONAL ASSOCIATION
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By:
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/s/ Xxxxxxx X. Xxxxx |
By:
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/s/ Xxxxx X. Xxxxxx | |||
Xxxxxxx X. Xxxxx
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Name:
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Xxxxx X. Xxxxxx | ||||
Executive Vice President,
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Title:
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Relationship Manager | ||||
Chief Financial Officer | Xxxxx Fargo Bank, N.A. |
Third Amended and Restated Credit Agreement
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