EXHIBIT 10.1
CREDIT AGREEMENT
dated as of
February 28, 2006
between
ATLANTIC AMERICAN CORPORATION
and
WACHOVIA BANK, NATIONAL ASSOCIATION
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.............................................................................................1
Section 1.01 Definitions.....................................................................................1
-----------
Section 1.02 Accounting Terms and Determinations............................................................13
-----------------------------------
Section 1.03 Use of Defined Terms...........................................................................14
--------------------
Section 1.04 Terminology....................................................................................14
-----------
Section 1.05 References.....................................................................................14
----------
ARTICLE II THE CREDITS...........................................................................................14
Section 2.01 Commitment to Make the Loan....................................................................14
---------------------------
Section 2.02 Conversion and Continuation of Loan............................................................14
-----------------------------------
Section 2.03 Notes..........................................................................................15
-----
Section 2.04 Mandatory Repayment of Loan....................................................................16
---------------------------
Section 2.05 Interest Rates.................................................................................16
--------------
Section 2.06 Optional Prepayments...........................................................................18
--------------------
Section 2.07 General Provisions as to Payments..............................................................18
---------------------------------
Section 2.08 Computation of Interest........................................................................19
-----------------------
ARTICLE III CONDITIONS TO LOAN...................................................................................20
Section 3.01 Conditions to Loan.............................................................................20
------------------
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................................21
Section 4.01 Corporate Existence and Power..................................................................21
-----------------------------
Section 4.02 Corporate and Governmental Authorization; No Contravention.....................................21
----------------------------------------------------------
Section 4.03 Binding Effect.................................................................................21
--------------
Section 4.04 Financial Information..........................................................................22
---------------------
Section 4.05 Litigation.....................................................................................22
----------
Section 4.06 Compliance with ERISA..........................................................................22
---------------------
Section 4.07 Taxes..........................................................................................22
-----
Section 4.08 Subsidiaries...................................................................................23
------------
Section 4.09 Not an Investment Company......................................................................23
-------------------------
Section 4.10 Public Utility Holding Company Act.............................................................23
----------------------------------
Section 4.11 Ownership of Property; Liens...................................................................23
----------------------------
Section 4.12 No Default.....................................................................................23
----------
Section 4.13 Full Disclosure................................................................................23
---------------
Section 4.14 Environmental Matters.........................................................................24
----------------------
Section 4.15 Compliance with Laws...........................................................................24
--------------------
Section 4.16 Capital Stock..................................................................................24
-------------
Section 4.17 Margin Stock...................................................................................24
------------
Section 4.18 Insolvency.....................................................................................25
----------
Section 4.19 Insurance......................................................................................25
---------
Section 4.20 Debt and Redeemable Preferred Stock............................................................25
-----------------------------------
-i-
ARTICLE V COVENANTS..............................................................................................25
Section 5.01 Information....................................................................................25
-----------
Section 5.02 Inspection of Property, Books and Records......................................................27
-----------------------------------------
Section 5.03 Ratio of Funded Debt to Consolidated Total Capitalization......................................27
---------------------------------------------------------
Section 5.04 Ratio of Funded Debt to EBITDA.................................................................27
------------------------------
Section 5.05 Minimum Consolidated Tangible Net Worth........................................................27
---------------------------------------
Section 5.06 Restricted Payments............................................................................27
-------------------
Section 5.07 Capital Expenditures...........................................................................28
--------------------
Section 5.08 Loans or Advances..............................................................................28
-----------------
Section 5.09 Investments....................................................................................28
-----------
Section 5.10 Negative Pledge................................................................................29
---------------
Section 5.11 Maintenance of Existence.......................................................................29
------------------------
Section 5.12 Dissolution....................................................................................30
-----------
Section 5.13 Consolidations, Mergers and Sales of Assets....................................................30
-------------------------------------------
Section 5.14 Use of Proceeds................................................................................30
---------------
Section 5.15 Compliance with Laws; Payment of Taxes.........................................................30
--------------------------------------
Section 5.16 Insurance......................................................................................31
---------
Section 5.17 Change in Fiscal Year..........................................................................31
---------------------
Section 5.18 Maintenance of Property........................................................................31
-----------------------
Section 5.19 Environmental Notices..........................................................................31
---------------------
Section 5.20 Environmental Matters..........................................................................31
---------------------
Section 5.21 Environmental Release..........................................................................31
---------------------
Section 5.22 Additional Covenants, Etc......................................................................31
-------------------------
Section 5.23 Transactions with Affiliates...................................................................32
----------------------------
Section 5.24 Risk-Based Capital Ratio.......................................................................32
------------------------
Section 5.25 Maintenance of Statutory Surplus...............................................................32
--------------------------------
Section 5.26 Minimum Investment in NAIC Rated Bonds; Maximum Investment in Investment Properties...........32
------------------------------------------------------------------------------------
Section 5.27 Senior Indebtedness under Indenture............................................................33
-----------------------------------
Section 5.28 Other Obligations of Borrower..................................................................33
-----------------------------
ARTICLE VI DEFAULTS..............................................................................................33
Section 6.01 Events of Default..............................................................................33
-----------------
ARTICLE VII CHANGE IN CIRCUMSTANCES; COMPENSATION................................................................36
Section 7.01 Basis for Determining Interest Rate Inadequate or Unfair.......................................36
--------------------------------------------------------
Section 7.02 Illegality.....................................................................................36
----------
Section 7.03 Increased Cost and Reduced Return..............................................................37
---------------------------------
Section 7.04 Base Rate Loans Substituted for Affected Euro-Dollar Loans.....................................38
----------------------------------------------------------
Section 7.05 Compensation...................................................................................39
------------
ARTICLE VIII MISCELLANEOUS.......................................................................................39
Section 8.01 Notices........................................................................................39
-------
Section 8.02 No Waivers.....................................................................................39
----------
Section 8.03 Expenses; Documentary Taxes; Indemnification; Increased Cost and Reduced Return................40
-------------------------------------------------------------------------------
Section 8.04 CONSEQUENTIAL DAMAGES..........................................................................40
---------------------
Section 8.05 Setoffs........................................................................................40
-------
-ii-
Section 8.06 Amendments and Waivers.........................................................................41
----------------------
Section 8.07 Successors and Assigns.........................................................................41
----------------------
Section 8.08 Confidentiality................................................................................42
---------------
Section 8.09 Survival of Certain Obligations................................................................43
-------------------------------
Section 8.10 Georgia Law....................................................................................43
-----------
Section 8.11 Severability...................................................................................43
------------
Section 8.12 Interest.......................................................................................43
--------
Section 8.13 Interpretation.................................................................................43
--------------
Section 8.14 Consent to Jurisdiction........................................................................43
-----------------------
Section 8.15 Counterparts...................................................................................44
------------
EXHIBIT A Note
EXHIBIT B [Reserved]
EXHIBIT C Form of Closing Certificate of Borrower
EXHIBIT D Form of Secretary's Certificate
EXHIBIT E Form of Compliance Certificate
EXHIBIT F Form of Assignment and Acceptance
EXHIBIT G Form of Notice of Conversion or Continuation
-iii-
CREDIT AGREEMENT
----------------
CREDIT AGREEMENT dated as of February 28, 2006 between
ATLANTIC
AMERICAN CORPORATION and WACHOVIA BANK, NATIONAL ASSOCIATION.
The Borrower has requested a term loan in the amount of Three Million
and No/100 Dollars ($3,000,000.00) to be used for general corporate
purposes of the Borrower, and the Bank has agreed to make such term loan on
the terms and conditions as hereinafter provided. The parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. The terms as defined in this Section 1.01
shall, for all purposes of this Agreement and any amendment hereto (except
as herein otherwise expressly provided or unless the context otherwise
requires), have the meanings set forth herein:
"2002 Debentures" has the meaning given to the term "Debentures" in
the 2002 Indenture.
"2003 Debentures" has the meaning given to the term "Debentures" in
the 2003 Indenture.
"2002 Indenture" means that certain indenture delivered in connection
with the Trust Preferred Transaction dated December 4, 2002 by and between
the Borrower and State Street Bank and Trust Company of Connecticut,
National Association, as Trustee.
"2003 Indenture" means that certain indenture delivered in connection
with the Trust Preferred Transaction dated May 15, 2003 by and between the
Borrower and U.S. Bank National Association, as Trustee.
"2002 Trust Preferred Transaction" means a transaction in which: (a)
the Borrower established the Statutory Trust I and acquired all of the
Statutory Trust I's common securities; (b) the Statutory Trust I acquired
up to $18,042,000 of the Borrower's subordinated debentures with proceeds
received from the issuance of its own trust preferred securities; and (c)
the Borrower provided a limited-recourse guaranty to pay the Statutory
Trust I's obligations on the trust preferred securities, but only to the
extent the Statutory Trust I has funds available for the payment of such
obligations.
"2003 Trust Preferred Transaction" means a transaction in which: (a)
the Borrower established the Statutory Trust II and acquired all of the
Statutory Trust II's common securities; (b) the Statutory Trust II acquired
up to $23,196,000 of the Borrower's subordinated debentures with proceeds
received from the issuance of its own trust preferred securities; and (c)
the Borrower provided a limited-recourse guaranty to pay the Statutory
Trust II's obligations on the trust preferred securities, but only to the
extent the Statutory Trust II has funds available for the payment of such
obligations.
"Adjusted Capital" shall mean, as to any Insurance Subsidiary, the
total amount identified as "Total Adjusted Capital" in column 1 in the
five-year historical data exhibit of the Annual Statement of each Insurance
Subsidiary, prepared in accordance with statutory accounting principles.
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Schedule 2.05(c).
"Affiliate" of any Person means (i) any other Person which directly,
or indirectly through one or more intermediaries, controls such Person,
(ii) any other Person which directly, or indirectly through one or more
intermediaries, is controlled by or is under common control with such
Person, or (iii) any other Person of which such Person owns, directly or
indirectly, 20% or more of the common stock or equivalent equity interests.
As used herein, the term "control" means possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Aggregate Value of NAIC Rated Bonds" shall mean the aggregate cost,
without duplication, of all bonds rated "2" or better by NAIC, owned by the
Borrower or any Consolidated Subsidiary and held as investments, as shown
on the books and records of the Borrower or such Consolidated Subsidiary
and as determined in accordance with GAAP.
"Aggregate Value of Total Investments" shall mean the aggregate cost,
without duplication, of all bonds, redeemable preferred stocks,
non-redeemable preferred stocks, common stocks, mortgage loans, loans to
policy holders, other long term investments, short term investments and
other properties of the Borrower or any Consolidated Subsidiary held for
investment purposes, as shown on the books and records of the Borrower or
such Consolidated Subsidiary and as determined in accordance with GAAP.
"Agreement" means this
Credit Agreement, together with all amendments
and supplements hereto.
"Amortization" means for any period the sum of all amortization
expenses of the Borrower and its Consolidated Subsidiaries for such period,
determined in accordance with GAAP, exclusive of the amortization of
deferred acquisition costs.
"Annual Statement" means, with respect to any Insurance Subsidiary,
the annual report, statement or other filing made by such Insurance
Subsidiary with the insurance department or other governmental authority of
the state in which such Insurance Subsidiary is formed or incorporated
which regulates, supervises or otherwise has jurisdiction over such
Insurance Subsidiary, all in accordance with statutory accounting
principles.
"Applicable Margin" has the meaning set forth in Section 2.05(a).
"Assignee" has the meaning set forth in Section 8.07(c).
"Assignment and Acceptance" means an Assignment and Acceptance
executed in accordance with Section 8.07(c) in the form attached hereto as
Exhibit F.
-2-
"Authority" has the meaning set forth in Section 7.02.
"Bank" means Wachovia Bank, National Association, a national banking
association, and its successors and assigns.
"Base Rate" means for any day, the rate per annum equal to the higher
as of such day of (i) the Prime Rate, and (ii) one-half of one percent
above the Federal Funds Rate for such day. For purposes of determining the
Base Rate for any day, changes in the Prime Rate and the Federal Funds Rate
shall be effective on the date of each such change.
"Base Rate Loan" means a Loan which bears or is to bear interest at a
rate based upon the Base Rate.
"Book Value" means with respect to any asset, the cost of such asset,
minus accumulated depreciation or amortization, if any, with respect to
such asset.
"Borrower" means
Atlantic American Corporation, a
Georgia corporation,
and its successors and permitted assigns.
"Capital Expenditures" means for any period the sum of all capital
expenditures incurred during such period by the Borrower and its
Consolidated Subsidiaries, as determined in accordance with GAAP.
"Capital Stock" means any redeemable or nonredeemable capital stock of
the Borrower or any Consolidated Subsidiary (to the extent issued to a
Person other than the Borrower), whether common or preferred.
"CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C. ss.9601 et seq. and its implementing
regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Information System established pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in Section 7.02.
"Closing Certificate" has the meaning set forth in Section 3.01(c).
"Closing Date" means February 28, 2006.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code. Any reference to any provision of the Code
shall also be deemed to be a reference to any successor provision or
provisions thereof.
"Commitment" means $3,000,000.
"Company Action Level" means 200% of the Authorized Control Level
Risk-Based Capital of each Insurance Subsidiary. The Authorized Control
Level Risk-Based Capital of each Insurance Subsidiary shall be computed in
the manner from time to time prescribed by the applicable state insurance
department or regulatory authority for inclusion in the Annual Statement of
each Insurance Subsidiary to such department or regulatory authority.
-3-
"Compliance Certificate" has the meaning set forth in Section 5.01(c).
"Consolidated Interest Expense" for any period means interest, whether
expensed or capitalized, in respect of Debt of the Borrower and any of its
Consolidated Subsidiaries outstanding during such period.
"Consolidated Net Income" means, for any period, the Net Income of the
Borrower and its Consolidated Subsidiaries determined on a consolidated
basis, but excluding (i) extraordinary gains and (ii) any equity interests
of the Borrower or any Subsidiary in the unremitted earnings of any Person
that is not a Subsidiary in excess of $500,000, determined on a
consolidated basis, per annum.
"Consolidated Subsidiary" means at any date with respect to any
Person, any Subsidiary or other entity the accounts of which, in accordance
with GAAP, would be consolidated with those of such Person in its
consolidated financial statements as of such date.
"Consolidated Tangible Net Worth" means, at any time, Stockholders'
Equity, less the sum of the value, as set forth or reflected on the most
recent consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries, prepared in accordance with GAAP, of
(A) Any change in equity resulting from any write-up of assets
subsequent to December 31, 2002 (other than the usual and customary
valuation of the investment portfolio of the Borrower or any
Consolidated Subsidiary from time to time);
(B) All assets which would be treated as intangible assets for
balance sheet presentation purposes under GAAP, related to the
compliance by the Borrower with the provisions of Financial Accounting
Statement Board Statement No. 141, all determined in accordance with
GAAP; provided, however, deferred acquisition costs, as determined in
accordance with GAAP, shall not be deducted from Stockholders Equity;
(C) To the extent not included in (B) of this definition,
deferred expenses, other than deferred acquisition costs, as
determined in accordance with GAAP, provided, however, that deferred
expenses in an amount not to exceed $2,000,000 incurred as a result of
financings of Funded Debt, including, without limitation, the 2002
Trust Preferred Transaction and the 2003 Trust Preferred Transaction,
shall be excluded from this definition; and provided further, that
prepaid expenses shall not constitute deferred expenses for the
purposes of this definition; and
(D) Other than in the ordinary course of business, loans or
advances to stockholders, directors, officers or employees.
"Consolidated Total Assets" means, at any time, the total assets of
the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis, as set forth or reflected on the most recent
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries, prepared in accordance with GAAP.
-4-
"Consolidated Total Capitalization" means, at any time, the sum of (i)
Consolidated Tangible Net Worth, and (ii) Funded Debt. "Controlled Group"
means all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control which,
together with the Borrower, are treated as a single employer under Section
414 of the Code.
"Debentures" means the 2002 Debentures and the 2003 Debentures,
collectively.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee under
capital leases, (v) all obligations of such Person to reimburse any bank or
other Person in respect of amounts payable under a banker's acceptance,
(vi) all Redeemable Preferred Stock of such Person (in the event such
Person is a corporation), (vii) all obligations (absolute or contingent) of
such Person to reimburse any bank or other Person in respect of amounts
paid under a letter of credit or similar instrument, (viii) all Debt of
others secured by a Lien on any asset of such Person, whether or not such
Debt is assumed by such Person, and (ix) all Debt of others Guaranteed by
such Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived in writing, become an Event of Default.
"Default Rate" means, on any day, the sum of the Base Rate plus 2%.
"Depreciation" means for any period the sum of all depreciation expenses of
the Borrower and its Consolidated Subsidiaries for such period, as
determined in accordance with GAAP.
"Dividend Ability" means, at any time and for any Insurance
Subsidiary, the greater of (i) 10% of Statutory Surplus or (ii) (a) if such
Insurance Subsidiary is a life insurer, the "Net Gain from Operations" of
such Insurance Subsidiary as set forth on the most recent Annual Statement
or Quarterly Statement of such Insurance Subsidiary, prepared in accordance
with statutory accounting principles or (b) if such Insurance Subsidiary is
not a life insurer, the "Net Income" of such Insurance Subsidiary as set
forth on the most recent Annual Statement or Quarterly Statement of such
Insurance Subsidiary, prepared in accordance with statutory accounting
principles; provided, however, that (i) realized capital gains shall not be
included in such calculations; and (ii) any extraordinary dividend approved
by the appropriate regulatory authorities shall be included in such
calculation.
"Dividends" means for any period the sum of all dividends paid or
declared during such period in respect of any Capital Stock and Redeemable
Preferred Stock (other than dividends paid or payable in the form of
additional Capital Stock).
"Dollars" or "$" means dollars in lawful currency of the United States
of America.
-5-
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in
Georgia are authorized or required
by law to close.
"EBITDA" for any period means the sum of (i) Consolidated Net Income,
(ii) taxes on income, (iii) Consolidated Interest Expense, (iv)
Depreciation and (v) Amortization, all determined with respect to the
Borrower and its Consolidated Subsidiaries on a consolidated basis for such
period and in accordance with GAAP. In determining EBITDA for any period,
(i) any Consolidated Subsidiary acquired during such period by the Borrower
or any other Consolidated Subsidiary shall be included on a pro forma,
historical basis as if it had been a Consolidated Subsidiary during such
entire period and (ii) any amounts which would be included in a
determination of EBITDA for such period with respect to assets acquired
during such period by the Borrower or any Consolidated Subsidiary shall be
included in the determination of EBITDA for such period and the amount
thereof shall be calculated on a pro forma, historical basis as if such
assets had been acquired by the Borrower or such Consolidated Subsidiary
prior to the first day of such period.
"Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority
under any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for
conducting the business of the Borrower or any Subsidiary required by any
Environmental Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements
with an Environmental Authority or other entity arising from or in any way
associated with any Environmental Requirement, whether or not incorporated
in a judgment, decree or order.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to
emissions, discharges or releases of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous substances
or wastes into the environment, including, without limitation, ambient air,
surface water, groundwater or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes
or the clean-up or other remediation thereof.
"Environmental Liabilities" means any liabilities, whether accrued,
contingent or otherwise, arising from and in any way associated with any
Environmental Requirements.
"Environmental Notices" means written notice from any Environmental
Authority of possible or alleged noncompliance with or liability under any
Environmental Requirement, including without limitation any complaints,
citations, demands or requests from any Environmental Authority for
correction of any violation of any Environmental Requirement or any
investigations concerning any violation of any Environmental Requirement.
-6-
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or under
any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to the Borrower, any
Subsidiary or the Properties, including but not limited to any such
requirement under CERCLA or similar state legislation and all federal,
state and local laws, ordinances, regulations, orders, writs, decrees and
common law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any
provision of ERISA shall also be deemed to be a reference to any successor
provision or provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business Day on which
dealings in Dollar deposits are carried out in the London interbank market.
"Euro-Dollar Loan" means a Loan which bears or is to bear interest at
a rate based upon the London Interbank Offered Rate.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.05(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Fair Market Value" means, with respect to any asset, the greater of:
(i) the Gross Proceeds received by the Borrower or any Subsidiary in
connection with the sale, transfer or other disposition by the Borrower or
such Subsidiary (as the case may be) of such asset, or (ii) the Book Value
of such asset.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next higher 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day, provided that (i) if the day for
which such rate is to be determined is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day,
and (ii) if such rate is not so published for any day, the Federal Funds
Rate for such day shall be the average rate charged to the Bank on such day
on such transactions as determined by the Bank.
"Final Maturity Date" means April 1, 2007.
"Financing" shall mean (i) any transaction or series of transactions
for the incurrence by the Borrower of any Debt or for the establishment of
a commitment to make advances which would constitute Debt of the Borrower,
which Debt (in either of the foregoing cases) is not by its terms
subordinate and junior to Debt of the Borrower arising hereunder, (ii) an
obligation incurred in a transaction or series of transactions in which
assets of the Borrower are sold and leased back, or (iii) a sale of
accounts or other receivables or any interest therein, other than a sale or
transfer of accounts or receivables attendant to a sale permitted hereunder
of an operating division.
-7-
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"Forfeiture Proceeding" means any action, proceeding or investigation
affecting the Borrower or any of its Subsidiaries before any court,
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, if such action, proceeding or
investigation could result in (i) the seizure or forfeiture of any of their
assets, revenues or share capital, which when the Fair Market Value of such
assets, revenues or share capital subject to such seizure or forfeiture
when aggregated with the Fair Market Value of all other assets, revenues
and share capital of the Borrower and its Subsidiaries seized or forfeited
since the Closing Date exceeds $1,000,000, or (ii) a Material Adverse
Effect.
"Funded Debt" means, at any date, the total Debt of the Borrower and
its Subsidiaries determined on a consolidated basis, provided however, that
for the purposes of determining compliance with the covenant contained in
Section 5.04 only, Funded Debt shall exclude the Subordinated Debt.
"GAAP" means generally accepted accounting principles applied on a
basis consistent with those which, in accordance with Section 1.02, are to
be used in making the calculations for purposes of determining compliance
with the terms of this Agreement.
"Gross Proceeds" means any and all cash, plus the face amount of any
and all notes, bonds, debentures, instruments and evidences of
indebtedness, and the value of any other property, of whatever kind or
nature, received by the Borrower or any Subsidiary in connection with the
sale, transfer or other disposition by the Borrower or such Subsidiary (as
the case may be) of any of its assets.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or
other obligation of any other Person and, without limiting the generality
of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to secure, purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to provide
collateral security, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring
in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
The term "Guarantee" used as a verb has a corresponding meaning.
-8-
"Hazardous Materials" includes, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act
of 1980, 42 U.S.C. ss.6901 et seq. and its implementing regulations and
amendments, or in any applicable state or local law or regulation, (b) any
"hazardous substance", "pollutant" or "contaminant", as defined in CERCLA,
or in any applicable state or local law or regulation, (c) gasoline, or any
other petroleum product or by-product, including crude oil or any fraction
thereof, (d) toxic substances, as defined in the Toxic Substances Control
Act of 1976, or in any applicable state or local law or regulation and (e)
insecticides, fungicides, or rodenticides, as defined in the Federal
Insecticide, Fungicide, and Rodenticide Act of 1975, or in any applicable
state or local law or regulation, as each such Act, statute or regulation
may be amended from time to time.
"Holding Company Expense" means, as applied to the Borrower for any
period, the aggregate amount of expenses incurred by the Borrower and/or
payments made by the Borrower on behalf of the Borrower's Subsidiaries in
connection with services provided by the Borrower to its Subsidiaries.
"Insurance Subsidiaries" means those Persons set forth on Schedule
4.08A attached hereto, together with their respective successors, and any
other Subsidiary which at any time after the Closing Date is engaged
principally in the property and casualty insurance business, the accident
and health insurance business or the life insurance business or any
combination thereof.
"Intercompany Billing" means amounts received by the Borrower from
Subsidiaries and/or payments made by the Borrower on behalf of the
Borrower's Subsidiaries as payment for services provided by the Borrower to
such Subsidiaries.
"Interest Coverage" for any period means (a) the sum of Dividend
Ability, Intercompany Billing and Tax Sharing Payments minus (b) Holding
Company Expense, all determined with respect to the Borrower.
"Interest Period" means, with respect to each Euro-Dollar Loan, the
period commencing on the date that such Euro-Dollar Loan is first made,
converted or continued and ending on the numerically corresponding day in
the first, second, third or sixth month thereafter, as the Borrower may
elect; provided that:
(a) any Interest Period (subject to clause (c) below) which would
otherwise end on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in
which case such Interest Period shall end on the next preceding
Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the appropriate subsequent calendar
month) shall, subject to clause (c) below, end on the last Euro-Dollar
Business Day of the appropriate subsequent calendar month; and
(c) no Interest Period may be selected which begins before the
Final Maturity Date and would otherwise end after the Final Maturity
Date.
-9-
"Investment" means any investment in any Person, whether by means of
purchase or acquisition of obligations or securities of such Person,
capital contribution to such Person, loan or advance to such Person, making
of a time deposit with such Person, Guarantee or assumption of any
obligation of such Person or otherwise.
"Investment Properties" for any period means all real property owned
by the Borrower and its Consolidated Subsidiaries during the applicable
period; provided, however, the definition of Investment Properties shall
exclude any real property if: (i) at least fifty percent (50%) of the net
leasable area with respect to such real property is occupied by the
Borrower and/or its Subsidiaries; and (ii) the primary use of such real
property is the operation of the Borrower's and/or Subsidiaries' respective
businesses.
"Lending Office" means, as to the Bank, its office located at its
address set forth on the signature pages hereof (or identified on the
signature pages hereof as its Lending Office) or such other office as the
Bank may hereafter designate as its Lending Office by notice to the
Borrower.
"Lien" means, with respect to any asset, any mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, security interest, security
title, preferential arrangement which has the practical effect of
constituting a security interest or encumbrance, servitude or encumbrance
of any kind in respect of such asset to secure or assure payment of a Debt
or a Guarantee, whether by consensual agreement or by operation of statute
or other law, or by any agreement, contingent or otherwise, to provide any
of the foregoing. For the purposes of this Agreement, the Borrower or any
Subsidiary shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Loan" means the term loan advanced to the Borrower in accordance with
Section 2.01(a).
"Loan Documents" means this Agreement, the Note, the Pledge Agreement,
any other document evidencing, relating to or securing the Loan, and any
other document or instrument delivered from time to time in connection with
this Agreement, the Note or the Loan, as such documents and instruments may
be amended or supplemented from time to time.
"London Interbank Offered Rate" has the meaning set forth in Section
2.05(c).
"Margin Stock" means "margin stock" as defined in Regulation T, U or X
of the Board of Governors of the Federal Reserve System, as in effect from
time to time, together with all official rulings and interpretations issued
thereunder.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental investigation
or proceeding), whether singly or in conjunction with any other event or
events, act or acts, condition or conditions, occurrence or occurrences,
whether or not related, a material adverse change in, or a material adverse
effect upon, any of (a) the financial condition, operations, business or
properties of the Borrower and its Consolidated Subsidiaries taken as a
whole, (b) the rights and remedies of the Bank under the Loan Documents, or
the ability of the Borrower to perform its obligations under the Loan
Documents to which it is a party, as applicable, or (c) the legality,
validity or enforceability of any Loan Document.
-10-
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"NAIC" means the National Association of Insurance Commissioners.
"Net Income" means, as applied to any Person for any period, the
aggregate amount of net income of such Person, after taxes, for such
period, as determined in accordance with GAAP.
"Note" means the promissory note of the Borrower, substantially in the
form of Exhibit A hereto, evidencing the obligation of the Borrower to
repay the Loan.
"Notice of Continuation or Conversion" has the meaning as specified in
Section 2.02.
"Officer's Certificate" has the meaning set forth in Section 3.01(d).
"Participant" has the meaning set forth in Section 8.07(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means the acquisition by the Borrower or any
Subsidiary of shares of capital stock of any Person or assets from any
Person, if: (A) in the case of the acquisition of shares of capital stock
of any Person, immediately after giving effect to such acquisition (i) such
Person is a Consolidated Subsidiary; (ii) the Borrower controls such Person
directly or indirectly through a Subsidiary; (iii) no Default shall have
occurred and be continuing; (iv) the line or lines of business engaged in
by such Person are the same or substantially the same as the lines of
business engaged in by the Borrower and its Subsidiaries on the Closing
Date; and (v) such acquisition is made on a negotiated basis with the
approval of the Board of Directors of the Person to be acquired and, if
necessary, the shareholders of the Person to be acquired; and (B) in the
case of the acquisition of assets from any Person, immediately after giving
effect to such acquisition: (i) the assets acquired by the Borrower or such
Subsidiary shall be used by the Borrower or such Subsidiary in a line of
business the same or substantially the same as the lines of business
engaged in by the Borrower and its Subsidiaries on the Closing Date; and
(ii) no Default shall have occurred and be continuing.
"Person" means an individual, a corporation, a limited liability
company, a partnership (including without limitation, a joint venture), an
unincorporated association, a trust or any other entity or organization,
including, but not limited to, a government or political subdivision or an
agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and is either (i) maintained by a member of
the Controlled Group for employees of any member of the Controlled Group or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to
which a member of the Controlled Group is then making or accruing an
obligation to make contributions or has within the preceding 5 plan years
made contributions.
-11-
"Pledge Agreement" means the Amended and Restated Pledge Agreement
dated as of June 30, 2003 executed by the Borrower for the benefit of the
Bank, as the same may be amended, restated, supplemented or otherwise
modified from time to time, pursuant to which the Borrower has pledged to
the Bank the stock or other equity interests it holds in the following
Subsidiaries: American Southern Insurance Company, Association Casualty
Insurance Company,
Georgia Casualty & Surety Company and Bankers Fidelity
Life Insurance Company, and agrees to pledge any stock or equity interests
it obtains in the future with respect to existing Subsidiaries or Persons
which become Subsidiaries, as more fully set forth therein.
"Prime Rate" refers to that interest rate so denominated and set by
the Bank from time to time as an interest rate basis for borrowings. The
Prime Rate is but one of several interest rate bases used by the Bank. The
Bank lends at interest rates above and below the Prime Rate.
"Properties" means all real property owned, leased or otherwise used
or occupied by the Borrower or any Subsidiary, wherever located.
"Quarterly Statement" means, with respect to any Insurance Subsidiary,
the quarterly report, statement or other filing made by such Insurance
Subsidiary with the insurance department or other governmental authority of
the state in which such Insurance Subsidiary is formed or incorporated
which regulates, supervises or otherwise has jurisdiction over such
Insurance Subsidiary, all in accordance with statutory accounting
principles.
"Rate Determination Date" has the meaning set forth in Section
2.05(a).
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Final Maturity Date
either (i) mandatorily redeemable (by sinking fund or similar payments or
otherwise) or (ii) redeemable at the option of the holder thereof.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the Borrower's capital stock (except dividends payable solely
in shares of its capital stock) or (ii) any payment on account of the
purchase, redemption, retirement or acquisition of (a) any shares of the
Borrower's capital stock (except shares acquired upon the conversion
thereof into other shares of its capital stock) or (b) any option, warrant
or other right to acquire shares of the Borrower's capital stock.
"Series C Preferred Stock" means the Borrower's Series C Preferred
Stock.
"Statutory Surplus" means, at any time for any Insurance Subsidiary,
the "Statutory Surplus" of such Insurance Subsidiary as set forth or
reflected on the most recent Annual Statement or Quarterly Statement of
such Insurance Subsidiary, prepared in accordance with statutory accounting
principles.
"Statutory Trust I" means ATLANTIC AMERICAN STATUTORY TRUST I, a
Connecticut statutory trust.
-12-
"Statutory Trust II" means ATLANTIC AMERICAN STATUTORY TRUST II, a
Connecticut statutory trust.
"Stockholders' Equity" means, at any time, the shareholders' equity of
the Borrower and its Consolidated Subsidiaries, as set forth or reflected
on the most recent consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries prepared in accordance with GAAP, but excluding
(i) any Redeemable Preferred Stock of the Borrower or any of its
Consolidated Subsidiaries and (ii) the amount appearing as "accumulated
other comprehensive income" on the balance sheets of the Borrower.
Shareholders' equity generally would include, but not be limited to (i) the
par or stated value of all outstanding Capital Stock, (ii) capital surplus,
(iii) retained earnings, and (iv) various deductions such as (A) purchases
of treasury stock, (B) valuation allowances, (C) receivables due from an
employee stock ownership plan, (D) employee stock ownership plan debt
guarantees, and (E) translation adjustments for foreign currency
transactions.
"Subordinated Debt" means Debt of the Borrower and its Subsidiaries
incurred in connection with the 2002 Trust Preferred Transaction and the
2003 Trust Preferred Transaction.
"Subsidiary" means as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned
by such Person.
"Taxes" has the meaning set forth in Section 2.07(c).
"Tax Sharing Agreement" means, that Tax Allocation Agreement among the
Borrower and certain Subsidiaries of the Borrower, including, among others,
the following: (i) American Southern Insurance Company, effective January
1, 1996; (ii) American Safety Insurance Company, effective January 1, 1996;
(iii) Banker's Fidelity Life Insurance Company, effective January 28, 1994;
(iv)
Georgia Casualty and Surety Company, effective January 28, 1994; and
(v) Association Casualty Insurance Company, effective July 1, 1999.
"Tax Sharing Payments" means those payments received by the Borrower
from its Subsidiaries as a result of the Tax Sharing Agreement.
"Third Parties" means all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the
ordinary course of the Borrower's or any Subsidiary's business and on a
temporary basis.
"Transferee" has the meaning set forth in Section 8.07(d).
"Wholly Owned Subsidiary" means any Subsidiary all of the shares of
capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the
Borrower.
Section 1.02 Accounting Terms and Determinations. Unless otherwise
specified herein, all terms of an accounting character used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared
in accordance with (a) in the case of the Borrower and each Subsidiary,
GAAP, applied on a basis consistent (except for changes concurred in by the
Borrower's independent public accountants or otherwise required by a change
in GAAP) with the most recent audited consolidated financial statements of
the Borrower and its Consolidated Subsidiaries delivered to the Bank,
unless with respect to any such change concurred in by the Borrower's
independent public accountants or required by GAAP, in determining
compliance with any of the provisions of this Agreement or any of the other
Loan Documents: (i) the Borrower shall have objected to determining such
compliance on such basis at the time of delivery of such financial
statements, or (ii) the Bank shall so object in writing within 30 days
after the delivery of such financial statements, in either of which events
such calculations shall be made on a basis consistent with those used in
the preparation of the latest financial statements as to which such
objection shall not have been made (which, if objection is made in respect
of the first financial statements delivered under Section 5.01 hereof,
shall mean the financial statements referred to in Section 4.04), and (b)
in the case of any Insurance Subsidiary, statutory accounting principles as
in effect from time to time, applied on a consistent basis.
-13-
Section 1.03 Use of Defined Terms. All terms defined in this Agreement
shall have the same meanings when used in any of the other Loan Documents,
unless otherwise defined therein or unless the context shall otherwise
require.
Section 1.04 Terminology. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural and the
plural shall include the singular. Titles of Articles and Sections in this
Agreement are for convenience only, and neither limit nor amplify the
provisions of this Agreement.
Section 1.05 References. Unless otherwise indicated, references in
this Agreement to "Articles", "Exhibits", "Schedules", and "Sections" are
references to articles, exhibits, schedules and sections hereof.
ARTICLE II
THE CREDITS
Section 2.01 Commitment to Make the Loan.
---------------------------
(a) The Bank hereby agrees, on the terms and conditions set forth
herein, to establish a term loan facility by making the Loan to the
Borrower on the Closing Date in an aggregate principal amount equal to
the Commitment. The Commitment shall terminate on the Closing Date and
the Bank shall have no further obligation to advance moneys to the
Borrower.
Section 2.02 Conversion and Continuation of Loan.
-----------------------------------
(a) The Loan shall initially be a Euro-Dollar Loan in an amount
equal to the Commitment with an Interest Period of three months.
Thereafter, on the terms and subject to the conditions of this
Agreement, the Borrower may elect (A) at the end of any Interest
Period with respect to the Euro-Dollar Loan to convert such
Euro-Dollar Loan into a Base Rate Loan or to continue such Euro-Dollar
Loan for an additional Interest Period, or (B) at any time to convert
a Base Rate Loan to a Euro-Dollar Loan. The Borrower shall make each
such election by delivering to the Bank a notice in the form of
Exhibit G (a "Notice of Continuation or Conversion") prior to 11:00
a.m. (Atlanta,
Georgia time) at least 3 Euro-Dollar Business Days
prior to the effective date of any conversion to or continuation of a
Euro-Dollar Loan, and prior to 10:00 a.m. (Atlanta,
Georgia time) on
the same Domestic Business Day as the effective date of any conversion
to a Base Rate Loan, specifying (x) in the case of a conversion to or
continuation of a Euro-Dollar Loan, the Interest Period; (y) the date
of conversion or continuation (which shall be a Euro-Dollar Business
Day, in the case of a conversion to or continuation of a Euro-Dollar
Loan and a Domestic Business Day in the case of a conversion to a Base
Rate Loan); and (z) the amount and type of conversion or continuation.
Upon timely receipt of a Notice of Continuation or Conversion, the
Bank shall promptly notify the Borrower of the applicable interest
rate for the Interest Period selected in such Notice of Continuation
or Conversion; provided that the failure by the Bank to provide any
such notice shall not, in any way, affect or diminish the Borrower's
obligations to the Bank or the Bank's rights under this Agreement, the
Notes or any of the other Loan Documents. If, within the time period
required under this Section, the Bank shall not have received a Notice
of Continuation or Conversion with respect to a Euro-Dollar Loan from
the Borrower of an election to continue such loans for an additional
Interest Period, then, upon the expiration of the Interest Period
therefor, such Loan shall be converted automatically into a Base Rate
Loan.
-14-
(b) No more than one Interest Period shall be applicable to the
Loan on any day.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Loan may not be continued as, or converted to, a
Euro-Dollar Loan if at the time of continuation or conversion there
shall have occurred an Event of Default, which Event of Default shall
not have been cured or waived in writing.
Section 2.03 Note.
-----
(a) The Loan shall be evidenced by a Note payable to the order of
the Bank for the account of its Lending Office in an amount equal to
the original principal amount of the Commitment.
(b) The Bank shall record, and prior to any transfer of the Note
shall endorse on the schedule forming a part thereof appropriate
notations to evidence, the date, amount and maturity of the Loan made
by it, the interest rates from time to time applicable thereto and the
date and amount of each payment of principal made by the Borrower with
respect thereto and such schedule shall constitute rebuttable
presumptive evidence of the principal amount owing and unpaid on the
Bank's Note; provided that the failure of the Bank to make,
--------
or any error in making, any such recordation or endorsement shall not
affect the obligation of the Borrower hereunder or under the Note or
the ability of the Bank to assign its Note. The Bank is hereby
irrevocably authorized by the Borrower so to endorse the Note and to
attach to and make a part of the Note a continuation of any such
schedule as and when required.
-15-
Section 2.04 Mandatory Repayment of Loan. Unless due sooner pursuant
to the provisions of Article VI, the Borrower agrees to repay the principal
of the Loan on the Final Maturity Date in an amount equal to the unpaid
principal balance of, and accrued but unpaid interest on, the Loan. Section
2.05 Interest Rates.
(a) "Applicable Margin" shall be determined quarterly based upon
the ratio of Funded Debt to Consolidated Total Capitalization
(calculated as of the last day of each Fiscal Quarter), as follows:
Ratio of Funded Debt to
Consolidated Total Capitalization Base Rate Loan Euro-Dollar Loan
---------------------------------- ---------------- ------------------
Greater than 45% 0% 2.50%
Greater than or equal to 40% but less than or 0% 2.00%
equal to 45%
Less than 40% 0% 1.75%
The Applicable Margin shall be determined effective as of the
date (herein, the "Rate Determination Date") which is 60 days after
the last day of the Fiscal Quarter as of the end of which the
foregoing ratio is being determined, based on the quarterly financial
statements of the Borrower for such Fiscal Quarter, and the Applicable
Margin so determined shall remain effective from such Rate
Determination Date until the date which is 60 days after the last day
of the Fiscal Quarter in which such Rate Determination Date falls
(which latter date shall be a new Rate Determination Date); provided
that (i) for the period from and including the Closing Date to but
excluding the Rate Determination Date next following the Closing Date,
the Applicable Margin shall be 0% for a Base Rate Loan and 2.50% for a
Euro-Dollar Loan (ii) in the case of any Applicable Margin determined
for the fourth and final Fiscal Quarter of a Fiscal Year, the Rate
Determination Date shall be the date which is 120 days after the last
day of such final Fiscal Quarter and such Applicable Margin shall be
determined based upon the annual audited financial statements of the
Borrower for the Fiscal Year ended on the last day of such final
Fiscal Quarter, and (iii) if on any Rate Determination Date the
Borrower shall have failed to deliver to the Bank the financial
statements required to be delivered pursuant to Section 5.01(a) or
Section 5.01(b) with respect to the Fiscal Year or Fiscal Quarter, as
the case may be, most recently ended prior to such Rate Determination
Date, then for the period beginning on such Rate Determination Date
and ending (subject to Section 7.05 and the provisions relating to
Interest Periods contained in this Agreement) on the date such
financial statements are delivered, the Applicable Margin shall be
determined as if the ratio of Funded Debt to Consolidated Total
Capitalization was more than 45% at all times during such period. Any
change in the Applicable Margin on any Rate Determination Date shall
result in a corresponding change, effective on and as of such Rate
Determination Date, in the interest rate applicable to the Loan
outstanding on such Rate Determination Date, provided that no
Applicable Margin shall be decreased pursuant to this Section 2.05 if
a Default is in existence on the Rate Determination Date until such
Default shall have been cured or waived in accordance with the terms
of this Agreement.
-16-
(b) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the Base Rate for
such day plus the Applicable Margin. Such interest shall be payable on
the first Domestic Business Day of each calendar month while such Base
Rate Loan is outstanding, on the date such Base Rate Loan is converted
to a Euro-Dollar Loan and, if a Base Rate Loan is then outstanding, on
the Final Maturity Date. Any overdue principal of and, to the extent
permitted by applicable law, overdue interest on any Base Rate Loan
shall bear interest, payable on demand, for each day until paid at a
rate per annum equal to the Default Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto,
at a rate per annum equal to the sum of the Applicable Margin plus the
applicable Adjusted London Interbank Offered Rate for such Interest
Period; provided that if any Euro-Dollar Loan shall, as a
--------
result of clause (1)(c) of the definition of Interest Period, have an
Interest Period of less than one month, such Euro-Dollar Loan shall
bear interest during such Interest Period at the rate applicable to
Base Rate Loans during such period. Interest on each Euro-Dollar Loan
shall be payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than 3 months, at intervals of 3
months after the first day thereof. Any overdue principal of and, to
the extent permitted by applicable law, overdue interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained
(rounded upward, if necessary, to the next higher 1/100th of 1%) by
dividing (i) the applicable London Interbank Offered Rate for such Interest
Period by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Euro-Dollar Loan
means for the Interest Period of such Euro-Dollar Loan the rate per annum
determined on the basis of the rate for deposits in Dollars of amounts
equal or comparable to the principal amount of such Euro-Dollar Loan
offered for a term comparable to such Interest Period, which rate appears
on the display designated as Page "3750" of the Telerate Service (or such
other page as may replace page 3750 of that service or such other service
or services as may be nominated by the British Banker's Association for the
purpose of displaying London Interbank Offered Rates for U.S. dollar
deposits) determined as of 1:00 p.m. New York City time, 2 Euro-Dollar
Business Days prior to the first day of such Interest Period.
-17-
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor) for
determining the applicable reserve requirement for the Bank in respect of
"Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate
on Euro-Dollar Loans is determined or any category of extensions of credit
or other assets which includes loans by a non-United States office of the
Bank to United States residents). The Adjusted London Interbank Offered
Rate shall be adjusted automatically on and as of the effective date of any
change in the Euro-Dollar Reserve Percentage.
(d) The Bank shall determine the interest rates applicable to the
Loan hereunder in accordance with the terms of this Agreement. The
Bank shall give prompt notice to the Borrower by telecopy of each rate
of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
(e) After the occurrence and during the continuance of a Default,
the principal amount of the Loan (and, to the extent permitted by
applicable law, all accrued interest thereon) may, at the election of
the Bank, bear interest at the Default Rate.
Section 2.06 Optional Prepayments.
--------------------
(a) The Borrower may, upon at least 1 Domestic Business Day's
notice to the Bank, prepay any Base Rate Loan in whole at any time, or
from time to time in part in amounts aggregating at least $500,000, or
any larger multiple of $100,000, by paying the principal amount to be
prepaid together with accrued interest thereon to the date of
prepayment.
(b) The Borrower may not prepay all or any portion of the
principal amount of any Euro-Dollar Loan prior to the last day of an
Interest Period applicable thereto, unless the Borrower complies with
Section 7.05.
Section 2.07 General Provisions as to Payments.
---------------------------------
(a) The Borrower shall make each payment of principal of, and
interest on, the Bank's Loan and of fees hereunder, not later than
11:00 A.M. (Atlanta,
Georgia time) on the date when due, in Federal or
other funds immediately available at the place where payment is due,
to the Bank at its address set forth on the signature pages hereof.
(b) Whenever any payment of principal of, or interest on, the
Base Rate Loan or of fees shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended
to the next succeeding Domestic Business Day. Whenever any payment of
principal of or interest on the Euro-Dollar Loan shall be due on a day
which is not a Euro-Dollar Business Day, the date for payment thereof
shall be extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar month,
in which case the date for payment thereof shall be the next preceding
Euro-Dollar Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall be
payable for such extended time.
-18-
(c) All payments of principal, interest and fees and all other
amounts to be made by the Borrower pursuant to this Agreement with
respect to any Loan or fee relating thereto shall be paid without
deduction for, and free from, any tax, imposts, levies, duties,
deductions, or withholdings of any nature now or at anytime hereafter
imposed by any governmental authority or by any taxing authority
thereof or therein excluding in the case of the Bank, taxes imposed on
or measured by its net income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which the Bank is organized or any
political subdivision thereof and, in the case of the Bank, taxes
imposed on its income, and franchise taxes imposed on it, by the
jurisdiction of the Bank's applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, imposts, levies,
duties, deductions or withholdings of any nature being "Taxes"). In
the event that the Borrower is required by applicable law to make any
such withholding or deduction of Taxes with respect to any Loan or fee
or other amount, the Borrower shall pay such deduction or withholding
to the applicable taxing authority, shall promptly furnish to the Bank
in respect of which such deduction or withholding is made all receipts
and other documents evidencing such payment and shall pay to the Bank
additional amounts as may be necessary in order that the amount
received by the Bank after the required withholding or other payment
shall equal the amount the Bank would have received had no such
withholding or other payment been made. If no withholding or deduction
of Taxes are payable in respect of any Loan or fee relating thereto,
the Borrower shall furnish the Bank, at the Bank's request, a
certificate from each applicable taxing authority or an opinion of
counsel acceptable to the Bank, in either case stating that such
payments are exempt from or not subject to withholding or deduction of
Taxes. If the Borrower fails to provide such original or certified
copy of a receipt evidencing payment of Taxes or certificate(s) or
opinion of counsel of exemption, the Borrower hereby agrees to
compensate the Bank for, and indemnify it with respect to, the tax
consequences of the Borrower's failure to provide evidence of tax
payments or tax exemption.
In the event the Bank receives a refund of any Taxes paid by the
Borrower pursuant to this Section 2.07, it will pay to the Borrower the
amount of such refund promptly upon receipt thereof; provided, however, if
-------- -------
at any time thereafter it is required to return such refund, the Borrower
shall promptly repay to it the amount of such refund.
Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.07 shall be applicable with respect to any
Participant, Assignee or other Transferee, and any calculations required by
such provisions (i) shall be made based upon the circumstances of such
Participant, Assignee or other Transferee (provided that each Participant
shall not be entitled to any compensation greater than that which would
have been received by the Bank under similar circumstances), and (ii)
constitute a continuing agreement and shall survive the termination of this
Agreement and the payment in full or cancellation of the Note.
Section 2.08 Computation of Interest. Interest on Base Rate Loans
shall be computed on the basis of a year of 365 days and paid for the
actual number of days elapsed (including the first day but excluding the
last day). Interest on Euro-Dollar Loans shall be computed on the basis of
a year of 360 days and paid for the actual number of days elapsed,
calculated as to each Interest Period from and including the first day
thereof to but excluding the last day thereof.
-19-
ARTICLE III
CONDITIONS TO LOAN
Section 3.01 Conditions to Loan. The obligation of the Bank to make
the Loan is subject to the following conditions:
(a) receipt by the Bank from the Borrower of a duly executed
counterpart of this Agreement signed by the Borrower;
(b) receipt by the Bank of the duly executed Note for the account
of the Bank complying with the provisions of Section 2.03;
(c) receipt by the Bank of a certificate (the "Closing
Certificate"), dated the Closing Date, substantially in the form of
Exhibit C hereto, signed by a principal financial officer of the
Borrower, to the effect that (i) no Default has occurred and is
continuing on the Closing Date and (ii) the representations and
warranties of the Borrower contained in Article IV are true on and as
of the Closing Date;
(d) receipt by the Bank of all documents which the Bank may
reasonably request relating to the existence of the Borrower, the
corporate authority for and the validity of this Agreement, the Note,
and any other matters relevant hereto, all in form and substance
satisfactory to the Bank, including without limitation a certificate
of incumbency from the Borrower (the "Officer's Certificate"), signed
by the Secretary or an Assistant Secretary of the Borrower
substantially in the form of Exhibit D hereto, certifying as to the
names, true signatures and incumbency of the officer or officers of
the Borrower authorized to execute and deliver the Loan Documents to
which it is a party, and, if requested by Bank, certified copies of
the following items with respect to the Borrower: (i) Certificate of
Incorporation, (ii) Bylaws, (iii) a certificate of the Secretary of
State of the state of organization of the Borrower as to the good
standing of the Borrower as a corporation organized under the laws of
such state, and (iv) the action taken by the Board of Directors of the
Borrower authorizing the Borrower's execution, delivery and
performance of the Loan Documents to which it is a party;
(e) receipt by the Bank of UCC Financing Statements in form and
substance satisfactory to the Bank in its sole discretion, providing
for a continuation of the Bank's first priority security interest in
the stock or other equity interests held by the Borrower in all
Subsidiaries of the Borrower (which such UCC Financing Statements the
Borrower hereby authorizes the Bank to file);
(f) if requested by Bank, receipt by the Bank from each Insurance
Subsidiary of a certificate signed by the Chief Actuary or Chief
Financial Officer of such Insurance Subsidiary to the effect that the
reserves of such Insurance Subsidiary are adequate under statutory
accounting principles and the applicable laws of the state under the
laws of which such Insurance Subsidiary was organized or incorporated
as of December 31, 2005;
-20-
(g) the fact that, immediately before and after the making of the
Loan, no Default shall have occurred and be continuing;
(h) the fact that the representations and warranties of the
Borrower contained in Article IV of this Agreement shall be true on
and as of the Closing Date; and
(i) payment by the Borrower of the reasonable fees and expenses
of Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC, special counsel to the Bank,
in connection with the negotiation, preparation, execution and
delivery of this Agreement and the Loan hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
Section 4.01 Corporate Existence and Power. The Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, is duly qualified to
transact business in every jurisdiction where, by the nature of its
business, such qualification is necessary, and has all corporate powers and
all governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted, if the failure to be so
qualified or to have such powers, licenses, authorizations, consents or
approvals could reasonably be expected, alone or in the aggregate, to have
or cause a Material Adverse Effect.
Section 4.02 Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of
this Agreement, the Note and the other Loan Documents (i) are within the
Borrower's corporate powers, (ii) have been duly authorized by all
necessary corporate action, (iii) require no action by or in respect of, or
filing with, any governmental body, agency or official, which has not been
obtained, (iv) do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of
incorporation or by-laws of the Borrower or of any material agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower or any of its Subsidiaries, and (v) do not result in the creation
or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries other than as provided therein.
Section 4.03 Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower enforceable in accordance with its terms,
and the Note and the other Loan Documents, when executed and delivered in
accordance with this Agreement, will constitute valid and binding
obligations of the Borrower enforceable in accordance with their respective
terms, provided that the enforceability hereof and thereof is subject in
each case to general principles of equity and to bankruptcy, insolvency and
similar laws affecting the enforcement of creditors' rights generally.
-21-
Section 4.04 Financial Information.
(a) As of the Closing Date, the consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of December 31, 2004 and
the related consolidated statements of income, shareholders' equity
and cash flows for the Fiscal Year then ended, reported on by an
independent public accounting firm of nationally recognized standing,
copies of which have been delivered to the Bank, and the unaudited
consolidated financial statements of the Borrower for the interim
period ended September 30, 2005, copies of which have been delivered
to the Bank, fairly present, in conformity with GAAP, the consolidated
financial position of the Borrower and its Consolidated Subsidiaries
as of such dates and their consolidated results of operations and cash
flows for such periods stated.
(b) The Annual Statements of the Insurance Subsidiaries together
with supplemental schedules thereto, dated as of December 31, 2004,
and the Quarterly Statements of the Insurance Subsidiaries together
with supplemental schedules thereto, dated as of September 30, 2005,
copies of which have been delivered to the Bank, fairly present the
respective financial positions of the Insurance Subsidiaries as of
such dates.
(c) Since September 30, 2005 there has been no event, act,
condition or occurrence having a Material Adverse Effect.
Section 4.05 Litigation. Except as provided as Schedule 4.05 attached
hereto, there is no action, suit or proceeding pending, or to the knowledge
of the Borrower threatened, against or affecting the Borrower or any of its
Subsidiaries before any court or arbitrator or any governmental body,
agency or official which could have a Material Adverse Effect or which in
any manner draws into question the validity or enforceability of, or could
impair the ability of the Borrower to perform its obligations under, this
Agreement, the Note or any of the other Loan Documents.
Section 4.06 Compliance with ERISA.
(a) The Borrower and each member of the Controlled Group have
fulfilled their obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and are in compliance in
all material respects with the presently applicable provisions of
ERISA and the Code, and have not incurred any material liability to
the PBGC or a Plan under Title IV of ERISA.
(b) Neither the Borrower nor any member of the Controlled Group
is or ever has been obligated to contribute to any Multiemployer Plan.
Section 4.07 Taxes. There have been filed on behalf of the Borrower
and its Subsidiaries all Federal, state and local income, excise, property
and other tax returns which are required to be filed by them and all taxes
due pursuant to such returns or pursuant to any assessment received by or
on behalf of the Borrower or any Subsidiary have been paid. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of taxes or other governmental charges are, in the opinion of the
Borrower, adequate. United States income tax returns of the Borrower and
its Subsidiaries have been examined and closed through the Fiscal Year
ended December 31, 1983.
-22-
Section 4.08 Subsidiaries.
(a) Each of the Borrower's Subsidiaries is a corporation or other
business entity or other business entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, is duly qualified to transact business
in every jurisdiction where, by the nature of its business, such
qualification is necessary, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted, if the failure to be so
qualified, or to have such powers, licenses, authorizations, consents
or approvals could reasonably be expected, alone or in the aggregate,
to have or cause a Material Adverse Effect.
(b) As of the Closing Date, the Borrower has no Insurance
Subsidiaries except those Subsidiaries listed on Schedule 4.08A, which
accurately sets forth each such Insurance Subsidiary's complete name
and jurisdiction of incorporation.
(c) Schedule 4.08B accurately sets forth the complete name of
each Subsidiary of the Borrower as of the Closing Date which is not an
Insurance Subsidiary, as well as its jurisdiction of incorporation.
Section 4.09 Not an Investment Company. Neither the Borrower nor any
of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
Section 4.10 Public Utility Holding Company Act. Neither the Borrower
nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company"
or of a "subsidiary company" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended.
Section 4.11 Ownership of Property; Liens. Each of the Borrower and
its Consolidated Subsidiaries has title to its properties sufficient for
the conduct of its business, and none of such property is subject to any
Lien (including tax liens) except as permitted in Section 5.10.
Section 4.12 No Default. Neither the Borrower nor any of its
Consolidated Subsidiaries is in default under or with respect to any
agreement, instrument or undertaking to which it is a party or by which it
or any of its property is bound which could have or cause a Material
Adverse Effect. No Default or Event of Default has occurred and is
continuing.
Section 4.13 Full Disclosure. All information heretofore furnished by
the Borrower to the Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Borrower to the Bank will be, true,
accurate and complete in every material respect or based on reasonable
estimates on the date as of which such information is stated or certified.
As of the Closing Date, the Borrower has disclosed to the Bank in writing
any and all facts specific to the Borrower's business and finances and
known to the Borrower which could reasonably be expected to have or cause a
Material Adverse Effect and are not generally known by or available to the
Bank.
-23-
Section 4.14 Environmental Matters.
(a) Neither the Borrower nor any Subsidiary is subject to any
Environmental Liability which could have or cause a Material Adverse
Effect and neither the Borrower nor any Subsidiary has been designated
as a potentially responsible party under CERCLA or under any state
statute similar to CERCLA. None of the Properties has been identified
on any current or proposed (i) National Priorities List under 40
C.F.R. ss. 300, (ii) CERCLIS list or (iii) any list arising from a
state statute similar to CERCLA.
(b) No Hazardous Materials have been or are being used, produced,
manufactured, processed, treated, recycled, generated, stored,
disposed of, managed or otherwise handled at, or shipped or
transported to or from the Properties or are otherwise present at, on,
in or under the Properties, or, to the best of the knowledge of the
Borrower, at or from any adjacent site or facility, except for
Hazardous Materials, such as cleaning solvents, pesticides and other
materials used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed of, and managed or otherwise handled in
minimal amounts in the ordinary course of business in compliance with
all applicable Environmental Requirements.
(c) The Borrower, and each of its Subsidiaries and Affiliates,
has procured all Environmental Authorizations necessary for the
conduct of its business, and is in compliance with all Environmental
Requirements in connection with the operation of the Properties and
the Borrower's, and each of its Subsidiary's and Affiliate's,
respective businesses.
Section 4.15 Compliance with Laws. The Borrower and each Subsidiary is
in compliance with all applicable laws, including, without limitation, all
Environmental Laws, except where any failure to comply with any such laws
would not, alone or in the aggregate, have a Material Adverse Effect.
Section 4.16 Capital Stock. All Capital Stock, debentures, bonds,
notes and all other securities of the Borrower and its Subsidiaries
presently issued and outstanding are validly and properly issued in
accordance with all applicable laws, including, but not limited to, the
"Blue Sky" laws of all applicable states and the federal securities laws.
The issued shares of Capital Stock of the Borrower's Wholly Owned
Subsidiaries are directly or indirectly owned by the Borrower free and
clear of any Lien or adverse claim, other than Liens arising under the Loan
Documents. At least a majority of the issued shares of voting capital stock
of each of the Borrower's other Subsidiaries (other than Wholly Owned
Subsidiaries) is owned by the Borrower free and clear of any Lien or
adverse claim, other than Liens arising under the Loan Documents.
Section 4.17 Margin Stock. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities,
in the business of purchasing or carrying any Margin Stock, and no part of
the proceeds of any Loan will be used to purchase or carry any Margin Stock
or to extend credit to others for the purpose of purchasing or carrying any
Margin Stock, or be used for any purpose which violates, or which is
inconsistent with, the provisions of Regulation X.
-24-
Section 4.18 Insolvency. After giving effect to the execution and
delivery of the Loan Documents and the making of the Loan under this
Agreement, the Borrower will not be "insolvent," within the meaning of such
term as used in O.C.G.A. ss. 18-2-22 or as defined in ss. 101 of Title 11
of the United States Code or Section 2 of the Uniform Fraudulent Transfer
Act, or any other applicable state law pertaining to fraudulent transfers,
as each may be amended from time to time, or be unable to pay its debts
generally as such debts become due, or have an unreasonably small capital
to engage in any business or transaction, whether current or contemplated.
Section 4.19 Insurance. The Borrower maintains and each Subsidiary
maintains (either in the name of the Borrower or in such Subsidiary's own
name), with financially secure and reputable insurance companies, insurance
on all its Properties in at least such amounts and against at least such
risks as are usually insured against in the same general area by companies
of established repute engaged in the same or similar business.
Section 4.20 Debt and Redeemable Preferred Stock. As of the Closing
Date, the Borrower has no Debt or Redeemable Preferred Stock outstanding
except as described on Schedule 4.20 attached hereto.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as the Bank has any Commitment
hereunder or any amount payable under the Note remains unpaid:
Section 5.01 Information. The Borrower will deliver to the Bank (or,
in the case of clauses (a), (b), (e) and (f) of this Section, make
available on a continuous basis on "XXXXX" (the Electronic Data Gathering,
Analysis, and Retrieval system of the Securities and Exchange Commission)
at xxx.xxxxx-xxxxxx.xxx or on the website of the SEC at
"xxxx://xxx.xxx.xxx/xxxxxxx.xxx"):
(a) (i) as soon as available and in any event within 100 days
after the end of each Fiscal Year, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such
Fiscal Year and the related consolidated statements of income,
shareholders' equity and cash flows for such Fiscal Year, setting
forth in each case in comparative form the figures for the previous
fiscal year, all certified by an independent public accounting firm of
nationally recognized standing, with such certification to be free of
exceptions and qualifications not acceptable to the Bank, and (ii) as
soon as available and in any event within 70 days after the end of
each fiscal year of each Insurance Subsidiary, a copy of the Annual
Statement of each such Insurance Subsidiary, together with all
supplemental schedules thereto, as of the end of such Fiscal Year, all
prepared in accordance with statutory accounting principles;
-25-
(b) (i) as soon as available and in any event within 50 days
after the end of each of the first 3 Fiscal Quarters of each Fiscal
Year, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such Fiscal Quarter and the
related statement of income and statement of cash flows for such
Fiscal Quarter and for the portion of the Fiscal Year ended at the end
of such Fiscal Quarter, setting forth in each case in comparative form
the figures for the corresponding Fiscal Quarter and the corresponding
portion of the previous Fiscal Year, all certified (subject to normal
year-end adjustments) as to fairness of presentation, GAAP and
consistency by the chief financial officer or the chief accounting
officer of the Borrower, and (ii) as soon as available and in any
event within 70 days after the end of each fiscal quarter of each
fiscal year of each Insurance Subsidiary, a copy of the Quarterly
Statement of each such Insurance Subsidiary, together with all
supplement schedules thereto, as of the end of such fiscal quarter,
all prepared in accordance with statutory accounting principles;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate,
substantially in the form of Exhibit E (a "Compliance Certificate"),
of the chief financial officer or the chief accounting officer of the
Borrower (i) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Sections 5.03 through 5.07, inclusive, 5.10, 5.24,
5.25 and 5.26 on the date of such financial statements and (ii)
stating whether any Default exists on the date of such certificate
and, if any Default then exists, setting forth the details thereof and
the action which the Borrower is taking or proposes to take with
respect thereto;
(d) within 5 Domestic Business Days after the Borrower becomes
aware of the occurrence of any Default, a certificate of the chief
financial officer or the chief accounting officer of the Borrower
setting forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(e) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and
proxy statements so mailed;
(f) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and annual, quarterly or
monthly reports which the Borrower shall have filed with the
Securities and Exchange Commission;
(g) if and when the Borrower or any member of the Controlled
Group (i) gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA) with respect
to any Plan which might constitute grounds for a termination of such
Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given
or required to be given to the PBGC; (ii) receives notice of complete
or partial withdrawal liability under Title IV of ERISA, a copy of
such notice; or (iii) receives notice from the PBGC under Title IV of
ERISA of an intent to terminate or appoint a trustee to administer any
Plan, a copy of such notice;
-26-
(h) promptly after the Borrower knows of the commencement
thereof, notice of any litigation, dispute or proceeding involving a
claim against the Borrower and/or any Subsidiary for $1,000,000 or
more in excess of amounts covered in full by applicable insurance;
(i) promptly after the Borrower knows of the commencement, notice
of any Forfeiture Proceeding; and
(j) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as
the Bank may reasonably request.
Section 5.02 Inspection of Property, Books and Records. The Borrower
will (i) keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries in conformity
with GAAP (and, in the case of Insurance Subsidiaries, statutory accounting
principles) shall be made of all dealings and transactions in relation to
its business and activities; and (ii) permit, and will cause each
Subsidiary to permit, representatives of the Bank at the Bank's expense
prior to the occurrence of an Event of Default and at the Borrower's
expense after the occurrence of an Event of Default to visit and inspect
any of their respective properties, to examine and make abstracts from any
of their respective books and records and to discuss their respective
affairs, finances and accounts with their respective officers, employees
and independent public accountants. The Borrower agrees to cooperate and
assist in such visits and inspections, in each case at such reasonable
times and as often as may reasonably be desired.
Section 5.03 Ratio of Funded Debt to Consolidated Total
Capitalization. The ratio of Funded Debt to Consolidated Total
Capitalization will not at any time exceed 50%.
Section 5.04 Ratio of Funded Debt to EBITDA. As of the end of each
Fiscal Quarter the ratio of Funded Debt as of the end of such Fiscal
Quarter to EBITDA for the period of 4 consecutive Fiscal Quarters then
ended shall be less than 3.10 to 1.0.
Section 5.05 Minimum Consolidated Tangible Net Worth. Consolidated
Tangible Net Worth will at no time be less than $59,500,000 plus 50% of the
cumulative Consolidated Net Income during any period after December 31,
2002 (taken as one accounting period), calculated quarterly at the end of
each Fiscal Quarter, but excluding from such calculations of Consolidated
Net Income for purposes of this Section, any Fiscal Quarter in which
Consolidated Net Income is negative.
Section 5.06 Restricted Payments. The Borrower will not declare or
make any Restricted Payment during any Fiscal Year; provided that: (1) the
Borrower may redeem shares of the Borrower's capital stock for the purpose
of satisfying the Borrower's obligations under its 401K plan and stock
options provided by the Borrower to its executive officers, in the ordinary
course of business and consistent with practices existing on the Closing
Date; (2) the total number of shares of the Borrower's capital stock
redeemed pursuant to the preceding subsection (1) shall not exceed five
hundred thousand in the aggregate in any Fiscal Year; and (3) the aggregate
amount expended by the Borrower in connection with the redemptions made
pursuant to the preceding subsection (1) shall not exceed $2,000,000 in the
aggregate in any Fiscal Year; and provided further that the Borrower may
make Restricted Payments on or in connection with the Series C Preferred
Stock, so long as, (a) the dividend rate payable on such Series C Preferred
Stock shall not exceed nine percent (9%) per annum, (b) the redemption
value of the Series C Preferred Stock shall not be greater than $2,000,000
and (c) no Event of Default shall be in existence or shall result from the
making of such Restricted Payment.
-27-
Section 5.07 Capital Expenditures. Capital Expenditures will not
exceed in the aggregate in any Fiscal Year the sum of $2,000,000; provided
that after giving effect to the incurrence of any Capital Expenditures
permitted by this Section, no Default shall have occurred and be
continuing.
Section 5.08 Loans or Advances. Neither the Borrower nor any of its
Subsidiaries shall make loans or advances to any Person except: (i)
advances made to insurance agents of the Borrower's Subsidiaries, with
respect to such agent's commissions, made in the ordinary course of
business and consistently with practices existing on the Closing Date; (ii)
deposits required by government agencies or public utilities; (iii) loans
and advances made by the Statutory Trust I to the Borrower in connection
with the 2002 Trust Preferred Transaction and Investments made by the
Borrower in the Statutory Trust I to the extent allowed in Section 5.09;
and (iv) loans and advances made by the Statutory Trust II to the Borrower
in connection with the 2003 Trust Preferred Transaction and Investments
made by the Borrower in the Statutory Trust II to the extent allowed in
Section 5.09; provided that after giving effect to the making of any loans,
advances or deposits permitted by clause (i) and (ii) of this Section, no
Default shall have occurred and be continuing.
Section 5.09 Investments. Neither the Borrower nor any of its
Subsidiaries shall make Investments in any Person except as permitted by
Section 5.08 and except Investments (i) in direct obligations of the United
States Government maturing within one year, (ii) in certificates of deposit
issued by a commercial bank whose credit is satisfactory to the Bank, (iii)
in commercial paper rated A-1 or the equivalent thereof by Standard &
Poor's Corporation or P-1 or the equivalent thereof by Xxxxx'x Investors
Service, Inc. and in either case maturing within 6 months after the date of
acquisition, (iv) in tender bonds the payment of the principal of and
interest on which is fully supported by a letter of credit issued by a
United States bank whose long-term certificates of deposit are rated at
least AA or the equivalent thereof by Standard & Poor's Corporation and AA
or the equivalent thereof by Xxxxx'x Investors Service, Inc., (v) with
respect to the 2002 Trust Preferred Transaction, Investments by the
Borrower in the Statutory Trust I, Investments by the Statutory Trust I in
the Borrower, the Borrower's guaranty of the Statutory Trust I's
obligations, and other Investments made by the Borrower and the Statutory
Trust I, (vi) with respect to the 2003 Trust Preferred Transaction,
Investments by the Borrower in the Statutory Trust II, Investments by the
Statutory Trust II in the Borrower, the Borrower's guaranty of the
Statutory Trust II's obligations, and other Investments made by the
Borrower and the Statutory Trust II, (vii) constituting Permitted
Acquisitions in an aggregate amount not exceeding $3,000,000; provided,
however, that this Section 5.09 shall not prohibit Investments made in the
ordinary course of business involving the investment portfolio of any
Insurance Subsidiary.
-28-
Section 5.10 Negative Pledge. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal
amount not exceeding $25,000,000;
(b) any Lien existing on any specific fixed asset of any
corporation at the time such corporation becomes a Consolidated
Subsidiary and not created in contemplation of such event;
(c) any Lien on any specific fixed asset securing Debt incurred
or assumed for the purpose of financing all or any part of the cost of
acquiring or constructing such asset, provided that such Lien attaches
to such asset concurrently with or within 18 months after the
acquisition or completion of construction thereof;
(d) any Lien on any specific fixed asset of any corporation
existing at the time such corporation is merged or consolidated with
or into the Borrower or a Consolidated Subsidiary and not created in
contemplation of such event;
(e) any Lien existing on any specific fixed asset prior to the
acquisition thereof by the Borrower or a Consolidated Subsidiary and
not created in contemplation of such acquisition;
(f) any Lien arising out of the refinancing, extension, renewal
or refunding of any Debt secured by any Lien permitted by any of the
foregoing paragraphs of this Section, provided that (i) such Debt is
not secured by any additional assets, and (ii) the amount of such Debt
secured by any such Lien is not increased;
(g) Liens incidental to the conduct of its business or the
ownership of its assets which (i) do not secure Debt and (ii) do not
in the aggregate materially detract from the value of its assets or
materially impair the use thereof in the operation of its business;
(h) any Lien on Margin Stock;
(i) Debt owing to the Borrower or another Subsidiary;
(j) Liens created under the Pledge Agreement and the other Loan
Documents; and
(k) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt (other than indebtedness represented by the
Note) in an aggregate principal amount at any time outstanding not to
exceed $100,000.
Section 5.11 Maintenance of Existence. The Borrower shall, and shall
cause each Subsidiary to (a) maintain its corporate existence and carry on
its business in substantially the same manner and in substantially the same
fields as such business is now carried on and maintained; and (b) preserve,
renew and keep in full force and effect their respective rights,
privileges, licenses (including, without limitation, insurance licenses)
and franchises necessary or desirable in the normal conduct of business;
provided that the Borrower may dissolve or cause the dissolution of the
Statutory Trust I after the redemption of all of the Statutory Trust I's
Capital Stock and the Borrower may dissolve or cause the dissolution of the
Statutory Trust II after the redemption of all of the Statutory Trust II's
Capital Stock.
-29-
Section 5.12 Dissolution. Neither the Borrower nor any of its
Subsidiaries shall suffer or permit dissolution or liquidation either in
whole or in part or redeem or retire any shares of its own stock or that of
any Subsidiary, except through corporate reorganization to the extent
permitted by Section 5.13 or as permitted in Section 5.11.
Section 5.13 Consolidations, Mergers and Sales of Assets.
-------------------------------------------
(a) The Borrower will not, nor will it permit any Subsidiary to,
consolidate or merge with or into any other Person, provided that: (i)
the Borrower may merge with another Person if (x) such Person was
organized under the laws of the United States of America or one of its
states, (y) the Borrower is the corporation surviving such merger and
(z) immediately after giving effect to such merger, no Default shall
have occurred and be continuing; and (ii) Subsidiaries of the Borrower
may merge with one another.
(b) The Borrower will not, and will not permit any Subsidiary to,
sell, lease, transfer, or otherwise dispose of in any one transaction
or series of transactions (excluding sales in the ordinary course of
business of investment securities that are part of a Subsidiary's
investment portfolio) any assets, if the Book Value of such assets
when aggregated with the Book Value of all assets sold, leased,
transferred or otherwise disposed of after the Closing Date exceeds
10% of Consolidated Total Assets of the Borrower and its Consolidated
Subsidiaries as of the last day of the Fiscal Quarter immediately
preceding the date of such sale, lease, transfer or other disposition
without the prior written consent of the Bank (which consent shall not
be unreasonably withheld).
Section 5.14 Use of Proceeds. No portion of the proceeds of the Loan
will be used by the Borrower or any Subsidiary (i) in connection with any
tender offer for, or other acquisition of, stock of any corporation with a
view toward obtaining control of such other corporation (other than any
Permitted Acquisition), (ii) directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of purchasing or carrying any
Margin Stock, or (iii) for any purpose in violation of any applicable law
or regulation.
Section 5.15 Compliance with Laws; Payment of Taxes. The Borrower
will, and will cause each of its Subsidiaries and each member of the
Controlled Group to, comply with applicable laws (including but not limited
to ERISA), regulations and similar requirements of governmental authorities
(including but not limited to PBGC), except where the necessity of such
compliance is being contested in good faith through appropriate proceedings
diligently pursued. The Borrower will, and will cause each of its
Subsidiaries to, pay promptly when due all taxes, assessments, governmental
charges, claims for labor, supplies, rent and other obligations which, if
unpaid, might become a lien against the property of the Borrower or any
Subsidiary, except liabilities being contested in good faith by appropriate
proceedings diligently pursued and against which, if requested by the Bank,
the Borrower shall have set up reserves in accordance with GAAP.
-30-
Section 5.16 Insurance. The Borrower will maintain, and will cause
each of its Subsidiaries to maintain (either in the name of the Borrower or
in such Subsidiary's own name), with financially sound and reputable
insurance companies, insurance on all its Property in at least such amounts
and against at least such risks as are usually insured against in the same
general area by companies of established repute engaged in the same or
similar business.
Section 5.17 Change in Fiscal Year. The Borrower will not change its
Fiscal Year without the consent of the Bank.
Section 5.18 Maintenance of Property. The Borrower shall, and shall
cause each Subsidiary to, maintain all of its properties and assets in good
condition, repair and working order, ordinary wear and tear excepted.
Section 5.19 Environmental Notices. The Borrower shall furnish to the
Bank prompt written notice of all material Environmental Liabilities,
pending, threatened or anticipated Environmental Proceedings, Environmental
Notices, Environmental Judgments and Orders, and Environmental Releases at,
on, in, under or in any way affecting the Properties or any adjacent
property, and all facts, events, or conditions that could reasonably be
expected to lead to any of the foregoing.
Section 5.20 Environmental Matters. The Borrower and its Subsidiaries
will not, and will not permit any Third Party to, use, produce,
manufacture, process, treat, recycle, generate, store, dispose of, manage
at, or otherwise handle or ship or transport to or from the Properties any
Hazardous Materials except for Hazardous Materials such as cleaning
solvents, pesticides and other similar materials used, produced,
manufactured, processed, treated, recycled, generated, stored, disposed,
managed or otherwise handled in minimal amounts in the ordinary course of
business in compliance with all applicable Environmental Requirements.
Section 5.21 Environmental Release. The Borrower agrees that upon the
occurrence of a material Environmental Release at or on any of the
Properties it will act immediately to investigate the extent of, and to
take appropriate remedial action to eliminate, such Environmental Release,
whether or not ordered or otherwise directed to do so by any Environmental
Authority.
Section 5.22 Additional Covenants, Etc. In the event that at any time
this Agreement is in effect or the Note remains unpaid the Borrower shall
enter into any agreement, guarantee, indenture or other instrument
governing, relating to, providing for commitments to advance, guaranteeing,
providing for security interests or liens to secure, or otherwise affording
any credit support or credit enhancement for, any Financing or to amend any
terms and conditions applicable to any Financing, which agreement,
guarantee, indenture or other instrument includes covenants, warranties,
representations, defaults or events of default (or any other type of
restriction which would have the practical effect of any of the foregoing,
including, without limitation, any "put" or mandatory prepayment of such
debt) or other terms or conditions or provides for security interests,
liens or guarantees, credit support or credit enhancement (whether provided
by the Borrower or any other Person) not substantially as, or in addition
to those, provided in this Agreement or any other Loan Document, or more
favorable to the lender or other counterparty thereunder than those
provided in this Agreement or any other Loan Document, the Borrower shall
promptly so notify the Bank. Thereupon, if the Bank shall request by
written notice to the Borrower, the Borrower and the Bank shall enter into
an amendment to this Agreement and if requested by the Bank, the Borrower
shall cause any Person providing such other guarantees, credit support or
credit enhancement to deliver such documentation as the Bank may reasonably
request, all providing for substantially the same such covenants,
warranties, representations, defaults or events of default, security
interests, liens or other guarantees, credit support or credit enhancement
(in which the Bank shall participate on a pari passu basis with such other
lender), or other terms or conditions as those provided for in such
agreement, guarantee, indenture or other instrument, to the extent required
and as may be selected by the Bank, such amendment and other documentation
to remain in effect, unless otherwise specified in writing by the Bank, for
the entire duration of the stated term to maturity of such Financing (to
and including the date to which the same may be extended at the Borrower's
option), notwithstanding that such Financing might be earlier terminated by
prepayment, refinancing, acceleration or otherwise, provided that if any
such agreement, guarantee, indenture or other instrument shall be modified,
supplemented, amended or restated so as to modify, amend or eliminate from
such agreement, guarantee, indenture or other instrument any such covenant,
warranty, representation, default or event of default, security interest,
lien, or other credit support or enhancement or other term or condition so
made a part of this Agreement, then unless required by the Bank pursuant to
this Section, such modification, supplement or amendment shall not operate
to modify, amend or eliminate such covenant, warranty, representation,
default or event of default, security interest, lien or other credit
support or enhancement or other term or condition as so made a part of this
Agreement.
-31-
Section 5.23 Transactions with Affiliates. Neither the Borrower nor
any of its Subsidiaries shall enter into, or be a party to, any transaction
with any Affiliate of the Borrower or such Subsidiary (which Affiliate is
not the Borrower or a Subsidiary), except as permitted by law and in the
ordinary course of business and pursuant to reasonable terms, and are no
less favorable to the Borrower or such Subsidiary than would be obtained in
a comparable arm's length transaction with a Person which is not an
Affiliate.
Section 5.24 Risk-Based Capital Ratio. The Borrower shall maintain, or
cause to be maintained, at all times the Adjusted Capital for the Insurance
Subsidiaries on a consolidated basis in an amount equal to or greater than
200% of the Company Action Level for the Insurance Subsidiaries on a
consolidated basis.
Section 5.25 Maintenance of Statutory Surplus. The Borrower shall
maintain or cause to be maintained at all times the Statutory Surplus of
each of its Insurance Subsidiaries in an amount equal to or greater than
the sum of (i) the Statutory Surplus required under applicable law for such
Insurance Subsidiary, plus (ii) $1,000,000.
Section 5.26 Section 5.26 Minimum Investment in NAIC Rated Bonds;
Maximum Investment in Investment Properties. The Borrower will not at any
time permit: (i) the Aggregate Value of NAIC Rated Bonds to be less than
(A) 50% of the Aggregate Value of Total Investments during the period from
May 2, 2005 to and including December 31, 2005, and (B) 70% of the
Aggregate Value of Total Investments at all other times and any time after
December 31, 2005; or (ii) the aggregate value of Investment Properties to
exceed 5% of the Aggregate Value of Total Investments. Prior to January 1,
2006, neither the Borrower nor any Consolidated Subsidiary shall purchase
or make any Investments that are not bonds rated "2" or better by NAIC.
-32-
Section 5.27 Senior Indebtedness under Indenture. The Borrower hereby
covenants that the obligations of the Borrower to the Bank under this
Agreement shall at all times constitute "Senior Indebtedness" as that term
is defined in each of the 2002 Indenture and the 2003 Indenture.
Section 5.28 Other Obligations of Borrower. The Borrower hereby agrees
that the Borrower shall be and at all times shall remain the obligated
party under the Debentures and shall be the party responsible for the
payment of all obligations under the Debentures.
ARTICLE VI
DEFAULTS
Section 6.01 Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of the
Loan or shall fail to pay any interest on the Loan within 5 Business
Days after such interest shall become due, or shall fail to pay any
fee or other amount payable hereunder within 5 Business Days after
such fee or other amount becomes due; or
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.02(ii), 5.03 to 5.14, inclusive, Section 5.17,
Section 5.22 or Sections 5.24 to 5.28, inclusive; or
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained or incorporated by reference in this Agreement
(other than those covered by clause (a) or (b) above or clause (n)
below) for thirty days after the earlier of (i) the first day on which
the Borrower has knowledge of such failure or (ii) written notice
thereof has been given to the Borrower by the Bank; or
(d) any representation, warranty, certification or statement made
or deemed made by the Borrower in Article IV of this Agreement, the
Loan Documents or in any certificate, financial statement or other
document delivered pursuant to this Agreement shall prove to have been
incorrect or misleading in any material respect when made (or deemed
made); or
(e) the Borrower or any Subsidiary shall fail to make any payment
in respect of Debt outstanding in an aggregate amount equal to or in
excess of $1,000,000 (other than the Note) when due or within any
applicable grace period; or
-33-
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt outstanding in an aggregate
amount equal to or in excess of $1,000,000 of the Borrower or any
Subsidiary or the mandatory prepayment or purchase of such Debt by the
Borrower (or its designee) or such Subsidiary (or its designee) prior
to the scheduled maturity thereof, or enables the holders of such Debt
or any Person acting on such holders' behalf to accelerate the
maturity thereof or require the mandatory prepayment or purchase
thereof prior to the scheduled maturity thereof, without regard to
whether such holders or other Person shall have exercised or waived
their right to do so; or
(g) the Borrower or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment
for the benefit of creditors, or shall fail generally, or shall admit
in writing its inability, to pay its debts as they become due, or
shall take any corporate action to authorize any of the foregoing; or
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an order
for relief shall be entered against the Borrower or any Subsidiary
under the federal bankruptcy laws as now or hereafter in effect; or
(i) the Borrower or any member of the Controlled Group shall fail
to pay when due any material amount which it shall have become liable
to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of
intent to terminate a Plan or Plans shall be filed under Title IV of
ERISA by the Borrower, any member of the Controlled Group, any plan
administrator or any combination of the foregoing and such filing
could reasonably be expected to have or cause a Material Adverse
Effect; or the PBGC shall institute proceedings under Title IV of
ERISA to terminate or to cause a trustee to be appointed to administer
any such Plan or Plans or a proceeding shall be instituted by a
fiduciary of any such Plan or Plans to enforce Section 515 or
4219(c)(5) of ERISA and such proceeding shall not have been dismissed
within 30 days thereafter; or a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree adjudicating that
any such Plan or Plans must be terminated; or the Borrower or any
other member of the Controlled Group shall enter into, contribute or
be obligated to contribute to, terminate or incur any withdrawal
liability with respect to, a Multiemployer Plan; or
(j) one or more judgments or orders for the payment of money in
an aggregate amount in excess of $500,000 shall be rendered against
the Borrower or any Subsidiary and such judgment or order shall
continue unsatisfied and unstayed for a period of 30 days; or
-34-
(k) a federal tax lien shall be filed against the Borrower under
Section 6323 of the Code or a lien of the PBGC shall be filed against
the Borrower or any Subsidiary under Section 4068 of ERISA and in
either case such lien shall remain undischarged for a period of 25
days after the date of filing; or
(l) (i) any Person or two or more Persons (other than J. Xxxx
Xxxxxxxx and members of his family) acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act
of 1934) of 20% or more of the outstanding shares of the voting stock
of the Borrower; or (ii) as of any date a majority of the Board of
Directors of the Borrower consists of individuals who were not either
(A) directors of the Borrower as of the corresponding date of the
previous year, (B) selected or nominated to become directors by the
Board of Directors of the Borrower of which a majority consisted of
individuals described in clause (A), or (C) selected or nominated to
become directors by the Board of Directors of the Borrower of which a
majority consisted of individuals described in clause (A) and
individuals described in clause (B); or
(m) the occurrence of any event, act or condition which the Bank
determines either does cause or has a reasonable probability of
causing a Material Adverse Effect and failure by the Borrower to cure
the same within 60 days following notice from the Bank to the Borrower
identifying such event, act or condition; or
(n) the Borrower shall fail to observe or perform any obligation
under the Pledge Agreement or the Bank shall cease to have a first
priority perfected security interest in the Collateral (as defined in
the Pledge Agreement); or
(o)
Georgia Casualty & Surety Company, Bankers Fidelity Life
Insurance Company, American Southern Insurance Company or any
Subsidiary of American Southern Insurance Company shall fail to
maintain an AM Best rating of "B+" or better; or
(p) the Borrower shall at any time or times and for any reason
cease to own (either directly or indirectly through a Wholly Owned
Subsidiary) at least 80% of the Capital Stock and other ownership
interests of each of American Southern Insurance Company,
Georgia
Casualty & Surety Company, Bankers Fidelity Life Insurance Company and
Associated Casualty Insurance Company; or
(q) either (i) any Forfeiture Proceeding shall have been
commenced or the Borrower shall have given the Bank written notice of
the commencement or threatened commencement of any Forfeiture
Proceeding as provided in Section 5.01(i); or (ii) the Bank has a good
faith basis to believe that a Forfeiture Proceeding has been
threatened or commenced;
then, and in every such event, the Bank may (i) terminate the
Commitment and it shall thereupon terminate, and (ii) by notice to the
Borrower declare the Note (together with accrued interest thereon) and all
other amounts payable hereunder and under the other Loan Documents to be,
and the Note (together will all accrued interest thereon) and all other
amounts payable hereunder and under the other Loan Documents shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; provided that if any Event of Default specified in clause (g) or
(h) above occurs with respect to the Borrower or any Subsidiary, without
any notice to the Borrower or any other act by the Bank, the Commitment
shall thereupon automatically terminate and the Note (together with accrued
interest thereon) and all other amounts payable hereunder and under the
other Loan Documents shall automatically become immediately due and payable
without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower. Notwithstanding the foregoing, the
Bank shall have available to it all other remedies at law or equity.
-36-
ARTICLE VII
CHANGE IN CIRCUMSTANCES; COMPENSATION
Section 7.01 Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period:
(a) the Bank determines that deposits in Dollars (in the
applicable amounts) are not being offered in the relevant market for
such Interest Period, or
(b) the Bank determines that the London Interbank Offered Rate as
determined by the Bank will not adequately and fairly reflect the cost
to the Bank of funding any Euro-Dollar Loan for such Interest Period,
the Bank shall forthwith give notice thereof to the Borrower,
whereupon until the Bank notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, the obligations of the
Bank to make the Euro-Dollar Loan specified in such notice shall be
suspended and such Loan shall instead be continued as a Base Rate
Loan. Unless the Borrower notifies the Bank at least 2 Domestic
Business Days before the date of any Euro-Dollar Loan for which a
Notice of Continuation or Conversion has previously been given that it
elects not to borrow on such date, such Loan shall instead be
continued as a Base Rate Loan.
Section 7.02 Illegality. If, after the date hereof, the adoption of
any applicable law, rule or regulation, or any change in any existing or
future law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof
(any such authority, bank or agency being referred to as an "Authority" and
any such event being referred to as a "Change of Law"), or compliance by
the Bank (or its Lending Office) with any request or directive (whether or
not having the force of law) of any Authority shall make it unlawful or
impossible for the Bank (or its Lending Office) to maintain or fund the
Euro-Dollar Loans and the Bank shall so notify the Borrower, whereupon
until the Bank notifies the Borrower that the circumstances giving rise to
such suspension no longer exist, the obligation of the Bank to maintain
Euro-Dollar Loans shall be suspended. Before giving any notice to the
Borrower pursuant to this Section, the Bank shall designate a different
Lending Office if such designation will avoid the need for giving such
notice and will not, in the judgment of the Bank, be otherwise
disadvantageous to the Bank. If the Bank shall determine that it may not
lawfully continue to maintain and fund any outstanding Euro-Dollar Loans to
maturity and shall so specify in such notice, the Borrower shall
immediately prepay in full the then outstanding principal amount of each
Euro-Dollar Loan, together with accrued interest thereon and any amount due
the Bank pursuant to Section 7.05(a). Concurrently with prepaying each such
Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from the Bank, and the Bank shall make such a Base Rate
Loan.
-36-
Section 7.03 Increased Cost and Reduced Return.
(a) If after the date hereof, a Change of Law or compliance by
the Bank (or its Lending Office) with any request or directive
(whether or not having the force of law) of any Authority:
(i) shall subject the Bank (or its Lending Office) to any
tax, duty or other charge with respect to Euro-Dollar Loans, the
Note or its obligation to maintain Euro-Dollar Loans, or shall
change the basis of taxation of payments to the Bank (or its
Lending Office) of the principal of or interest on Euro-Dollar
Loans or any other amounts due under this Agreement in respect of
Euro-Dollar Loans or its obligation to make Euro-Dollar Loans
(except for changes in the rate of tax on the overall net income
of the Bank or its Lending Office imposed by the jurisdiction in
which the Bank's principal executive office or Lending Office is
located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding with
respect to any Euro-Dollar Loan any such requirement included in
an applicable Euro-Dollar Reserve Percentage) against assets of,
deposits with or for the account of, or credit extended by, the
Bank (or its Lending Office); or
(iii) shall impose on the Bank (or its Lending Office) or
the London interbank market any other condition affecting
Euro-Dollar Loans, the Note or its obligation to maintain
Euro-Dollar Loans;
and the result of any of the foregoing is to increase the cost to the
Bank (or its Lending Office) of maintaining any Euro-Dollar Loan, or
to reduce the amount of any sum received or receivable by the Bank (or
its Lending Office) under this Agreement or under the Note with
respect thereto, by an amount deemed by the Bank to be material, then,
within 15 days after demand by the Bank, the Borrower shall pay to the
Bank such additional amount or amounts as will compensate the Bank for
such increased cost or reduction which accrued within 90 days
immediately prior to such notice.
(b) If the Bank shall have determined that after the date hereof
the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any existing or future law, rule or
regulation, or any change in the interpretation or administration
thereof, or compliance by the Bank (or its Lending Office) with any
request or directive regarding capital adequacy (whether or not having
the force of law) of any Authority, has or would have the effect of
reducing the rate of return on the Bank's capital as a consequence of
its obligations hereunder to a level below that which the Bank could
have achieved but for such adoption, change or compliance (taking into
consideration the Bank's policies with respect to capital adequacy) by
an amount deemed by the Bank to be material, then from time to time,
within 15 days after demand by the Bank, the Borrower shall pay to the
Bank such additional amount or amounts as will compensate the Bank for
such reduction which accrued or occurred within 90 days immediately
prior to such notice.
-37-
(c) The Bank will promptly notify the Borrower of any event of
which it has knowledge, occurring after the date hereof, which will
entitle the Bank to compensation pursuant to this Section and will
designate a different Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not,
in the judgment of the Bank, be otherwise disadvantageous to the Bank.
A certificate of the Bank claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. In
determining such amount, the Bank may use any reasonable averaging and
attribution methods.
(d) The provisions of this Section 7.03 shall be applicable with
respect to any Participant, Assignee or other Transferee, and any
calculations required by such provisions shall be made based upon the
circumstances of such Participant, Assignee or other Transferee.
Section 7.04 Base Rate Loans Substituted for Affected Euro-Dollar
Loans. If (i) the obligation of the Bank to make or maintain Euro-Dollar
Loans has been suspended pursuant to Section 7.02 or (ii) any Bank has
demanded compensation under Section 7.03, and the Borrower shall, by at
least 5 Euro-Dollar Business Days' prior notice to the Bank, have elected
that the provisions of this Section shall apply to the Bank, then, unless
and until the Bank notifies the Borrower that the circumstances giving rise
to such suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by the Bank as
Euro-Dollar Loans shall be made instead as Base Rate Loans, and
(b) after each Euro-Dollar Loan has been repaid, all payments of
principal which would otherwise be applied to repay Euro-Dollar Loans
shall be applied to repay Base Rate Loans instead.
In the event that the Borrower shall elect that the provisions of this
Section shall apply to the Bank, the Borrower shall remain liable for, and
shall pay to the Bank as provided herein, all amounts due the Bank under
Section 7.03 in respect of the period preceding the date of conversion of
the Loans resulting from the Borrower's election.
-38-
Section 7.05 Compensation. Upon the request of the Bank, delivered to
the Borrower, the Borrower shall pay to the Bank such amount or amounts as
shall compensate the Bank for any actual loss, cost or expense incurred by
the Bank as a result of:
(a) any payment or prepayment (pursuant to Section 2.05, Section
2.06, Section 7.02 or otherwise) of a Euro-Dollar Loan on a date other
than the last day of an Interest Period for such Euro-Dollar Loan;
(b) any failure by the Borrower to prepay a Euro-Dollar Loan on
the date for such prepayment specified in the relevant notice of
prepayment hereunder; or
(c) any failure by the Borrower to borrow a Euro-Dollar Loan on
the date such Euro-Dollar Loan is a part specified in the applicable
Notice of Continuation or Conversion delivered pursuant to Section
2.02;
such compensation to include, without limitation, an amount equal to the
excess, if any, of (x) the amount of interest which would have accrued on
the amount so paid or prepaid or not prepaid or borrowed for the period
from the date of such payment, prepayment or failure to prepay or borrow to
the last day of the then current Interest Period for such Euro-Dollar Loan
(or, in the case of a failure to prepay or borrow, the Interest Period for
such Euro-Dollar Loan which would have commenced on the date of such
failure to prepay or borrow) at the applicable rate of interest for such
Euro-Dollar Loan provided for herein (excluding, however, the Applicable
Margin) over (y) the amount of interest (as reasonably determined by the
Bank) the Bank would have paid on deposits in Dollars of comparable amounts
having terms comparable to such period placed with it by leading banks in
the London interbank market (if such Loan is a Euro-Dollar Loan).
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile
transmission or similar writing) and shall be given to such party at its
address or telecopy number set forth on the signature pages hereof or such
other address or telecopy number as such party may hereafter specify for
the purpose by notice to each other party. Each such notice, request or
other communication shall be effective (i) if given by telecopier, when
such telecopy is transmitted to the telecopy number specified in this
Section and the telecopy machine used by the sender provides a written
confirmation that such telecopy has been so transmitted or receipt of such
telecopy transmission is otherwise confirmed, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, and (iii) if given by any other
means, when delivered at the address specified in this Section; provided
that notices to the Bank under Article II shall not be effective until
received.
Section 8.02 No Waivers. No failure or delay by the Bank in exercising
any right, power or privilege hereunder or under the Note or other Loan
Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
-39-
Section 8.03 Expenses; Documentary Taxes; Indemnification; Increased
Cost and Reduced Return.
(a) The Borrower shall pay (i) all out-of-pocket expenses of the
Bank, including reasonable fees and disbursements of counsel for the
Bank actually incurred, in connection with the preparation of this
Agreement and the other Loan Documents, any waiver or consent
hereunder or thereunder or any amendment hereof or thereof or any
Default or alleged Default hereunder or thereunder and (ii) if a
Default occurs, all out-of-pocket expenses incurred by the Bank,
including reasonable fees and disbursements of counsel actually
incurred, in connection with such Default and collection and other
enforcement proceedings resulting therefrom, including out-of-pocket
expenses incurred in enforcing this Agreement and the other Loan
Documents.
(b) The Borrower shall indemnify the Bank against any transfer
taxes, documentary taxes, assessments or charges made by any Authority
by reason of the execution and delivery of this Agreement or the other
Loan Documents.
(c) The Borrower shall indemnify the Bank and each Affiliate
thereof and their respective directors, officers, employees and agents
from, and hold each of them harmless against, any and all losses,
liabilities, claims or damages to which any of them may become
subject, insofar as such losses, liabilities, claims or damages arise
out of or result from any actual or proposed use by the Borrower of
the proceeds of any extension of credit by the Bank hereunder or
breach by the Borrower of this Agreement or any other Loan Document or
from investigation, litigation (including, without limitation, any
actions taken by the Bank to enforce this Agreement or any of the
other Loan Documents) or other proceeding (including, without
limitation, any threatened investigation or proceeding) relating to
the foregoing, and the Borrower shall reimburse the Bank, and each
Affiliate thereof and their respective directors, officers, employees
and agents, upon demand for any expenses (including, without
limitation, legal fees) incurred in connection with any such
investigation or proceeding; but excluding any such losses,
liabilities, claims, damages or expenses incurred by reason of the
gross negligence or willful misconduct of the Person to be
indemnified.
Section 8.04 CONSEQUENTIAL DAMAGES. THE BANK SHALL NOT BE RESPONSIBLE
OR LIABLE TO THE BORROWER OR ANY OTHER PERSON OR ENTITY FOR ANY PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
Section 8.05 Setoffs.
(a) The Borrower hereby grants to the Bank, as security for the
full and punctual payment and performance of the obligations of the
Borrower under this Agreement, a continuing lien on and security
interest in all deposits and other sums credited by or due from the
Bank to the Borrower or subject to withdrawal by the Borrower; and
regardless of the adequacy of any collateral or other means of
obtaining repayment of such obligations, the Bank may at any time upon
or after the occurrence of any Event of Default, and without notice to
the Borrower, set off the whole or any portion or portions of any or
all such deposits and other sums against such obligations, whether or
not any other Person or Persons could also withdraw money therefrom.
-40-
(b) The Borrower agrees, to the fullest extent it may effectively
do so under applicable law, that any holder of a participation in the
Note may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the amount of
such participation.
Section 8.06 Amendments and Waivers. Any provision of this Agreement,
the Note or any other Loan Document may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by the Borrower
and the Bank.
Section 8.07 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns; provided that the Borrower may not assign or
otherwise transfer any of its rights under this Agreement.
(b) The Bank may at any time sell to one or more Persons (each a
"Participant") participating interests in any Loan owing to the Bank,
any Note held by the Bank, any Commitment hereunder or any other
interest of the Bank hereunder. In the event of the sale by the Bank
of a participating interest to a Participant, the Bank's obligations
under this Agreement shall remain unchanged, the Bank shall remain
solely responsible for the performance thereof, the Bank shall remain
the holder of any such Note for all purposes under this Agreement, and
the Borrower shall continue to deal solely and directly with the Bank
in connection with the Bank's rights and obligations under this
Agreement. In no event shall the Bank be obligated to the Participant
to take or refrain from taking any action hereunder except that the
Bank may agree that it will not (except as provided below), without
the consent of the Participant, agree to (i) the change of any date
fixed for the payment of principal of or interest on the related Loan
or Loans, (ii) the change of the amount of any principal, interest or
fees due on any date fixed for the payment thereof with respect to the
Loan, (iii) the change of the principal of the Loan, (iv) any change
in the rate at which either interest is payable thereon or (if the
Participant is entitled to any part thereof) commitment fee is payable
hereunder from the rate at which the Participant is entitled to
receive interest or commitment fee (as the case may be) in respect of
such participation, (v) the release or substitution of all or any
substantial part of the collateral (if any) held as security for the
Loan, or (vi) the release of any guaranty given to support payment of
the Loan. If the Bank sells a participating interest in the Loan,
Note, Commitment or other interest under this Agreement, it shall
within 10 Domestic Business Days of such sale, provide the Borrower
with written notification stating that such sale has occurred and
identifying the Participant and the interest purchased by such
Participant.
-41-
(c) The Bank may at any time assign to one or more banks or
financial institutions (each an "Assignee") all, or a proportionate
part of all, of its rights and obligations under this Agreement, the
Note and the other Loan Documents, and such Assignee shall assume all
such rights and obligations, pursuant to an Assignment and Acceptance
in the form attached hereto as Exhibit F, executed by such Assignee
and the Bank (and, in the case of an Assignee that is not an Affiliate
of the Bank, by the Borrower); provided that (i) the amount of the
Loan or Commitment subject to such assignment (determined as of the
effective date of the assignment) shall be equal to or greater than
$1,000,000, and (ii) unless a Default shall have occurred and be
continuing, no interest may be sold by the Bank pursuant to this
paragraph (c) to any Assignee that is not then an Affiliate of the
Bank without the consent of the Borrower, which consent shall not be
unreasonably withheld. Upon (A) execution of the Assignment and
Acceptance by the Bank, such Assignee and (if applicable) the
Borrower, (B) delivery of an executed copy of the Assignment and
Acceptance to the Borrower, (C) payment by such Assignee to the Bank
of an amount equal to the purchase price agreed between the Bank and
such Assignee, such Assignee shall for all purposes be the party to
this Agreement and shall have pro rata share of all the rights and
obligations of the Bank under this Agreement to the same extent as if
it were an original party hereto with a Commitment as set forth in
such instrument of assumption, and the Bank shall be released from its
obligations hereunder to a corresponding extent, and no further
consent or action by the Borrower or the Bank shall be required. Upon
the consummation of any transfer to an Assignee pursuant to this
paragraph (c), the Bank and the Borrower shall make appropriate
arrangements so that, if required, a new Note is issued to each of
such Assignee and the Bank.
(d) Subject to the provisions of Section 8.08, the Borrower
authorizes the Bank to disclose to any Participant, Assignee or other
transferee (each a "Transferee") and any prospective Transferee any
and all financial and other information in the Bank's possession
concerning the Borrower which has been delivered to the Bank by the
Borrower pursuant to this Agreement or which has been delivered to the
Bank by the Borrower in connection with the Bank's credit evaluation
prior to entering into this Agreement.
(e) Anything in this Section 8.07 to the contrary
notwithstanding, the Bank may assign and pledge all or any portion of
the Loan and/or obligations owing to it to any Federal Reserve Bank or
the United States Treasury as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System
and Operating Circular issued by such Federal Reserve Bank, provided
that any payment in respect of such assigned Loan and/or obligations
made by the Borrower to the assigning and/or pledging Bank in
accordance with the terms of this Agreement shall satisfy the
Borrower's obligations hereunder in respect of such assigned Loans
and/or obligations to the extent of such payment. No such assignment
shall release the assigning and/or pledging Bank from its obligations
hereunder.
Section 8.08 Confidentiality. The Bank agrees to exercise its best
efforts to keep any information delivered or made available by the Borrower
to it which is clearly indicated to be confidential information,
confidential from anyone other than persons employed or retained by such
Bank who are or are expected to become engaged in evaluating, approving,
structuring or administering the Loans; provided, however, that nothing
herein shall prevent the Bank from disclosing such information (i) upon the
order of any court or administrative agency, (ii) upon the request or
demand of any regulatory agency or authority having jurisdiction over the
Bank, (iii) which has been publicly disclosed, (iv) to the extent
reasonably required in connection with any litigation to which the Bank or
its respective Affiliates may be a party, (v) to the extent reasonably
required in connection with the exercise of any remedy hereunder, (vi) to
the Bank's legal counsel and independent auditors and (vii) to any actual
or proposed Participant, Assignee or other Transferee of all or part of its
rights hereunder which has agreed in writing to be bound by the provisions
of this Section 8.08; provided, further, that to the extent practicable
under the circumstances, prior to disclosing such information pursuant to
clause (i) or (ii) of this Section, the Bank will provide notice to the
Borrower of such disclosure and, if reasonably requested by the Borrower,
shall cooperate with any attempt by the Borrower to overturn or invalidate
any request for such information (provided that the Bank shall not be
required to cooperate with any such attempt if the Bank determines, in its
sole discretion, that it would be materially prejudicial to the Bank or its
interests to so cooperate).
-42-
Section 8.09 Survival of Certain Obligations. Section 8.03 and the
obligations of the Borrower thereunder, shall survive, and shall continue
to be enforceable notwithstanding, the termination of this Agreement and
the Commitment and the payment in full of the principal of and interest on
the Loan.
Section 8.10 Georgia Law. This Agreement and the Note shall be
construed in accordance with and governed by the law of the State of
Georgia.
Section 8.11 Severability. In case any one or more of the provisions
contained in this Agreement, the Note or any of the other Loan Documents
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein
and therein shall not in any way be affected or impaired thereby and shall
be enforced to the greatest extent permitted by law.
Section 8.12 Interest. In no event shall the amount of interest due or
payable hereunder or under the Note exceed the maximum rate of interest
allowed by applicable law, and in the event any such payment is
inadvertently made to the Bank by the Borrower or inadvertently received by
the Bank, then such excess sum shall be credited as a payment of principal,
unless the Borrower shall notify the Bank in writing that it elects to have
such excess sum returned forthwith. It is the express intent hereof that
the Borrower not pay and the Bank not receive, directly or indirectly in
any manner whatsoever, interest in excess of that which may legally be paid
by the Borrower under applicable law.
Section 8.13 Interpretation. No provision of this Agreement or any of
the other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or
judicial authority by reason of such party having or being deemed to have
structured or dictated such provision.
Section 8.14 Consent to Jurisdiction. The Borrower (a) submits to
personal jurisdiction in the State of Georgia, the courts thereof and the
United States District Courts sitting therein, for the enforcement of this
Agreement, the Note and the other Loan Documents, (b) waives any and all
personal rights under the law of any jurisdiction to object on any basis
(including, without limitation, inconvenience of forum) to jurisdiction or
venue within the State of Georgia for the purpose of litigation to enforce
this Agreement, the Note or the other Loan Documents, and (c) agrees that
service of process may be made upon it in the manner prescribed in Section
8.01 for the giving of notice to the Borrower. Nothing herein contained,
however, shall prevent the Bank from bringing any action or exercising any
rights against any security and against the Borrower personally, and
against any assets of the Borrower, within any other state or jurisdiction.
-43-
Section 8.15 Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
[The remainder of this page intentionally left blank]
-44-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, under seal, by their respective authorized officers as of
the day and year first above written.
ATTEST: ATLANTIC AMERICAN CORPORATION
/s/ Xxxxx X. Xxxx By:/s/Xxxx X. Sample, Jr. (SEAL)
--------------------------------- ------------------------------
Xxxxx X. Xxxx , Secretary Name: Xxxx X. Sample, Jr.
---------------------- -------------------------
Title: Senior Vice President &
[CORPORATE SEAL] ------------------------
Chief Financial Officer
------------------------
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Sample, Jr.,
Senior Vice President and
Chief Financial Officer
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Xxx Xxxxxxx (SEAL)
-------------------------------
Name: Xxx Xxxxxxx
--------------------------
Title: Senior Vice President
-------------------------
Lending Office
--------------
Wachovia Bank, National Association
000 00xx Xxxxxx, X.X.
Mail Code: GA 4568
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxx Xxxxxxx
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
-45-
SCHEDULE 4.05
-------------
LITIGATION
----------
Bankers Fidelity Life Insurance Company ("Bankers"), prior to October
2002, retained the services of an independent "lead card" marketing
organization based in Dallas, Texas. That organization has subsequently
been closed. In connection therewith, the Office of the Inspector General
served Bankers a subpoena. The subpoena requested documents related to the
Company's use of certain "lead cards" which the OIG believes violate
Section 1140 of the Social Security Act. To date, Bankers has met with OIG
attorneys who indicated that the matter could take as long as a year to
resolve. Bankers has not been sued, received any complaints related to such
"lead cards," or had any further conversations with OIG attorneys.
SCHEDULE 4.08A
EXISTING INSURANCE SUBSIDIARIES
Name of Subsidiary Jurisdiction of Incorporation
------------------------- --------------------------------
American Southern Insurance Company Kansas
American Safety Insurance Company Georgia
Association Casualty Insurance Company Texas
Bankers Fidelity Life Insurance Company Georgia
Georgia Casualty & Surety Company Georgia
SCHEDULE 4.08B
EXISTING SUBSIDIARIES WHICH
ARE NOT INSURANCE SUBSIDIARIES
Jurisdiction of
Incorporation or
Name of Subsidiary Organization
---------------------- -------------------------
Self-Insurance Administrators, Inc. Georgia
Association Risk Management
General Agency Inc. Texas
Atlantic American Statutory Trust I. Connecticut
Atlantic American Statutory Trust II Connecticut
The following companies are 100%
-----------------------------------------
owned by American Southern
--------------------------
Insurance Company:
-----------------
Premier Adjusting and Claim Services, Inc. Georgia
Automobile Safety Management, Inc. Delaware
Automated Systems of Georgia, Inc. Georgia
SCHEDULE 4.20
REDEEMABLE PREFERRED STOCK AND DEBT
EXISTING ON CLOSING DATE
Principal Amount
Holder Outstanding Interest Rate Maturity Date Amortization
------------ -------------------- ----------------- ----------------- ---------------
Privately held $18,042,000 Variable rate December 4, 2033 None
Privately held $23,196,000 Variable rate May 15, 2034 None
J. Xxxx Xxxxxxxx $13,400,000 of 9.00% Not None
and Family Series B Preferred redeemable(1)
Stock
Wachovia Bank, $10,250,000 Variable rate June 30, 2008
National
Association
1 Series B Preferred Stock is redeemable only by the Borrower.
EXHIBIT A
NOTE
$3,000,000 Atlanta, Georgia
February 28, 2006
For value received,
ATLANTIC AMERICAN CORPORATION, a Georgia
corporation (the "Borrower"), promises to pay to the order of WACHOVIA
BANK, NATIONAL ASSOCIATION (the "Bank"), for the account of its Lending
Office, the principal sum of Three Million and No/100 Dollars ($3,000,000),
or such lesser amount as shall equal the unpaid principal amount of the
Loan made by the Bank to the Borrower pursuant to the
Credit Agreement
referred to below, on the dates and in the amounts provided in the
Credit
Agreement. The Borrower promises to pay interest on the unpaid principal
amount of this Note on the dates and at the rate or rates provided for in
the
Credit Agreement. Interest on any overdue principal of and, to the
extent permitted by law, overdue interest on the principal amount hereof
shall bear interest at the Default Rate, as provided for in the
Credit
Agreement. All such payments of principal and interest shall be made in
lawful money of the United States in Federal or other immediately available
funds at the office of the Bank located at 000 00xx Xxxxxx, X.X. Xxxxxxx,
Xxxxxxx 00000, or such other address as may be specified from time to time
pursuant to the
Credit Agreement.
The Loan made by the Bank, the maturity thereof, the interest rates
from time to time applicable thereto and all repayments of the principal
thereof shall be recorded by the Bank and, prior to any transfer hereof,
endorsed by the Bank on the schedule attached hereto, or on a continuation
of such schedule attached to and made a part hereof; provided, that the
failure of the Bank to make, or any error of the Bank in making, any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the
Credit Agreement.
This Note is the Note referred to in the Credit Agreement dated as of
February 28, 2006 between the Borrower and the Bank (as the same may be
amended or modified from time to time, the "Credit Agreement"). Terms
defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the prepayment
and the repayment hereof and the acceleration of the maturity hereof.
The Borrower hereby waives presentment, demand, protest, notice of
demand, protest and nonpayment and any other notice required by law
relative hereto, except to the extent as otherwise may be expressly
provided for in the Credit Agreement.
The Borrower agrees, in the event that this Note or any portion hereof
is collected by law or through an attorney at law, to pay all reasonable
costs of collection, including, without limitation, reasonable attorneys'
fees.
A-1
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed under seal, by its duly authorized officer as of the day and year
first above written.
ATLANTIC AMERICAN CORPORATION
By: (SEAL)
------------------------------
Title:
------------------------
A-2
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
--------------------------------------------------------------------------------
Amount Amount of Type of Interest of Principal Maturity Notation
Date Loan(1) Rate Loan Repaid Date Made By
---- ------- ---- ---- ------ ---- -------
2 i.e., a Base Rate or Euro-Dollar Loan
X-0
X - 0
XXXXXXX X
[RESERVED]
B-1
EXHIBIT C
CLOSING CERTIFICATE
OF
ATLANTIC AMERICAN CORPORATION
Reference is made to the Credit Agreement (the "Credit Agreement")
dated as of February 28, 2006, between
Atlantic American Corporation (the
"Borrower") and Wachovia Bank, National Association (the "Bank").
Capitalized terms used herein have the meanings ascribed thereto in the
Credit Agreement.
Pursuant to Section 3.01(c) of the Credit Agreement,
___________________, the duly authorized ____________________ of the
Borrower, hereby certifies to the Bank that: (i) no Default has occurred
and is continuing on the date hereof; and (ii) the representations and
warranties of the Borrower contained in Article IV of the Credit Agreement
are true on and as of the date hereof.
Certified as of the ___ day of February, 2006.
ATLANTIC AMERICAN CORPORATION
By: (SEAL)
-----------------------------
Title:
-----------------------
C-1
EXHIBIT D
ATLANTIC AMERICAN CORPORATION
SECRETARY'S CERTIFICATE
-----------------------
The undersigned, _____________, _______ Secretary of Atlantic American
Corporation, a Georgia corporation (the "Borrower"), hereby certifies that
he has been duly elected, qualified and is acting in such capacity and
that, as such, he is familiar with the facts herein certified and is duly
authorized to certify the same, and hereby further certifies, in connection
with the Credit Agreement dated as of February 28, 2006 (the "Credit
Agreement") between the Borrower and Wachovia Bank, National Association
that:
1. Attached hereto as Exhibit A is a complete and correct copy of the
Certificate of Incorporation of the Borrower as in full force and effect on
the date hereof as certified by the Secretary of State of the State of
Georgia, the Borrower's state of incorporation.
2. Attached hereto as Exhibit B is a complete and correct copy of the
Bylaws of the Borrower as in full force and effect on the date hereof.
3. Attached hereto as Exhibit C is a complete and correct copy of the
resolutions duly adopted by the Board of Directors of the Borrower on
___________ __, 2006 approving, and authorizing the execution and delivery
of, the Credit Agreement, the Note (as such term is defined in the Credit
Agreement) and the other Loan Documents (as such term is defined in the
Credit Agreement) to which the Borrower is a party. Such resolutions have
not been repealed or amended and are in full force and effect, and no other
resolutions or consents have been adopted by the Board of Directors of the
Borrower in connection therewith.
4. ____________, who as ________________________ of the Borrower
signed the Credit Agreement, the Note and the other Loan Documents to which
the Borrower is a party, was duly elected, qualified and acting as such at
the time he signed the Credit Agreement, the Note and other Loan Documents
to which the Borrower is a party, and his signature appearing on the Credit
Agreement, the Note and the other Loan Documents to which the Borrower is a
party is his genuine signature.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the ___ day of February, 2006.
ATLANTIC AMERICAN CORPORATION
By: (SEAL)
-----------------------------
Title:
-----------------------
D-1
EXHIBIT E
FORM OF COMPLIANCE CERTIFICATE
------------------------------
To be provided by the Borrower prior to the Closing Date.
E-1
EXHIBIT F
ASSIGNMENT AND ACCEPTANCE
-------------------------
Dated ________________ __, ____
Reference is made to the Credit Agreement dated as of February 28,
2006 (together with all amendments and modifications thereto, the "Credit
Agreement") between Atlantic American Corporation, a Georgia corporation
(the "Borrower") and Wachovia Bank, National Association (the "Bank").
Terms defined in the Credit Agreement are used herein with the same
meaning.
Wachovia Bank, National Association (the "Assignor") and
____________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, without
recourse to the Assignor, and the Assignee hereby purchases and assumes
from the Assignor, a ______% interest in and to all of the Assignor's
rights and obligations under the Credit Agreement as of the Effective Date
(as defined below) (including, without limitation, a ______% interest
(which on the Effective Date hereof is $_______________) in the Assignor's
Commitment and a ______% interest (which on the Effective Date hereof is
$_______________) in the Loans owing to the Assignor and a ______% interest
in the Note held by the Assignor (which on the Effective Date hereof is
$------------------).
2. The Assignor (i) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement, any
other instrument or document furnished pursuant thereto or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of
the Credit Agreement, any other Loan Document or any other instrument or
document furnished pursuant thereto, other than that it is the legal and
beneficial owner of the interest being assigned by it hereunder, that such
interest is free and clear of any adverse claim and that as of the date
hereof the Commitment (without giving effect to assignments thereof which
have not yet become effective) is $_________________ and the aggregate
outstanding principal amount of the Loans owing to it (without giving
effect to assignments thereof which have not yet become effective) is
$_________________; (ii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or
the performance or observance by the Borrower of any of its obligations
under the Credit Agreement, any other Loan Document or any other instrument
or document furnished pursuant thereto; and (iii) attaches the Note
referred to in paragraph 1 above and requests that the Bank exchange such
Note as follows: [a new Note dated _______________, ____ in the principal
amount of $________________ payable to the order of the Assignee] [new
Notes as follows: a Note dated _________________, ____ in the principal
amount of $_______________ payable to the order of the Assignor and a Note
dated ______________, ____ in the principal amount of $______________
payable to the order of the Assignee].
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.04(a) thereof (or any more recent financial statements of the
Borrower delivered pursuant to Section 5.01(a) or (b) thereof) and such
other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and
Acceptance; (ii) agrees that it will, independently and without reliance
upon the Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iii) confirms that
it is a bank or financial institution; (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of
the Credit Agreement are required to be performed by it as an assignee of
the Bank; (v) specifies as its Lending Office (and address for notices) the
office set forth beneath its name on the signature pages hereof, (vi)
represents and warrants that the execution, delivery and performance of
this Assignment and Acceptance are within its corporate powers and have
been duly authorized by all necessary corporate action[, and (vii) attaches
the forms prescribed by the Internal Revenue Service of the United States
certifying as to the Assignee's status for purposes of determining
exemption from United States withholding taxes with respect to all payments
to be made to the Assignee under the Credit Agreement and the Note or such
other documents as are necessary to indicate that all such payments are
subject to such taxes at a rate reduced by an applicable tax treaty].(1)
4. The Effective Date for this Assignment and Acceptance shall be
_______________ (the "Effective Date"). [Following the execution of this
Assignment and Acceptance, it will be delivered to the Borrower for
execution by the Borrower](1).
5. [Upon such execution by the Borrower](2), [F]rom and after the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement
and, to the extent rights and obligations have been transferred to it by
this Assignment and Acceptance, have the rights and obligations of an
assignee of the Bank thereunder and (ii) the Assignor shall, to the extent
its rights and obligations have been transferred to the Assignee by this
Assignment and Acceptance, relinquish its rights (other than under Section
8.03 of the Credit Agreement) and be released from its obligations under
the Credit Agreement.
6. [Upon such execution by the Borrower](2), [F]rom and after the
Effective Date, the Borrower shall make all payments in respect of the
interest assigned hereby to the Assignee. The Assignor and Assignee shall
make all appropriate adjustments in payments for periods prior to such
acceptance by the Borrower directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of Georgia.
3 If the Assignee is organized under the laws of a jurisdiction outside the
United States.
4 If the Assignee is not an Affiliate of the Bank and a Default has not
occurred and is continuing..
F-2
WACHOVIA BANK, NATIONAL ASSOCIATION
By:
--------------------------------
Title:
--------------------------
[NAME OF ASSIGNEE]
By:
--------------------------------
Title:
--------------------------
Lending Office:
[Address]
ATLANTIC AMERICAN CORPORATION(1)
By:
--------------------------------
Title:
--------------------------
1 If the Assignee is not an Affiliate of the Bank and a Default has not
occurred and is continuing..
F-3
EXHIBIT G
FORM OF NOTICE OF CONTINUATION OR CONVERSION
--------------------------------------------
_____________________, 20____
Wachovia Bank, National Association
000 00xx Xxxxxx, X.X.
Mail Code: GA 4568
Xxxxxxx, Xxxxxxx 00000-0000
Re: Credit Agreement (the "Credit Agreement") dated as of February
28, 2006, between Atlantic American Corporation (the "Borrower")
and Wachovia Bank, National Association (the "Bank")
Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings attributable thereto in the Credit Agreement.
This Notice of Continuation or Conversion is delivered to you pursuant
to Section 2.02 of the Credit Agreement.
With respect to the [Base Rate Loan] [Euro-Dollar Loan] in the
aggregate amount of $___________ [which has an Interest Period ending on
_____________], the Borrower hereby requests that such loan be [converted
to a] [Base Rate Loan] [Euro-Dollar Loan] [continued as a] [Euro-Dollar
Loan] in the aggregate principal amount of $__________ to be made on such
date, and for interest to accrue thereon at the rate established by the
Credit Agreement for [Base Rate Loans] [Euro-Dollar Loans]. [The duration
of the Interest Period with respect thereto shall be [1 month] [2 months]
[3 months] [6 months]].
The Borrower has caused this Notice of Continuation or Conversion to
be executed and delivered by its duly authorized officer this ______ day of
____________, 20___.
ATLANTIC AMERICAN CORPORATION
By: _______________________(SEAL)
Title:_______________________
G-1
