AMENDED AND RESTATED CREDIT AGREEMENT
Exhibit
10.1
Execution
Copy
AMENDED AND
RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT
AGREEMENT (this “Agreement”) is entered into
as of May 23, 2008, by and between EMPLOYERS HOLDINGS, INC., a Nevada
corporation (“Borrower”), and XXXXX FARGO
BANK, NATIONAL ASSOCIATION (“Bank”).
RECITALS
WHEREAS, Borrower is indebted to Bank
pursuant to the terms and conditions of that certain Credit Agreement, dated as
of March 26, 2008 (as amended, modified or supplemented prior to the date
hereof, the “Existing Credit
Agreement”), by and between Borrower and Bank.
WHEREAS,
the Bank has
previously extended a credit facility to Borrower more particularly described in
the Existing Credit Agreement, including, but not limited to a line of
credit in the maximum principal amount of Fifty Million Dollars ($50,000,000.00)
(the “Existing Line of
Credit”), which is evidenced by that certain Revolving Line of Credit
Note, dated March 26, 2008, in the original principal amount of Fifty
Million Dollars ($50,000,000.00), as amended or modified from time to
time.
WHEREAS, Borrower has requested that
Bank provide the credit accommodations described below, the proceeds of which
shall repay in full Borrower’s outstanding revolving advances under and in
respect of the Existing Credit Agreement and the Existing Line of Credit, if
any, and for such other purposes as described below, and Bank has agreed to
provide such credit to Borrower on the terms and conditions contained
herein.
NOW, THEREFORE, for valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Bank and Borrower hereby agree that the Existing Credit Agreement is hereby
amended and restated in its entirety as follows:
ARTICLE
I
CREDIT
TERMS
SECTION
1.1. LINE OF CREDIT.
(a)
Line of
Credit. Subject to the terms and conditions of this Agreement,
Bank hereby agrees to make advances to Borrower from time to time up to and
including March 26, 2011, not to exceed at any time the aggregate principal
amount of (i) prior to May 1, 2009, One Hundred Fifty Million Dollars
($150,000,000.00) and (ii) from and after May 1, 2009, Fifty Million
Dollars ($50,000,000.00) (“Line of Credit”), the
proceeds of which shall be used to repay outstanding advances under the Existing
Line of Credit, if any, provide financing for Borrower’s acquisition of AmCOMP
Incorporated, and to finance Borrower’s working capital
requirements. Borrower’s obligation to repay advances under the Line
of Credit shall be evidenced by that certain Amended and Restated Revolving Line
of Credit Note, dated May 23, 2008, executed by
Borrower and payable to the order of
Bank (“Line of Credit
Note”), all terms of which are incorporated herein by this
reference.
(b)
Letter of Credit
Subfeature. As a subfeature under the Line of Credit, Bank
agrees from time to time during the term thereof to issue or cause an affiliate
to issue standby letters of credit for the account of Borrower (each, a “Letter of Credit” and
collectively, “Letters of
Credit”); provided however, that the aggregate undrawn amount of all
outstanding Letters of Credit shall not at any time exceed Five Million Dollars
($5,000,000.00). The form and substance of each Letter of Credit
shall be subject to approval by Bank, in its sole discretion. Each
Letter of Credit shall be issued for a term not to exceed three hundred sixty
(360) days, as designated by Borrower; provided however, that no Letter of
Credit shall have an expiration date subsequent to the maturity date of the Line
of Credit. The undrawn amount of all Letters of Credit shall be
reserved under the Line of Credit and shall not be available for borrowings
thereunder. Each Letter of Credit shall be subject to the additional
terms and conditions of the Letter of Credit agreements, applications and any
related documents required by Bank in connection with the issuance
thereof. Each drawing paid under a Letter of Credit shall be deemed
an advance under the Line of Credit and shall be repaid by Borrower in
accordance with the terms and conditions of this Agreement applicable to such
advances; provided however, that if advances under the Line of Credit are not
available, for any reason, at the time any drawing is paid, then Borrower shall
immediately pay to Bank the full amount drawn, together with interest thereon
from the date such drawing is paid to the date such amount is fully repaid by
Borrower, at the rate of interest applicable to advances under the Line of
Credit. In such event Borrower agrees that Bank, in its sole
discretion, may first debit the Collection Account (as defined below), and if
there are insufficient funds therein, may then debit any other deposit account
maintained by Borrower with Bank, for the amount of any such
drawing.
(c)
Borrowing and
Repayment. Borrower may from time to time during the term of
the Line of Credit borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions contained
herein or in the Line of Credit Note; provided however, that the total
outstanding borrowings under the Line of Credit shall not at any time exceed the
maximum principal amount available thereunder, as set forth above.
SECTION
1.2. INTEREST/FEES.
(a)
Interest. The
outstanding principal balance of each credit subject hereto shall bear interest
from the date such drawing is paid to the date such amount is fully repaid by
Borrower, at the rate of interest set forth in each promissory note or other
instrument or document executed in connection therewith.
(b)
Computation and
Payment. Interest shall be computed on the basis of a 360-day
year, actual days elapsed. Interest shall be payable at the times and
place set forth in each promissory note or other instrument or document required
hereby.
(c)
Unused Commitment
Fee. Borrower shall pay to Bank a fee equal to one-tenth
percent (0.10%) per annum (computed on the basis of a 360-day year, actual days
elapsed) on the average daily unused amount of the Line of Credit, which fee
shall be calculated on a quarterly
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basis by
Bank and shall be due and payable by Borrower in arrears within ten (10) days
after each billing is sent by Bank.
(d)
Letter of Credit
Fees. Borrower shall pay to Bank (i) fees upon the
issuance of each Letter of Credit equal to (A) prior to May 1, 2009,
seventy-five one hundredths of one percent (0.75%) per annum, and (B) from
and after May 1, 2009, thirty one hundredths of one percent (0.30%) per
annum (in each case, computed on the basis of a 360-day year, actual days
elapsed) of the face amount thereof, and (ii) fees upon the payment or
negotiation of each drawing under any Letter of Credit and fees upon the
occurrence of any other activity with respect to any Letter of Credit (including
without limitation, the transfer, amendment or cancellation of any Letter of
Credit) determined in accordance with Bank’s standard fees and charges then in
effect for such activity.
(e)
Commitment
Fee. Borrower shall pay to Bank a non-refundable commitment
fee for the Line of Credit equal to Three Hundred Seventy-Five Thousand Dollars
($375,000.00), which fee shall be due and payable in full on May 30,
2008.
SECTION
1.3. COLLECTION OF
PAYMENTS. Borrower authorizes Bank to collect all principal, interest
and fees due under each credit subject hereto by charging Borrower’s deposit
account number 4121458269 with Bank (the “Collection Account”), or any
other deposit account maintained by Borrower with Bank, for the full amount
thereof. Should there be insufficient funds in any such deposit
account to pay all such sums when due, the full amount of such deficiency shall
be immediately due and payable by Borrower.
SECTION
1.4. COLLATERAL.
As security for all indebtedness and
other obligations of Borrower to Bank pursuant to the Loan Documents, Borrower
hereby grants to Bank security interests of first priority in Borrower’s custody
account number 00000000 maintained with Xxxxx Fargo Bank, N.A. Institutional
Trust Services (“Custody
Account”), which Custody Account shall at all times have deposited to it
securities having an aggregate Collateral Value (as defined in that
certain Amended and Restated Security Agreement: Securities Account,
executed as of May 23, 2008, by Borrower) not less than the maximum
principal amount available to be advanced to Borrower under the Line of Credit,
as set forth in Section 1.1(a) hereof.
The foregoing shall be evidenced by
and subject to the terms of such security agreements, financing statements,
deeds or mortgages, control agreements and other documents as Bank shall
reasonably require, all in form and substance satisfactory to
Bank. Borrower shall pay to Bank immediately upon demand the full
amount of all charges, costs and expenses (to include fees paid to third parties
and all allocated costs of Bank personnel), expended or incurred by Bank in
connection with any of the foregoing security, including without limitation,
filing and recording fees and costs of appraisals, audits and title
insurance.
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ARTICLE
II
REPRESENTATIONS AND
WARRANTIES
Borrower makes the following
representations and warranties to Bank, which representations and warranties
shall survive the execution of this Agreement and shall continue in full force
and effect until the full and final payment, and satisfaction and discharge, of
all obligations of Borrower to Bank subject to this Agreement.
SECTION
2.1. LEGAL STATUS. Borrower
is a corporation, duly organized and existing and in good standing under the
laws of Nevada, and is qualified or licensed to do business (and is in good
standing as a foreign corporation, if applicable) in all jurisdictions in which
such qualification or licensing is required or in which the failure to so
qualify or to be so licensed could have a material adverse effect on
Borrower.
SECTION
2.2. AUTHORIZATION AND
VALIDITY. This Agreement and each promissory note, contract,
instrument and other document required hereby or at any time hereafter delivered
to Bank in connection herewith (collectively, the “Loan Documents”) have been
duly authorized, and upon their execution and delivery in accordance with the
provisions hereof will constitute legal, valid and binding agreements and
obligations of Borrower or the party which executes the same, enforceable in
accordance with their respective terms.
SECTION
2.3. NO VIOLATION. The
execution, delivery and performance by Borrower of each of the Loan Documents do
not violate any provision of any law or regulation (including, without
limitation, any insurance laws or regulations), or contravene any provision of
the Articles of Incorporation or By-Laws of Borrower, or result in any breach of
or default under any contract, obligation, indenture or other instrument to
which Borrower is a party or by which Borrower may be bound.
SECTION
2.4. LITIGATION. There are
no pending, or to the best of Borrower’s knowledge threatened, actions, claims,
investigations, suits or proceedings by or before any governmental authority,
arbitrator, court or administrative agency which could have a material adverse
effect on the financial condition or operation of Borrower other than those
disclosed by Borrower to Bank in writing prior to the date hereof.
SECTION
2.5. CORRECTNESS OF FINANCIAL
STATEMENT. The annual financial statement of Borrower dated December
31, 2007, and all interim financial statements delivered to Bank since said
date, true copies of which have been delivered by Borrower to Bank prior to the
date hereof, (a) are complete and correct and present fairly the financial
condition of Borrower, (b) disclose all liabilities of Borrower that are
required to be reflected or reserved against under generally accepted accounting
principles, whether liquidated or unliquidated, fixed or contingent, and (c)
have been prepared in accordance with generally accepted accounting principles
consistently applied. Since the dates of such financial statements
there has been no material adverse change in the financial condition of
Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or
otherwise encumbered any of its assets or properties except in favor of Bank or
as otherwise permitted by Bank in writing.
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SECTION
2.6. INCOME TAX
RETURNS. Borrower has no knowledge of any pending assessments or
adjustments of its income tax payable with respect to any year.
SECTION
2.7. NO
SUBORDINATION. There is no agreement, indenture, contract or
instrument to which Borrower is a party or by which Borrower may be bound that
requires the subordination in right of payment of any of Borrower’s obligations
subject to this Agreement to any other obligation of Borrower.
SECTION
2.8. PERMITS,
FRANCHISES. Borrower possesses, and will hereafter possess, all
permits, consents, approvals, franchises and licenses required and rights to all
trademarks, trade names, patents, and fictitious names, if any, necessary to
enable it to conduct the business in which it is now engaged in compliance with
applicable law.
SECTION
2.9. ERISA. Borrower is in
compliance in all material respects with all applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended or recodified from
time to time (“ERISA”);
Borrower has not violated any provision of any defined employee pension benefit
plan (as defined in ERISA) maintained or contributed to by Borrower (each, a
“Plan”); no Reportable
Event as defined in ERISA has occurred and is continuing with respect to any
Plan initiated by Borrower; Borrower has met its minimum funding requirements
under ERISA with respect to each Plan; and each Plan will be able to fulfill its
benefit obligations as they come due in accordance with the Plan documents and
under generally accepted accounting principles.
SECTION
2.10. OTHER
OBLIGATIONS. Borrower is not in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.
SECTION
2.11. ENVIRONMENTAL
MATTERS. Except as disclosed by Borrower to Bank in writing prior to
the date hereof, Borrower is in compliance in all material respects with all
applicable federal or state environmental, hazardous waste, health and safety
statutes, and any rules or regulations adopted pursuant thereto, which govern or
affect any of Borrower’s operations and/or properties, including without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the
Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic
Substances Control Act, as any of the same may be amended, modified or
supplemented from time to time. None of the operations of Borrower is
the subject of any federal or state investigation evaluating whether any
remedial action involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the
environment. Borrower has no material contingent liability in
connection with any release of any toxic or hazardous waste or substance into
the environment.
SECTION
2.12. On
May 15, 2008, the Nevada Commissioner of Insurance approved the increased limit
for a special dividend to Borrower from Employers Insurance Company of Nevada to
$275,000,000, which dividend has been distributed to Borrower prior to the date
hereof and the proceeds of which are not subject to any claim, right of set-off,
encumbrance or other limitation of any sort.
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ARTICLE
III
CONDITIONS
SECTION
3.1. CONDITIONS OF INITIAL EXTENSION
OF CREDIT. The obligation of Bank to extend any credit contemplated
by this Agreement is subject to the fulfillment to Bank’s satisfaction of all of
the following conditions:
(a)
Approval of Bank
Counsel. All legal matters incidental to the extension of
credit by Bank shall be satisfactory to Bank’s counsel.
(b)
Documentation. Bank
shall have received, in form and substance satisfactory to Bank, each of the
following, duly executed:
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(i)
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This
Agreement and each promissory note or other instrument or document
required hereby.
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(ii)
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Certificate
of Incumbency.
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(iii)
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Secretary’s
Certificate attaching board resolutions authorizing
transaction.
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(iv)
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Amended
and Restated Security Agreement: Securities Account.
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(v)
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Addendum
to Amended and Restated Security Agreement: Securities
Account.
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(vi)
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Securities
Account Control Agreement.
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(vii)
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Statement
of Purpose.
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(viii)
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Disbursement
Order.
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(ix)
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Institutional
Trust Services Account Set Up and Disclosures Custody Account Management
Information for Employers Holdings, Inc. Custody Account (to include an
amended authorization allowing internal Xxxxx Fargo Bank, N.A. disclosure
of custody account information).
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(x)
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Custody
Agreement For Non-ERISA Assets.
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(xi)
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Institutional
Trust Services Custody Fee Schedule for Employers Holdings,
Inc.
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(xii)
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Service
Agreement Trust Portfolio Reporting Service.
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(xiii)
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Authorized
Signers List of Employers Holdings, Inc.
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(xiv)
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Such
other documents as Bank may require under any other Section of this
Agreement.
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(c)
Legal
Opinion. Bank shall have received, in form and substance
satisfactory to Bank, an executed
favorable legal opinion of counsel to Borrower covering no violation of
applicable laws and regulations.
(d)
Financial
Condition. There shall have been no material adverse change,
as reasonably determined by Bank, in the financial condition or business of
Borrower, nor any material decline, as reasonably determined by Bank, in the
market value of any collateral required hereunder or a substantial or material
portion of the assets of Borrower.
SECTION
3.2. CONDITIONS OF EACH EXTENSION OF
CREDIT. The obligation of Bank to make each extension of credit
requested by Borrower hereunder shall be subject to the fulfillment to Bank’s
satisfaction of each of the following conditions:
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(a)
Compliance. The
representations and warranties contained herein and in each of the other Loan
Documents shall be true on and as of the date of the signing of this Agreement
and on the date of each extension of credit by Bank pursuant hereto, with the
same effect as though such representations and warranties had been made on and
as of each such date, and on each such date, no Event of Default as defined
herein, and no condition, event or act which with the giving of notice or the
passage of time or both would constitute such an Event of Default, shall have
occurred and be continuing or shall exist.
(b)
Documentation. Bank
shall have received all additional documents which may be required in connection
with such extension of credit.
ARTICLE
IV
AFFIRMATIVE
COVENANTS
Borrower covenants that so long as
Bank remains committed to extend credit to Borrower pursuant hereto, or any
liabilities (whether direct or contingent, liquidated or unliquidated) of
Borrower to Bank under any of the Loan Documents remain outstanding, and until
payment in full of all obligations of Borrower subject hereto, Borrower shall,
and shall cause each of Borrower’s subsidiaries to, unless Bank otherwise
consents in writing:
SECTION
4.1. PUNCTUAL
PAYMENTS. Punctually pay all principal, interest, fees or other
liabilities due under any of the Loan Documents at the times and place and in
the manner specified therein.
SECTION
4.2. ACCOUNTING
RECORDS. Maintain adequate books and records in accordance with
generally accepted accounting principles consistently applied, and permit any
representative of Bank, at any reasonable time, to inspect, audit and examine
such books and records, to make copies of the same, and to inspect the
properties of Borrower.
SECTION
4.3. FINANCIAL
STATEMENTS. Provide to Bank all of the following, in form and detail
satisfactory to Bank:
(a)
not later than 100 days after and as of the end of each fiscal year, a
consolidated financial statement of Borrower, prepared by a certified public
accountant acceptable to Bank, to include balance sheets, statements of income,
retained earnings, cash flow and 10-K filing.
(b)
not later than 60 days after and as of the end of each fiscal quarter, a
consolidated financial statement of Borrower, prepared by a certified public
accountant acceptable to Bank, to include balance sheets, statements of income,
retained earnings, cash flow and 10-Q filing;
(c)
not later than 60 days after and as of the end of the preceding fiscal year, a
projection of consolidated financial statements of Borrower; prepared by
Borrower;
(d)
[intentionally omitted];
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(e)
not later than 90 days after and as of the end of each fiscal year, an annual
statutory statement for each subsidiary of Borrower that is a regulated
insurance company;
(f)
not later than 60 days after and as of the end of each fiscal quarter, a
quarterly statutory statement for all regulated insurance
companies;
(g)
promptly upon becoming available, copies of all registration statements and
annual, quarterly, monthly or other regular reports which Borrower files with
the United States Securities and Exchange Commission;
(h)
upon Bank’s request, Borrower shall furnish independent actuarial reserve
adequacy reports for Borrower’s insurance company subsidiaries in the form and
substance utilized by Borrower and its subsidiaries in the ordinary course of
their businesses, and issued by the actuarial consultant designated by such
insurance company subsidiaries;
(i)
not later than 15 days after and as of the end of each month, a trust and
custody account statement covering the Custody Account, to be delivered by
either Borrower or, at the direction of Borrower, Xxxxx Fargo Bank, N.A.’s
Institutional Trust Service Group;
(j)
from time to time such other information as Bank may reasonably
request.
SECTION
4.4. COMPLIANCE. Preserve
and maintain all licenses, permits, governmental approvals, rights, privileges
and franchises necessary for the conduct of Borrower’s and its subsidiaries
business; and comply with the provisions of all documents pursuant to which
Borrower and each of Borrower’s subsidiaries is organized and/or which govern
each such person’s continued existence and with the requirements of all laws,
rules, regulations and orders of any governmental authority applicable to each
such person and/or its business.
SECTION
4.5. INSURANCE. Maintain
and keep in force, for each business in which Borrower and each of Borrower’s
subsidiaries is engaged, insurance of the types and in amounts customarily
carried in similar lines of business, including but not limited to fire,
extended coverage, public liability, flood, property damage and workers’
compensation, and deliver to Bank from time to time at Bank’s request schedules
setting forth all insurance then in effect.
SECTION
4.6. FACILITIES. Keep all
properties useful or necessary to Borrower’s and its subsidiaries businesses in
good repair and condition, and from time to time make necessary repairs,
renewals and replacements thereto so that such properties shall be fully and
efficiently preserved and maintained.
SECTION
4.7. TAXES AND OTHER
LIABILITIES. Pay and discharge when due any and all indebtedness,
obligations, assessments and taxes, both real or personal, including without
limitation federal and state income taxes and state and local property taxes and
assessments, except (a) such as Borrower may in good faith contest or as to
which a bona fide dispute may arise, and (b) for which Borrower has made
provision, to Bank’s satisfaction, for eventual
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payment
thereof in the event Borrower or a subsidiary of Borrower is obligated to make
such payment.
SECTION
4.8. LITIGATION. Promptly
give notice in writing to Bank of any litigation pending or threatened against
Borrower or any of Borrower’s subsidiaries with a claim in excess of
$5,000,000.00.
SECTION
4.9. NOTICE TO
BANK. Promptly (but in no event more than five (5) days after the
occurrence of each such event or matter) give written notice to Bank in
reasonable detail of: (a) the occurrence of any Event of Default
as defined in Article VI of this Agreement, or any condition, event or act which
with the giving of notice or the passage of time or both would constitute such
an Event of Default; (b) any change in the name or the organizational
structure of Borrower or any of Borrower’s subsidiaries; (c) the occurrence
and nature of any Reportable Event or Prohibited Transaction, each as defined in
ERISA, or any funding deficiency with respect to any Plan; or (d) any
termination or cancellation of any insurance policy which Borrower or any of
Borrower’s subsidiaries is required to maintain, or any uninsured or partially
uninsured loss through liability or property damage, or through fire, theft or
any other cause materially affecting Borrower’s property or the property of a
subsidiary of Borrower.
SECTION
4.10. FINANCIAL
CONDITION. Borrower shall maintain at all times its financial
condition such that it has at all times aggregate cash and cash equivalents in
an amount not less than $7,500,000.
ARTICLE
V
NEGATIVE
COVENANTS
Borrower further covenants that so
long as Bank remains committed to extend credit to Borrower pursuant hereto, or
any liabilities (whether direct or contingent, liquidated or unliquidated) of
Borrower to Bank under any of the Loan Documents remain outstanding, and until
payment in full of all obligations of Borrower subject hereto, Borrower will
not, and, if specified below, shall cause each of Borrower’s subsidiaries to
not, without Bank’s prior written consent (which consent or denial thereof,
shall not be unreasonably delayed under the circumstances):
SECTION
5.1. USE OF FUNDS. Use any
of the proceeds of any credit extended hereunder except for the purposes stated
in Article I hereof.
SECTION
5.2. OTHER
INDEBTEDNESS. Create, incur, assume or permit to exist, or permit any
of Borrower’s subsidiaries to create, incur, assume or permit to exist, any
indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except (a) the liabilities of Borrower to Bank under the Loan
Documents and (b) additional
indebtedness not to exceed an aggregate amount outstanding of up to, prior to
May 1, 2009, $100,000,000.00, and, from and after May 1, 2009,
$250,000,000.
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SECTION
5.3. MERGER, CONSOLIDATION, TRANSFER
OF ASSETS. Merge into or consolidate with any other entity; make any
substantial change in the nature of Borrower’s business as conducted as of the
date hereof; acquire all or substantially all of the stock or assets of any
other entity; nor sell, lease, transfer or otherwise dispose of all or a
substantial or material portion of Borrower’s assets except in the ordinary
course of its business. Specifically excepted from this covenant is
the previously announced acquisition of AmCOMP Incorporated and its subsidiaries
as well as any future acquisitions in which the proposed merger or acquisition
does not exceed twenty (20%) percent of the market capitalization of Borrower
immediately prior to such announcement.
SECTION
5.4. GUARANTIES. Guarantee
or become liable, or permit any of Borrower’s subsidiaries to guarantee or
become liable, in any way as surety, endorser (other than the endorser of
negotiable instruments for deposit or collection in the ordinary course of
business), accommodation endorser or otherwise for, nor pledge or hypothecate
any assets of Borrower or any of Borrower’s subsidiaries as security for, any
liabilities or obligations of any other person or entity, except any of the
foregoing in favor of Bank, or those liabilities of Borrower and Borrower’s
subsidiaries existing as of, and disclosed to Bank prior to, the date
hereof.
SECTION
5.5. LOANS, ADVANCES,
INVESTMENTS. Make any loans or advances to or investments in any
person or entity, or permit any of Borrower’s subsidiaries to make any loans or
advances to or investments in any person or entity, except any of the foregoing
existing as of, and disclosed to Bank, prior to, the date
hereof. Specifically exempted from this provision are (a) the
announced and anticipated acquisition of AmCOMP Incorporated, which Borrower
intends to finance, (b) loans, advances or investments that do not, together
with all other loans, advances and investments permitted pursuant to this clause
(b), exceed an aggregate amount of $125,000,000.00, and (c) investments made by
Borrower and its subsidiaries pursuant to such persons’ written investment
policies and in compliance with applicable state statutes and
regulations.
SECTION
5.6. PLEDGE OF
ASSETS. Mortgage, pledge, grant or permit to exist a security
interest in, or lien upon, all or any portion of Borrower’s assets now owned or
hereafter acquired, except any of the foregoing in favor of Bank or which is
existing as of, and disclosed to Bank in writing prior to, the date
hereof. Specifically excepted from this provision are any deposits of
cash or securities required by the state insurance departments in the states in
which Borrower or its subsidiaries operate or for any acquisition of operating
assets required from time to time in the ordinary course of Borrower’s
business.
ARTICLE
VI
EVENTS OF
DEFAULT
SECTION
6.1. The occurrence of any of the
following shall constitute an “Event of Default” under this
Agreement:
(a)
Borrower shall fail to pay when due any principal, interest, fees or other
amounts payable under any of the Loan Documents.
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(b)
Any financial statement or certificate furnished to Bank in connection with, or
any representation or warranty made by Borrower or any other party under this
Agreement or any other Loan Document shall prove to be incorrect, false or
misleading in any material respect when furnished or made.
(c)
Any default in the performance of or compliance with any obligation, agreement
or other provision contained herein or in any other Loan Document (other than
those referred to in subsections (a) and (b) above), and with respect to any
such default which by its nature can be cured, such default shall continue for a
period of twenty (20) days from its occurrence.
(d)
Any default in the payment or performance of any obligation, or any defined
event of default, under the terms of any contract or instrument (other than any
of the Loan Documents) pursuant to which Borrower has incurred any debt or other
liability to any person or entity, including Bank, having an outstanding
principal balance greater than $1,000,000.00.
(e)
The filing of a notice of judgment lien against Borrower; or the recording of
any abstract of judgment against Borrower or the service of a notice of levy
and/or of a writ of attachment or execution, or other like process, or the entry
of a final judgment against Borrower, in each case, against a material portion
of the assets of Borrower.
(f)
Borrower shall become insolvent, or shall suffer or consent to or apply for the
appointment of a receiver, trustee, custodian or liquidator of itself or any of
its property, or shall generally fail to pay its debts as they become due, or
shall make a general assignment for the benefit of creditors; Borrower shall
file a voluntary petition in bankruptcy, or seeking reorganization, in order to
effect a plan or other arrangement with creditors or any other relief under the
Bankruptcy Reform Act, Title 11 of the United States Code, as amended or
recodified from time to time (“Bankruptcy Code”), or under
any state or federal law granting relief to debtors, whether now or hereafter in
effect; or any involuntary petition or proceeding pursuant to the Bankruptcy
Code or any other applicable state or federal law relating to bankruptcy,
reorganization or other relief for debtors is filed or commenced against
Borrower, or Borrower shall file an answer admitting the jurisdiction of the
court and the material allegations of any involuntary petition; or Borrower
shall be adjudicated a bankrupt, or an order for relief shall be entered against
Borrower by any court of competent jurisdiction under the Bankruptcy Code or any
other applicable state or federal law relating to bankruptcy, reorganization or
other relief for debtors.
(g)
[Reserved].
(h)
The dissolution or liquidation of Borrower if a corporation, partnership, joint
venture or other type of entity; or Borrower, or any of its directors,
stockholders or members, shall take action seeking to effect the dissolution or
liquidation of Borrower.
(i)
Any “person” or “group” (as
such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the “Exchange
Act”)) becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of
-11-
twenty-five percent or more of the
equity securities of Borrower entitled to vote for members of the board of
directors of Borrower on a fully-diluted basis (and taking into account all such
securities that such person or group has the right to acquire pursuant to any
option right).
SECTION
6.2. REMEDIES. Upon the
occurrence of any Event of Default: (a) all indebtedness of
Borrower under each of the Loan Documents, any term thereof to the contrary
notwithstanding, shall at Bank’s option and without notice become immediately
due and payable without presentment, demand, protest or notice of dishonor, all
of which are hereby expressly waived by Borrower; (b) the obligation, if
any, of Bank to extend any further credit under any of the Loan Documents shall
immediately cease and terminate; and (c) Bank shall have all rights, powers
and remedies available under each of the Loan Documents, or accorded by law,
including without limitation the right to resort to any or all security for any
credit subject hereto and to exercise any or all of the rights of a beneficiary
or secured party pursuant to applicable law. All rights, powers and
remedies of Bank may be exercised at any time by Bank and from time to time
after the occurrence of an Event of Default, are cumulative and not exclusive,
and shall be in addition to any other rights, powers or remedies provided by law
or equity.
ARTICLE
VII
MISCELLANEOUS
SECTION
7.1. NO WAIVER. No delay,
failure or discontinuance of Bank in exercising any right, power or remedy under
any of the Loan Documents shall affect or operate as a waiver of such right,
power or remedy; nor shall any single or partial exercise of any such right,
power or remedy preclude, waive or otherwise affect any other or further
exercise thereof or the exercise of any other right, power or
remedy. Any waiver, permit, consent or approval of any kind by Bank
of any breach of or default under any of the Loan Documents must be in writing
and shall be effective only to the extent set forth in such
writing.
SECTION
7.2. NOTICES. All notices,
requests and demands which any party is required or may desire to give to any
other party under any provision of this Agreement must be in writing delivered
to each party at the following address:
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BORROWER:
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00000
Xxxxxxxxxxxx Xxxxxx
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Xxxx,
XX 00000
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BANK:
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XXXXX
FARGO BANK, NATIONAL ASSOCIATION
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San
Xxxxxxx Valley Regional Commercial Banking Xxxxxx
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0000
Xxxxx Xxxxx, Xxxxx 000
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Xxxx
Xxxxxx, XX 00000
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or to such
other address as any party may designate by written notice to all other
parties. Each such notice, request and demand shall be deemed given
or made as follows: (a) if sent by hand delivery, upon delivery;
(b) if sent by mail, upon the earlier of the date of receipt or five (5)
days after deposit in the U.S. mail, first class and postage prepaid;
(c) if sent by telecopy, upon receipt; and (d) if sent via overnight
courier, upon delivery.
-12-
SECTION
7.3. COSTS, EXPENSES AND ATTORNEYS’
FEES. Borrower shall pay to Bank promptly upon demand the full amount
of all payments, advances, charges, costs and expenses, including reasonable
attorneys’ fees (to include only outside counsel fees), expended or incurred by
Bank in connection with (a) the negotiation and preparation of this
Agreement and the other Loan Documents, Bank’s continued administration hereof
and thereof, and the preparation of any amendments and waivers hereto and
thereto, (b) the enforcement of Bank’s rights and/or the collection of any
amounts which become due to Bank under any of the Loan Documents, and
(c) the prosecution or defense of any action in any way related to any of
the Loan Documents, including without limitation, any action for declaratory
relief, whether incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing incurred in
connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to Borrower or any other person or entity.
SECTION
7.4. SUCCESSORS,
ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided however, that Borrower may not
assign or transfer its interests or rights hereunder without Bank’s prior
written consent. Bank reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any interest in,
Bank’s rights and benefits under each of the Loan Documents. In
connection therewith, Bank may disclose all documents and information which Bank
now has or may hereafter acquire relating to any credit subject hereto, Borrower
or its business, or any collateral required hereunder to any prospective
assignee so long as such person has executed a nondisclosure agreement in form
and substance reasonably satisfactory to Bank and Borrower.
SECTION
7.5. ENTIRE AGREEMENT;
AMENDMENT. This Agreement and the other Loan Documents constitute the
entire agreement between Borrower and Bank with respect to each credit subject
hereto and supersede all prior negotiations, communications, discussions and
correspondence concerning the subject matter hereof. This Agreement
may be amended or modified only in writing signed by each party
hereto.
SECTION
7.6. NO THIRD PARTY
BENEFICIARIES. This Agreement is made and entered into for the sole
protection and benefit of the parties hereto and their respective permitted
successors and assigns, and no other person or entity shall be a third party
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any other of the Loan Documents to which it
is not a party.
SECTION
7.7. TIME. Time is of the
essence of each and every provision of this Agreement and each other of the Loan
Documents.
SECTION
7.8. SEVERABILITY OF
PROVISIONS. If any provision of this Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity without invalidating the remainder of
such provision or any remaining provisions of this Agreement.
-13-
SECTION
7.9. COUNTERPARTS. This
Agreement may be executed in any number of counterparts, each of which when
executed and delivered shall be deemed to be an original, and all of which when
taken together shall constitute one and the same Agreement.
SECTION
7.10. GOVERNING LAW. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Nevada.
SECTION
7.11. NO NOVATION. This
Agreement amends and restates the Existing Credit Agreement in its entirety and
is not intended to constitute a novation of the obligations
thereunder. Nothing contained herein shall terminate any security
interests, liens, guaranties or subordinations in favor of Bank and all such
security interests, guaranties and subordinations shall continue in full force
and effect.
SECTION
7.12. ARBITRATION.
(a)
Arbitration. The
parties hereto agree, upon demand by any party, to submit to binding arbitration
all claims, disputes and controversies between or among them (and their
respective employees, officers, directors, attorneys, and other agents), whether
in tort, contract or otherwise in any way arising out of or relating to (i) any
credit subject hereto, or any of the Loan Documents, and their negotiation,
execution, collateralization, administration, repayment, modification,
extension, substitution, formation, inducement, enforcement, default or
termination; or (ii) requests for additional credit.
(b)
Governing
Rules. Any arbitration proceeding will (i) proceed in a
location in Nevada selected by the American Arbitration Association (“AAA”); (ii) be governed by
the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding
any conflicting choice of law provision in any of the documents between the
parties; and (iii) be conducted by the AAA, or such other administrator as the
parties shall mutually agree upon, in accordance with the AAA’s commercial
dispute resolution procedures, unless the claim or counterclaim is at least
$1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which
case the arbitration shall be conducted in accordance with the AAA’s optional
procedures for large, complex commercial disputes (the commercial dispute
resolution procedures or the optional procedures for large, complex commercial
disputes to be referred to herein, as applicable, as the “Rules”). If there
is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or
refuses to submit to arbitration following a demand by any other party shall
bear all costs and expenses incurred by such other party in compelling
arbitration of any dispute. Nothing contained herein shall be deemed
to be a waiver by any party that is a bank of the protections afforded to it
under 12 U.S.C. §91 or any similar applicable state law.
(c)
No Waiver of
Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not
constitute a waiver of the right or
-14-
obligation
of any party to submit any dispute to arbitration or reference hereunder,
including those arising from the exercise of the actions detailed in sections
(i), (ii) and (iii) of this paragraph.
(d)
Arbitrator
Qualifications and Powers. Any arbitration proceeding in which
the amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award of
greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be
a neutral attorney licensed in the State of Nevada or a neutral retired judge of
the state or federal judiciary of Nevada, in either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or
not an issue is arbitratable and will give effect to the statutes of limitation
in determining any claim. In any arbitration proceeding the
arbitrator will decide (by documents only or with a hearing at the arbitrator’s
discretion) any pre-hearing motions which are similar to motions to dismiss for
failure to state a claim or motions for summary adjudication. The
arbitrator shall resolve all disputes in accordance with the substantive law of
Nevada and may grant any remedy or relief that a court of such state could order
or grant within the scope hereof and such ancillary relief as is necessary to
make effective any award. The arbitrator shall also have the power to
award recovery of all costs and fees, to impose sanctions and to take such other
action as the arbitrator deems necessary to the same extent a judge could
pursuant to the Federal Rules of Civil Procedure, the Nevada Rules of Civil
Procedure or other applicable law. Judgment upon the award rendered
by the arbitrator may be entered in any court having
jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.
(e) Discovery. In
any arbitration proceeding, discovery will be permitted in accordance with the
Rules. All discovery shall be expressly limited to matters directly
relevant to the dispute being arbitrated and must be completed no later than 20
days before the hearing date. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party’s presentation and that no alternative means for
obtaining information is available.
(f)
Class Proceedings and
Consolidations. No party hereto shall be entitled to join or
consolidate disputes by or against others in any arbitration, except parties who
have executed any Loan Document, or to include in any arbitration any dispute as
a representative or member of a class, or to act in any arbitration in the
interest of the general public or in a private attorney general capacity.
(g) Payment Of Arbitration Costs
And Fees. The arbitrator
shall award all costs and expenses of the arbitration proceeding.
(h)
Real Property
Collateral. Notwithstanding anything herein to the contrary,
no dispute shall be submitted to arbitration if the dispute concerns
indebtedness secured directly or
-15-
indirectly,
in whole or in part, by any real property unless (i) the holder of the mortgage,
lien or security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single action rule statute of Nevada,
thereby agreeing that all indebtedness and obligations of the parties, and all
mortgages, liens and security interests securing such indebtedness and
obligations, shall remain fully valid and enforceable.
(i)
Miscellaneous. To
the maximum extent practicable, the AAA, the arbitrators and the parties shall
take all action required to conclude any arbitration proceeding within 180 days
of the filing of the dispute with the AAA. No arbitrator or other
party to an arbitration proceeding may disclose the existence, content or
results thereof, except for disclosures of information by a party required in
the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between
the parties potentially applies to a dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the dispute
shall control. This arbitration provision shall survive termination,
amendment or expiration of any of the Loan Documents or any relationship between
the parties.
[Signatures
to follow on next page]
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IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed as of the day and year first
written above.
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XXXXX
FARGO BANK,
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NATIONAL
ASSOCIATION
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By:
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/s/ Xxxxxxx X. Xxxxx |
By:
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/s/ Xxx X. Xxxx | |||
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Xxxxxxx
X. Xxxxx
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Xxx
X. Xxxx
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Executive
Vice President,
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Vice
President
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Chief
Financial Officer
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