SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 16, 1999 (June 24, 1999)
ATLANTIC AMERICAN CORPORATION
(Exact name of registrant as specified in its charter)
Georgia 0-3722 58-1027114
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Identification Number) Identification
Number)
4370 PEACHTREE ROAD, N.E., ATLANTA, GEORGIA 30319 (Address of
principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 266-5500
None
(Former name, former address and former fiscal year, if changed since last
report)
Item 2. Acquisition or Disposition of Assets
On July 1,1999, Atlantic American Corporation ("the Company") acquired
100% of the outstanding stock of Association Casualty Insurance Company ("ACIC")
and Association Risk Management General Agency, Inc. ("ARMGA",
and collectively with ACIC, the "Acquired Companies"). The Acquired Companies
were acquired for a combination of cash and common stock of the Company
totaling $32.5 million. The cost of the acquisition in millions is summarized as
follows:
Cash Common Stock Total Consideration
Consideration of Company Consideration
ACIC $15.6 $5.5 $21.1
ARMGA 8.4 $3.0 $11.4
---------- ---- -----
Total $24.0 $8.5 $32.5
----- ---- -----
ACIC is a Texas domiciled insurance company that specializes in underwriting
workers' compensation insurance in the state of Texas. ARMGA is a Texas
domiciled general agency. The cash used to finance the transaction was obtained
from the proceeds of issuing $25.0 million of Variable Rate Demand Bonds and a
new $30.0 million revolving credit facility with Wachovia Bank, N.A., each is
decribed below.
Item 5. Other Events
On June 24, 1999 the Company issued $25.0 million in Taxable
Variable Rate Demand Bonds, Series 1999. The proceeds from this issuance were
used to retire $25.0 million of the $26.0 million outstanding on the
Company's existing term loan. The bonds are rated AA/A-1+ by Standard &
Poor's and will mature July 1, 2009. The interest rate on the bonds is variable
and approximates 30-day LIBOR. The bonds are backed by a letter of credit
issued by Wachovia Bank, N.A. The cost of the letter of credit and its
associated fees will be 180 basis points.
On July 1, 1999 the Company entered into a $30.0 million revolving credit
facility with Wachovia Bank, N.A. The facility allows the Company to draw up to
$30.0 million for the acquisition of ACIC and ARMGA as well as for other
corporate needs. Immediately upon closing the facility the Company borrowed
$20.0 million on the facility to fund a portion of the acquisition of ACIC and
ARMGA, see Item 2 above. The interest rate on the facility is 30-day LIBOR plus
200 basis points.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Financial Statements of Business Acquired.
It is impracticable to provide the required financial statements for the
acquired business at the date of filing of this Form 8-K. Such financial
statements will be filed by admendmet as soon as practicable, but no later than
60-days following the date this Form 8-K is required to be filed.
Pro Forma Financial Information.
It is impracticable to provide the required pro forma financial information for
the acquired business at the date of filing of this form 8-K. Such pro forma
financial information will be filed as soon as practicable, but no later than
60-days following the date this Form 8-K is required to be filed.
Exhibits
(2.1) Acquisition Agreement by and among Atlantic American Corporation,
and Association Casualty Insurance Corporation, Association
Risk Management General Agency, Inc., and Harold K. Fischer, dated
as of April 21, 1999.
(10.1) Indenture of Trust, dated as of June 24, 1999, by and between
Atlantic American Corporation and The Bank of New York, as Trustee.
(10.2) Reimbursement and Security Agreement, dated as of June 24,
1999, between Atlantic American Corporation and Wachovia Bank of
Georgia, NA.
(10.3) Revolving Credit Facility, dated as of July 1, 1999 between Atlantic
American Corporation and Wachovia Bank of Georgia, N.A.
(99.1) Press Release dated June 24, 1999
(99.2) Press Release dated July 6, 1999
SIGNATURE
- ---------
Pursuant to the requirements of the Security Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ATLANTIC AMERICAN CORPORATION
- -----------------------------
(Registrant)
Date: July ____, 1999 By: __________/s/________________
Edward L. Rand, Jr.
Vice President-Treasurer
(Principal Financial Officer)
(2.1)
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT, made this 21st day of April, 1999, by and
among ATLANTIC AMERICAN CORPORATION, a Georgia corporation ("Atlantic"),
ASSOCIATION CASUALTY INSURANCE COMPANY, a Texas corporation ("ACIC"), and
ASSOCIATION RISK MANAGEMENT GENERAL AGENCY, INC. ("ARMGA"), a Texas corporation
(ACIC and ARMGA hereinafter collectively referred to as the "Acquired
Companies") and HAROLD K. FISCHER, the sole shareholder of ARMGA (the "Sole
Shareholder").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to enter into this Acquisition
Agreement pursuant to which, subject to any required Texas Department of
Insurance approvals, there will be a statutory share exchange under Article 5.02
of the Texas Business Corporation Act (hereinafter referred to as the "TBCA") of
all of the issued and outstanding shares of capital stock of ACIC, immediately
followed by the purchase of all of the issued and outstanding shares of capital
stock of ARMGA from the Sole Shareholder by ACIC, with the exchange and the
purchase to be completed each in accordance with the terms and subject to the
conditions set forth herein; and
WHEREAS, upon the effective date of the share exchange, all of the shares
of common stock of ACIC issued and outstanding immediately prior thereto will be
exchanged for shares of common stock of Atlantic and certain cash consideration
as described below;
NOW, THEREFORE, for and in consideration of the premises and the mutual
promises, agreements, representations, warranties and covenants hereinafter set
forth, and the sum of ten dollars and other good and valuable consideration, the
receipt and sufficiency of which is hereby specifically agreed to and
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS.
As used herein, the following terms shall have the following meanings
unless the context otherwise requires:
1.1 "ACIC" shall mean Association Casualty Insurance Company, a Texas
corporation.
1.2 "ACIC Cash Consideration" shall have the meaning set forth in Section
2.1.3.2.
1.3 "ACIC Option Shares" shall have the meaning as set forth in Section 2.1.3.1.
1.4 "ACIC Stock Consideration" shall have the meaning set forth in 2.1.3.2.
1.5 "Acquired Companies" shall mean ACIC and ARMGA, each of which may be
individually referred to as an "Acquired Company."
59
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1.6 "Acquired Companies Software" shall have the meaning set forth in Section
3.15.2.
1.7 "Acquisition Proposal" shall have the meaning set forth in Article X.
1.8 "Agreement" shall mean this Acquisition Agreement.
1.9 "Antitrust Division" shall mean the Antitrust Division of the
United States Department of Justice.
1.10 "ARMGA" shall mean Association Risk Management General Agency, Inc., a
Texas corporation.
1.11 "ARMGA Cash Consideration" shall have the meaning set forth in Section
2.1.5.
1.12 "ARMGA Purchase Price" shall have the meaning set forth in Section 2.1.5.
1.13 "ARMGA Stock Consideration" shall have the meaning set forth in Section
2.1.5.
1.14 "Association" shall mean the American Arbitration Association.
1.15 "Atlantic" shall mean Atlantic American Corporation, a Georgia corporation.
1.16 "Atlantic American Stock" shall mean the common stock, $1.00 par value per
share, of Atlantic.
1.17 "Benefit Plans" shall have the meaning set forth in Section 3.17.
1.18 "Businesses" shall mean the operations currently conducted by ACIC as a
property and casualty insurance carrier operating predominately as a monoline
carrier of workers compensation insurance products and by ARMGA as an insurance
management company with a Managing General Agency License, a Texas licensed
local recording insurance agency and a Texas licensed third party administrator.
1.19 "Cash Consideration" shall mean the ACIC Cash Consideration and the ARMGA
Cash Consideration.
1.20 "CERCLA" shall have the meaning set forth in Section 3.19.
1.21 "Certificate" shall have the meaning set forth in Section 2.1.12.
1.22 "Closing" shall mean the consummation of the transactions provided for in
this Agreement.
1.23 "Closing Date" shall mean the date on which the Closing occurs pursuant to
Section 8.1.1 hereof.
1.24 "Closing Date Capital and Surplus" shall have the meaning set forth in
Section 2.1.9.
1.25 "Closing Date Net Worth" shall have the meaning set forth in Section 2.1.9.
1.26 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.27 "Covenants Not To Compete" shall mean the Covenant Not to Compete among
Atlantic and the Sole Shareholder, substantially in the form attached as Exhibit
2.11(b).
1.28 "Demanding Shareholder" shall have the meaning set forth in Section
2.1.8.3.1.
1.29 "Direct Claim" shall have the meaning set forth in Section 9.5.2.
1.30 "Dispute" shall have the meaning set forth in Section 9.5.3.
1.31 "Dissenters Shortfall Amount" shall have the meaning set forth in Section
2.1.8.3.1.
1.32 "Effective Time" shall have the meaning set forth in Section 2.1.2.
1.33 "Employment Agreement" shall mean the employment agreement between the Sole
Shareholder and ARMGA, substantially in the form attached as Exhibit 2.10.
1.34 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
1.35 "ERISA Plan" shall have the meaning as set forth in Section 3.17.1.
1.36 "Escrow Agent" shall mean Wachovia Bank, N.A., as escrow agent under the
Escrow Agreement.
1.37 "Escrow Agreement" shall mean the Escrow Agreement attached hereto as
Exhibit 2.1.8.1.
1.38 "Escrowed ACIC Cash" shall have the meaning set forth in Section 2.1.8.2.
1.39 "Escrowed ACIC Shares" shall have the meaning set forth in Section 2.1.8.1.
1.40 "Escrowed ARMGA Cash" shall have the meaning set forth in Section 2.1.8.2.
1.41 "Escrowed ARMGA Shares" shall have the meaning set forth in Section
2.1.8.1.
1.42 "Escrowed Cash" shall have the meaning set forth in Section 2.1.8.2.
1.43 "Escrowed Shares" shall have the meaning set forth in Section 2.1.8.1.
1.44 "Excess Escrowed Amount" shall have the meaning set forth in Section
2.1.10.
1.45 "Exchange Consideration" shall have the meaning set forth in Section
2.1.3.2.
1.46 "Form 10-K" shall have the meaning set forth in Section 5.7.
1.1
1.47 "Forms 10-Q" shall have the meaning set forth in Section 5.7.
1.48 "FTC" shall mean the Federal Trade Commission.
1.49 "GAAP" shall mean generally accepted accounting principles.
1.50 "Hazardous Substance" shall have the meaning set forth in Section 3.19.
1.51 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
1.52 "Improvements" shall mean, collectively, any and all improvements located
on the Real Property.
1.53 "Indemnifying Party" shall have the meaning set forth in Section 9.5.1.1.
1.54 "Indemnitee" shall have the meaning set forth in Section 9.5.1.1.
1.55 "Licensed Software" shall have the meaning set forth in Section 3.15.2.
1.56 "Loss" shall have the meaning set forth in Section 9.1.
1.57 "Minimum Aggregate Liability Amount" shall have the meaning set forth in
Section 9.3.
1.58 "Morgan Keegan" shall mean Morgan Keegan & Company, Inc.
1.59 "Net Worth" shall have the meaning set forth in Section 2.1.9.
1.60 "1997 and 1998 Financial Statements" shall have the meaning set forth in
Section 3.5.2.
1.61 "1997 and 1998 Statutory Financial Statements" shall have the meaning set
forth in Section 3.5.1.
1.62 "1933 Act" shall mean the Securities Act of 1933, as amended.
1.63 "Non-Solicitation and Confidentiality Agreement" shall mean the
Non-Solicitation and Confidentiality Agreement among Atlantic, ACIC, ARMGA and
the persons listed on Exhibit 2.11.
1.64 "Notice of Settlement" shall have the meaning set forth in Section
9.5.1.2. (iii)
1.65 "Notice to Contest" shall have the meaning set forth in Section
9.5.1.2. (iv)
1.66 "Notice to Defend" shall have the meaning set forth in Section
9.5.1.1. (iii).
1.67 "Option Plan" shall mean the Association Casualty Insurance Company Stock
Option Plan, attached hereto as Exhibit 2.1.3.1.
1.68 "Owned Software" shall have the meaning set forth in Section 3.15.2.
1.69 "PCBs" shall have the meaning as set forth in Section 3.19.
1.70 "Per Share Closing Price" shall have the meaning set forth in Section
2.1.3.2.
1.71 "Permits" shall mean all licenses, registrations, certificates, approvals,
and permits issued by governmental authorities and quasi-governmental
authorities in regard to the Real Property, the Improvements, or any portion or
component of either of them.
1.72 "Plan of Exchange" shall mean the Plan of Exchange attached hereto as
Exhibit 2.1.1.
1.73 "Property" shall have the meaning set forth in Section 3.19.
1.74 "RCRA" shall have the meaning as set forth in Section 3.19.
1.75 "Real Property" shall mean that certain tract of land described on Exhibit
3.7.2.2.
1.76 "Representative" shall mean Kenneth Peeler, or in the event that Kenneth
Peeler resigns, dies or is physically unable to act as the "Representative,"
then the "Representative" shall mean Herbert S. Harris, III. In the event that
Herbert S. Harris, III resigns, dies or is physically unable to act as the
"Representative," then the "Representative" shall mean that individual selected
by Kenneth Peeler, or his guardian if one has been appointed, or the executor or
his administrator of his estate if he has died.
1.77 "SEC" shall mean the United States Securities and Exchange Commission.
1.78 "SEC Documents" shall have the meaning set forth in Section 5.7.
1.79 "Share Exchange" shall mean the exchange of the shares of ACIC pursuant to
the Plan of Exchange.
1.80 "Shareholders" shall mean the shareholders of ACIC and the Sole
Shareholder, each of whom may be individually referred to as a "Shareholder."
1.81 "Sole Shareholder" shall mean Harold K. Fischer, the sole shareholder of
ARMGA.
1.82 "Stock Consideration" shall mean the ACIC Stock Consideration and the ARMGA
Stock Consideration.
1.83 "Subsequent Event" shall have the meaning set forth in the prefatory
language to Article VI.
1.84 "TBCA" shall mean the Texas Business Corporation Act.
1.85 "Third Party Claim" shall have the meaning set forth in Section 9.5.1.1.
1.86 "Transmittal Letter" shall have the meaning set forth in Section 2.1.12.
1.87 "Year 2000 Defect" shall have the meaning set froth in Section 3.15.2.2.
1.88 "to the best knowledge," "aware of," "has reason to believe," "has any
knowledge" and similar phrases when used with regard to the Acquired Companies
shall mean (a) actual knowledge and (b) such level of knowledge or awareness as
would be obtained (1) by a reasonably prudent business person under
substantially similar circumstances after inquiry reasonable under the
circumstances then existing (which circumstances in each case shall be deemed to
include the position of the person with the Acquired Companies and whether such
person could reasonably be expected because of such position to have such
knowledge or awareness), and (2) from appropriate discussions with such
personnel of the Acquired Companies who may reasonably be believed to have
actual knowledge of the relevant matter.
2. COVENANTS AND UNDERTAKINGS.
2.1 Agreement to Exchange; Agreement to Purchase and Sell ARMGA Stock
2.1.1 Exchange. Subject to the terms and conditions hereinafter set forth and in
accordance with the applicable laws of the State of Texas and the State of
Georgia, the parties to this Agreement agree to effect a share exchange of the
shares of ACIC for shares of Atlantic American Stock and certain cash
consideration, in accordance with the Plan of Exchange attached hereto as
Exhibit 2.1.1.
2.1.2 Effective Time of Exchange. The Share Exchange shall become effective as
provided under the applicable provisions of the TBCA and the Texas Insurance
Code (and related rules) upon the time of the filing of Articles of Exchange
and/or such other documents as may be required by applicable law and the payment
of all fees therefor and the issuance by the Texas Commissioner of Insurance and
the Secretary of State of Georgia of certificates of exchange and/or such other
evidence of approval as may be required or permitted in accordance with
applicable law, (the time when such exchange becomes effective being referred to
herein as the "Effective Time"). To the extent permitted by applicable law, such
filing and payment of fees shall take place on the Closing Date.
2.1.3 Effect of Exchange.
2.1.3.1 Immediately prior to the Effective Time, (i) any option, or part of any
option, to purchase common stock of ACIC, as set forth on Exhibit 3.3(b)
attached hereto, under the Option Plan, a copy of which is attached hereto as
Exhibit 2.1.3.1, shall become immediately exercisable and vested and (ii) such
options shall be deemed to have been fully exercised and converted, in
accordance with the terms of the Option Plan, into the number of shares of
common stock of ACIC that represents the aggregate number of shares issuable
pursuant to such outstanding options and the $2.00 per share exercise price for
such options shall, in lieu of being paid to the Shareholders listed on Exhibit
3.3(b), be paid to ACIC and shall be included in the determination of the
Closing Date Capital and Surplus pursuant to Section 2.9 hereof. 1.1.1.1
2.1.3.2 At the Effective Time, all of the shares of common stock of ACIC then
issued and outstanding shall, in accordance with the Plan of Exchange, be
automatically converted into an aggregate of (i) Five Million Five Hundred
Twenty Five Thousand Dollars ($5,525,000.00) of Atlantic American Stock (the
"ACIC Stock Consideration"), valued at a per share price equal to the average
closing price of Atlantic American Stock on the Nasdaq National Market for the
ten consecutive trading day period ending on the trading day immediately prior
to the Closing Date (the "Per Share Closing Price") and (ii) Fifteen Million Six
Hundred Thousand Dollars ($15,600,000.000) by wire transfer (the "ACIC Cash
Consideration"; the ACIC Cash Consideration and the ACIC Stock Consideration
referred to together as the "Exchange Consideration") with such Exchange
Consideration being allocated among the Shareholders of ACIC in accordance with
the Plan of Exchange, which shall provide that (a) any Shareholder of ACIC who
owns seven hundred fifty (750) or fewer shares of common stock of ACIC shall
only be entitled to receive cash in consideration for such Shareholder's shares
of common stock of ACIC, at a price of $37.4664 per share, and (b) all other
Shareholders of ACIC shall receive, in consideration for their shares of common
stock of ACIC, the ACIC Stock Consideration and the remaining amount of the ACIC
Cash Consideration in proportion to such Shareholder's ownership interest in
such shares of common stock of ACIC; provided, however, that from the amount of
the ACIC Cash Consideration to be received by the Shareholders listed on Exhibit
3.3(b) shall be reduced by $2.00 per share of common stock of ACIC for the
shares received by such Shareholder by the exercise of the options described in
Section 2.1.3.1. Notwithstanding the foregoing, if the Per Share Closing Price
as so determined is greater than $5.50, the Per Share Closing Price will be
deemed to be $5.50, and if the Per Share Closing Price as so determined is less
than $3.75, the Per Share Closing Price will be deemed to be $3.75. All treasury
shares of ACIC, if any, shall be canceled and cease to exist as of the Effective
Time.
2.1.3.3 Purchases of Atlantic American Stock. Atlantic covenants not to make any
open market purchases of Atlantic American Stock during the ten (10) consecutive
trading day period ending on the trading day immediately prior to the Closing
Date. Atlantic further covenants not to make any open market purchases of
Atlantic American Stock solely for the purpose of influencing the calculation of
the Per Share Closing Price from the date hereof until the commencement of the
ten (10) consecutive trading day period described in the preceding sentence;
provided, however, that Atlantic shall not be restricted in any manner from
making purchases of Atlantic American Stock during such time period for any
other reason.
2.1.4 Purchase and Sale of ARMGA Stock. In accordance with the terms and subject
to the conditions set forth herein, immediately following the exchange as
described in Section 2.1.1, at the Closing the parties to this agreement will
cause ACIC to buy all of the issued and outstanding shares of capital stock of
ARMGA from the Sole Shareholder, and the Sole Shareholder hereby covenants and
agrees to sell, assign, transfer, convey and deliver to ACIC, free and clear of
all liens, claims, charges, security interests and other encumbrances of any
nature whatsoever, all of the issued and outstanding shares of capital stock of
ARMGA owned by him. Atlantic agrees to contribute the aggregate amount of
consideration to be paid for such purchase in stock and cash to ACIC. Such sale,
transfer, conveyance and delivery shall be evidenced by the delivery by the Sole
Shareholder to ACIC of stock certificates representing all of the issued and
outstanding shares of capital stock of ARMGA, duly endorsed in blank or
accompanied by duly executed stock powers (in either case, with all necessary
transfer taxes, if any, paid or other revenue stamps affixed thereto). 1.1.1
2.1.5 ARMGA Purchase Price. In full payment for the shares of capital stock of
ARMGA, ACIC shall pay to the Sole Shareholder Eleven Million Three Hundred
Seventy-Five Thousand Dollars ($11,375,000.00) as follows: (i) Two Million Nine
Hundred Seventy-Five Thousand Dollars ($2,975,000.00) of Atlantic American Stock
(the "ARMGA Stock Consideration") valued at the Per Share Closing Price and (ii)
Eight Million Four Hundred Thousand Dollars ($8,400,000.00) in cash by wire
transfer at Closing (the "ARMGA Cash Consideration")(the ARMGA Cash
Consideration and the ARMGA Stock Consideration referred to together as the
"ARMGA Purchase Price.")
2.1.6 Antidilution. In the event that, subsequent to the date of this Agreement,
the outstanding shares of Atlantic American Stock shall have been, without
consideration, increased, decreased, changed into, or exchanged for a different
number or kind of shares of securities through recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
like changes in Atlantic's capitalization, then an appropriate and proportionate
adjustment shall be made (i) in the number and kind of securities to be received
by the Shareholders pursuant to the exchange contemplated by Section 2.1.3 of
this Agreement, (ii) in the number and kind of securities to be received by the
Shareholders pursuant to the purchase contemplated by Section 2.1.5, (iii) to
the Escrowed Shares described in Section 2.1.8 of this Agreement, and (iv) to
the Per Share Closing Price described in Section 2.1.3.2 of this Agreement.
2.1.7 Shareholder Meeting. As soon as practicable following the execution of
this Agreement, ACIC will duly give notice of, convene and hold a meeting of its
shareholders in accordance with the TBCA and will submit the Plan of Exchange,
this Agreement and such other agreements, documents and instruments evidencing
the transactions contemplated hereby and thereby as may be necessary or
appropriate, to a special meeting of its shareholders. Subject to the good faith
exercise of their fiduciary duties under applicable law, the board of directors
of ACIC will unanimously recommend that the Shareholders of ACIC approve and
adopt this Agreement, the Plan of Exchange and the other transactions
contemplated hereby and thereby, and will use its best efforts to obtain such
approval. Any board of directors, or shareholders', action contemplated above
may be taken by unanimous written consent in lieu of a meeting.
2.1.8 Retention of Exchange Consideration and ARMGA Purchase Price.
2.1.8.1 Escrow of Shares. The parties hereto agree that, at the Closing,
Atlantic, the Representative and the Escrow Agent will enter into an Escrow
Agreement substantially in the form attached hereto as Exhibit 2.1.8.1. Atlantic
shall deliver to the Escrow Agent (i) a certificate or certificates representing
all of the ACIC Stock Consideration (the "Escrowed ACIC Shares") and (ii) a
certificate or certificates representing all of the ARMGA Stock Consideration
(the "Escrowed ARMGA Shares"; the Escrowed ACIC Shares and the Escrowed ARMGA
Shares referred to together as the "Escrowed Shares"), calculated using the Per
Share Closing Price, which Escrowed Shares may be offset to satisfy claims for
indemnification by Atlantic as provided in Article IX hereof, such Escrowed
Shares to be allocated among the Shareholders in proportion to their respective
Stock Consideration to be received under the Plan of Exchange and the purchase
of ARMGA stock as described in Section 2.1.4. The Escrowed Shares will be held
by the Escrow Agent and distributed pursuant to the terms of the Escrow
Agreement.
2.1.8.2 Escrow of Cash Consideration. The parties hereto agree that, at the
Closing, Atlantic will deliver to the Escrow Agent (i) One Million Five Hundred
Sixteen Thousand Six Hundred Sixty Six Dollars ($1,516,666.00), which shall be
deducted from the ACIC Cash Consideration (the "Escrowed ACIC Cash") and (ii)
Eight Hundred Sixteen Thousand Six Hundred Sixty Six Dollars ($816,666.00),
which shall be deducted from the ARMGA Cash Consideration (the "Escrowed ARMGA
Cash"; the Escrowed ACIC Cash and the Escrowed ARMGA Cash referred to together
as the "Escrowed Cash"), which Escrowed Cash may be used by Atlantic solely to
satisfy claims under Section 2.1.9, such Escrowed Cash to be allocated among the
Shareholders in proportion to their respective amounts of Cash Consideration to
be received under the Plan of Exchange and the purchase of ARMGA stock as
described in Section 2.1.4. The Escrowed Cash will be held by the Escrow Agent
and invested and distributed pursuant to the terms of the Escrow Agreement.
After the determinations described in Section 2.1.9, the Escrowed Cash shall be
released by the Escrow Agent pursuant to the terms of Section 2.1.10.
2.1.8.3 Retention of Exchange Consideration Related to Dissenters' Rights. To
the extent that any shareholder of ACIC has properly demanded dissenters' rights
under the TBCA (a "Demanding Shareholder"), the parties hereto agree that
Atlantic shall withhold from the ACIC Exchange Consideration the amount of the
ACIC Exchange Consideration that would have been allocated to any such Demanding
Shareholder. Atlantic, or ACIC as a subsidiary of Atlantic, shall bear any
costs, including attorney fees, incurred by Atlantic or ACIC related to any
actions respecting the demand of dissenters' rights under the TBCA by any
Demanding Shareholder and (ii) any amounts paid to any Demanding Shareholder in
excess of the amount of the ACIC Exchange Consideration that would have been
allocated to any such Demanding Shareholder pursuant to the terms of this
Agreement. Atlantic shall have the sole right to control the defense of any
actions in respect of dissenters' rights under the TBCA by any Demanding
Shareholder; provided, however, that the Representative shall on behalf of the
Shareholders cooperate to the extent reasonably necessary in the defense of any
such actions.
2.1.9 Closing Date Capital and Surplus; Closing Date Net Worth. As soon as
practicable following the Closing, the management of ACIC and ARMGA,
respectively, shall determine (i) the amount of ACIC's capital and surplus as of
the Closing Date (the "Closing Date Capital and Surplus") and (ii) the amount of
ARMGA's net worth as of the Closing Date (the "Closing Date Net Worth"). The
amount of such Closing Date Capital and Surplus shall be calculated in
accordance with generally accepted actuarial standards and statutory accounting
principles required or permitted by the Texas Department of Insurance,
consistently applied and fairly stated, and on the basis of assumptions
consistent with those used in computing the corresponding items on ACIC's
National Association of Insurance Commissioners' formal Annual Statement. Net
worth (the "Net Worth") shall mean the total assets which have been historically
classified on ARMGA's financial statements as "Current Assets," "Fixed Assets"
and "Other Assets", less total liabilities as have been classified historically
on ARMGA's financial statements under the categories "Current Liabilities" and
"Long Term Debt". The Closing Date Net Worth shall be determined in accordance
with GAAP (and in the event that the financial statements of ARMGA are not in
accordance with GAAP, such financial statements shall include any items required
by GAAP), applied in a manner consistent with the 1996 and 1997 financial
statements of ARMGA to the extent they are in accordance with GAAP. The
determination of the Closing Date Capital and Surplus and Closing Date Net Worth
shall be delivered in writing to Atlantic and to the Representative as promptly
as practicable following the determination thereof. Atlantic and the
Representative shall each have five (5) business days from such delivery in
which to review and notify the other of any disagreements with such
determinations of the Closing Date Capital and Surplus and Closing Date Net
Worth. At the end of such five (5) business day period, Atlantic and the
Representative will provide joint written instructions to the Escrow Agent
pursuant to Section 5 of the Escrow Agreement to immediately release to the
Representative for distribution to the Shareholders any portion of the Escrowed
Cash not in dispute. In the event that the Representative or Atlantic disagrees
with the determinations, Atlantic and the Representative shall negotiate in good
faith for at least ten (10) days to resolve the disputes. After such ten (10)
day period either party may retain PriceWaterhouseCoopers to determine the
Closing Date Capital and Surplus and/or the Closing Date Net Worth. If
PriceWaterhouseCoopers is retained to resolve a dispute with respect to the
Closing Date Capital and Surplus, the Representative, on behalf of the
Shareholders, and Atlantic hereby agree to equally split the fee charged by
PriceWaterhouseCoopers to make the above described determination. If
PriceWaterhouseCoopers is retained to resolve a dispute with respect to the
Closing Date Net Worth, the Sole Shareholder and Atlantic hereby agree to
equally split the fee charged by PriceWaterhouseCoopers to make the above
described determination, with the Shareholder's portion of such fee to be paid
out of the Escrowed Cash. In the event that the Closing Date Capital and Surplus
as determined above is less than Fifteen Million ($15,000,000.00), the Escrow
Agent, subject to Section 2.1.10, shall deliver to Atlantic, upon receipt of a
joint written instruction from Atlantic and the Representative pursuant to
Section 5 of the Escrow Agreement an amount of the Escrowed Cash, which is equal
in value to the amount by which the Closing Date Capital and Surplus is less
than Fifteen Million ($15,000,000.00). In the event that the Closing Date Net
Worth as determined above is less than One Hundred Fifty Thousand Dollars
($150,000.00), the Escrow Agent, subject to Section 2.1.10, shall deliver to
Atlantic, upon receipt of a joint written instruction from Atlantic and the
Representative pursuant to Section 5 of the Escrow Agreement, an amount of the
Escrowed Cash, which is equal in value to the amount by which the Closing Date
Net Worth is less than One Hundred Fifty Thousand Dollars ($150,000.00).
The parties acknowledge that ARMGA is obligated to make bonus
payments pursuant to employment agreements with each of the individuals, and in
the amounts, listed on Exhibit 2.1.9, upon the consummation of the transactions
contemplated herein. Such bonus payments, adjusted for any associated tax
effects, (i) if paid prior to Closing from internal sources shall reduce the
Closing Date Net Worth, (ii) if paid prior to Closing from borrowed sources,
such borrowings shall be treated as an accrued liability on the books of ARMGA
for purposes of determining and reducing the Closing Date Net Worth, and (iii)
if not paid prior to Closing shall be treated as an accrued liability on the
books of ARMGA for purposes of determining and reducing the Closing Date Net
Worth.
2.1.10 As soon as practicable following the final determination of the Closing
Date Capital and Surplus and Closing Date Net Worth pursuant to Section 2.1.9
hereof the Representative and Atlantic agree to jointly direct the Escrow Agent,
pursuant to Section 5 of the Escrow Agreement, to distribute to the Shareholders
in proportion to the total consideration received by the Shareholders hereunder,
the amount by which the Escrowed Cash exceeds any charges pursuant to Section
2.1.9.
2.1.11 Representative as Exclusive Spokesperson. Pursuant to the terms of this
Agreement, the Representative shall have the exclusive power and authority to
act on behalf of the Shareholders with regard to any matters contemplated by
this Agreement, including the following:
2.1.11.1 To receive the shares of Atlantic American Stock and cash payable to
the Shareholders, and to receive any other payments payable under this Agreement
or otherwise pursuant to the transactions contemplated herein and to make any
and all allocations and distributions thereof;
2.1.11.2 To deposit such payments in an account and draw upon such account to
pay the costs and expenses to be borne by or on behalf of the Shareholders.
2.1.11.3 To make any assurances, communications and reports for or on behalf of
the Shareholders to Atlantic that may be requisite or proper for facilitating
the transactions contemplated by this Agreement;
2.1.11.4 To receive all notices and other communications, to make all decisions,
to give all notices and other communications, and to take all other actions with
regard to notification, defense, contest, and settlement and all other matters
pertaining to any and all indemnification matters contemplated in this
Agreement, including, without limitation, all actions in regard to the Escrowed
Shares and the Escrowed Cash and any communications with the Escrow Agent; and
2.1.11.5 Otherwise to execute, acknowledge and deliver all other documents and
take all actions and do all things not inconsistent with this Agreement or the
transactions contemplated hereby, necessary or proper, required, contemplated or
deemed advisable in his view or discretion, in connection with or to carry out
and comply with all terms and conditions of this Agreement.
2.1.12 Transmittal Letters/Investment Letters. Atlantic shall mail to each
Shareholder a form of Transmittal Letter/Investment Letter (the "Transmittal
Letter"), which shall (i) specify that delivery shall be effected and risk of
loss and title to the certificate or certificates (the "Certificate")
representing shares of common stock of the Acquired Companies shall pass only
upon proper delivery of the Certificates to the Representative (and the
Representative's delivery of same to Atlantic) and instructions for use in
effecting the surrender of such Certificates for payment therefor and (ii)
contain acknowledgments and representations pertaining to investment intent by
each Shareholder regarding the receipt of the Atlantic American Stock described
in Article IV hereof. Upon surrender to the Representative (and the
Representative's delivery of same to Atlantic) of (i) the Transmittal Letter
duly executed, (ii) the Certificates and (iii) three (3) stock powers with
regard to the Escrowed Shares executed in blank (which Atlantic shall promptly
forward to the Escrow Agent to be held pursuant to the terms of the Escrow
Agreement), the holder of such Certificate shall be entitled to receive in
exchange therefor such Shareholder's portion of the Exchange Consideration set
forth in Section 2.1.3.2, less the portion of such Exchange Consideration that
is to be paid into escrow. Until surrendered in accordance with the provisions
of this Section 2.1.12, each Certificate (other than Certificates representing
dissenting shares) shall represent for all purposes only the right to receive
the Exchange Consideration. No dividends or other distributions that are
declared after the Closing Date with respect to shares of Atlantic American
Stock included in the Exchange Consideration payable to the holders of record
thereof after the Closing Date shall be paid to a stockholder of the Acquired
Companies entitled to receive Atlantic American Stock until such stockholder has
properly surrendered such stockholder's Certificates. Upon such surrender, there
shall be paid to the person in whose name the certificates representing such
shares of Atlantic American Stock shall be issued any dividends which shall have
become payable with respect to such Atlantic American Stock between the Closing
Date and the time of such surrender, without interest. Until surrendered, each
Certificate shall not have any voting rights with respect to the Atlantic
American Stock included in the Exchange Consideration. No interest will be paid
or will accrue on any cash payable to holders of Certificates.
2.2 Regulatory Consents.
2.2.1 Compliance with Securities Laws and Insurance Laws. In connection with the
transactions contemplated by this Agreement, the parties hereto agree to
cooperate with one another in complying with the provisions of the 1933 Act and
the General Rules and Regulations thereunder, and all other applicable federal
and state securities laws, and (ii) all other applicable laws, including,
without limitation, the making of any filings with any state insurance
commissions or departments. Each of the parties hereto further agrees to furnish
the other, or its counsel, with such information and to take such actions, as
may be reasonably requested in respect of such compliance.
2.2.2 HSR Act. The parties hereto agree to prepare and file the Notification and
Report Form required pursuant to the HSR Act with the FTC and the Antitrust
Division if reasonably practicable on the date hereof, and otherwise by no later
than the fifth (5th) Business Day following the date hereof. The Notification
and Report Form shall be in accordance with the requirements of the HSR Act.
Each such party hereby covenants (i) to request early termination of the waiting
period required by the HSR Act; (ii) to promptly furnish to the other party
hereto such necessary or appropriate information and reasonable assistance,
including access to each other's documents and personnel, as such other party
may reasonably request in connection with its preparation of necessary or
voluntary filings and other submissions, communications or presentations
pursuant to the HSR Act; (iii) to promptly keep the other party apprised of the
status of any communications with and any inquiries by the FTC or Antitrust
Division; and (iv) to comply with a request for additional information issued by
the FTC, the Antitrust Division or any other Authority, as the case may be, as
promptly and expeditiously as practicable. The parties shall use best efforts
and cooperate to expedite the termination of the waiting period under the HSR
Act. The parties agree that they will not undertake any unilateral contacts with
either the FTC or Antitrust Division without the prior approval of the other
party. ACIC and Atlantic agree to equally split the HSR Act filing fee. If any
administrative, judicial or legislative action or proceeding is instituted (or
threatened to be instituted) challenging the transactions contemplated by this
Agreement as violative of any antitrust Law, the parties shall use best efforts
and cooperate at their own respective expense to contest and vigorously resist
any such action or proceeding, and to have vacated, lifted, reversed or
overturned as promptly and expeditiously as practicable any decree, judgment,
injunction or other order (whether temporary, preliminary or permanent) that is
in effect and that restricts, prevents or prohibits consummation of the
transactions contemplated by this Agreement, including, without limitation, by
pursuing all reasonable avenues of administrative and judicial appeal.
2.3 Conduct of the Business of the Acquired Companies Prior to Closing.
2.3.1 Except with the prior consent in writing of Atlantic, the Acquired
Companies covenant and agree that, between the date of this Agreement and the
Closing Date, the Acquired Companies will conduct the Business and operate the
Business in the ordinary course, and they will: (a) use their best efforts to
preserve the organization of the Acquired Companies intact, to keep available
the services of the present officers and employees of the Acquired Companies,
and to preserve the goodwill of customers, suppliers and others having business
relations with the Acquired Companies; (b) maintain the properties of the
Acquired Companies in the same working order and condition as such properties
are in as of the date of this Agreement, reasonable wear and tear excepted and
not liquidate the assets to cash except in the ordinary course of business; (c)
keep in force at no less than their present limits all existing bonds and
policies of insurance insuring the Acquired Companies and their respective
properties; (d) (i) not incur any additional indebtedness of the Acquired
Companies or enter into any contract, agreement or lease which in any such case
provides for obligations of, or payments by, the Acquired Company of more than
Twenty Thousand Dollars ($20,000.00) in the aggregate or which is not terminable
without payment of premium or penalty upon 60 days' notice, except for the
selling of insurance policies written in the ordinary course of business, or
(ii) suffer, permit or incur any of the transactions or events described in
Section 3.11 hereof (except for the payment of any health, disability and life
insurance premiums which may become due distributions required to be made
pursuant to the terms currently in effect of any Benefit Plans and except for
the bonus payments described in the last sentence of Section 2.1.9 and except
for cash dividends and other cash distributions described in Section 2.3.4) to
the extent such events or transactions are within the control of the Acquired
Companies; (e) not make or permit any change in the Acquired Companies's
Articles of Incorporation or Bylaws, or in their authorized, issued or
outstanding securities except for changes pursuant to exercise of Options in
accordance with the Option Plan or Section 2.1.3.1 hereof; (f) not grant any
stock option or right to purchase any security of the Acquired Companies, issue
any security convertible into such securities, purchase, redeem, retire or
otherwise acquire any of such securities, or agree to do any of the foregoing;
(g) not make any contribution to or distribution from any employee benefit plan,
pension plan, stock bonus plan, 401(k) plan or profit sharing plan (except for
the payment of any health, disability and life insurance premiums which may
become due and distributions required to be made pursuant to the terms of any
Benefit Plans); (h) not increase the compensation payable or to become payable
by the Acquired Companies to any officer, employee or agent and not make any
bonus payment or arrangement to any of such persons except for such increases in
compensation or bonus payments to employees of the Acquired Companies other than
the Shareholders that are made at times and in amounts consistent with
historical practices of the Business and except for the bonus payments described
in the last sentence of Section 2.1.9; and (i) promptly advise Atlantic in
writing of any matters arising or discovered after the date of this Agreement
which, if existing or known at the date hereof, would be required to be set
forth or described in this Agreement or the Exhibits hereto. Notwithstanding the
foregoing, the Acquired Companies shall not be restricted in the adjustment,
compromise and settlement of insurance claims or the negotiation and
implementation of reinsurance transactions in the ordinary course of business
and in a manner consistent with historical practices.
2.3.2 Except after prior notification to, and with the prior written consent of,
Atlantic, the Acquired Companies will not make between the date of this
Agreement and the Closing Date, any change in their banking or safe deposit
arrangements or grant any powers of attorney. A list of all bank accounts, safe
deposit boxes (and the contents thereof) and powers of attorney of the Acquired
Companies and of all persons authorized to act with respect thereto is attached
hereto as Exhibit 2.3.2.
2.3.3 Except with the prior consent in writing of Atlantic, the Acquired
Companies will not between the date of this Agreement and the Closing Date make
any material changes in the Acquired Companies' statutory or financial
accounting methods or practices.
2.3.4 Notwithstanding any other provision of this Agreement to the contrary,
cash and short-term investments (as such term is used for statutory accounting
purposes) held by ACIC and ARMGA may be used to pay (i) expenses associated with
the transactions contemplated by this Agreement, (ii) other expenses of ACIC or
ARMGA and (iii) cash dividends or other cash distributions to the Shareholders
to the extent that (x) the Closing Date Capital and Surplus is not reduced below
Fifteen Million Dollars ($15,000,000.00) and (y) the Closing Date Net Worth is
not reduced below One Hundred Fifty Thousand Dollars ($150,000.00).
2.4 Filing of Tax Returns. The Acquired Companies covenant to cause all of the
Acquired Companies' federal, state and local tax returns required to be timely
filed before Closing to be timely and accurately filed with the appropriate
taxing authorities. For purposes of this Section 2.4, such returns shall be
deemed timely filed if an Acquired Company has obtained an extension from the
appropriate taxing authority as to the time in which it may file such tax
returns. The Acquired Companies shall submit all such tax returns to Atlantic at
least fifteen days prior to the date they must be filed, and Atlantic shall have
the opportunity to comment on such returns. The Acquired Companies hereby agree
to provide Atlantic with all information within the knowledge or possession of
the employees, officers, directors or agents of the Acquired Companies necessary
to file such returns. All such information shall be true, correct and accurate
in all respects.
2.5 Resignation. The Acquired Companies covenant to cause to be delivered at the
Closing the resignation of each of the directors of the Acquired Companies and
each noninstitutional trustee under any Benefit Plan maintained by the Acquired
Companies, such resignations to be effective immediately following the Closing.
2.6 Examination of Property and Records. Between the date of this Agreement and
the Closing Date, the Acquired Companies will allow Atlantic, its counsel and
other representatives full access to all the books, records, files, documents,
assets, properties, contracts and agreements of the Acquired Companies that may
be reasonably requested, and shall furnish Atlantic, its officers and
representatives during such period with all information concerning the affairs
of the Acquired Companies that may be reasonably requested. Atlantic will
conduct any investigation in a manner which will not unreasonably interfere with
the business of the Acquired Companies. All such information shall be held
confidential pursuant to the terms of that certain confidentiality agreement
executed on August 27, 1998.
2.7 Consent Waivers and Approvals. The Acquired Companies agree to use their
commercially reasonable best efforts, but shall not be required to expend any
funds or waive any right of the Acquired Companies, to obtain the waiver,
consent and approval of all persons whose waiver, consent or approval (i) is
required in order to consummate the transactions contemplated by this Agreement,
or (ii) is required by any agreement, lease, instrument, arrangement, judgment,
decree, order or license to which any Acquired Company is a party or subject on
the Closing Date, and (a) which would prohibit, or require the waiver, consent
or approval of any person to such transactions or (b) under which, without such
waiver, consent or approval, such transactions would constitute an occurrence of
default under the provisions thereof, result in the acceleration of any
obligation thereunder, or give rise to a right of any party thereto to terminate
its obligations thereunder. All written waivers, consents and final approvals
shall be produced at Closing in form and content reasonably satisfactory to
Atlantic.
2.8 Repayment of Loans and Advances. Excluding any intercompany accounts
receivable and accounts payable between ACIC and ARMGA, prior to or at the
Closing, all loans and advances made by the Acquired Companies to the
Shareholders or any entity controlled by any of them shall be repaid along with
all accrued interest and as of the Closing, no outstanding amounts shall be due
to the Acquired Companies from the Shareholders or any such controlled entity.
The Acquired Companies shall not forgive any such indebtedness nor shall it
disburse funds by way of bonus or otherwise to the Shareholders for the direct
or indirect purpose of providing funds to repay such loans or advances.
2.9 Amounts Due Shareholders by the Acquired Companies. On or prior to the
Closing Date, the Acquired Companies shall have received from the Shareholders
the full amount of any loans, advances, or other like amounts, including any
interest due thereon, from any Shareholder or any affiliate of any Shareholder;
provided, however, that in regard to amounts owed to the Acquired Companies by
Rumber Materials, Inc., on the Closing Date the Sole Shareholder shall be
allowed to transfer portions of the consideration to be received by the Sole
Shareholder from the transactions contemplated hereby to pay the amount of
loans, advances, or other like amounts owed to the Acquired Companies by Rumber
Materials, Inc. As of the Closing Date, no Acquired Company shall owe amounts to
any such person or entity for loans, advances, management fees, corporate
overhead or otherwise. Prior to Closing, no such loans, advances or other like
amounts (including interest thereon) shall be paid or retired from the assets of
any Acquired Company. Notwithstanding the foregoing, this Section 2.9 shall in
no way affect any right of any Shareholder to receive compensation for services
and employee fringe benefits in amounts and at times consistent with the
historical practices of the Acquired Companies.
2.10 Employment Agreement. The Acquired Companies agree to use their
commercially reasonable best efforts, but shall not be required to expend any
funds or waive any right of the Acquired Companies, to cause the Sole
Shareholder to enter into at the Closing an Employment Agreement substantially
in the form set forth in Exhibit 2.10.
2.11 Covenants Not to Compete. The Acquired Companies agree to use their
commercially reasonable best efforts, but shall not be required to expend any
funds or waive any right of the Acquired Companies, to cause each of the persons
listed on Exhibit 2.11 to enter at the Closing into a Non-Solicitation and
Confidentiality Agreement substantially in the form attached hereto as Exhibit
2.11(a) and to cause the Sole Shareholder to enter at the Closing into a
Covenant Not to Compete substantially in the form attached hereto as Exhibit
2.11(b).
2.12 Supplying of Financial Statements. The Acquired Companies covenant to
deliver to Atlantic all regularly prepared unaudited financial statements of the
Acquired Companies prepared after the date of this Agreement through the Closing
Date, in the format historically utilized internally, as soon as such financial
statements are available.
2.13 Atlantic Board Seat. Atlantic covenants that it will take all necessary
actions to elect Harold K. Fischer to the Board of Directors of Atlantic
for a normal term, effective as of the Closing.
1.1
2.14 Irrevocable Proxy. Contemporaneously with the execution of this Agreement,
the Acquired Companies have delivered stock options which shall contain
irrevocable proxies, in the form of Exhibit 2.14 attached hereto, duly and
validly executed and delivered by Shareholders (including the Sole Shareholder)
owning at least sixty seven percent (67%) of the outstanding shares of common
stock of ACIC.
2.15 Termination of Existing Employment Agreements. The Acquired Companies
covenant to cause any existing employment agreement with any employee of the
Acquired Companies to be terminated as of the Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRED COMPANIES.
The Acquired Companies, jointly and severally, represent and warrant to,
and for the benefit of, Atlantic as follows:
3.1 Organization and Standing. Each Acquired Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Texas, and has the full power and authority (corporate and otherwise) to carry
on its business in the places and as it is now being conducted and to own and
lease the properties and assets which it now owns or leases. Each Acquired
Company is now, and will be at Closing, duly qualified and/or licensed to
transact business and in good standing as a foreign corporation in all
jurisdictions listed in Exhibit 3.1 hereto, and the character of the property
owned or leased by such Acquired Company and the nature of the Business
conducted by it do not require such qualification and/or licensing in any other
jurisdiction.
3.2 Authority and Status. Each of the Acquired Companies has the capacity and
authority to execute and deliver this Agreement, to perform hereunder, and to
consummate the transactions contemplated hereby without the necessity of any act
or consent of any other person whomsoever. The execution, delivery and
performance by the Acquired Companies of this Agreement and each and every
agreement, document and instrument provided for herein have been duly authorized
and approved by the Board of Directors of each Acquired Company. This Agreement
and each and every agreement, document and instrument to be executed, delivered
and performed by the Acquired Companies in connection herewith, constitute or
will, when executed and delivered, constitute the valid and legally binding
obligations of each Acquired Company, enforceable against each of them in
accordance with their respective terms, except as enforceability may be limited
by applicable equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws from time to time in effect affecting the
enforcement of creditors' rights generally. Attached hereto as Exhibit 3.2 are
true, correct and complete copies of the Articles of Incorporation and Bylaws of
each Acquired Company.
3.3 Capitalization. The entire authorized capital stock of each Acquired Company
is as follows: (i) ACIC: Seven Hundred Thousand (700,000) shares of $2.00 par
value common stock, of which Five Hundred Twenty Five Thousand Shares (525,000)
shares are issued and outstanding and One Hundred Seventy Five Thousand
(175,000) shares are held in treasury; and (ii) ARMGA: One Hundred Thousand
(100,000) shares of $1.00 par value common stock, of which One Thousand (1,000)
shares are issued and outstanding and no shares are held in treasury. Neither of
the Acquired Companies has any other shares of capital stock authorized, issued
or outstanding. All of the issued and outstanding shares of each Acquired
Company have been validly issued and are fully paid and non-assessable and are
owned of record by the Shareholders as set forth on Exhibit 3.3(a). Except for
the requisite affirmative vote of the Shareholders pursuant to Texas law, the
authorization or consent of no other person or entity is required in order to
consummate the transactions contemplated herein by virtue of any such person or
entity having an equitable or beneficial interest in any Acquired Company or the
capital stock of any Acquired Company. There are no outstanding options,
warrants, calls, commitments, or plans by the Acquired Companies to issue any
additional shares of its capital stock, or to pay any dividends on such shares,
or to purchase, redeem, or retire any outstanding shares of its capital stock,
nor are there outstanding shares of its capital stock, nor are there outstanding
any securities or obligations which are convertible into or exchangeable for any
shares of capital stock of any Acquired Company, except options issued pursuant
to the Option Plan. A schedule identifying the holders and the amounts of all
currently outstanding options, all of which have been issued pursuant to the
Option Plan, and the exercise prices and vesting terms for such options, is set
forth on Exhibit 3.3(b).
3.4 Absence of Equity Investment. Except as described in Exhibit 3.4 hereto,
neither Acquired Company, directly or indirectly, owns of record or beneficially
any shares or other equity interests in any corporation (except as a stockholder
holding less than one percent (1%) interest in a corporation whose shares are
traded on a national or regional securities exchange or in the over-the-counter
market), partnership, limited partnership, joint venture, trust, limited
liability company or other business entity, all or any portion of the business
of which is competitive with that of any Acquired Company.
3.5 Liabilities and Obligations of the Acquired Companies.
3.5.1 Attached hereto as Exhibit 3.5.1 are true, correct and complete copies of
each of the ACIC's (i) certified statutory annual statements for the years ended
December 31, 1997 and December 31, 1998, together with the report of Ernst &
Young LLP (the "1997 and 1998 Statutory Financial Statements") The 1997 and 1998
Statutory Financial Statements fairly present in all material respects the
respective statutory financial condition of ACIC, taken as a whole, at year end
in each of such years and the statutory results of its operations and other data
contained therein for each of the years and were prepared in conformity with
statutory accounting practices prescribed or permitted by the Texas Department
of Insurance (which have been applied on a consistent basis). The books and
records of ACIC are sufficient and accurate to the extent required (i) to permit
Atlantic's independent certified public accountants to conduct an audit of ACIC
sufficient in scope to permit the issuance of an unqualified opinion on the
financial statements of ACIC and (ii) to permit Atlantic to comply with any
applicable reporting requirements under any applicable federal or state
securities laws.
3.5.2 Attached hereto as Exhibit 3.5.2 are true, correct and complete copies of
each of ARMGA's (i) unaudited balance sheets as of December 31, 1997 and
December 31, 1998 and the related G/L profit and loss statement for the years
then ended (the "1997 and 1998 Financial Statements"). The 1997 and 1998
Financial Statements have been prepared from and are in complete accordance with
the books and records of ARMGA, are true and complete statements of the
financial position of ARMGA as of their respective dates, have been prepared in
accordance with GAAP, consistently applied, fairly present in all material
respects the financial position and results of operations of ARMGA, taken as a
whole, as of the respective dates thereof, and disclose all liabilities of
ARMGA, whether absolute, contingent, accrued or otherwise, existing as of the
respective dates thereof which are of a nature required to be reflected in
financial statements prepared in accordance with GAAP, consistently applied. The
books and records of ARMGA are sufficient and accurate to the extent required
(i) to permit Atlantic's independent certified public accountants to conduct an
audit of ARMGA sufficient in scope to permit the issuance of an unqualified
opinion on the financial statements of ARMGA and (ii) to permit Atlantic to
comply with any applicable reporting requirements under any applicable federal
or state securities laws.
3.5.3 No Acquired Company has any liability or obligation (whether accrued,
absolute, contingent or otherwise) which is of a nature required to be reflected
in financial statements prepared in accordance with generally accepted
accounting principles, consistently applied, including, without limitation, any
liability which might result from an audit of its tax returns by any appropriate
authority, except for (i) the liabilities and obligations of the Acquired
Companies which are disclosed on Exhibit 3.5.3 hereto, to the extent and in the
amounts so disclosed, and (ii) liabilities incurred or accrued in the ordinary
course of business since December 31, 1998, and which do not, either
individually or in the aggregate, have an adverse effect on the assets,
operations or the business of the Acquired Companies. There is no basis for any
assertion against any Acquired Company as of December 31, 1998 of any liability
of any nature or in any amount not fully accrued and appearing on the balance
sheet as of that date.
3.5.4 Except as disclosed on Exhibit 3.5.3, no Acquired Company is in default
with respect to any liabilities or obligations, and all such liabilities or
obligations shown on Exhibit 3.5.3, and such liabilities incurred or accrued
subsequent to December 31, 1998 have been, or are being, paid or discharged as
they become due, and all such liabilities and obligations were incurred in the
ordinary course of business, except as indicated in Exhibit 3.5.3.
3.6 Taxes.
3.6.1 Each Acquired Company has, as of the date hereof, and will have prior to
Closing, timely and accurately filed all federal, state, foreign and local tax
returns and reports required to be filed by it prior to such dates and has
timely paid, or will timely pay prior to Closing, all taxes shown on such
returns as owed for the periods of such returns, including all withholding or
other payroll related taxes shown on such returns. The tax basis of all assets
of each Acquired Company as reflected on its books and records is correct and
accurate for use in tax periods ending after Closing, assuming that no change in
applicable federal or state tax laws or generally accepted accounting principles
occur subsequent to Closing. Except as described on Exhibit 3.6, no Acquired
Company is, nor will it become, subject to any additional taxes, interest,
penalties or other similar charges as of a result of the failure to file timely
or accurately, as required by applicable law, any such tax return or to pay
timely any amount shown to be due thereon, including, without limitation, any
such taxes, interest, penalties or charges resulting from the obtaining of an
extension of time to file any return or to pay any tax. No assessments or
notices of deficiency or other communications have been received by any Acquired
Company with respect to any such tax return which has not been paid, discharged
or fully reserved against in the Interim Financial Statements or Exhibit 3.6
hereto, and no amendments or applications for refund have been filed or are
planned with respect to any such return. There are no agreements between any
Acquired Company and any taxing authority, including, without limitation, the
Internal Revenue Service, waiving or extending any statute of limitations with
respect to any tax return, and the Acquired Company has not filed any consent or
election under the Code, including, without limitation, any election under
Section 341(f) of the Code, other than such consents and elections, if any,
reflected in each Acquired Company's tax return for its taxable year ended
December 31, 1997. True and complete copies of ACIC's tax returns for its 1995,
1996 and 1997 taxable years are attached as Exhibit 3.6. ACIC's federal income
tax returns have been audited by the Internal Revenue Service through the 1993
taxable year and the only taxable years which are open for audit are 1994, 1995,
1996, 1997 and 1998. True and complete copies of ARMGA's tax returns for its
1995, 1996 and 1997 taxable years are attached as Exhibit 3.6. ARMGA's federal
income tax returns have been audited by the Internal Revenue Service through the
1995 taxable year and the only taxable years which are open for audit are 1996,
1997 and 1998.
3.6.2 For all taxable periods not closed by the applicable statute of
limitations, ARMGA has been a "small business corporation" as that term is
defined in Section 1361(b) of the Code, it has had in effect an election under
Section 1362(a) of the Code to be treated as an S corporation, and it has filed
all of the federal income tax returns (and all state income tax returns in those
states permitting the equivalent of an S corporation election) consistently with
S corporation status. No Acquired Company has incurred and will not, with
respect to any taxable period ending on or prior to the Closing Date or, with
respect to any taxable period ending after the Closing Date, that portion of
such period ending on the Closing Date, incur any taxable income or liability
for taxes under or by reason of Sections 1363(d), 1371(d), 1374 or 1375 of the
Code.
3.7 Ownership of Assets and Leases.
3.7.1 Other than with respect to the Real Property and Improvements:
3.7.1.1 Exhibit 3.7.1.1 attached hereto contains a list of all fixed assets
owned by each Acquired Company, including, but not limited to, all machinery and
equipment, office furniture and equipment and all vehicles owned by each
Acquired Company, and depreciation schedules of the assets shown thereon.
3.7.1.2 Each Acquired Company has good and marketable title to all of the assets
shown on Exhibit 3.7.1.1 subject to no mortgage, pledge, lien, security
interest, conditional sale agreement, encumbrance, charge or adverse claim
whatsoever, except as specifically shown on Exhibit 3.8.
3.7.1.3 Except as shown on Exhibit 3.7.1.3, none of the properties or assets
used by the Acquired Companies are held under any lease, or as conditional
vendee under any conditional sale or other title retention agreement. Exhibit
3.7.1.3 includes a list of all leases of all machinery and equipment of which
any Acquired Company is a lessee, including respective expiration dates and
monthly rentals.
3.7.1.4 Each of the leases and agreements described in Exhibit 3.7.1.3 is in
full force and effect and constitutes a legal, valid and binding obligation of
the Acquired Company and the other respective parties thereto and is enforceable
in accordance with its terms, and there is not under any of such leases or
agreements existing any default of any Acquired Company or of any other parties
thereto (or event or condition which, with notice or lapse of time, or both,
would constitute a default). No Acquired Company has received any payment from a
lessor in connection with or as inducement for entering into any such lease
except as set forth on Exhibit 3.7.1.3.
3.7.1.5 None of the property of the Acquired Companies shown on Exhibits 3.7.1.1
or 3.7.1.3 is leased by the Acquired Companies to any other person or entity.
3.7.1.6 There are no items of machinery and equipment or vehicles employed or
used by the Acquired Companies which are not described in Exhibits 3.7.1.1 or
3.7.1.3. Each Acquired Company either owns or leases all assets which are
necessary to conduct its business. All machinery and equipment owned or leased
by the Acquired Companies are usable and operable in its business and are in
good operating condition and reasonable state of repair, subject only to
ordinary wear and tear.
3.7.1.7 Inventories of the Acquired Companies consist only of supplies and
materials used in the Business and neither Acquired Company holds any inventory
for sale. Except as set forth on Exhibit 3.7.1.7, all inventories owned by the
Acquired Companies consist only of items of a quality and quantity readily
usable in the normal course of business and are valued on the Acquired
Companies' books so as to reflect the normal valuation policy of the Acquired
Companies, all in accordance with generally accepted accounting principles,
applied on a basis consistent with prior years.
3.7.1.8 Except pursuant to this Agreement, no Acquired Company is a party to any
contract or obligation whereby there has been granted to anyone an absolute or
contingent right to purchase, obtain or acquire any rights in any of the assets,
properties or operations which are owned by the Acquired Company.
3.7.2 With respect to the Real Property and Improvements:
3.7.2.1 No Acquired Company presently owns, has previously owned or has been the
sole tenant on any Real Property, nor does it own any Improvements thereto
except leasehold improvements.
3.7.2.2 The parcel of property described in Exhibit 3.7.2.2 as the leased Real
Property is the only real estate leased by the Acquired Companies. Exhibit
3.7.2.2 includes a list of all leases of real estate of which each Acquired
Company is a lessee, including respective expiration dates and monthly rentals.
Each of the leases described in Exhibit 3.7.2.2 is in full force and effect and
constitutes a legal, valid and binding obligation of the Acquired Company and
the other respective parties thereto and is enforceable in accordance with its
terms, and there is not under any of such leases existing any default of any
Acquired Company or of any other party thereto (or event or condition which,
with notice or lapse of time, or both, would constitute a default). No Acquired
Company has received any payment from a lessor in connection with or as
inducement for entry into any such lease except as set forth on Exhibit 3.7.2.2.
3.7.2.3 Except as disclosed on Exhibit 3.7.2.3, none of the property shown on
Exhibit 3.7.2.2 is leased by any Acquired Company to any other person or entity.
3.7.2.4 There is no real estate used by the Acquired Companies which is not
described in Exhibit 3.7.2.2. Each Acquired Company either owns or leases all
real estate which is necessary to conduct its business.
3.7.2.5 No taxes, assessments, water charges or sewer charges relating to the
Real Property and payable by an Acquired Company are delinquent and there are no
special taxes, assessments or charges pending or threatened against the Real
Property that are payable by an Acquired Company.
3.7.2.6 The Real Property and the Improvements are usable and operable in the
Business and the Improvements are in good operating condition and reasonable
state of repair, subject only to ordinary wear and tear.
3.7.2.7 Each Acquired Company has obtained and maintained in full force and
effect to the date hereof all Permits required for the normal use and operation
of the Real Property and the Improvements as currently operated. A complete and
correct list of all such Permits is set forth on Exhibit 3.7.2.8. Each Acquired
Company has delivered to Atlantic complete and accurate photocopies of all
Permits. Each Acquired Company has complied in all respects with all such
Permits and has not received any notice that any such Permits will not be
renewed upon expiration or of any conditions which will be imposed in order to
receive any such renewal. Except as described on Exhibit 3.7.2.8, all of the
Permits will remain in full force and effect, and will inure to the benefit of
the Atlantic, after the consummation of the transactions contemplated by this
Agreement.
3.7.2.8 The Real Property is being operated and maintained in full compliance
with all building code, zoning and other applicable local, state and federal
ordinances, regulations and requirements which affect the use and operation
thereof, with all contracts related thereto and with all Permits. No Acquired
Company has received any notice or violation of law or municipal ordinance,
order or requirement having jurisdiction or affecting the Real Property.
3.8 Indebtedness of the Acquired Companies. Attached hereto as Exhibit 3.8 is a
list of all instruments, agreements or arrangements pursuant to which any the
Acquired Company has borrowed any money, incurred any indebtedness, or
established any line of credit, which represents a liability of any Acquired
Companies on the date hereof. Each Acquired Company has performed all the
obligations required to be performed by it to the date hereof pursuant to the
obligations listed on Exhibit 3.8 and no Acquired Company is in default under
any mortgage, indenture, note or other obligation for, or relating to, borrowed
money to which the Acquired Company is a party, or to which any property or
assets belonging to, or used by, the Acquired Company is subject, and there has
not occurred any event which, but for the passage of time or giving of notice,
or both, would constitute a default.
3.9 Accounts Receivable and Notes Receivable.
3.9.1 Attached hereto as Exhibit 3.9 is a true and complete list of all of the
accounts receivable of each Acquired Company as of September 30, 1998 and all of
the notes receivable of each Acquired Company as of such date. All sales and
services made or provided on credit between September 30, 1998 and the Closing
Date have been or will have been (as applicable) properly recorded on the books
of each Acquired Company in the ordinary course of business.
3.9.2 All of the accounts receivable, net of any reserves for doubtful accounts
established in the determination of the Closing Date Capital and Surplus and the
Closing Date Net Worth pursuant to Section 2.1.9 hereof, will be paid when due
and in accordance with their terms (and, in any event, within one hundred eighty
(180) days from the Closing) and the notes receivable will be paid when due and
in accordance with their terms. Any unpaid amounts shall first be applied
against applicable reserves for doubtful accounts established in the Closing
Date Capital and Surplus and the Closing Date Net Worth until such respective
reserves are extinguished. If any of the said accounts receivable, after
application of such reserves are not paid within one hundred eighty (180) days
from the Closing Date or notes receivable are not paid in full when due,
Atlantic shall deliver a notice to the Escrow Agent pursuant to the terms of the
Escrow Agreement and the Escrow Agent shall distribute to Atlantic the amounts
held from the Escrowed Shares, valued at the Per Share Closing Price, for any
such unpaid account receivable or note receivable for any such unpaid account
receivable or note receivable. All receipts from a customer shall be applied to
the specific invoices to which they relate, and neither Atlantic nor the
Acquired Companies shall direct a customer to pay a specific invoice in lieu of
another invoice unless such customer objects to a particular invoice.
3.10 Agreement Does Not Violate Other Instruments. Except as listed in Exhibit
3.10, the execution and delivery of this Agreement by each Acquired Company do
not, and the consummation of the transactions contemplated hereby will not,
violate any provision of the Articles of Incorporation, as amended, or Bylaws,
as amended, of any Acquired Company or violate or constitute an occurrence of
default under any provision of, or conflict with, or result in acceleration of
any obligation under, or give rise to a right by any party to terminate its
obligations under, any mortgage, deed of trust, conveyance to secure debt, note,
loan, lien, lease, agreement, instrument, or any order, judgment, decree or
other arrangement to which any Acquired Company is a party or is bound or by
which any Acquired Company's assets are affected. Except for insurance
regulatory approvals, HSR Act approvals, and except as listed or described on
Exhibit 3.10 attached hereto, no consent, approval, order or authorization of,
or registration, declaration or filing with, any governmental entity is required
to be obtained or made by or with respect any Acquired Company or any of the
assets, properties or operations of any Acquired Company, in connection with the
execution and delivery by any Acquired Company of this Agreement or any of the
agreements, certificates or other documents delivered or to be delivered on or
after the date hereof and at or prior to the Closing in connection with the
transactions contemplated hereby.
3.11 Absence of Changes. Since December 31, 1998, no Acquired Company has,
except as disclosed on Exhibit 3.11 attached hereto:
3.11.1 Transferred, assigned, conveyed or liquidated any of its assets or
business or entered into any transaction or incurred any liability or
obligation, other than in the ordinary course of its business;
3.11.2 Suffered any adverse change in its business, operations, or financial
condition and neither of the Acquired Companies has become aware of any event or
state of facts which may result in any such adverse change;
3.11.3 Suffered any destruction, damage or loss, whether or not covered by
insurance;
3.11.4 Suffered, permitted or incurred the imposition of any lien, charge,
encumbrance (which as used herein includes, without limitation, any mortgage,
deed of trust, conveyance to secure debt or security interest) or claim upon any
of its assets, except for any current year lien with respect to personal or real
property taxes not yet due and payable;
3.11.5 Committed, suffered, permitted or incurred any default in any
liability or obligation;
3.11.6 Made or agreed to any adverse change in the terms of any contract or
instrument to which it is a party, except with respect to the adjustment,
compromise and settlement of insurance claims in the ordinary course of business
and consistent with historical practices;
3.11.7 Waived, canceled, sold or otherwise disposed of, for less than the face
amount thereof, any claim or right which it has against others, except with
respect to the adjustment, compromise and settlement of insurance claims in the
ordinary course of business and consistent with historical practices;
3.11.8 Declared, promised or made any distribution or other payment to its
Shareholders (other than reasonable compensation for services actually rendered)
or issued any additional shares or rights, options or calls with respect to the
capital stock of any Acquired Company, or redeemed, purchased or otherwise
acquired any of the capital stock of any Acquired Company, or made any change
whatsoever in any Acquired Company's capital structure (if such action would
affect the ability of any Acquired Company to consummate the transactions
contemplated in this Agreement or would cause the necessity of obtaining the
consent of any individual or entity not disclosed in Exhibit 3.10);
3.11.9 Paid, agreed to pay or incurred any obligation for any payment for, any
contribution or other amount to, or with respect to, any employee benefit plan,
or paid any bonus to, or granted any increase in the compensation of, any
Acquired Company's officers, agents or employees (unless made at times and in
amounts consistent with the historical practices of such Acquired Company), or
made any increase in the pension, retirement or other benefits of any Acquired
Company's directors, officers, agents, field representatives or other employees,
except for the bonuses described in Section 2.1.9;
3.11.10 Committed, suffered, permitted or incurred any transaction or event
which would increase any Acquired Company's tax liability for any prior taxable
year;
3.11.11 Incurred any other liability or obligation or entered into any
transaction other than in the ordinary course of business;
3.11.12 Received any notices indicating, and no Acquired Company has reason to
believe, that any supplier has taken or contemplates any steps which could
disrupt the business relationship of any Acquired Company with said supplier or
could result in the diminution in the value of any Acquired Company as a going
concern;
3.11.13 Paid, agreed to pay or incurred any obligation for any payment of any
indebtedness except current liabilities incurred in the ordinary course of
business and except for payments as they become due pursuant to governing
agreements disclosed on Exhibit 3.8; or
3.11.14 Delayed or postponed the payment of any liabilities, whether current or
long term, or failed to pay in the ordinary course of business any liability on
a timely basis consistent with prior practice.
3.12 Litigation. Except as otherwise set forth in Exhibit 3.12 hereto, there is
no suit, action, proceeding, claim or investigation pending or threatened
against, or affecting, any Acquired Company, except with respect to insurance
claims matters relating to policies of insurance issued or assumed by or through
the Acquired Companies in the ordinary course of business which do not allege
bad faith or fraud on the part of any Acquired Company, and there exists no
basis or grounds for any such suit, action, proceedings, claim or investigation.
None of the items described in Exhibit 3.12, singly or in the aggregate, if
pursued and/or resulting in a judgment would have an adverse effect on the
assets, the business, goodwill or financial condition of any Acquired Company,
or the right of any Acquired Company to consummate the transactions contemplated
hereby.
3.13 Licenses and Permits; Compliance With Law. Each Acquired Company holds all
licenses, certificates, permits, franchises and rights from all appropriate
federal, state or other public authorities necessary for the conduct of its
business and the use of its assets. All such licenses, certificates, permits,
franchises and rights are listed on Exhibit 3.13. Except as noted in Exhibit
3.13, each Acquired Company is presently conducting its business so as to comply
in all respects with all applicable statutes, ordinances, rules, regulations and
orders of any governmental authority. Further, no Acquired Company is presently
charged with nor is under governmental investigation with respect to any actual
or alleged violation of any statute, ordinance, rule or regulation, nor is
presently the subject of any pending or threatened adverse proceeding by any
regulatory authority having jurisdiction over its business, properties or
operations. Except for the Texas local recording agent license of ARMGA, which,
as a result of the acquisition of ARMGA by ACIC, would not be renewable at the
next renewal date after such acquisition and which could be suspended or
revoked, as a result thereof, prior to such renewal date, neither the execution
nor delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will result in the termination of any such license,
certificate, permit, franchise or right held by any Acquired Company which is to
be assigned pursuant to this Agreement, and all such assigned licenses,
certificates, permits, franchises and rights will inure to the benefit of the
Atlantic after the transactions contemplated by this Agreement.
3.14 Contracts, Etc.
3.14.1 Exhibit 3.14 hereto consists of a true and complete list of all
contracts, agreements and other instruments relating to the Business except for
those contracts, insurance policies and Benefit Plans listed in Exhibits
3.7.1.3, 3.7.2.2, 3.8, 3.9, 3.13, 3.15.1, 3.15.2, 3.17, 3.18.3, 3.18.4(a),
3.18.4(b), 3.18.4(c) 3.18.5, 3.18.6, 3.18.8, 3.18.9 and 3.20, respectively.
Contemporaneously with the delivery of the Exhibits to this Agreement, each
respective Acquired Company has delivered a true and complete copy of each such
contract, agreement or instrument, certified as such by a duly authorized
officer of each Acquired Company, including those listed in Exhibits 3.7.1.3,
3.7.2.2, 3.8, 3.9, 3.13, 3.14, 3.15.1, 3.15.2, 3.17, and 3.20.
3.14.2 All of the contracts, agreements, policies of insurance or instruments
described in Exhibits 3.7.1.3, 3.7.2.2, 3.8, 3.9, 3.13, 3.14, 3.15.1, 3.15.2,
3.17, 3.18.3, 3.18.4(a), 3.18.4(b), 3.18.4(c), 3.18.5, 3.18.6, 3.18.8, 3.18.9
and 3.20 hereto are valid and binding upon each respective Acquired Company and,
to the best knowledge of the Acquired Companies, the other parties thereto and
are in full force and effect and enforceable in accordance with their terms, and
none of the Acquired Companies or any other party to any such contract,
commitment or arrangement has breached any provision of, or is in default under,
the terms thereof. Except for items specifically described in Exhibit 3.14,
neither Acquired Company has received any payment from any contracting party in
connection with or as an inducement for entering into any contract, agreement,
policy or instrument except for payment for actual services rendered or to be
rendered by the Acquired Companies consistent with amounts historically charged
for such services. 1.1.1
3.15 Intellectual Property; Computer Software.
3.15.1 Intellectual Property.
3.15.1.1 Exhibit 3.15.1 hereto sets forth a complete and correct list and
summary description of all trademarks, trade names, service marks, service
names, brand names, copyrights and patents, registrations thereof and
applications therefor, applicable to or used in the business of each Acquired
Company, together with a complete list of all licenses granted by or to such
Acquired Company with respect to any of the above. All such trademarks, trade
names, service marks, service names, brand names, copyrights and patents are
owned by the Acquired Companies, free and clear of all liens, claims and
encumbrances of any nature whatsoever. Neither Acquired Company is currently in
receipt of any notice of any violation of, and neither Acquired Company is
violating, the rights of others in any trademark, trade name, service mark,
copyright, patent, trade secret, know-how or other intangible asset.
3.15.1.2 Attached hereto as Exhibit 3.15.1 are copies of the Certificates of
Registration issued by the United States Patent and Trademark Office for the
trademarks listed on Exhibit 3.15.1. The trademark registrations specified in
Section 3.15.1 below for the trademarks listed on Exhibit 3.15.1 are owned
exclusively by the Acquired Companies, free and clear of all liens, claims,
security interests and encumbrances of any nature whatsoever and the respective
Acquired Company has the right to use the trade dress currently used in
connection therewith. Neither Acquired Company is currently in receipt of any
notice of any violation of, no Acquired Company is infringing on, the rights of
any other party in any trademark, trade name, or service mark used in connection
with the business of the Acquired Companies.
3.15.1.3 Each Acquired Company is the owner of Federal Registrations in the U.
S. Patent and Trademark Office as set forth on Exhibit 3.15.1 for use in
connection with the business of the Acquired Company, and such registrations are
in full force and effect.
3.15.1.4 Each Acquired Company has the right to use and transfer the trade dress
currently used in connection with the packaging and promotion of its products
under these marks;
3.15.1.5 No Acquired Company has granted any license, permits on or other
authorization to any other person or entity to use said marks or trade names, or
has made any conveyance of any such rights.
3.15.1.6 There have been, and are, no past or present disputes, demands, or
litigation challenging or casting doubt on the ownership by any Acquired Company
or any predecessor of any of the said marks or challenging the validity of any
of the marks or the registration thereof.
3.15.1.7 There are no prior settlements, agreements, or administrative or
judicial decisions affecting ownership or validity of the assigned marks or
limiting the right of any Acquired Company or any predecessor owner to use or
register the marks or to grant this assignment.
3.15.1.8 There are no other agreements, contracts or licenses granting,
limiting, encumbering or otherwise directly or indirectly affecting ownership or
use or right to use or assign the marks by any Acquired Company.
3.15.1.9 To the best knowledge of the Acquired Companies, there are no current
infringements of the said marks by any third party.
3.15.2 Computer Software.
3.15.2.1 Each Acquired Company has sole, full and clear title to that computer
software described as "Owned Software" on Exhibit 3.15.2 hereto (the "Owned
Software"), free of all claims, including claims or rights of employees, agents,
consultants or other parties involved in the development or creation of such
computer software. Except as set forth on Exhibit 3.15.2 hereto, each Acquired
Company has the right and license to use that software described as "Licensed
Software" on Exhibit 3.15.2 free and clear of any limitations or encumbrances
except as may be set forth in any license agreements listed in Exhibit 3.15.2.
Exhibit 3.15.2 sets forth a list of all license fees, rents, royalties or other
charges that each Acquired Company is required or obligated to pay with respect
to Licensed Software. Each Acquired Company is in full compliance with all
provisions of any license, lease or other similar agreement pursuant to which it
has rights to use the Licensed Software. Except as disclosed on Exhibit 3.15.2,
none of the Licensed Software has been incorporated into or made a part of any
Owned Software or any other Licensed Software and none of the Owned Software is
dependent on any Licensed Software in order to freely operate in the manner in
which it is intended. The Owned Software and Licensed Software constitute all
software used in the Business (the "Acquired Companies' Software"). No Acquired
Company is infringing any intellectual property rights of any other person or
entity with respect to the Acquired Companies' Software, and to the best
knowledge and belief of the Acquired Companies, after due inquiry, no other
person or entity is infringing any intellectual property rights of any Acquired
Company with respect to the Acquired Companies' Software which any Acquired
Company leases or licenses to it.
3.15.2.2 Year 2000 Compliance. Except as listed on Exhibit 3.15.2.2 and except
for over-the-counter "shrink-wrap" software that is commercially available at a
cost of no more than Three Hundred Dollars ($300.00) per unit, all of the Owned
Software, Licensed Software, databases, hardware, computer controls and
peripherals used in the businesses of the Acquired Companies will be able to
process accurately date and time data (including, but not limited to,
calculating, comparing and sequencing) from, into, and between the 20th and 21st
centuries and the years 1999 and 2000 and leap year calculations without error
relating to date data, specifically including any error relating to, or the
product of, date data that represents or references different centuries or more
than one century (any failure to so operate being referred to hereinafter as a
"Year 2000 Defect"). None of the assets of any Acquired Company will fail to
perform in any respect require any repair, rewrite, conversion or other
adaptation because of, or due in any way to, a Year 2000 Defect. None of the
businesses of the Acquired Companies depends to any extent on embedded computer
technology or computer information systems of its vendors or suppliers that
would, in the event that the embedded chips or vendor/supplier technology or
systems contain a Year 2000 Defect, have an adverse effect on any business of
the Acquired Companies or their assets.
3.16 Labor Matters. Exhibit 3.16 sets forth a list of all employees and
independent contractors of each Acquired Company, their current salaries or
rates and the Acquired Company's salary increase guidelines. Except as set forth
on Exhibit 3.16, within the last three (3) years no Acquired Company has been
the subject of any union activity or labor dispute, nor has there been any
strike of any kind called or threatened to be called against it; and, except as
set forth on Exhibit 3.16, no Acquired Company has violated any federal, state,
or other governmental statutes, regulations, or ordinances relating to
employment and labor matters, including, without limitation, the provisions of
Title VII of the Civil Rights Act of 1964 (race, color, religion, sex, and
national origin discrimination), 42 U.S.C. ss. 1981 (discrimination), 42 U.S.C.
ss.ss. 621-634 (the Age Discrimination in Employment Act), 29 U.S.C. ss. 206
(equal pay), Executive Order 11246 (race, color, religion, sex, and national
origin discrimination), Executive Order 11141 (age discrimination), ss. 503 of
the Rehabilitation Act of 1973 (handicap discrimination), 42 U.S.C. ss.ss.
12101-12213 (Americans with Disabilities Act), 29 U.S.C. ss.ss. 2001-2654
(Family and Medical Leave Act), 29 U.S.C. ss.ss. 651-678 (occupational safety
and health) and requirements relating to the documentation of the nationality of
employees. The staffing and employment levels of each Acquired Company are now,
and will be at Closing, sufficient to run the Business at levels of production,
sales, marketing and administration consistent with the levels of production,
sales, marketing and administration for the prior fiscal year.
3.17 Benefit Plans.
3.17.1 Exhibit 3.17 lists every pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay, vacation,
bonus or other incentive plan, any other written or unwritten employee program,
arrangement, agreement or understanding, (whether arrived at through collective
bargaining or otherwise), any medical, vision, dental or other health plan, any
life insurance plan or any other employee benefit plan or fringe benefit plan,
including, without limitation, any "employee benefit plan," as that term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974
as amended ("ERISA") and any multiemployer plan within the meaning of Section
3(37) of ERISA, currently or previously adopted, maintained, sponsored in whole
or in part or contributed to by any Acquired Company or any current or former
member of a commonly controlled group of trades or businesses (as defined in
Section 4001(b)(1) of ERISA) including any Acquired Company for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors or
other beneficiaries of any Acquired Company and under which employees, retirees,
dependents, spouses, directors, independent contractors or other beneficiaries
of any Acquired Company are eligible to participate or under or in connection
with which any Acquired Company has any contingent or noncontingent liability of
any kind whether or not probable of assertion (collectively, the "Benefit
Plans"). Any of the Benefit Plans which is an "employee pension benefit plan,"
as that term is defined in Section 3(2) of ERISA, or an "employee welfare
benefit plan" as that term is defined in Section 3(1) of ERISA, is referred to
herein as an "ERISA Plan." No Benefit Plan is or has been a multiemployer plan
within the meaning of Section 3(37) of ERISA.
3.17.2 Exhibit 3.17 also lists: (a) all trust agreements or other funding
arrangements, including insurance contracts, and all amendments thereto
applicable to the Benefit Plans, (b) where applicable, with respect to any such
plan or plan amendments, the most recent determination letters issued by the
United States Internal Revenue Service, (c) all rulings, opinion letters,
information letters or advisory opinions issued by the United States Department
of Labor after December 31, 1974, with respect to each such Benefit Plan, (d)
annual reports or returns and audited or unaudited financial statements for the
most recent three plan years and any amendments thereto, and (e) the most recent
summary plan descriptions and any material modifications thereto with respect to
such Benefit Plans. Contemporaneously with the delivery of the Exhibits to this
Agreement, each Acquired Company has delivered a true and complete copy of each
such Benefit Plan, together with the Internal Revenue Service determination
letters, the Form 5300, all summary plan descriptions, and, for the period since
January 1, 1996, all agreements, letter rulings, opinions, letters, reports,
returns, financial statements, including Form 5500s, in each case with respect
to each such Benefit Plan, all certified as such by a duly authorized officer of
each Acquired Company and the Representative.
3.17.3 All the Benefit Plans and the related trusts subject to ERISA comply with
and have been administered in compliance with the provisions of ERISA, all
provisions of the Code relating to qualification and tax exemption under Code
Sections 401(a) and 501(a) or otherwise applicable to secure intended tax
consequences, all applicable state or federal securities laws and all other
applicable laws, rules and regulations and collective bargaining agreements, and
no Acquired Company has received any notice from any governmental agency or
instrumentality questioning or challenging such compliance. All necessary
governmental approvals for the Benefit Plans which have been obtained,
including, but not limited to, timely determination letters on the qualification
of the ERISA Plans and tax exemption of related trusts, as applicable, under the
Code and timely registration and disclosure under applicable securities laws,
and all such governmental approvals continue in full force and effect. No event
has occurred which will or could give rise to disqualification of any such plan
under Sections 401(a) or 501(a) of the Code or to a tax under Section 511 of the
Code.
3.17.4 No Acquired Company or any administrator or fiduciary of any such Benefit
Plan (or agent or delegate of any of the foregoing) has engaged in any
transaction or acted or failed to act in any manner which could subject any
Acquired Company to any direct or indirect liability (by indemnity or otherwise)
for a breach of any fiduciary, co-fiduciary or other duty under ERISA. No oral
or written representation or communication with respect to any aspect of the
Benefit Plans has been made to employees of any Acquired Company prior to the
Closing Date which is not in accordance with the written or otherwise
preexisting terms and provisions of such Benefit Plans in effect immediately
prior to the Closing Date. Except as disclosed in Exhibit 3.17 there are no
unresolved claims or disputes under the terms of, or in connection with, the
Benefit Plans, and no action, legal or otherwise, has been commenced with
respect to any claim.
3.17.5 All annual reports or returns, audited or unaudited financial statements,
actuarial valuations, summary annual reports and summary plan descriptions
issued with respect to the Benefit Plans are correct and accurate as of the
dates thereof, and there have been no amendments filed to any of such reports,
returns, statements, valuations or descriptions or required to make the
information therein true and accurate.
3.17.6 No "party in interest" (as defined in Section 3(14) of ERISA) or
"disqualified person" (as defined in Section 4975(e)(2) of the Code) of any
Benefit Plan has engaged in any "prohibited transaction" (within the meaning of
Section 4975(c) of the Code or Section 406 of ERISA). There has been no (a)
"reportable event" (as defined in Section 4043 of ERISA), or event described in
Section 4062(f) or Section 4063(a) of ERISA or (b) termination or partial
termination, withdrawal or partial withdrawal with respect to any of the ERISA
Plans which any Acquired Company (or any member of a controlled group of trades
or businesses as defined in Section 4001(b) which has, since January 1, 1975,
included any Acquired Company) maintains or contributes to or has maintained or
contributed to or was required to maintain or contribute to for the benefit of
employees of any Acquired Company or any subsidiaries now or formerly in
existence. With respect to any termination or withdrawal from any such ERISA
Plan, no Acquired Company has direct or indirect liability to said Plan or any
beneficiary thereof.
3.17.7 For any ERISA Plan which is an employee pension benefit plan as defined
in ERISA Section 3(2), the fair market value of such Benefit Plan's assets
equals or exceeds the present value of all benefits (whether vested or not)
accrued to date by all present or former participants in such Benefit Plan. For
this purpose the assumptions prescribed by the Pension Benefit Guaranty
Corporation for valuing plan assets or liabilities upon plan termination shall
be applied and the term "benefits" shall include the value of any early
retirement or ancillary benefits (including shutdown benefits) provided under
any Benefit Plan.
3.17.8 As of September 30, 1998, no Acquired Company had current or future
liability under any Benefit Plan that was not reflected in the Interim Financial
Statements and the liability of the Acquired Companies in connection with any
Benefit Plan as of Closing will be fully accrued against in the determination of
the Closing Date Net Worth of the Acquired Companies as determined under Section
2.1.9 hereof.
3.17.9 No Acquired Company maintains any Benefit Plan providing deferred or
stock based compensation which is not reflected in the Interim Financial
Statements, other than the Option Plan.
3.17.10 Except as disclosed on Exhibit 3.17, no Acquired Company has maintained,
and does not now maintain, a Benefit Plan providing welfare benefits (as defined
in ERISA Section 3(l)) to employees after retirement or other separation of
service except to the extent required under Part 6 of Title I of ERISA and Code
Section 4980B.
3.17.11 Except as disclosed in Exhibit 3.17, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee of any Acquired Company to severance pay, unemployment
compensation or any payment contingent upon a change in control or ownership of
any Acquired Company, or (ii) accelerate the time of payment or vesting, or
increase the amount, of any compensation due to any such employee or former
employee.
3.17.12 All Benefit Plans subject to section 4980B of the Code, as amended from
time to time, or Part 6 of Title I of ERISA or both have been maintained in
compliance with the requirements of such laws and any regulations (proposed or
otherwise) issued thereunder.
3.18 Insurance Matters.
3.18.1 Legal Investments. The bonds, stocks and other investments owned
beneficially or of record by each of the Acquired Companies are permissible
investments for it under all applicable insurance statutes or regulations.
3.18.2 Insurance Issued. All insurance policies and contracts issued by each of
the Acquired Companies now in force (other than policies and contracts issued
under applicable surplus lines laws) are on forms and at rates approved by the
insurance regulatory authority of the state or jurisdiction where issued or have
been filed with and not objected to by such authority within the period provided
for objection. 1.1.1
3.18.3 Exhibit 3.18.3 contains a complete and correct list of all custodians and
depositories for investment assets of each of the Acquired Companies, and lists
the persons having signatory authority or access thereto on behalf of each of
the Acquired Companies.
3.18.4 Exhibit 3.18.4(a) contains a complete and correct list of all insurance
agencies and agents authorized to write insurance on behalf of each of the
Acquired Companies as of the date shown on such list. To the knowledge of each
of the Acquired Companies, all such agencies and agents are duly licensed with
the insurance regulatory authority of the state or jurisdiction in which such
agency or agent writes insurance on behalf of each of the Acquired Companies.
Exhibit 3.18.4(b) contains for each of the Acquired Companies the standard form
of agency agreement (including commission schedule) and standard form of
contingent commission agreement and a list of all agents who have agency or
commission agreements the terms of which vary from such standard agreement and
the non-standard terms thereof, all of which agreements are cancelable upon no
more than 180 days' notice, unless otherwise required by law to keep such
agreement in force. Except as set forth on Exhibit 3.18.4(c), to the best
knowledge of the Acquired Companies, no agent or broker of any of the Acquired
Companies, (i) has entered into any lease or other contract (other than
contracts of insurance) which bind or purport to bind any of the Acquired
Companies or (ii) is in arrears with respect to premium remittances more than
ninety (90) days from the end of the accounting month in which the premium was
billed as shown by the Acquired Companies' most recent "90 day list" which has
been prepared in the ordinary course of business.
3.18.5 There are no contracts, arrangements, treaties or understandings with any
party with respect to reinsurance, excess insurance, ceding of insurance or
indemnification with respect to the insurance currently being provided by each
of the Acquired Companies that have been entered into except as disclosed in
Exhibit 3.18.5.
3.18.6 Exhibit 3.18.6 contains a true and complete list of all individual
policyholder claims or individual group certificateholder claims against each of
the Acquired Companies which claims were reported and unpaid as the date hereof.
Each of the Acquired Companies shall also provide to Atlantic a current list
thereof at Closing.
3.18.7 The transactions contemplated by this Agreement will not affect the
validity and binding character of any policy of insurance issued by each of the
Acquired Companies or render any admissible assets of each of the Acquired
Companies inadmissible under the applicable insurance laws of any state or the
regulations promulgated thereunder by the applicable insurance regulatory
authorities; provided, however, that the Acquired Companies make no
representation or warranty regarding the admissible asset value, if any, of
ARMGA on the books of ACIC. Except as disclosed on Exhibit 3.18.7, no provision
in any insurance policy issued by each of the Acquired Companies and in force
gives policyholders the right to receive dividends or distributions on their
policies or otherwise share in the benefits or revenues of each of the Acquired
Companies. Except as disclosed in Exhibit 3.18.7, (i) no policyholder or related
group of policyholders which, singly or in the aggregate, accounted for 5% or
more of the gross revenues of each of the Acquired Companies for the years ended
December 31, 1997 or December 31, 1998 has materially adversely changed its
agreement(s) with any of the Acquired Companies or, to the best knowledge of the
Acquired Companies, intends to materially adversely change the volume of
business done thereunder and (ii) no broker or agent of any of the Acquired
Companies who provided more than $250,000 in direct written premiums annually in
1997 or 1998 has terminated or had terminated its relationship with the Acquired
Companies.
3.18.8 Except as disclosed in Exhibit 3.18.8, the contracts entered into by each
of the Acquired Companies with each of its agents, managers or brokers are
valid, binding and in full force and effect and are enforceable in accordance
with their terms except as enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or other laws affecting the
enforceability of creditors' rights generally or by general equitable
principles. Each of the Acquired Companies is not in default of any provision
thereof and, except as disclosed in Exhibit 3.18.8, no such contract contains
(i) any provision providing that the other party thereto may terminate the same
by reason of the transactions contemplated by this Agreement, or (ii) any other
provision which would be altered or otherwise become applicable by reason of
such transactions. Each of the Acquired Companies' current commission schedule
on all in force business is as disclosed in Exhibit 3.18.8. Except as disclosed
in Exhibit 3.18.8, neither of the Acquired Companies is a party to any agreement
providing for the collection of insurance premiums payable to each of the
Acquired Companies by any other person.
3.18.9 Reserves. The insurance reserving practices and policies of ACIC have not
changed since December 31, 1997, and the results of the application of such
practices and policies are accurately reflected in the accrual for unpaid losses
and expenses in ACIC's consolidated balance sheet as of December 31, 1998. The
reserves carried on the books of ACIC are, in the aggregate, adequate to cover
the total amount of all the insurance and reinsurance liabilities of ACIC.
Exhibit 3.18.9 lists the actuarial reserve certifications prepared for ACIC,
copies of which have been provided to Atlantic.
3.19 Environmental Matters. Except as set forth in Exhibit 3.19, no real
property now or previously used by any Acquired Company or now or previously
owned or leased by any Acquired Company (the "Property") has been used by any
Acquired Company or any other party under the control of any Acquired Company or
for whose conduct any Acquired Company is or was legally responsible for the
handling, treatment, storage or disposal into the environment of any Hazardous
Substance (as hereinafter defined). Except as set forth in Exhibit 3.19, no
release, discharge, spillage or disposal of any Hazardous Substance and no soil,
water or air contamination by any Hazardous Substance has occurred or is
occurring in, from or on the Property in such manner or amounts which could give
rise to liability to any Acquired Company or any entity under the control of any
Acquired Company or for whose conduct any Acquired Company is or was legally
responsible. Except as set forth in Exhibit 3.19, each Acquired Company has
complied with all reporting requirements under any applicable federal, state or
local environmental laws and have obtained and is in compliance with all permits
required by or as they relate to the business of such Acquired Company, and
there are no existing violations by any Acquired Company of any such
environmental laws or permits. Except as set forth in Exhibit 3.19, there are
no, nor has there been any threat of, any claims, actions, suits, proceedings or
investigations related to the presence, release, production, handling,
discharge, spillage, transportation or disposal of any Hazardous Substance or
contamination of soil, water or air by any Hazardous Substance pending or
threatened with respect to any use or ownership by any Acquired Company of the
Property or otherwise against any Acquired Company in any court or before any
state, federal or other governmental agency or private arbitration tribunal and
there is no basis for any such claim, action, suit, proceeding or investigation.
Except as set forth in Exhibit 3.19, there are no underground storage tanks on
the Property for which any Acquired Company may be held to be or have been the
owner or operator. No building or other improvement included in the Property for
which any Acquired Company or any entity for whose conduct any Acquired Company
may be held legally responsible contains any asbestos or any asbestos-containing
materials, and such buildings and improvements are free from radon
contamination. None of the buildings, improvements or equipment which are part
of the business of any Acquired Company contain any polychlorinated biphenyls
("PCBs") for which any Acquired Company or any entity for whose conduct any
Acquired Company may be held legally responsible . For the purposes of this
Agreement, "Hazardous Substance" shall mean any hazardous or toxic substance,
pollutant, contaminant or waste as those terms are defined by or regulated
pursuant to any applicable federal, state or local law, ordinance, regulation,
policy, judgment, decision, order or decree regulation including, without
limitations, the Comprehensive Environmental Recovery Compensation and Liability
Act, 42 U.S.C. ss. 9601 et seq. ("CERCLA"), the Hazardous Materials
Transportation Act, 49 U.S.C. ss. 1801 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. ss. 6901 et seq. ("RCRA"), the Federal Water Pollution
Control Act, 33 U.S.C. ss. 1311 et seq., the Clean Air Act, 42 U.S.C. ss. 7401
et seq. and the Toxic Substance Control Act, 15 U.S.C. ss. 2601 et seq., and
petroleum, petroleum products and oil.
3.20 Insurance. Set forth in Exhibit 3.20 is a complete list of all insurance
policies which any Acquired Company has maintained as the insured with respect
to its business, properties or employees within the preceding three years.
Except as set forth in Exhibit 3.20, such policies are in full force and effect
and no event has occurred which would give any insurance carrier a right to
terminate any such policy. Except as set forth in Exhibit 3.20, since the
beginning of each of the Acquired Companies' fiscal year, there has not been any
change in any Acquired Company's relationship with its insurers or in the
premiums payable pursuant to such policies.
3.21 Related Party Relationships. Except as set forth in Exhibit 3.21, neither
Acquired Company has any relationship with any Shareholder, officer or director
(other than for insurance policies issued in the ordinary course of business and
the management agreement between ARMGA and ACIC) or possesses, directly or
indirectly, any beneficial interest in any corporation, partnership, firm,
association or business organization which is a client, supplier, customer,
lessor, lessee, lender, creditor, borrower, debtor or contracting party with or
of any Acquired Company (except as a stockholder holding less than a one percent
interest in a corporation whose shares are traded on a national or regional
securities exchange or in the over-the-counter market).
3.22 Antitrust Matters. Each Acquired Company has conducted and is conducting
the Business in compliance with all federal and state antitrust and trade
regulation laws, statutes, rules and regulations, including without limitation,
the Sherman Act, the Clayton Act, the Robinson Patman Act, the Federal Trade
Commission Act, state laws patterned after any of the above, all laws forbidding
price-fixing, collusion, or bid-rigging, and rules or regulations issued
pursuant to authority set forth in any of the above. With respect to any of the
foregoing, no Acquired Company is presently directly or indirectly involved
with, charged with, or under any governmental investigation with respect to, and
there is no basis or grounds for, any charge, claim, investigation, suit,
action, proceeding or any actual or alleged violation of any such law, statute,
rule or regulation.
3.23 Suppliers. Attached hereto as Exhibit 3.23 is a complete and correct list
of all persons, partnerships, corporations, or entities from which any Acquired
Company has purchased any supplies relating to its business within the last six
(6) months, along with their respective addresses and telephone numbers.
3.24 Fairness Opinion. Morgan Keegan has rendered a fairness opinion with
respect to the transactions contemplated hereby in the form attached as Exhibit
3.24 hereto, and such opinion has not been revoked or amended in any way.
3.25 Exhibits. All Exhibits attached hereto are true, correct and complete as of
the date of this Agreement, and will be true, correct and complete as of the
Closing, except to the extent that such Exhibits may be untrue, incorrect or
incomplete due to changes occurring due to the operation of any Acquired Company
in the ordinary course. Matters disclosed on each Exhibit shall be deemed
disclosed only for purposes of the matters to be disclosed in such Exhibit and
shall not be deemed to be disclosed for any other purpose unless expressly
provided therein.
3.26 Disclosure. No representation or statement contained herein or in any
certificate, schedule, list, exhibit or other instrument furnished to Atlantic
pursuant to the provisions hereof contains or will contain any untrue statement
of any material fact or omits or will omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
3.27 No Implied Representations and Warranties. Except as expressly set forth in
this Agreement, the Acquired Companies make no other representations or
warranties concerning the Acquired Companies, the Shareholders, the Businesses,
or the transactions described in this Agreement.
4. SECURITIES LAWS.
4.1 Condition Precedents to Issuance of Atlantic American Stock. As a condition
to the issuance of the Atlantic American Stock under the terms of this
Agreement, each of the Shareholders receiving Atlantic American Stock shall have
executed and delivered to Atlantic on the Closing Date, a Transmittal Letter
substantially in the form of Exhibit 4.1. dated as of the Closing Date, in which
each Shareholder will acknowledge and represent to Atlantic that:
4.1.1 The Atlantic American Stock to be issued and delivered pursuant to the
provisions of this Agreement will not be registered under the 1933 Act, or under
Georgia or Texas or any other applicable "Blue-Sky" laws, in reliance upon the
exemptions contained in the 1933 Act and the General Rules and Regulations under
the 1933 Act promulgated by the SEC.
4.1.2 The Atlantic American Stock to be issued and delivered pursuant to the
provisions of this Agreement will be, when issued and delivered, acquired by the
Shareholder for investment for his or her own account and not with a view to the
subsequent resale or other distribution thereof, except within the limitations
prescribed under the Rules and Regulations under the 1933 Act, or in some other
manner which will not violate the registration requirements of the 1933 Act or
any applicable "Blue-Sky" laws.
4.1.3 The transfer of the Atlantic American Stock received by him or her under
this Agreement, will be permitted or allowed only when:
4.1.3.1 such request for transfer is accompanied by an opinion of counsel
satisfactory to Atlantic, which satisfaction will not be unreasonably denied, to
the effect that neither the sale nor the proposed transfer results in a
violation of the 1933 Act or the Rules and Regulations thereunder or applicable
"Blue-Sky" laws, or 1.1.1.1
4.1.3.2 such request for transfer is accompanied by a "no-action" letter from
the SEC and the applicable state securities regulatory agency with respect to
the proposed transfer, or
4.1.3.3 a Registration Statement under the 1933 Act and applicable Blue-Sky laws
is then in effect with respect to the Atlantic American Stock.
4.1.4 The Atlantic American Stock issued and delivered under this Agreement
shall contain the following legend:
"THE SECURITIES ACT OF 1933 AND STATE SECURITIES LAWS
This Share of Atlantic American Corporation Common Stock has not
been registered under the Securities Act of 1933, as amended, or
under the securities laws of Georgia, Texas or any other state and
cannot be sold or transferred unless (i) a Registration Statement
under the Securities Act of 1933, as amended, and any applicable
state securities laws is then in effect with respect to the
securities represented hereby; or (ii) a written opinion from legal
counsel reasonably acceptable to the issuer is obtained to the
effect that an exemption from registration under the Securities Act
of 1933, as amended, and any applicable state securities laws is
available with respect to the proposed sale or transfer and that no
such registration is required; or (iii) a no action letter or its
then equivalent with respect to such sale or transfer has been
issued by the Staff of the Securities and Exchange Commission and
any applicable state securities governmental body."
In the event that all the conditions for the applicability of Rule 144(k) under
the 1933 Act are satisfied by a respective Shareholder, at any time after the
second anniversary of the Closing Date such Shareholder may submit such
certificates to Atlantic for reissuance without the above legend and Atlantic
shall reissue such certificates.
5. REPRESENTATIONS AND WARRANTIES OF ATLANTIC.
Atlantic represents and warrants to, and for the benefit of, the Acquired
Companies as follows:
5.1 Organization and Standing. Atlantic is a duly organized and validly existing
corporation in good standing under the laws of the State of Georgia, and has the
full power and authority (corporate and otherwise) to carry on its business in
the places and as it is now being conducted and to own and lease the properties
and assets which it now owns or leases.
5.2 Corporate Power and Authority. Atlantic has the capacity and authority to
execute and deliver this Agreement, to perform hereunder, and to consummate the
transactions contemplated hereby without the necessity of any act or consent of
any other person whomsoever. The execution, delivery and performance by Atlantic
of this Agreement and each and every agreement, document and instrument provided
for herein have been duly authorized and approved by the Board of Directors (or
executive committees thereof that are authorized to grant approval on behalf of
the full Board of Directors) of Atlantic. This Agreement and the transactions
contemplated by this Agreement do not require the approval of the shareholders
of Atlantic. This Agreement, and each and every other agreement, document and
instrument to be executed, delivered and performed by Atlantic in connection
herewith, constitute or will, when executed and delivered, constitute the valid
and legally binding obligations of Atlantic, enforceable against it in
accordance with their respective terms, except as enforceability may be limited
by applicable equitable principles, or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally.
5.3 Agreement Does Not Violate Other Instruments. The execution and delivery of
this Agreement by Atlantic does not, and the consummation of the transactions
contemplated hereby will not, violate any provisions of the Articles of
Incorporation, as amended, or Bylaws, as amended, of Atlantic, or violate or
constitute an occurrence of default under any provision of, or conflict with,
result in acceleration of any obligation under, or give rise to a right by any
party to terminate its obligations under, any mortgage, deed of trust,
conveyance to secure debt, note, loan, lien, lease, agreement, instrument, or
any order, judgment, decree or other arrangement to which Atlantic is a party or
is bound or by which its assets are affected. Except as listed or described on
Exhibit 5.3 attached hereto, no consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental entity is required to
be obtained or made by or with respect to the Atlantic, or any assets,
properties or operations of Atlantic, in connection with the execution and
delivery by Atlantic of this Agreement or the consummation of the transactions
contemplated hereby.
5.4 Due Issuance of Atlantic Stock; No Restrictions. The shares of Atlantic
American Stock to be delivered to the Escrow Agent at the Closing will be, at
the time of such delivery, validly authorized and issued and fully paid and
nonassessable. Except as set forth in Section 2.1.8, the shares of Atlantic
American Stock to be delivered to the Escrow Agent at the Closing will have no
restrictions on their voting rights or their rights to receive dividends.
5.5 Litigation. There is no suit, action, proceeding, claim or investigation
pending or threatened against or affecting the right of Atlantic to consummate
the transactions contemplated hereby, and there exists no basis or grounds, with
respect to actions by Atlantic, for any such suit, action, proceeding, claim or
investigation.
5.6 SEC Reports. Since December 31, 1997, Atlantic has made all filings required
by it to be made with the SEC ("SEC Documents"). As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
Securities Act of 1933 and the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC thereunder applicable to such SEC
Documents, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Acquired Companies acknowledge that
Atlantic has delivered to them a copy of its Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 (the "Form 10-K") The consolidated financial
statements of Atlantic contained in the Form 10-K present fairly, in all
material respects, the financial position of Atlantic as of the period
indicated, in conformity with generally accepted accounting principles. The Form
10-K complies in all material respects as to form with the requirements of the
Securities Exchange Act of 1934, as amended. 1.1
5.7 Disclosure. No representation or statement contained herein or in any
certificate, schedule, list, exhibit or other instrument furnished to the
Acquired Companies pursuant to the provisions hereof contains or will contain
any untrue statement of any material fact or omits or will omit to state a
material fact necessary in order to make the statements contained herein or
therein not misleading.
5.8 No Adverse Change. Since December 31, 1998, Atlantic has not suffered any
material adverse change in its business, operations or financial condition and
Atlantic has not become aware of any event or state of facts which may result in
any such material adverse change.
5.9 No Implied Representations and Warranties. Except as expressly set forth in
this Agreement, Atlantic makes no representations or warranties concerning
Atlantic, its business or the transactions described in this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ATLANTIC TO CLOSE.
All of the obligations of Atlantic to consummate the transactions
contemplated by this Agreement shall be contingent upon and subject to the
satisfaction on or before the Closing Date, of each and every one of the
following conditions, all or any of which may be waived in writing by Atlantic
prior to the Closing Date which shall be delayed if necessary in order for there
to be a full fifteen (15) day cure period, as described below. Notwithstanding
any other provision herein to the contrary, in the event that prior to the
Closing Date the Acquired Companies give Atlantic notice of any
misrepresentation or breach of any covenant or warranty or the occurrence of any
event after the date hereof which would prohibit the Acquired Companies from
delivering the certificate described in Section 6.2, without exception (a
"Subsequent Event"), the Acquired Companies shall have fifteen (15) days from
the Acquired Companies' discovery thereof within which to cure such
misrepresentation, or breach of covenant or warranty or the effects of such
Subsequent Event, which cure period shall in no event extend beyond the Closing
as delayed for a full cure period. In the event that such misrepresentation,
breach or effects of such Subsequent Event remains uncured, and the Loss
attributable to it is reasonably anticipated to be less than One Million Dollars
($1,000,000.00) (after taking into account any applicable Minimum Aggregate
Liability Amount) and the circumstances or events giving rise to such
misrepresentation, breach or effects do not result in material interference with
the operation of the Business, the parties shall close the transactions
contemplated by this Agreement regardless, and Atlantic shall have the right to
indemnification pursuant to the provisions of Article IX hereof. In the event
that such reasonably anticipated Loss is equal to or greater than One Million
Dollars ($1,000,000.00) (after taking into account any applicable Minimum
Aggregate Liability Amount) or the circumstances or events giving rise to such
misrepresentation, breach or effects of such Subsequent Event results in
material interference with the operation of the Business, Atlantic may elect not
to close the transactions contemplated hereby. In the event that Atlantic elects
to close the transactions contemplated hereby notwithstanding any such uncured
misrepresentation, breach or effects of such Subsequent Event the Loss
attributable to which is reasonably anticipated to be equal to or greater than
One Million Dollars ($1,000,000.00) (after taking into account any applicable
Minimum Aggregate Liability Amount) or the circumstances or events giving rise
to such misrepresentation, breach or effects of such Subsequent Event results in
material interference with the operation of the Business, such Closing shall be
deemed a waiver of Atlantic's right to seek indemnification for such
misrepresentation, breach or effects of such Subsequent Event in excess of One
Million Dollars ($1,000,000.00), but Atlantic shall have the right to seek
indemnification pursuant to Article IX for up to One Million Dollars
($1,000,000.00) after taking into account any applicable Minimum Aggregate
Liability Amount. The foregoing shall not be construed to prohibit Atlantic from
not closing if the conditions to close set forth in Sections 6.3 through 6.13
are not satisfied or waived, and any such condition waived for purposes of the
Closing shall be waived for all purposes.
6.1 Representations True at Closing. The representations and warranties made by
each Acquired Company to Atlantic in this Agreement, the Exhibits hereto or any
document or instrument delivered to Atlantic or its representatives hereunder
shall be true and correct on the Closing Date with the same force and effect as
though such representations and warranties had been made on and as of such time
(except for changes contemplated by this Agreement).
6.2 Covenants of the Acquired Companies. Each Acquired Company shall have duly
performed all of the covenants, acts and undertakings to be performed by them on
or prior to the Closing Date and duly authorized officers of each Acquired
Company shall deliver to Atlantic a certificate dated as of the Closing Date
certifying to the fulfillment of this condition and the condition set forth in
Section 6.1 hereof.
6.3 No Injunction, Etc. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain, prohibit, or obtain
substantial damages in respect of, or which is related to, or arises out of,
this Agreement or the consummation of the transactions contemplated hereby, or
which is related to or arises out of the assets or the Business, if such action,
proceeding, investigation, regulation or legislation, in the reasonable judgment
of Atlantic would make it inadvisable to consummate such transactions.
6.4 Opinion of Counsel. A favorable opinion of Sneed, Vine & Perry shall have
been delivered to Atlantic dated as of the Closing Date, substantially in form
and substance of the opinion attached hereto as Exhibit 6.4.
6.5 Consents, Approvals and Waivers. Atlantic shall have received a true and
correct copy of each and every consent, approval and waiver (a) described in
Sections 2.2 and 2.7 hereof, or (b) otherwise required for the execution of this
Agreement and the consummation of the transactions contemplated hereby.
6.6 Approvals. The execution and the delivery of this Agreement and the
consummation of the transactions contemplated hereby shall have been approved by
all regulatory authorities whose approvals are required by law including,
without limitation, all required approvals from the applicable insurance
regulatory authorities and the waiting period applicable to the transactions
contemplated hereby under the HSR Act shall have expired or been terminated.
6.7 Absence of Changes. Since the date of this Agreement, no Acquired Company
shall have suffered any change in its financial condition, business, property or
assets which materially and adversely affects the conduct of its business.
6.8 Employment Agreement. Atlantic shall have received a copy of the Employment
Agreement, substantially in the form of Exhibit 2.10, for the Sole Shareholder.
The existing employment agreements described in Section 2.15 shall have been
terminated. 1.1
6.9 Covenant Not to Compete; Non-Solicitation and Confidentiality Agreements.
Atlantic shall have received a copy of the Covenant not to Compete,
substantially in the form of Exhibit 2.11(b) for the Sole Shareholder, and a
copy of the Non-Solicitation and Confidentiality Agreement, for all of those
persons listed Exhibit 2.11.
6.10 Shareholder Approval. This Agreement, the Plan of Exchange, the Exchange,
and the transactions contemplated hereby and thereby, shall have been adopted
and approved by the affirmative vote of the holders of the outstanding shares of
common stock of ACIC by the vote required by, and in accordance with, the TBCA
and other applicable law.
6.11 Dissenting Shareholders. The holders of no more than five percent (5%) of
the outstanding shares of common stock of ACIC are entitled to demand payment of
the value of their shares pursuant to the provisions of the TBCA , or any other
law, respecting rights of dissenting shareholders.
6.12 Fairness Opinion. The fairness opinion rendered by Morgan Keegan and
referred to in Section 3.24 shall not have been revoked or amended.
6.13 A.M. Best Rating. A.M. Best shall have acknowledged the continuation of
ACIC's "A-" A.M. Best Rating following the Closing of the transaction as
of the Closing Date.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE ACQUIRED COMPANIES.
All of the obligations of the Acquired Companies to consummate the
transactions contemplated by this Agreement shall be contingent upon and subject
to the satisfaction of each and every one of the following conditions, all or
any of which may be waived in writing by the Acquired Companies prior to the
Closing Date, which shall be delayed if necessary in order for there to be a
full fifteen (15) day cure period, as described below. Notwithstanding any other
provision herein to the contrary, in the event that prior to the Closing Date
Atlantic gives the Acquired Companies notice of any misrepresentation or breach
of any covenant or warranty or the occurrence of a Subsequent Event (which in
the case of Atlantic relates to its inability to deliver the certificate
described in Section 7.2), Atlantic shall have fifteen (15) days from Atlantic's
discovery thereof within which to cure such misrepresentation or breach of
covenant or warranty or effects of such Subsequent Event which cure period shall
in no event extend beyond the Closing as delayed for a full cure period. In the
event that such misrepresentation, breach or effects of such Subsequent Event
remains uncured, and the loss attributable to it is reasonably anticipated to be
less than One Million Dollars ($1,000,000.00), the parties shall close the
transactions contemplated by this Agreement regardless and the Acquired
Companies shall have the right to indemnification pursuant to the provisions of
Article IX hereof. In the event that such reasonably anticipated Loss is equal
to or greater than One Million Dollars ($1,000,000.00), the Acquired Companies
may elect not to close the transactions contemplated hereby. In the event that
the Acquired Companies elect to close the transactions contemplated hereby
notwithstanding any such uncured misrepresentation, breach or effects of such
Subsequent Event the Loss attributable to which is reasonably anticipated to be
equal to or greater than One Million Dollars ($1,000,000.00), such Closing shall
be deemed a waiver of the Acquired Companies' right to seek indemnification for
such misrepresentation, breach or effects of such Subsequent Event in excess of
One Million Dollars ($1,000,000.00), but the Acquired Companies shall have the
right to seek indemnification pursuant to Article IX for up to One Million
Dollars ($1,000,000.00). The foregoing shall not be construed to prohibit the
Acquired Companies from not closing if the conditions to close set forth in
Sections 7.3 through 7.7 are not satisfied or waived, and any such condition
waived for purposes of the Closing shall be waived for all purposes.
7.1 Representations True at Closing. The representations and warranties made by
Atlantic in this Agreement to the Acquired Companies or any document or
instrument delivered to any Acquired Company or their representatives hereunder
shall be true and correct on the Closing Date with the same force and effect as
though such representations and warranties had been made on and as of such date,
except for changes contemplated by this Agreement.
7.2 Covenants of Atlantic. Atlantic shall have duly performed all of the
covenants, acts and undertakings to be performed by them on or prior to the
Closing Date, and a duly authorized officer of Atlantic shall deliver a
certificate dated as of the Closing Date certifying to the fulfillment of this
condition and the condition set forth under Section 7.1 above.
7.3 No Injunction, Etc. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain, prohibit, or obtain
substantial damages in respect of, or which is related to, or arises out of,
this Agreement or the consummation of the transactions contemplated hereby, or
which is related to or arises out of the business of Atlantic, if such action,
proceedings, investigation, regulation or legislation, in the reasonable
judgment of the Acquired Companies would make it inadvisable to consummate same.
7.4 Opinion of Counsel for Atlantic. A favorable opinion of Jones, Day, Reavis &
Pogue shall have been delivered to the Acquired Company dated as of the Closing
Date, substantially in form and substance of the opinion attached hereto as
Exhibit 7.4.
7.5 Approvals. The execution and the delivery of this Agreement and the
consummation of the transactions contemplated hereby shall have been approved by
all regulatory authorities and all courts whose approvals are required by law,
including, without limitation, all required approvals from the applicable
insurance regulatory authorities and the waiting period applicable to the
transactions contemplated hereby under the HSR Act shall have expired or been
terminated.
7.6 Atlantic Board Seat. Atlantic shall, subject to the Closing, have appointed
Harold K. Fischer to its Board of Directors as required by Section 2.13.
7.7 Fairness Opinion. The fairness opinion rendered by Morgan Keegan and
referred to in Section 3.24 shall not have been revoked or amended.
7.8 Absence of Changes. Since the date of this Agreement, Atlantic shall not
have suffered any change in its financial condition, business, property or
assets which materially and adversely effects the conduct of its business.
8. CLOSING.
8.1 Time and Place of Closing and Effective Date.
8.1.1 The Closing shall commence on the last day of the calendar month in which
the last of the regulatory approvals required by Section 6.6 is received (the
"Closing Date"), unless another date is agreed to in writing by the Acquired
Companies and Atlantic, at the offices of Sneed, Vine & Perry, 901 Congress
Avenue, Austin, Texas, commencing at 10:00 a.m. Central Time. In no event will
the Closing be held later than June 30, 1999.
8.2 Transactions at Closing. At the Closing, the order of the transactions shall
be deemed the Share Exchange, immediately followed by the purchase of all of the
issued and outstanding shares of capital stock from the sole shareholder of
ARMGA by ACIC and each of the following transactions shall occur:
8.2.1 The Acquired Companies' Performance. At the Closing, each Acquired Company
shall deliver to Atlantic, the following:
(1) to the extent received by the Representative from the Shareholders,
all certificates representing shares of the outstanding capital
stock of each Acquired Company, duly endorsed for transfer or
accompanied by instruments of transfer reasonably satisfactory in
form and substance to Atlantic and its counsel;
(2) the certificates of the duly authorized officers of each Acquired
Company described in Section 6.2;
(3) copies of all consents, approvals, acknowledgments and waivers
described in Sections 2.7 and Section 6.5, which have been obtained
prior to Closing;
(4) satisfactory evidences of the approvals described in Section 6.6
that are required by law to be obtained by the Acquired Companies;
(5) certificates of compliance or certificates of good standing of each
Acquired Company, as of the most recent practicable date, from the
appropriate governmental authority of the jurisdiction of its
incorporation and any other jurisdiction which is set forth in
Exhibit 3.1 hereto;
(6) certified copies of resolutions of the Board of Directors of each
Acquired Company approving the transactions set forth in this
Agreement and, in the case of ACIC, the Plan of Exchange;
(7) certified copies of resolutions of the Shareholders of each Acquired
Company approving the transactions set forth in this Agreement and,
in the case of ACIC, the Plan of Exchange;
(8) certificate of incumbency for the officers of each Acquired Company
who are executing this Agreement and the other documents
contemplated hereunder;
(1)
(9) resignations of each director of each Acquired Company and each
noninstitutional trustee under any Benefit Plan maintained by any
Acquired Company;
(10) Employment Agreement executed by the Sole Shareholder, substantially
in the form of Exhibit 2.10.;
(11) Covenant Not to Compete executed by the Sole Shareholder and
Non-Solicitation and Confidentiality Agreements executed by each of
the persons listed Exhibit 2.11, substantially in the forms of
Exhibit 2.11(b) and Exhibit 2.11(a), respectively;
(12) list of claims described in Section 3.18.6;
(13) opinion of counsel described in Section 6.4;
(14) to the extent received by the Representative from Shareholders,
Transmittal Letters executed by the Shareholders, substantially in
the form of Exhibit 4.1;
(15) to the extent received by the Representative from Shareholders,
three (3) executed blank stock transfers for each Shareholder with
regard to the Escrowed Shares;
(16) evidence satisfactory to Atlantic that the condition set forth in
Section 6.12 has been met;
(17) evidence of the termination of the existing employment agreements
described in Section 2.15;
(18) such other evidence of the performance of all covenants and
satisfaction of all conditions required of the Acquired Company by
this Agreement, at or prior to the Closing, as Atlantic or its
counsel may reasonably require.
8.2.2 Performance by Atlantic. At the Closing, Atlantic shall deliver to the
Acquired Companies the following:
(1) The certificates of the authorized officers described in Section 7.2;
(2) Satisfactory evidence of the approvals described in Section 7.5 that are
required by law to be obtained by Atlantic;
(3) Opinion of counsel described in Section 7.4;
(4) Certificate of incumbency of the officers of Atlantic who are executing
this Agreement and the other documents contemplated hereunder;
(5) executed Employment Agreement, substantially in the respective form of
Exhibits 2.10;
(6) executed Covenant Not to Compete and Non-Solicitation and
Confidentiality Agreements, substantially in the forms of Exhibit
2.11(b) and Exhibit 2.11(a), respectively;
(7) certified copy of resolutions of the Boards of Directors (or
executive committees thereof) of Atlantic approving the transactions
set forth in this Agreement and the Plan of Exchange; and
(8) such other evidence of the performance of all the covenants and
satisfaction of all of the conditions required of Atlantic by this
Agreement at or before the Closing as the Acquired Companies or
their counsel may reasonably require.
8.2.3 Delivery of Share Certificates. As soon as practicable following the
Closing, on the Closing Date, the Articles of Exchange described in Section
2.1.2 shall be filed with the Secretary of State of Georgia and with the Texas
Department of Insurance, if required under Texas law. At the Closing, Atlantic,
the Representative and the Escrow Agent will enter into an escrow agreement in
the form attached as Exhibit 2.1.8.1. At the Closing, Atlantic shall deliver to
the Representative (for those Shareholders who at that time have executed and
delivered (i) the Transmittal Letter described in Sections 2.1.12 and 4.1, (ii)
Certificates representing shares of common stock of ACIC, and (iii) three (3)
stock powers executed in blank, certificates representing the shares of Atlantic
American Stock issuable to the Shareholders and the ACIC Cash Consideration and
ARMGA Cash Consideration as provided in Section 2.1 and the Plan of Exchange,
except for the Escrowed Shares and the Escrowed Cash, which shall be delivered
by Atlantic to the Escrow Agent along with the executed blank stock transfers
described in Section 2.1.8 pursuant to the terms of this Agreement. The Escrowed
Shares and the Escrowed Cash shall be held by the Escrow Agent pursuant to the
terms of the Escrow Agreement. Following the Closing, at such time as the
Representative shall deliver a Transmittal Letter executed by a Shareholder,
Atlantic shall deliver additional shares of Atlantic American Stock as Escrowed
Shares and additional cash consideration as Escrowed Cash to the Escrow Agent
and shall deliver other cash consideration to the Representative, in a
proportionate amount to reflect the ownership interest of such Shareholder
delivering such Transmittal Letter.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION.
9.1 Survival of Representations and Warranties of the Acquired Companies. All
representations, warranties, agreements, covenants and obligations made or
undertaken by any Acquired Company in this Agreement or in any document or
instrument executed and delivered pursuant hereto are material, have been relied
upon by Atlantic and shall survive the Closing hereunder for the periods set
forth in Section 9.4 and shall not merge in the performance of any obligation by
any party hereto. Prior to the Closing, the Acquired Companies, jointly and
severally, shall indemnify and hold harmless Atlantic or any assignee of
Atlantic at all times until the Closing, from and against and in respect of, any
liability, claim, deficiency, loss, damage, or injury and all reasonable costs
and expenses (including reasonable counsel fees and costs of any suit related
thereto) suffered or incurred (collectively, a "Loss") by Atlantic arising from
(i) any misrepresentation, or breach of any covenant or warranty of any Acquired
Companies contained in this Agreement or any exhibit, certificate or other
instrument furnished or to be furnished by either of the Acquired Companies
hereunder, or any Third Party Claim (regardless of whether the claimant is
ultimately successful) which if true would be such a misrepresentation or
breach, (ii) any nonfulfillment of any agreement on the part of either of the
Acquired Companies under this Agreement or from any misrepresentation in or
omission from, any certificate or other instrument furnished or to be furnished
to Atlantic hereunder, or (iii) any Subsequent Event subject to the prefatory
language of Article VI. From and following the Closing, the Shareholders, solely
by application of the provisions, and subject to the limitations of this Article
IX, shall indemnify and hold harmless Atlantic or any assignee of Atlantic at
all times prior to the expiration of the period specified in Section 9.4 from
and against and in respect of any Loss by Atlantic arising from (i) any
misrepresentation, or breach of any covenant or warranty of any Acquired
Companies contained in this Agreement or any exhibit, certificate or other
instrument furnished or to be furnished by either of the Acquired Companies
hereunder, or any Third Party Claim (regardless of whether the claimant is
ultimately successful) which if true would be such a misrepresentation or
breach, (ii) any nonfulfillment of any agreement on the part of either of the
Acquired Companies under this Agreement or from any misrepresentation in or
omission from, any certificate or other instrument furnished or to be furnished
to Atlantic hereunder, or (iii) any Subsequent Event subject to the prefatory
language of Article VI. Since following the Closing, the Acquired Companies will
be owned by Atlantic, the parties to this Agreement agree that no individual or
person will have a right of reimbursement or contribution against the Acquired
Companies (including without limitation, any rights of law), and any Loss
suffered or incurred by the Acquired Companies against which Atlantic is
indemnified and held harmless as provided above shall be deemed suffered by
Atlantic, which shall be entitled to enforce such indemnity.
Any examination, inspection or audit of the properties, financial
condition or other matters of any Acquired Company and its business conducted by
Atlantic pursuant to this Agreement shall in no way limit, affect or impair the
ability of Atlantic to rely upon the representations, warranties, covenants and
obligations of the Acquired Companies set forth herein.
9.2 Survival of Representations and Warranties of Atlantic. All representations,
warranties, agreements, covenants and obligations made or undertaken by Atlantic
in this Agreement or in any document or instrument executed and delivered
pursuant hereto are material, have been relied upon by the Acquired Companies
and shall survive the Closing hereunder for the period specified in Section 9.4,
and shall not merge in the performance of any obligation by any party hereto.
Atlantic agrees to and shall indemnify and hold harmless the Shareholders at all
times after the date of this Agreement from and against and in respect of, any
Loss suffered or incurred by any Shareholder arising from (i) any
misrepresentation, or breach of any covenant or warranty of Atlantic contained
in this Agreement or any exhibit, certificate or other instrument furnished or
to be furnished by Atlantic hereunder, or any claim by a third party (regardless
of whether the claimant is ultimately successful) which if true would be such a
misrepresentation or breach, or (ii) any nonfulfillment of any agreement on the
part of Atlantic under this Agreement or from any misrepresentation in or
omission from, any certificate or other instrument furnished or to be furnished
to any Acquired Company hereunder or (iii) any Subsequent Event subject to the
prefatory language of Article VII. Since following the Closing, the Acquired
Companies will be owned by Atlantic, the Shareholders shall be deemed to be
third party beneficiaries of this Agreement and shall be entitled to enforce
such indemnification matters described above solely through the Representative.
9.3 Minimum Aggregate Liability Amount. Atlantic agrees not to seek recourse
against, and shall not recover from the Shareholders under this Article IX on
account of any liability, loss, damage, injury or claim until the aggregate
amount thereof exceeds Four Hundred Thousand Dollars ($400,000.00) (the "Minimum
Aggregate Liability Amount"), at which time claims may be asserted only for
amounts in excess of the Minimum Aggregate Liability Amount. Notwithstanding the
foregoing, there shall be no Minimum Aggregate Liability Amount for, and the
Minimum Aggregate Liability Amount shall not be charged for or reduced by, any
liability, loss, damage, injury or claim resulting from the covenants,
representations and warranties contained in the provisions of Sections 2.3.4,
3.1, 3.2, 3.3, 3.9.2, , 13.2 or 13.5 or from a breach of the covenants contained
in Section 2.3.1 to the extent it pertains to the making of a payment in excess
of the amounts permitted in Section 2.3.4.
9.4 Survival Period for Claims. A claim for indemnification based on the
covenants, representations and warranties contained in this Agreement must be
made within twenty-four (24) months after the Closing Date.
9.5 Notification and Defense of Claims.
9.5.1 Third Party Claims.
9.5.1.1 Notification and Defense Rights.
(1) If any party to this Agreement (an "Indemnitee") receives written notice of
the assertion of any claim or of the commencement of any action or proceeding by
any entity who is not a party to this Agreement (a "Third Party Claim") against
or affecting such Indemnitee, and if such assertion were presumed to be true
(regardless of the actual outcome) then the other party or parties could be
obligated to provide indemnification under this Agreement (an "Indemnifying
Party"), then such Indemnitee will give such Indemnifying Party reasonably
prompt written notice thereof, but in any event no later than twenty (20)
calendar days after receipt of such written notice of such Third Party Claim.
However, if it is reasonably determined by the Indemnitee that immediate action
is required to address a condition giving rise to a Third Party Claim, the
Indemnitee is authorized to take immediate action without prior notice, and
thereafter give notice to the Indemnifying Party as soon as practicable. In such
event the Indemnitee shall be entitled to recover from the Indemnifying Party to
the extent the Indemnifying Party is liable for indemnification hereunder. Such
written notice shall specify in reasonable detail, to the extent known, the
nature and any particulars of the Third Party Claim giving rise to a right of
indemnification.
(2) Failure of the Indemnitee to give the notice described in subsection (i)
above shall not relieve the Indemnifying Party from any liability which it may
have on account of indemnification or otherwise, except to the extent that the
Indemnifying Party is prejudiced thereby.
(3) If (a) the Indemnifying Party admits in the Notice to Defend (defined below)
its obligation to indemnify the Indemnitee for the Third Party Claim, and (b) in
the case of where the Shareholders are the Indemnifying Party, the full amount
of the asserted claim is less than the remaining Escrowed Shares, then in such
event, the Indemnifying Party will have the sole right to control the defense of
such Third Party Claim at such Indemnifying Party's sole expense by Indemnifying
Party's own counsel (which counsel must be reasonably satisfactory to the
Indemnitee), by giving written notice to the Indemnitee (the "Notice to Defend")
no later than twenty (20) calendar days after receipt of the above-described
notice of such Third Party Claim.
(4) In all circumstances other than that described in subsection (iii) above,
the Indemnifying Party may participate in (but not control) the defense if it
gives the Notice to Defend within such twenty-day period, and the Indemnitee
also will have the right to participate in the defense of any Third Party Claim
assisted by counsel of its own choosing; provided, however, that the Indemnitee
shall have the sole right to make any significant decisions with respect to the
defense of such Third Party Claim except as to the settlement or compromise of
such Third Party Claim which shall be subject to the provisions of Section
9.5.1.2.
(5) During the period prior to receiving the Notice to Defend, the Indemnitee
can proceed to defend the claim, action or proceeding and the Indemnitee shall
be entitled to recover from the Indemnifying Party to the extent the
Indemnifying Party is liable for indemnification hereunder.
(6) Notwithstanding anything in this Section 9.5.1.1 to the contrary, the
Indemnifying Party shall not be entitled to participate in, and the Indemnitee
shall be entitled to sole and absolute control over the defense, compromise or
settlement of, any claim to the extent that the claim seeks an injunction or
other similar equitable or nonmonetary relief against the Indemnitee.
(7) If the Indemnitee does not receive a Notice to Defend with respect to a
Third Party Claim within the twenty day period described in subsection (iii)
above, the Indemnitee may, at its option, solely defend the Third Party Claim
assisted by counsel of its own choosing, and the Indemnifying Party will be
liable for all costs and expenses, and all settlement amounts (subject to and in
accordance with Section 9.5.1.2), but only to the extent the Indemnifying Party
is liable for indemnification hereunder.
9.5.1.2 Defense Costs.
(1) If, within the twenty (20) day period set forth in subsection 9.5.1.1 (iii)
above, an Indemnitee receives a Notice to Defend from an Indemnifying Party with
respect to any Third Party Claim and the other conditions set forth in
9.5.1.1(iii) are met, the Indemnifying Party will not be liable for any legal
expenses incurred by the Indemnitee after receipt of the Notice to Defend in
connection with the defense thereof.
(2) Notwithstanding subsection (i) above, if after giving a Notice to Defend,
the Indemnifying Party fails to take reasonable steps necessary to defend
diligently such Third Party Claim within the earlier of (a) twenty (20) calendar
days after receiving written notice from the Indemnitee that the Indemnitee
believes, after due inquiry, that the Indemnifying Party has failed to take such
steps or (b) within such period necessary in the reasonable judgment of the
Indemnitee to not prejudice the defense of such Third Party Claim, then the
Indemnitee may, at its option, solely assume the defense of the Indemnifying
Party Claim, assisted by counsel of its own choosing, and the Indemnifying Party
will be liable for all reasonable costs and expenses, and all settlement amounts
(subject to and in accordance with Section 9.6.1.3) and other liabilities,
losses, damages and injuries paid or incurred in connection therewith where the
Indemnifying Party is liable for such other liabilities, losses, damages and
injuries pursuant to this Article IX.
(3) Notwithstanding subsection (i) above if (a) the Indemnitee has available
defenses, counterclaims or third party claims that are not available to the
Indemnifying Party, (b) a claim seeks an injunction or other similar equitable
relief against the Indemnitee, or (c) the claim seeks any remedy or relief other
than a monetary claim, then the Indemnitee shall be entitled to recover from the
Indemnifying Party its reasonable costs and expenses incurred in defending the
portions of such Third Party Claim that relates to the matters described in (a),
(b) or (c) of this subsection (iii), and all settlement amounts (subject to and
in accordance with Section 9.5.1.3) and other liabilities, losses, damages and
injuries paid or incurred in connection therewith to the extent that the
Indemnifying Party is liable for indemnification hereunder.
9.5.1.3 Settlement.
(1) In the circumstances described in Section 9.5.1.1(iii) where the
Indemnifying Party has the sole right to control the defense of the Third Party
Claim, the Indemnifying Party shall have the sole right to settle such claim,
provided that settlement is less than the amount of Escrowed Shares valued at
the Per Share Closing Price. Furthermore, in the circumstances described in
Section 9.5.1.1(vi), the Indemnitee shall have the sole right to settle a Third
Party Claim to the extent provided in such Section.
(2) In all other circumstances, if there is a dispute between the Indemnifying
Party and Indemnitee concerning whether a Third Party Claim should be contested,
settled or compromised, it shall be settled, compromised or contested, in
accordance with the next succeeding subsections of this Section 9.5.1.3;
provided, however, that the Indemnitee, or its respective successors or assigns,
shall neither be required to refrain from paying or satisfying any claim which
the Indemnifying Party has not acknowledged in writing its obligations to
indemnify the Indemnitee, or which has matured by court judgment or decree,
unless appeal is taken thereafter and proper appeal bond posted by the
Indemnifying Party, nor shall the Indemnitee be required to refrain from paying
or satisfying any Third Party Claim after and to the extent that such Third
Party Claim has resulted in an unstayed injunction or other similar equitable
relief against the Indemnitee or in an imposition of a lien upon any of the
properties or assets then held by the Indemnitee or its respective successors
and assigns (unless such claim shall have been discharged or enforcement thereof
stayed by the filing of a legally permitted bond by the Indemnifying Party or
otherwise, at its sole expense), or result in a breach or default in a license,
lease or other contract by which any of them is bound, or would materially
adversely affect their respective assets, businesses or financial condition.
(3) Subject to subsection (ii), in the event that the Indemnifying Party, on the
one hand, or the Indemnitee, on the other hand, has reached a good faith, bona
fide settlement agreement or compromise, subject only to approval hereunder,
with any claimant regarding a matter which may be the subject of indemnification
hereunder and desires to settle on the basis of such agreement or compromise,
such party who desires to so settle or compromise shall notify the other party
in writing of its desire setting forth the terms of such settlement or
compromise (the "Notice of Settlement").
(4) The Third Party Claim may be settled or compromised on the basis set forth
in the Notice of Settlement unless within twenty (20) days of the receipt of the
Notice of Settlement the party who issued the Notice of Settlement receives a
notice from the other party of its desire to continue to contest the matter (the
"Notice to Contest") and, in such case:
(1) Should the Indemnitee deliver a Notice to Contest, the claim shall be so
contested and the liability of the Indemnifying Party shall be limited as
provided in subsection (c) below.
(2) If the settlement or compromise could result in a claim for indemnification
being made against the Indemnifying Party and if the Indemnifying Party delivers
the Notice to Contest, the claim shall be so contested and the liability of the
Indemnitee shall be limited as provided in subsection (c) below.
(3) If a matter is contested as provided in subsections (a) or (b) above and is
later adjudicated, settled, compromised or otherwise disposed of and such
adjudication, compromise, settlement or disposition results in a liability,
loss, damage or injury in excess of the amount for which one party desired
previously to settle the matter as set forth in the Notice of Settlement, then
the liability of such party shall be limited to such lesser proposed settlement
amount and the party contesting the matter shall be solely responsible for the
amount in excess of such lesser proposed settlement amount and without regard to
any minimum or maximum restriction on liability described in the Agreement.
(5) For an Indemnifying Party's Notice to Contest to be effective, it must also
state that the Indemnifying Party acknowledges and agrees that it shall be
obligated to indemnify the Indemnitee for any amount in excess of the lesser
proposed settlement amount as described in subsection (iv)(c) above.
(6) The Indemnifying Party hereby expressly waives and renounces any and all
rights to make a claim against the Indemnitee or its respective directors,
officers, agents and employees based upon a right or claim of any Third Party to
which it may become subrogated as a result of making any payment for
indemnification hereunder except to the extent that such waiver adversely
affects any rights of subrogation of an insurer under an applicable insurance
policy; provided however, nothing herein is intended to constitute a waiver by
the Indemnifying Party of any rights of subrogation to which it may be entitled
against persons other than those described herein.
9.5.2 Direct Claims. Any claim by an Indemnitee for indemnification other than
indemnification against a Third Party Claim (a "Direct Claim") will be asserted
by giving the Indemnifying Party reasonably prompt written notice thereof, and
the Indemnifying Party will have a period of Thirty (30) calendar days within
which to respond in writing to such Direct Claim. If the Indemnifying Party does
not so respond within such thirty (30) calendar day period, the Indemnifying
Party will be deemed to have rejected such claim, in which event the Indemnitee
will be free to pursue such remedies as are set forth in Section 9.5.3 hereof.
9.5.3 Direct Claims Procedures. Any Direct Claim which the parties are unable to
resolve through negotiation within sixty (60) days of notice to the Indemnifying
Party of such Direct Claim (a "Dispute") shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (the "Association"), as the same are to be supplemented hereunder,
by a sole arbitrator. The decision of the arbitrator shall be final, binding and
conclusive and judgment upon the award rendered by the arbitrator may be entered
in any court or appropriate jurisdiction. With respect to such arbitration:
(1) the arbitration proceeding shall be held in the Association's office in
Dallas, Texas, or in such other location as is mutually agreeable to the parties
and the arbitrator. (For purposes herein, "party" shall refer to Atlantic and,
collectively, to the Shareholders and the selection of an arbitrator on behalf
of the Shareholders shall be made by the Representative.)
(2) the parties agree to use their best efforts, in good faith, to select a sole
arbitrator qualified to act as an arbitrator based on the underlying nature of
the Dispute. Both parties acknowledge that under most circumstances an executive
of an insurance company would be most qualified to act as an arbitrator
hereunder. Such arbitrator shall be selected within twenty (20) business days
after either party requests arbitration. Upon selection, the arbitrator's name,
address and telephone number shall be forwarded to the Association's office in
Dallas, Texas as part of the arbitration process.
(3) in the event the parties do not agree on an arbitrator within twenty (20)
days of demand for arbitration, the parties shall be furnished with a list of
arbitrators available from the Association. The parties shall have ten (10)
business days after receipt of such list to use their best efforts, in good
faith, to select an arbitrator from such list. In the event a sole arbitrator is
not agreed upon by the parties within the ten (10) business days, then the
arbitrator will be selected from the list provided by the Association through a
process of elimination in which each party alternately strikes a name from such
list and the arbitrator shall be the last such name on the list. The
Indemnifying Party shall be the first to strike a name from such list.
(4) the arbitrator is specifically instructed to allow the parties reasonable
discovery and to be guided therein by the Federal Rules of Civil Procedure. If
the arbitrator is not an attorney, or is an attorney not familiar with the
Federal Rules or Civil Procedure, and the parties cannot agree among themselves
with respect to discovery, the arbitrator may consult an attorney and the cost
of such consultation to the arbitrator shall be an additional cost of the
arbitration.
(5) once an arbitrator has been selected, each party shall submit a statement of
the case detailing the nature of the Dispute, the basis for the position taken
by the party, that party's understanding of the basis for the position taken by
the other party, legal authority believed to govern the Dispute, a list of the
exhibits and witnesses known to the party at the point in time, and a request
for discovery. In no event shall this submission exceed five double spaced pages
of text without specific written waiver first being received from the arbitrator
who shall specify additional pages allowed.
(6) after the date of selection of an arbitrator, the parties shall have a
period not to exceed sixty (60) days to conduct discovery as each deems
appropriate. Once the discovery period has closed, either by expiration of the
time limit or by mutual agreement of the parties, the arbitrator and the parties
shall mutually agree upon a date to hold the arbitration proceeding, said date
not to be more than thirty (30) days after the close of the discovery period.
Prior to commencement of the arbitration proceeding, each party shall serve an
amended statement of the case, updating the material set forth in the party's
original statement of the case, and including the list of witnesses who will
testify, with a brief summation of the testimony of such witnesses; which
amended brief shall not exceed ten double spaced pages of text without written
waiver first being received from the arbitrator.
(7) Atlantic shall pay half of the fees charged by the Association including any
fee to be paid to the arbitrator, and any cost incurred by the arbitrator as
allowed by the Rules of the American Arbitration Association, or this Section
9.6.3. The remaining half shall be paid by the Escrow Agent from the amount of
the Escrowed Stock based on the Per Share Closing Price. In addition, in the
award the arbitrator shall specify which of the parties is the prevailing party,
and the prevailing party shall receive, as an additional part of the award,
his/their/its reasonable attorneys' fees, costs and expenses incurred in
connection with the arbitration proceeding in an amount deemed appropriate by
the arbitrator based upon the comparative fault of the parties. The amount of
fees and costs shall be based upon an affidavit from legal counsel of each
party, submitted as part of the arbitration proceeding, setting forth in
chronological order the dates legal services were rendered, the amount of time
within each day devoted to this proceeding, the name of the individual attorney,
paralegal and other assistants and his or her billing rate, and a list of
out-of-pocket costs or expenses incurred. The arbitrator shall take into account
the additional time involved in the arbitration hearing itself when considering
an award of reasonable attorneys' fees.
9.6 Escrowed Account to be Used for Indemnity. The parties hereto agree that (i)
for claims regarding the determinations of the Closing Date Capital and Surplus
and Closing Date Net Worth, as its sole and exclusive remedy, Atlantic shall
first seek payment from the Escrowed Cash held pursuant to Section 2.1.8, and to
the extent such claims exceed the amount of the Escrowed Cash, from the Escrowed
Shares calculated on the basis of the Per Share Closing Price and (ii) for all
other claims pursuant to this Agreement, as its sole and exclusive remedy,
Atlantic shall seek payment from the Escrowed Shares calculated on the basis of
the Per Share Closing Price. Upon its reasonable belief of the occurrence of
events giving rise to a claim for indemnification of Atlantic under this
Agreement, Atlantic shall deliver notice to the Escrow Agent and the
Representative in accordance with the terms of Section 6(a) of the Escrow
Agreement, setting forth the amount Atlantic reasonably believes in good faith
to be due and owing for such claim. An amount of Escrowed Shares, shall be
released by the Escrow Agent to Atlantic upon delivery of such notice and the
occurrence of an Atlantic Operative Event (as such term is defined in the Escrow
Agreement). For purposes of determining the number of Escrow Shares to be
delivered and retained in escrow upon notice of a claim not resolved prior to
the first anniversary of the Closing Date, the value of each share of Atlantic
American Stock constituting the Escrow Shares shall be calculated on the basis
of the Per Share Closing Price. Upon resolution of any such claim, the valuation
of the Escrow Shares for purposes of determining the number of Escrow Shares, if
any, to be transferred to Atlantic shall be calculated on the basis of Per Share
Closing Price. 1.1
9.7 Exclusive Remedies. After the Closing, the remedies provided in this Article
IX constitute the sole and exclusive remedies and sources of recoveries of
obligations or claims for the payment of money with respect to
misrepresentations and breaches and failures to comply with or nonfulfillment of
the representations, warranties, covenants, agreements and indemnifications in
this Agreement.
10. NO SOLICITATION
The Acquired Companies and their officers, directors, employees,
representatives and agents shall immediately cease any existing discussion or
negotiations, if any, with any parties conducted heretofore with respect to any
acquisition or exchange of all or any material portion of the assets of, or any
equity interest in, either of the Acquired Companies or any business combination
with or involving either of the Acquired Companies. At any time prior to
consummation of the transactions contemplated hereby, either of the Acquired
Companies may, directly or indirectly, furnish information and access, in each
case only in response to a request for such information or access to any person
made after the date hereof which was not encouraged, solicited or initiated by
either of the Acquired Companies or any of their affiliates or any of its or
their respective officers, directors, employees, representatives or agent after
the date hereof, pursuant to appropriate confidentiality agreements, and may
participate in discussions and negotiate with such person concerning any merger,
sale of material portion of assets, sale of shares of capital stock or similar
transaction (including an exchange of stock or assets) involving the Acquired
Companies (an "Acquisition Proposal"), in each case (whether furnishing
information and access or participating in discussions and negotiations) only if
such person has submitted a written proposal to the Board of Directors of either
of the Acquired Companies relating to any such transaction and such Board by a
majority vote determines in good faith, based upon the written advice of outside
counsel to the Acquired Company, that failing to take such action would
constitute a breach of the such Board's fiduciary duty under applicable law.
Such Board shall provide a copy of any such written proposal to Atlantic
immediately after receipt thereof, shall notify Atlantic immediately if any
Acquisition Proposal (oral or written) is made and shall, in such notice,
indicate in reasonable detail the identity of the offeror and the terms and
conditions of any Acquisition Proposal and shall keep Atlantic promptly advised
of all developments which could reasonably be expected to culminate in such
Board of Directors withdrawing, modifying or amending its recommendation
regarding the transactions contemplated by this Agreement. Except as set forth
in this Article X, neither of the Acquired Companies nor any of their
affiliates, nor any of its or their respective officers, directors, employees,
representatives or agents, shall, directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Atlantic, any affiliate or associate of Atlantic or any designees of
Atlantic) concerning any Acquisition Proposal. The Acquired Companies agree not
to release any third party from, or waive any provisions of, any confidentiality
or standstill agreement to which either of the Acquired Companies is a party,
unless the Board of each of the Acquired Companies by majority vote shall have
determined in good faith, based upon written the advice of outside counsel, that
failing to release such third party or waive such provisions would constitute a
breach of the fiduciary duties of such Board of Directors under applicable law.
11. TAX EFFECT OF THE TRANSACTION.
Neither Atlantic nor the Acquired Companies have made nor do any of them
make herein any representation or warranty as to the tax consequences of the
transactions contemplated or provided for herein to any party hereto. It is
understood and agreed that each party has looked to its own advisors for advice
and counsel as to such tax effects.
12. TERMINATION.
12.1 Method of Termination. This Agreement constitutes the binding and
irrevocable agreement of the parties to consummate the transactions contemplated
hereby, the consideration for which is (a) the covenants set forth in Article II
hereof, and (b) expenditures and obligations incurred and to be incurred by
Atlantic and by the Acquired Companies in respect of this Agreement, and this
Agreement may be terminated or abandoned only as follows:
12.1.1 By the mutual consent of the Boards of Directors of each Acquired Company
and Atlantic, notwithstanding prior approval by the Shareholders of any or all
of such corporations;
12.1.2 By the Acquired Companies after June 30, 1999, if any of the conditions
set forth in Article VII hereof, to which their obligations are subject, have
not been fulfilled or waived, unless such fulfillment has been frustrated or
made impossible by any act or failure to act of any of them; or
12.1.3 By Atlantic after June 30, 1999, if any of the conditions set forth in
Article VI hereof, to which the obligations of Atlantic is subject, have not
been fulfilled or waived, unless such fulfillment has been frustrated or made
impossible by any act or failure to act of Atlantic.
12.1.4 By the Acquired Companies, if they shall have received an Acquisition
Proposal and shall have advised Atlantic in writing that the Board of Directors
of the Acquired Companies, after consultation with and based upon the written
advice of independent legal counsel, determined in good faith that failure to
accept such Acquisition Proposal would result in a breach by the Boards of
Directors of the Acquired Companies of fiduciary duties under applicable law;
provided, however, that this Agreement shall not be terminated pursuant to this
Section 12.1.4 unless simultaneously with the termination the Acquired Companies
shall have made the payment to Atlantic required to be paid pursuant to Section
12.3
12.2 Effect of Termination. In the event of a termination of this Agreement
pursuant to Section 12.1.1 or 12.1.4 hereof, subject to and except as provided
in Section 12.3 below, each party shall pay the costs and expenses incurred by
it in connection with this Agreement, and no party (or any of its officers,
directors, employees, agents, representatives or shareholders) shall be liable
to any other party for any costs, expenses, damage or loss of anticipated
profits hereunder. In the event of any other termination, the parties shall
retain any and all rights incident to a breach of any covenant, representation
or warranty made hereunder.
12.3 Fees and Expenses. If this Agreement is terminated pursuant to Section
12.1.4, the Acquired Companies shall pay to Atlantic, within one business day
following the occurrence described in Section 12.1.4, a fee, in cash, of One
Million Three Hundred Thousand Dollars ($1,300,000.00). In addition, Atlantic
shall submit to the Acquired Companies a report of any and all expenses and
costs, including attorney fees, incurred by Atlantic in connection with the
transactions contemplated by this Agreement. Within one business day following
receipt of such report by the Acquired Companies, the Acquired Companies shall
pay to Atlantic the amount of all such expenses and costs.
12.4 Risk of Loss. The Acquired Companies assume all risk of condemnation,
destruction, loss or damage due to fire or other casualty from the date of this
Agreement up to the Closing. If the condemnation, destruction, loss or damage is
such that the business of any Acquired Company is interrupted or curtailed or
the assets are materially affected, then Atlantic shall have the right to
terminate this Agreement. If the condemnation, destruction, loss, or damage is
such that the business of any Acquired Company is neither interrupted nor
curtailed nor its assets materially affected, or if the business is interrupted
or curtailed or the assets are materially affected, and Atlantic nevertheless
forgoes the right to terminate this Agreement, the amount of shares of Atlantic
to be given under the Share Exchange shall be adjusted at the Closing to reflect
such condemnation, destruction, loss, or damage to the extent that insurance
proceeds are not sufficient to cover such destruction, loss or damage, and if
Atlantic, on the one hand, and the Acquired Companies, on the other hand, are
unable to agree upon the amount of such adjustment, the dispute shall be
resolved jointly by the independent accounting firms then employed by Atlantic
and Acquired Companies, and if said accounting firms do not agree, they shall
appoint a nationally recognized accounting firm, whose determination of the
dispute shall be final and binding.
13. GENERAL PROVISIONS.
13.1 Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be delivered by hand or mailed by registered or
certified mail, return receipt requested, first class postage prepaid, or sent
by Federal Express or similarly recognized overnight delivery service with
receipt acknowledged, addressed as follows:
13.1.1 If to the Acquired Companies or the Shareholders:
Mr. Kenneth A. Peeler, Representative
#3 Chatham Court
Midland, Texas 79705
and to:
Sneed, Vine & Perry
901 Congress Avenue
Austin, TX 78767
Attention: James L. Shawn, III, Esq.
13.1.2 If to Atlantic:
Atlantic American Corporation
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319
Attn: Hilton H. Howell, Jr., President and Chief Executive
Officer
and to:
Jones, Day, Reavis & Pogue
3500 SunTrust Plaza
303 Peachtree Street, N.E.
Atlanta, Georgia 30308-3242
Attention: Barry J. Stein, Esq.
13.1.3 If delivered personally, the date on which a notice, request, instruction
or document is delivered shall be the date on which such delivery is made and,
if delivered by mail or by overnight delivery service, the date on which such
notice, request, instruction or document is received shall be the date of
delivery. In the event any such notice, request, instruction or document is
mailed or shipped by overnight delivery service to a party in accordance with
this Section 13 and is returned to the sender as nondeliverable, then such
notice, request, instruction or document shall be deemed to have been delivered
or received on the fifth day following the deposit of such notice, request,
instruction, or document in the United States mails or the delivery to the
overnight delivery service.
13.1.4 Any party hereto may change its address specified for notices herein by
designating a new address by notice in accordance with this Section 13.1.
13.2 Brokers.
13.2.1 The Acquired Companies shall be solely responsible for all fees of Morgan
Keegan to the extent that the Closing Date Capital and Surplus and Closing Date
Net Worth are greater than Fifteen Million Dollars ($15,000,000.00) and One
Hundred Fifty Thousand Dollars ($150,000.00) respectively. To the extent that
the Closing Date Capital and Surplus or the Closing Date Net Worth are less than
such amount the Shareholders shall be solely responsible for such fees, and the
Representative shall pay such fees from cash proceeds (which shall not be
Escrowed Cash) delivered by the Shareholders to the Representative at Closing.
The Shareholders shall indemnify and hold harmless Atlantic from and against any
fee, claim, loss, or expense arising out of any claim by any other investment
banker, broker or finder employed or alleged to have been employed by them in
connection with this Agreement or any of the transactions contemplated hereby.
13.2.2 Atlantic shall be solely responsible for all fees of Search Information
Services and Atlantic agrees to indemnify and hold harmless the Acquired
Companies from and against any fee, claim, loss, or expense arising out of any
claim by any investment banker, broker or finder employed or alleged to have
been employed by it in connection with this Agreement or any of the transactions
contemplated hereby.
13.3 Further Assurances. Each party covenants that at any time, and from time to
time, after the Closing Date, it will execute such additional instruments and
take such actions as may be reasonably requested by the other parties to confirm
or perfect or otherwise to carry out the intent and purposes of this Agreement.
13.4 Waiver. Any failure on the part of any party hereto to comply with any of
its obligations, agreements or conditions hereunder may be waived by any other
party to whom such compliance is owed. No waiver of any provision of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver.
13.5 Expenses. All expenses incurred by the parties hereto in connection with or
related to the authorization, preparation and execution of this Agreement and
the Closing of the transactions contemplated hereby, including, without
limitation of the generality of the foregoing, all fees and expenses of brokers,
agents, representatives, counsel and accountants employed by any such party,
shall be borne solely and entirely by the party which has incurred the same,
unless otherwise provided for herein. All such fees and expenses of the Acquired
Companies shall be borne by the Acquired Companies to the extent that the
Closing Date Capital and Surplus and Closing Date Net Worth are greater than
Fifteen Million Dollars ($15,000,000.00) and One Hundred Fifty Thousand Dollars
($150,000.00) respectively. To the extent that the Closing Date Capital and
Surplus or Closing Date Net Worth are less than such amounts, all such fees and
expenses of the Acquired Companies shall be borne by the Shareholders. Fees
incurred by the parties under Sections 2.1.9 and 2.2.2. shall be borne as
described therein.
13.6 Nondisclosure of Terms.
13.6.1 The Acquired Companies, jointly and severally, covenant and agree that
following the execution of this Agreement, it and they shall not disclose to any
person, individual or entity any of such terms, conditions or matters and to
keep the same confidential, regardless of whether the Closing occurs, except for
disclosures to their respective attorneys, accountants, other consultants who
have assisted with the transactions that are the subject of this Agreement, and
regulators who have jurisdiction over such transactions.
13.6.2 In the event that either party proposes to issue, make or distribute any
press release, public announcement or other written publicity or disclosure
prior to the Closing Date that refers to the transactions contemplated herein,
the party proposing to make such disclosure shall provide a copy of such
disclosure to the other parties and shall afford the other parties reasonable
opportunity (subject to any legal obligation of prompt disclosure) to comment on
such disclosure or the portion thereof which refers to the transactions
contemplated herein prior to making such disclosure.
13.7 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
executors, administrators, successors and assigns. The invalidity or
nonenforceability of this Agreement as to one of the Acquired Companies shall
not affect the validity or enforceability of this Agreement as to the other
Acquired Company.
13.8 Headings. The section and other headings in this Agreement are inserted
solely as a matter of convenience and for reference, and are not a part of this
Agreement.
13.9 Entire Agreement. This Agreement and the confidentiality agreement dated
August 27, 1998, constitute the entire agreement among the parties hereto and
supersedes and cancels any prior agreements, representations, warranties, or
communications, whether oral or written, among the parties hereto relating to
the transactions contemplated hereby or the subject matter herein. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, but only by an agreement in writing signed by the party
against whom or which the enforcement of such change, waiver, discharge or
termination is sought.
13.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia.
13.11 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
13.12 Pronouns. All pronouns used herein shall be deemed to refer to the
masculine, feminine or neuter gender as the context requires.
13.13 Exhibits Incorporated. All Exhibits attached hereto are incorporated
herein by reference, and all blanks in such Exhibits, if any, will be filled in
as required in order to consummate the transactions contemplated herein and in
accordance with this Agreement.
13.14 Time of Essence. Time is of the essence in this Agreement.
IN WITNESS WHEREOF, each party hereto has executed or caused this
Agreement to be executed on its behalf, all on the day and year first above
written.
ATLANTIC AMERICAN CORPORATION
("ATLANTIC")
By: /s/ Hilton H. Howell, Jr.
Title: President and Chief Executive Officer
ACQUIRED COMPANIES:
ASSOCIATION CASUALTY INSURANCE COMPANY
By: /s/ Harold K. Fischer
Title: President
ASSOCIATION RISK MANAGEMENT GENERAL AGENCY, INC.
By /s/ Harold K. Fischer
Title: President
SOLE SHAREHOLDER:
/s/ Harold K. Fischer
Harold K. Fischer
63
AT: 1013097v17
LIST OF EXHIBITS
EXHIBITS
2.1.1 Plan of Exchange.
2.1.3.1 ACIC Stock Option Plan
2.1.8.1 Form of Escrow Agreement
2.1.9 List of Bonus Payments
2.3.2 List of Bank Accounts, Safe Deposit Boxes and Powers of Attorney.
2.10 Form of Employment Agreement.
2.11 List of Persons to Enter Into Non-Solicitation and
Confidentiality Agreements
2.11(a) Form of Non-Solicitation and Confidentiality Agreement
2.11(b) Form of Covenant Not to Compete.
2.14 Form of Option and Irrevocable Proxy
3.1 List of Jurisdictions Where There is Good Standing Status.
3.2 Articles of Incorporation and Bylaws.
3.3(a) List of Shareholders of Record
3.3(b) List of Outstanding Options and Exercise Prices under Option Plan
3.4 List of Equity Investments.
3.5.1 1996 and 1997 Statutory Financial Statements.
3.5.2 1996 and 1997 Financial Statements.
3.5.3 List of Liabilities not disclosed in the Financial Statements.
3.6 List of Tax Matters and Copies of Federal Income Tax Returns.
3.7.1.1 Fixed Assets and Depreciation Schedules.
3.7.1.3 List of Leased Assets - other than Real Estate.
3.7.1.7 Inventory - Not Readily Useable or Salable.
3.7.2.2 List of all Leases of Real Property.
3.7.2.3 List of all Subleases of Real Property Leased by Acquired
Companies.
3.7.2.8 List of Permits regarding Real Property and Improvements.
3.8 List of Indebtedness.
3.9 Accounts Receivable and Notes Receivable Schedules.
3.10 List of Consent Requirements.
3.11 List of Changes.
3.12 List of Litigation.
3.13 List of Licenses and Permits.
3.14 List of Contracts.
3.15.1 List of Trademarks, Trade Names, Service Marks, Service Names,
Etc.
3.15.2 Lists of Acquired Companies' Software.
3.15.2.2 List of Software not in Year 2000 Compliance.
3.16 List of Employees, Independent Contractors, Salaries, Rates,
Salary Increase Guidelines and Labor Matters.
3.17 List of Benefit Plans.
3.18.3 List of Custodians and Depositaries and Authorized Persons.
3.18.4(a) List of Insurance Agencies and Agents.
3.18.4(b) Standard Forms of Agency and Contingent Commission Agreements
3.18.4(c) Agent Contract List/90 Day List
3.18.5 List of Contracts, Arrangements, Treaties and Understandings.
3.18.6 List of Individual Policyholder and Group Certificateholder
Claims.
3.18.7 List of Agreements Requiring Dividends or Distributions
; List of Terminations or Threatened Terminations.
3.18.8 List of Agent, Managers or Broker Contract, Commission
Schedules and Collection Agreements.
3.18.9 List of Actuarial Reserve Certifications
3.19 List of Environmental Matters.
3.20 List of Insurance Matters.
3.21 List of Related Party Relationships.
3.23 List of Suppliers.
3.24 Form of Fairness Opinion
4.1 Form of Transmittal Letter.
5.3 List of Required Government Consents, Orders, Authorizations,
Registrations, Declarations or Filings.
6.4 Form of Opinion of Counsel for the Acquired Companies and
the Shareholders.
7.4 Form of Opinion of Jones, Day, Reavis & Pogue.
(10.1)
Execution Copy
INDENTURE OF TRUST
by and between
ATLANTIC AMERICAN CORPORATION
and
THE BANK OF NEW YORK,
as Trustee
Dated as of June 1, 1999
Relating to the Issuance of
$25,000,000 TAXABLE
VARIABLE RATE DEMAND BONDS,
SERIES 1999
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 .........................................Defined Terms
1
Section 1.2...................................Rules of Construction
13
ARTICLE II
THE BONDS
Section 2.1..............................Authorized Amount of Bonds
13
Section 2.2.......................................Issuance of Bonds
13
Section 2.3.................................Interest Rates on Bonds
14
Section 2.4........Conversion of Interest Rate Determination Method
19
Section 2.5..............................................[Reserved]
21
Section 2.6............................Tender of Bonds for Purchase
21
Section 2.7....................................Remarketing of Bonds
24
Section 2.8.............................Delivery of Purchased Bonds
25
Section 2.9...............................................Execution
26
Section 2.10..........................Certificate of Authentication
26
Section 2.11..........................................Form of Bonds
27
Section 2.12......................................Delivery of Bonds
27
Section 2.13.............Mutilated, Lost, Stolen or Destroyed Bonds
30
Section 2.14Exchangeability and Transfer of Bonds; Persons Treated as Owners
31
Section 2.15......................................Replacement Bonds
32
Section 2.16...........................................Cancellation
32
Section 2.17........................................Ratably Secured
32
Section 2.18.......Redemption of Bonds; Partial Redemption of Bonds
32
Section 2.19...................................Notice of Redemption
34
Section 2.20......................................Book Entry System
35
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY;
CREDIT FACILITY
Section 3.1Representations, Warranties and Covenants of the Company
36
Section 3.2...................................Covenant to Pay Bonds
37
Section 3.3....Covenant to Perform Obligations Under This Indenture
38
Section 3.4Corporate Existence, Sale of Assets, Consolidation or Merger; Notice
of Certain Acquisitions of Control....................38
Section 3.5....................................Compliance with Laws
38
Section 3.6...............................Maintenance of Properties
38
Section 3.7.......................Payment of Taxes and Other Claims
39
Section 3.8.........................................Credit Facility
39
ARTICLE IV
FUNDS
Section 4.1Establishment and Use of Bond Fund, Current Account and Bond Fund
Subaccounts...........................................42
Section 4.2......................Establishment and Use Initial Fund
43
Section 4.3..............................................[Reserved]
44
Section 4.4.............Establishment and Use of Bond Purchase Fund
44
Section 4.5................................Deposit of Bond Proceeds
45
Section 4.6.................................................Records
45
Section 4.7Investment of Initial Fund, Bond Fund and Bond Purchase Fund Moneys
46
Section 4.8..............................................[Reserved]
46
Section 4.9................................Non-presentment of Bonds
46
ARTICLE V
DISCHARGE OF INDENTURE
Section 5.1..................................Discharge of Indenture
47
Section 5.2..........................Provision for Payment of Bonds
47
ARTICLE VI
DEFAULT PROVISIONS AND REMEDIES
Section 6.1.......................................Events of Default
49
Section 6.2............................................Acceleration
51
Section 6.3.......................Other Remedies; Rights of Holders
52
Section 6.4Right of Holders and Credit Issuer to Direct Proceedings
52
Section 6.5...................Discontinuance of Default Proceedings
53
Section 6.6..................................................Waiver
53
Section 6.7...................................Application of Moneys
54
Section 6.8...............................Rights of a Credit Issuer
55
ARTICLE VII
THE TRUSTEE; THE PAYING AGENT; THE TENDER AGENT;
THE REGISTRAR; THE UNDERWRITER; THE REMARKETING AGENT
Section 7.1..................................Appointment of Trustee
55
Section 7.2Compensation and Indemnification of Trustee, Paying Agents, Tender
Agent and Registrar; Trustee's Prior Claim............57
Section 7.3..............................Intervention in Litigation
58
Section 7.4.........................Resignation; Successor Trustees
58
Section 7.5......................................Removal of Trustee
59
Section 7.6............................................Paying Agent
59
Section 7.7............................................Tender Agent
60
Section 7.8Qualifications of Paying Agents and Tender Agent; Resignation;
Removal; Successors...................................61
Section 7.9..................................Instruments of Holders
61
Section 7.10...........................Power to Appoint Co-Trustees
62
Section 7.11......................Underwriters for Additional Bonds
64
Section 7.12......................................Remarketing Agent
64
Section 7.13Qualifications of Remarketing Agent; Resignation; Removal
64
Section 7.14.....................................Several Capacities
65
Section 7.15Trustee Not Responsible for Duties of Remarketing Agent, Tender
Agent, Registrar and Paying Agents....................65
Section 7.16Cooperation of the Trustee, the Tender Agent, the Registrar and
the Paying Agents.....................................65
ARTICLE VIII
AMENDMENTS, SUPPLEMENTAL INDENTURES
Section 8.1.................................Supplemental Indentures
65
Section 8.2Amendments to Indenture; Consent of Holders and the Credit Issuers
67
Section 8.3Amendments, Changes and Modifications to a Credit Facility
67
Section 8.4........................Notice to and Consent of Holders
68
ARTICLE IX
MISCELLANEOUS
Section 9.1..............................................[Reserved]
69
Section 9.2....................................Limitation of Rights
69
Section 9.3............................................Severability
69
Section 9.4.................................................Notices
69
Section 9.5.......................Payments Due on Non-Business Days
71
Section 9.6..........................................Binding Effect
71
Section 9.7................................................Captions
71
Section 9.8...........................................Governing Law
71
Section 9.9................................Notices to Rating Agency
71
Section 9.10..............................Execution in Counterparts
72
EXHIBIT A Form of Bond
EXHIBIT B Form of Conversion Notice
EXHIBIT C Form of Notice of Credit Modification Date
EXHIBIT D Form of Notice of Mandatory Purchase Date
EXHIBIT E Form of Notice of Alternate Credit Facility
INDENTURE OF TRUST
THIS INDENTURE OF TRUST (the "Indenture"), dated as of June 1, 1999, is
made and entered into by and between ATLANTIC AMERICAN CORPORATION, a Georgia
corporation (the "Company"), and THE BANK OF NEW YORK, a New York banking
corporation, as trustee, and its successors and assignees in trust (the
"Trustee").
W I T N E S S E T H:
WHEREAS, the Company desires (i) to issue and sell its Taxable Variable
Rate Demand Bonds, Series 1999 in the aggregate principal amount of $25,000,000
(the "Series 1999 Bonds"), (ii) to secure payment of the principal and purchase
price of and interest on the Series 1999 Bonds with an irrevocable, direct-pay
letter of credit (the "Series 1999 Credit Facility") issued by Wachovia Bank,
N.A. (in such capacity, the "Series 1999 Credit Issuer"), and (iii) to provide
for the issuance of Additional Bonds (as hereinafter defined) of the Company
from time to time subject to the terms and conditions set forth in Section
2.12(b) hereof; and
WHEREAS, the Series 1999 Bonds and the Trustee's certificate of
authentication to be endorsed thereon are to be in substantially the form
attached hereto as Exhibit A, with appropriate variations, omissions and
insertions as are permitted or required by this Indenture;
NOW, THEREFORE, in consideration of the premises and of the covenants and
undertakings herein expressed, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. In addition to terms defined elsewhere in this
Indenture, the following words and terms as used in this Indenture and the
preambles hereto shall have the following meanings unless the context or use
clearly indicates another or different meaning or intent.
"Act of Bankruptcy" means, with respect to any Series of
Bonds, any of the following events:
(i) The Company (or any other Person obligated, as guarantor or
otherwise, to make payments on such Series or under a Credit Agreement
relating to such Series or an "affiliate" of the Company as defined in
Bankruptcy Code ss. 101(2)) shall (1) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee, liquidator or the like of the Company (or such other Person) or
of all or any substantial part of their respective property, (2) commence
a voluntary case under the Bankruptcy Code, or (3) file a petition seeking
to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts; or
(ii) A proceeding or case shall be commenced, without the application
or consent of the Company (or any other Person obligated, as guarantor or
otherwise, to make payments on such Series or under a Credit Agreement
relating to such Series or an "affiliate" of the Company as defined in
Bankruptcy Code ss. 101(2)) in any court of competent jurisdiction,
seeking (1) the liquidation, reorganization, dissolution, winding-up, or
composition or adjustment of debts, of the Company (or any such other
Person), (2) the appointment of a trustee, receiver, custodian, liquidator
or the like of the Company (or any such other Person) or of all or any
substantial part of its property, or (3) similar relief in respect of the
Company (or any such other Person) under any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of
debts.
"Additional Bonds" means bonds other than the Series 1999 Bonds issued
under this Indenture pursuant to Section 2.12(b).
"Alternate Credit Facility" means an irrevocable, direct-pay letter of
credit delivered to, and accepted by, the Trustee pursuant to Section 3.8(e) in
substitution for a Credit Facility then in effect.
"Alternate Credit Facility Effective Date" has the meaning
specified in Section 3.8(e).
"Alternate Weekly Index" means, as of the date of determination thereof,
the rate per annum determined on the basis of the rate for deposits in United
States dollars of amounts equal to or comparable to the principal amount of the
Bonds to which the Alternate Weekly Index will apply, offered for a term of one
month, 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 Bankers'
Association for the purpose of displaying London interbank offered rates for
United States dollar deposits), determined as of 1:00 p.m., Local Time, on the
date of determination, plus 0.10% per annum.
"Applicable Credit Facility" means, with respect to a Series of Bonds, the
Credit Facility securing such Series.
"Applicable Credit Issuer" means (a) with respect to a Series of Bonds,
the issuer of the Credit Facility then in effect securing such Series, and (b)
with respect to a Credit Facility, the issuer of such Credit Facility.
"Applicable Paying Agent" means, with respect to a Series of Bonds, the
Paying Agent for such Series.
"Authorized Denomination" means (i) with respect to the Series 1999 Bonds,
(a) during any Short-Term Rate Period or any Medium-Term Rate Period, $100,000
and integral multiples thereof, and (b) during the Fixed Rate Period, $5,000 and
integral multiples thereof; and (ii) with respect to any Series of Additional
Bonds, the denominations specified in the supplemental indenture authorizing the
issuance of such Series.
"Bankruptcy Code" means Title 11 of the United States Code, as amended,
and any successor statute or statutes having substantially the same function.
"Beneficial Owner" means the Person in whose name a Bond is recorded as
beneficial owner of such Bond by the Securities Depository or a Participant or
an Indirect Participant on the records of such Securities Depository,
Participant or Indirect Participant, as the case may be, or such Person's
subrogee.
"Bond" or "Bonds" means any Bonds authorized under this Indenture,
including the Series 1999 Bonds and any Additional Bonds.
"Bond Documents" means, collectively, the Series 1999 Bonds, this
Indenture, the Series 1999 Credit Facility, the Series 1999 Credit Agreement,
the Purchase Agreement, the Remarketing Agreement and the Official Statement.
"Bond Fund" means the fund created by Section 4.1.
"Bond Purchase Fund" means the fund created by Section 4.4.
"Book Entry System" means a book entry system established and operated for
the recordation of Beneficial Owners of the Bonds pursuant to Section 2.20.
"Business Day" means, with respect to a Series of Bonds, any day on which
the offices of the Applicable Credit Issuer at which drawings on the Applicable
Credit Facility are made, the Trustee, the Applicable Paying Agent, the Tender
Agent, the Registrar and the Remarketing Agent are each open for business and on
which The New York Stock Exchange is not closed.
"Ceiling Rate" means (i) with respect to the Series 1999 Bonds, 12% per
annum; and (ii) with respect to any Series of Additional Bonds, the rate per
annum set forth in the supplemental indenture authorizing the issuance of such
Series.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rulings and regulations (including temporary and proposed regulations)
promulgated thereunder or under the Internal Revenue Code of 1954, as amended.
"Company" means Atlantic American Corporation, a Georgia
corporation, and its successors and assigns.
"Company Agent" shall have the meaning set forth in
Section 7.2.
"Company Representative" means any one of the persons at the time
designated to act on behalf of the Company by written certificate furnished to
the Trustee containing the specimen signatures of such persons and signed on
behalf of the Company by the President or any Vice President of the Company.
"Computation Date" means, with respect to a Series of Bonds, (i) the
Business Day next preceding the first day of each Interest Period during which
such Series bears interest at a Weekly Rate, (ii) the last Business Day of the
calendar month next preceding each Interest Period during which such Series
bears interest at a Monthly Rate, (iii) the first Business Day of each Flexible
Term Rate Period and (iv) a date that is not more than twenty (20) nor less than
two (2) days prior to any Conversion Date relating to conversion of such Series
to a Long-Term Rate.
"Conversion Date" means, with respect to a Series of Bonds, (i) each date
on which the Interest Rate Determination Method then in effect with respect to
such Series is changed to another Interest Rate Determination Method, including
a Fixed Rate Conversion Date with respect to such Series, and (ii) each date on
which the interest rate borne by such Series is changed from the interest rate
applicable during a Medium-Term Rate Period to the interest rate applicable
during another Medium-Term Rate Period.
"Conversion Notice" shall have the meaning set forth in
Section 2.4(a).
"Counsel" means an attorney, or firm of attorneys, admitted to practice
law before the highest court of any state in the United States of America or the
District of Columbia.
"Credit Agreement" means any agreement between the Company and a Credit
Issuer relating to a Credit Facility, as such agreement may be amended or
supplemented from time to time pursuant to its terms.
"Credit Facility" means an irrevocable, direct-pay letter of credit issued
by a Credit Issuer on the Issue Date of a Series of Bonds in favor of the
Trustee, for the account of the Company, which provides security for the payment
of certain payments on or with respect to such Series of Bonds as contemplated
pursuant to Section 3.8 and, upon acceptance by the Trustee of any Alternate
Credit Facility with respect to such Series, such Alternate Credit Facility.
"Credit Issuer" means the issuer of any Credit Facility, its successors
and assigns; provided, however, that in connection with the acceptance of an
Alternate Credit Facility that results in the occurrence of a Mandatory Purchase
Date for a Series of Bonds, until the occurrence of such Mandatory Purchase
Date, "Credit Issuer" shall mean, with respect to such Series, the Applicable
Credit Issuer immediately prior to acceptance of such Alternate Credit Facility.
"Credit Modification Date" means, with respect to a Series of Bonds,
either (a) the second Business Day next preceding the date on which the
Applicable Credit Facility then in effect is stated to expire (unless extended),
or (b) if the Applicable Credit Facility will terminate prior to its stated
expiration date on account of the delivery of an Alternate Credit Facility, the
proposed Alternate Credit Facility Effective Date with respect to such Alternate
Credit Facility, if:
(i) such Series is then rated by a Rating Agency and (1) the Company
fails to deliver to the Trustee, no more than sixty (60) nor less than
forty (40) days prior to such stated expiration date or proposed Alternate
Credit Facility Effective Date, (a) notice that an Alternate Credit
Facility will be delivered to the Trustee with respect to such Series on
or prior to the second Business Day preceding such stated expiration date
or on or prior to such proposed Alternate Credit Facility Effective Date,
and (b) a letter from any Rating Agency then rating such Series stating
that such Rating Agency has reviewed the terms of such Alternate Credit
Facility and the issuer thereof and that acceptance of the Alternate
Credit Facility for the benefit of the Holders will not result in a
lowering or elimination of the rating then assigned by such Rating Agency
to such Series, (2) the Company delivers such notice and letter but prior
to the date such Alternate Credit Facility is to be delivered such Rating
Agency revokes such letter, or (3) the Company delivers such notice and
letter but such Alternate Credit Facility is not delivered to, and
accepted by, the Trustee on or prior to the second Business Day preceding
such stated expiration date or on or prior to such proposed Alternate
Credit Facility Effective Date; or
(ii) such Series is not then rated and (1) the Company fails to
deliver to the Trustee, not more than sixty (60) nor less than forty (40)
days prior to such stated expiration date or proposed Alternate Credit
Facility Effective Date, (a) notice that an Alternate Credit Facility will
be delivered to the Trustee with respect to such Series on or prior to the
second Business Day preceding such stated expiration date or on or prior
to such proposed Alternate Credit Facility Effective Date, and (b) written
evidence that the issuer of such Alternate Credit Facility is a commercial
bank organized and doing business in the United States of America or a
branch or agency of a foreign commercial bank located and doing business
in the United States of America and subject to regulation by state or
federal banking regulatory authorities and that has, as of the date sixty
(60) days prior to such stated expiration date or proposed Alternate
Credit Facility Effective Date (i) senior debt or long-term bank deposits
rated by a Rating Agency with a rating at least equivalent to the senior
debt or long-term bank deposits of the Applicable Credit Issuer or (ii)
outstanding letters of credit or other similar instruments that, when
supporting debt obligations, result in such debt obligations being rated
by a Rating Agency with a rating at least the equivalent of the ratings
assigned to debt obligations supported with letters of credit or other
similar instruments or devices issued by such Credit Issuer on the date
sixty (60) days prior to such stated expiration date or such proposed
Alternate Credit Facility Effective Date or (2) the Company delivers such
notice but such Alternate Credit Facility is not delivered to, and
accepted by, the Trustee on or prior to the second Business Day preceding
such stated expiration date or such proposed Alternate Credit Facility
Effective Date.
"Current Subaccount" means each subaccount so designated within the Bond
Fund established pursuant to Section 4.1.
"Eligible Funds" means, when a Credit Facility is in effect with respect
to a Series of Bonds, moneys held by the Trustee or the Applicable Paying Agent
under this Indenture which consist of any of the following:
(i) any moneys if, in the written opinion of Counsel experienced in
bankruptcy law matters (which opinion shall be delivered to the Trustee
and the Rating Agency, if any, rating such Series at or prior to the time
of the deposit of such moneys with the Trustee and shall be in form and
substance satisfactory to the Rating Agency, if any, rating such Series),
the deposit and use of such moneys with respect to such Series will not
constitute an avoidable preferential payment pursuant to Section 547 of
the Bankruptcy Code, or an avoidable post-petition transfer pursuant to
Section 549 of the Bankruptcy Code, recoverable from Holders of the Bonds
pursuant to Section 550 of the Bankruptcy Code in the event of an Act of
Bankruptcy, and if a Rating Agency is rating such Series, such Rating
Agency has confirmed to the Trustee in writing that its rating will not be
withdrawn or reduced as a result of using such moneys; or
(ii) moneys paid by a Credit Issuer to the Trustee under a Credit
Facility which are not commingled with any other moneys.
If no Credit Facility is in effect with respect to a Series of Bonds, any moneys
held by the Trustee or the Applicable Paying Agent under this Indenture shall
constitute "Eligible Funds" with respect to such Series.
"Event of Default" means any of the events specified in
Section 6.1.
"Fitch" means Fitch IBCA Inc., a corporation organized and existing under
the laws of the State of Delaware, its successors and assigns and, if such
corporation shall be dissolved or liquidated or shall no longer perform the
functions of a securities rating agency, "Fitch" shall, with respect to a Series
of Bonds, be deemed to refer to any other nationally recognized securities
rating agency designated by the Company with the approval of the Remarketing
Agent, by notice to the Trustee.
"Fixed Rate" means, with respect to a Series of Bonds, the Fixed Rate
established for such Series in accordance with Section 2.3(g).
"Fixed Rate Conversion Date" means, with respect to a Series of Bonds, the
day on which the Interest Rate Determination Method for such Series shall be
converted to a Fixed Rate.
"Fixed Rate Period" means, with respect to a Series of Bonds, the period
from and including the applicable Fixed Rate Conversion Date to and including
the date of payment in full of such Series.
"Flexible Term Rate" means, with respect to the Bonds of a Series, the
Flexible Term Rate established for each such Bond in accordance with Section
2.3(e).
"Flexible Term Rate Period" means, with respect to the Bonds of a Series,
any and all periods during which each such Bond bears interest at a Flexible
Term Rate, such periods not to be of a duration in excess of 270 days as may be
determined by the Remarketing Agent pursuant to Section 2.3(e).
"Government Obligations" means (i) direct obligations of the United States
of America for the full and timely payment of which the full faith and credit of
the United States of America is pledged, and (ii) obligations issued by a Person
controlled or supervised by and acting as an instrumentality of the United
States of America, the full and timely payment of the principal of, premium, if
any, and interest on which is fully guaranteed as a full faith and credit
obligation of the United States of America (including any securities described
in (i) or (ii) issued or held in book-entry form on the books of the Department
of the Treasury of the United States of America), which obligations, in either
case, are not subject to redemption prior to maturity at less than par at the
option of anyone other than the holder thereof.
"Holder" means the Person who shall be the registered owner
of any Bond.
"Indenture" means this Indenture of Trust, as the same may be amended or
supplemented from time to time as permitted hereby.
"Indirect Participant" means a broker-dealer, bank or other financial
institution for which the Securities Depository holds Bonds as a securities
depository through a Participant.
"Initial Fund" means the fund created pursuant to
Section 4.2.
"Interest Payment Date" means, with respect to a Series of Bonds, (i)
during any Weekly Rate Period or any Monthly Rate Period, each Monthly Interest
Payment Date, (ii) during any Medium-Term Rate Period or the Fixed Rate Period,
each Semiannual Interest Payment Date, and (iii) during any Flexible Term Rate
Period, the first Business Day immediately following the last day of each
Flexible Term Rate Period, but only as to Bonds of such Series for which such
Flexible Term Rate Period is applicable.
"Interest Period" means (a) with respect to a Series of Bonds bearing
interest at a Weekly Rate, (i) if such Series initially bears interest at a
Weekly Rate, the period from and including the Issue Date to and including the
next Tuesday, (ii) the period from and including the Conversion Date on which
the Interest Rate Determination Method for such Series is changed to the Weekly
Rate to and including the next Tuesday, and (iii) in each case, each succeeding
period from and including each Wednesday to and including the following Tuesday;
and (b) with respect to a Series of Bonds bearing interest at a Monthly Rate,
(i) if such Series initially bears interest at a Monthly Rate, the period from
and including the Issue Date to and including the last day of the calendar month
in which such Issue Date occurred, (ii) the period from and including the
Conversion Date on which the Interest Rate Determination Method for such Series
is changed to the Monthly Rate to and including the last day of the calendar
month in which such Conversion Date occurred, and (iii) in each case, each
succeeding period from and including the first day of each calendar month to and
including the last day of such calendar month.
"Interest Rate Determination Method" means any of the methods of
determining the interest rate on a Series of Bonds described in Section 2.3.
"Issue Date" means, with respect to a Series of the Bonds, the date on
which such Series is delivered to the purchaser or purchasers thereof upon
original issuance.
"Local Time" means eastern time (daylight or standard, as
applicable).
"Long-Term Rate" means either a Medium-Term Rate or the
Fixed Rate.
"Long-Term Rate Period" means either a Medium-Term Rate Period or the
Fixed Rate Period.
"Mandatory Purchase Date" means, with respect to a Series of Bonds (or, in
the case of clause (iii) of this sentence, with respect to each Bond of a Series
then bearing interest at a Flexible Term Rate), (i) a Conversion Date for such
Series (other than Conversion Dates resulting from deemed conversions under
Sections 2.3(c), (e) or (f)), (ii) a Credit Modification Date for such Series,
(iii) the day next succeeding the last day of each Flexible Term Rate Period
applicable to such Bond, (iv) the fifth Business Day after receipt by the
Trustee of a written notice from the Applicable Credit Issuer that an event of
default under the Credit Agreement pursuant to which such Credit Issuer issued
its Applicable Credit Facility has occurred and is continuing and a written
request from such Applicable Credit Issuer that all of the Bonds of such Series
be required to be tendered for purchase, or (v) while such Series bears interest
at the Weekly Rate or the Monthly Rate, any Business Day designated by the
Company, with the consent of the Remarketing Agent and the Applicable Credit
Issuer, that could be an Optional Tender Date for the Bonds of such Series.
"Medium-Term Rate" means, with respect to a Series of Bonds, the interest
rate on such Series established from time to time pursuant to Section 2.3(f).
"Medium-Term Rate Period" means, with respect to a Series of Bonds, any
period of not less than 271 days during which such Series bears interest at a
Medium-Term Rate.
"Monthly Interest Payment Date" means the first day of each
calendar month.
"Monthly Rate" means, with respect to a Series of Bonds, the interest rate
on such Series established from time to time pursuant to Section 2.3(c).
"Monthly Rate Period" means, with respect to a Series of Bonds, any period
during which such Series bears interest at a Monthly Rate.
"Moody's" means Moody's Investors Service, Inc., a corporation organized
and existing under the laws of the State of Delaware, its successors and assigns
and, if such corporation shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, "Moody's" shall, with
respect to a Series of Bonds, be deemed to refer to any other nationally
recognized securities rating agency designated by the Company with the approval
of the Remarketing Agent, by notice to the Trustee.
"Official Statement" means the Preliminary Official Statement and the
final Official Statement prepared and used in connection with the initial sale
of the Series 1999 Bonds on the Issue Date thereof.
"Optional Tender Date" means, with respect to a Series of Bonds, (i)
during any Weekly Rate Period, any Business Day, and (ii) during any Monthly
Rate Period, the first Business Day of each Interest Period.
"Outstanding" means, when used with reference to the Bonds at any date as
of which the amount of outstanding Bonds is to be determined, all Bonds that
have been authenticated and delivered by the Trustee hereunder, except:
(i) Bonds canceled or delivered for cancellation at or
prior to such date;
(ii) Bonds deemed to be paid in accordance with Section 5.2;
(iii) Bonds in lieu of which others have been authenticated under
Sections 2.13, 2.14 and 2.15;
(iv) Untendered Bonds; and
(v) For purposes of any consent, request, demand, authorization,
direction, notice, waiver or other action to be taken by the Holders of a
specified percentage of Outstanding Bonds hereunder, all Bonds held by or
for the account of the Company or any affiliate of the Company; provided,
however, that for purposes of any such consent, request, demand,
authorization, direction, notice, waiver or action the Trustee shall be
obligated to consider as not being outstanding only Bonds known by the
Trustee by actual notice thereof to be so held; provided, further, that if
all of the Bonds of a Series are at any time held by or for the account of
the Company or any affiliate of the Company, then such Bonds of such
Series shall be deemed to be Outstanding at such time for the purposes of
this subparagraph (v).
"Participant" means a broker-dealer, bank or other financial institution
for which the Securities Depository holds Bonds as a securities depository.
"Paying Agent" means (i) with respect to the Series 1999 Bonds, The Bank
of New York, and its successors appointed and serving under this Indenture; and
(ii) with respect to any Series of Additional Bonds, the party named as the
"Paying Agent" for such Series pursuant to Section 7.6, and its successors
appointed and serving under this Indenture.
"Permitted Investments" means, with respect to a Series of Bonds, any one
or more of the following investments, if and to the extent the same are then
legal investments under the applicable laws of the State for moneys proposed to
be invested therein:
(i) Bonds or other obligations of the United States;
(ii) Bonds or other obligations, the payment of the principal and
interest of which is unconditionally guaranteed by the United States;
(iii) Direct obligations issued by the United States or obligations
guaranteed in full as to principal and interest by the United States or
repurchase agreements with a qualified depository bank fully
collateralized by such obligations, maturing on or before the date when
such funds will be required for disbursement;
(iv) Obligations of state and local government and municipal bond
issuers, which are rated investment-grade by either S&P or Moody's or
other non-rated obligations of such issuers guaranteed or credit enhanced
by a Person whose long-term debt or long-term deposits or other
obligations are rated investment-grade by either S&P or Moody's;
(v) Prime commercial paper rated either "A-1" by S&P or "P-1" by
Moody's and, if rated by both, not less than "A-1" by S&P and "P-1" by
Moody's;
(vi) Bankers' acceptances drawn on and accepted by commercial banks;
(vii) Interests in any money market fund or trust, the investments of
which are restricted to obligations described in clauses (i)-(vi) of this
definition or obligations determined to be of comparable quality by the
board of directors of such fund or trust; and
(viii) Such other obligations as may at any time hereafter be approved by
the Applicable Credit Issuer.
"Person" means any natural person, firm, partnership, association,
corporation, limited liability company or public body.
"Purchase Agreement" means the Bond Purchase Agreement dated July 13, 1999
between the Company and the Underwriter, relating to the initial sale of the
Series 1999 Bonds.
"Purchase Price" means an amount equal to 100% of the principal amount of
any Bond tendered or deemed tendered for purchase pursuant to Section 2.6, plus
accrued and unpaid interest thereon to the date of purchase.
"Rate" means any Short-Term Rate or any Long-Term Rate.
"Rate Period" means any Weekly Rate Period, Monthly Rate
Period, Flexible Term Rate Period, Medium-Term Rate Period or
Fixed Rate Period.
"Rating Agency" means Fitch when a Series of Bonds is rated by Fitch,
Moody's when a Series of Bonds is rated by Moody's, and S&P when a Series of
Bonds is rated by S&P.
"Record Date" means with respect to each Interest Payment Date (i) during
any Short-Term Rate Period, the Trustee's close of business on the Business Day
next preceding such Interest Payment Date, and (ii) during any Long-Term Rate
Period, the Trustee's close of business on the fifteenth (15th) day of the
calendar month next preceding the calendar month during which such Interest
Payment Date occurs, regardless of whether such day is a Business Day.
"Register" means the register of the record owners of Bonds
maintained by the Registrar.
"Registrar" means the Trustee.
"Remarketing Agent" means Wachovia Securities, Inc. and its
successors appointed and serving in such capacity under this
Indenture.
"Remarketing Agreement" means any agreement between the Company and a
Remarketing Agent relating to the Bonds, as such agreement may be amended,
supplemented or restated from time to time pursuant to its terms.
"Replacement Bonds" means Bonds issued pursuant to Section 2.15, which
Bonds shall contain the terms and provisions specified herein as being
applicable to the Bonds following a Mandatory Purchase Date and have excised
therefrom the terms and provisions that are not so applicable and added thereto
terms that have become applicable.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, its successors and their assigns and, if such corporation
shall be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, "S&P" shall, with respect to a Series of Bonds, be
deemed to refer to any other nationally recognized securities rating agency
designated by the Company with the approval of the Remarketing Agent, by notice
to the Trustee.
"Securities Depository" means The Depository Trust Company and any
substitute for or successor to such securities depository that shall maintain a
Book Entry System with respect to the Bonds.
"Securities Depository Nominee" means the Securities Depository or the
nominee of such Securities Depository in whose name there shall be registered on
the Register the Bonds to be delivered to such Securities Depository during the
continuation with such Securities Depository of participation in its Book Entry
System.
"Semiannual Interest Payment Date" means each June 1 and
December 1.
"Series" means the Series 1999 Bonds and each series of
Additional Bonds.
"Series 1999 Credit Agreement" means, initially, the Credit Agreement
pursuant to which the Series 1999 Credit Facility is issued, and upon acceptance
by the Trustee of any Alternate Credit Facility securing the Series 1999 Bonds,
the Credit Agreement pursuant to which such Alternate Credit Facility is issued.
"Series 1999 Credit Facility" means, initially, the letter of credit
issued by the Series 1999 Credit Issuer on the Issue Date of the Series 1999
Bonds, and upon acceptance by the Trustee of any Alternate Credit Facility
securing the Series 1999 Bonds, such Alternate Credit Facility.
"Series 1999 Credit Issuer" means, initially, Wachovia Bank, N.A., and
upon acceptance by the Trustee of any Alternate Credit Facility securing the
Series 1999 Bonds, the issuer of such Alternate Credit Facility.
"Short-Term Rate" means any of the Weekly Rate, the Monthly Rate or the
Flexible Term Rate.
"Short-Term Rate Period" means, with respect to a Series of Bonds, any
period during which such Series bears interest at a Short-Term Rate.
"State" means the State of Georgia.
"Tender Agent" means Wachovia Bank, N.A., and its successors appointed and
serving in such capacity under this Indenture.
"Tender Agent Agreement" means any certificate or agreement executed by a
Tender Agent in connection with such Tender Agent's duties hereunder.
"Trustee" means The Bank of New York, as trustee hereunder, and any
successor trustee appointed under this Indenture.
"U.C.C." means the Uniform Commercial Code of the State as
now in effect or hereafter amended.
"Underwriter" means (i) with respect to the Series 1999 Bonds, Wachovia
Securities, Inc., and (ii) with respect to any Series of Additional Bonds, the
Person appointed by the Company to serve as Underwriter for such Series pursuant
to Section 7.11.
"Untendered Bond" means any Untendered Bond as defined in
Section 2.6(f).
"Weekly Rate" means, with respect to a Series of Bonds, the interest rate
on such Series established pursuant to Section 2.3(b).
"Weekly Rate Period" means, with respect to a Series of Bonds, any period
during which such Series bears interest at a Weekly Rate.
Section 1.2 Rules of Construction. Unless the context clearly indicates to
the contrary, the following rules shall apply to the construction of this
Indenture:
(a) Words importing the singular number shall include the plural number
and vice versa.
(b) The table of contents, captions and headings herein are for
convenience of reference only and shall not constitute a part of this Indenture
nor shall they affect its meaning, construction or effect.
(c) Words of the masculine gender shall be deemed and construed to include
correlative words of the feminine and neuter genders, and words of the neuter
gender shall be deemed and construed to include correlative words of the
masculine and feminine genders.
(d) All references in this Indenture to particular Articles or Sections
are references to Articles or Sections of this Indenture, unless otherwise
indicated.
ARTICLE II
THE BONDS
Section 2.1 Authorized Amount of Bonds. No Bonds may be issued under the
provisions of this Indenture except in accordance with this Article. The total
principal amount of Series 1999 Bonds that may be issued and outstanding
hereunder is expressly limited to $25,000,000, subject to the provisions of
Sections 2.13, 2.14 and 2.15. The Company may issue Additional Bonds pursuant to
Section 2.12(b). The total principal amount of Bonds and the number of Series of
Bonds that may be issued hereunder are not limited.
Section 2.2 Issuance of Bonds.
(a) The Series 1999 Bonds shall be designated "Atlantic American
Corporation Taxable Variable Rate Demand Bonds, Series 1999." The form of Bond
attached as Exhibit A to this Indenture shall be the form of Series 1999 Bond
referred to herein. The Series 1999 Bonds shall bear interest from the Issue
Date thereof, until paid, at the rates set forth in Section 2.3 (computed on the
basis of a 360-day year for the actual days elapsed during any Short-Term Rate
Period (calculated by multiplying the principal amount of Bonds by the interest
rate, dividing that sum by 360, and multiplying that amount by the actual days
elapsed) and a 360-day year of twelve 30-day months during any Long-Term Rate
Period), and shall mature, unless sooner paid, on June 1, 2009, on which date
all unpaid principal, redemption premium, if any, and interest on the Series
1999 Bonds shall be due and payable.
(b) The Bonds of each Series shall be issued as fully registered bonds
without coupons in Authorized Denominations. The Bonds of each Series shall be
numbered from R-1 upwards bearing numbers not then contemporaneously outstanding
(in order of issuance) according to the records of the Registrar.
The Bonds of each Series shall be dated the Issue Date thereof. Interest
on each of the Bonds shall be computed from the Interest Payment Date to which
interest has been paid or duly provided for next preceding the date of
authentication thereof, unless (a) such date of authentication shall be prior to
the first Interest Payment Date, in which case interest shall be computed from
the Issue Date thereof, or (b) such date of authentication shall be an Interest
Payment Date to which interest on such Bond has been paid in full or duly
provided for, in which case interest shall be computed from such date of
authentication; provided, however, that if interest on the Bonds shall be in
default, Bonds issued in exchange for Bonds surrendered for registration of
transfer or exchange shall bear interest from the last date to which interest
has been paid or duly provided for on the Bonds or, if no interest has been paid
or duly provided for on the Bonds, from the Issue Date thereof.
The principal of, redemption premium, if any, and the interest on the
Bonds shall be payable in lawful currency of the United States. The principal of
and redemption premium, if any, on a Series of Bonds shall be payable at the
principal office of the Applicable Paying Agent upon presentation and surrender
of the Bonds. Payments of interest on the Bonds will be mailed to the persons in
whose names the Bonds are registered on the Register at the close of business on
the Record Date next preceding each Interest Payment Date; provided that, prior
to the Fixed Rate Conversion Date for a Series of Bonds, any Holder of a Bond or
Bonds of such Series in an aggregate principal amount of not less than $250,000
may, by prior written instructions filed with the Applicable Paying Agent (which
instructions shall remain in effect until revoked by subsequent written
instructions), instruct that interest payments for any period prior to the Fixed
Rate Conversion Date be made by wire transfer to an account in the continental
United States or other means acceptable to such Paying Agent.
Section 2.3 Interest Rates on Bonds.
(a) Initial Rate - General. Each of the Bonds shall bear interest as
provided herein from its Issue Date to the date that such Bond is paid in full.
Interest accrued on the Bonds of a Series (or the applicable portion of the
Bonds of a Series if the Bonds of such Series bear interest at a Flexible Term
Rate) shall be paid on each Interest Payment Date for such Series (or, if such
day is not a Business Day, the next succeeding Business Day) commencing (i) with
respect to the Series 1999 Bonds, on July 1, 1999, and (ii) with respect to any
Series of Additional Bonds, on the date set forth as the initial Interest
Payment Date in the supplemental indenture authorizing the issuance of such
Series. The interest rate for a Series of Bonds will be determined as provided
in this Section except that no rate shall exceed the lesser of (i) the Ceiling
Rate applicable to such Series or (ii) the maximum rate permitted by applicable
law. The Ceiling Rate applicable to a Series of Bonds may be increased to a rate
not to exceed the maximum rate permitted by applicable law by execution and
delivery of a supplemental indenture, if the interest component of the
Applicable Credit Facility is increased on or prior to the effective date of
such supplemental indenture by recalculating the amount of such interest
component using the increased Ceiling Rate and the number of days coverage then
provided for in the Applicable Credit Facility. The Series 1999 Bonds shall
initially bear interest at a Weekly Rate from the Issue Date thereof until the
date on which the Interest Rate Determination Method for such Bonds is changed
as described in Section 2.4. Such Weekly Rate for the initial Interest Period
for the Series 1999 Bonds shall be determined by the Underwriter for such Series
on the Issue Date thereof in the manner set forth in Section 2.3(b) with respect
to subsequent Interest Periods. Thereafter, during any Weekly Rate Period for a
Series of Bonds, the Remarketing Agent will determine a Weekly Rate for such
Series in accordance with Section 2.3(b).
Notwithstanding anything herein to the contrary, each Interest Rate
Determination Method in effect for a Series of Bonds from time to time shall
continue in effect until the date on which the Interest Rate Determination
Method for such Series is changed as described in Section 2.3(c), (e) or (f) or
Section 2.4. Series of Bonds issued hereunder may bear interest using the same
or different Interest Rate Determination Methods; provided, however, all Bonds
of the same Series must bear interest using the same Interest Rate Determination
Method, as such Interest Rate Determination Method may be changed from time to
time as described in Section 2.3(c), (e) or (f) or Section 2.4.
(b) Weekly Rate. During any Weekly Rate Period in effect for a Series of
Bonds, all Bonds of such Series will bear interest at the Weekly Rate. During
any Weekly Rate Period for a Series of Bonds, the Remarketing Agent will
determine the Weekly Rate for the applicable Interest Period by 4:00 p.m., Local
Time, on the applicable Computation Date. Each Weekly Rate shall be the rate of
interest that, if borne by such Bonds, would, in the judgment of the Remarketing
Agent, having due regard for the prevailing financial market conditions for
bonds or other securities that are comparable as to credit and maturity (or
comparable with respect to optional tender provisions) with the credit and
maturity or the optional tender provisions of such Bonds, be the interest rate
necessary, but would not exceed the interest rate necessary, to enable the
Remarketing Agent to place such Bonds at a price of par (plus accrued interest,
if any) on the first Business Day of such Interest Period; provided, that, if
for any reason the Weekly Rate for any Interest Period is not established as
aforesaid by the Remarketing Agent, no Remarketing Agent shall be serving as
such hereunder or the rate so established is held to be invalid or unenforceable
with respect to any Interest Period, then the Weekly Rate for such Interest
Period shall be 100% of the Alternate Weekly Index on the date such interest
rate was (or would have been) determined as provided above. The Remarketing
Agent (or if no Remarketing Agent is serving as such hereunder, the Trustee)
shall notify the Company immediately by telephone if the Alternate Weekly Index
is applicable, with written notice to follow promptly. In connection with any
change in the Interest Rate Determination Method for a Series of Bonds to a
Weekly Rate pursuant to Section 2.3(c), (e) or (f) or Section 2.4(a), the
initial Weekly Rate for such Series shall be determined as provided above on the
applicable Computation Date.
(c) Monthly Rate. During any Monthly Rate Period in effect for a Series of
Bonds, all Bonds of such Series will bear interest at the Monthly Rate. During
any Monthly Rate Period in effect for a Series of Bonds, the Remarketing Agent
will determine a Monthly Rate by 4:00 p.m., Local Time, on the applicable
Computation Date. Each Monthly Rate shall be the rate of interest which, if
borne by such Bonds, would, in the judgment of the Remarketing Agent, having due
regard for the prevailing financial market conditions for bonds or other
securities that are comparable as to credit and maturity (or comparable with
respect to optional tender provisions) with the credit and maturity or the
optional tender provisions of such Bonds, be the interest rate necessary, but
would not exceed the interest rate necessary, to enable the Remarketing Agent to
place such Bonds at a price of par (plus accrued interest, if any) on the first
Business Day of such Interest Period; provided that, if for any reason the
Monthly Rate for any Interest Period is not established as aforesaid by the
Remarketing Agent, no Remarketing Agent shall be serving as such hereunder or
the rate so established is held to be invalid or unenforceable with respect to
any Interest Period, then the Interest Rate Determination Method with respect to
such Series of Bonds shall be deemed to have converted to the Weekly Rate on the
date such interest rate was (or would have been) determined as provided above.
The Remarketing Agent (or if no Remarketing Agent is serving as such hereunder,
the Trustee) shall notify the Company, the Trustee and the Applicable Paying
Agent immediately by telephone if such a conversion is deemed to have occurred,
with written notice to follow promptly. In connection with any change in the
Interest Rate Determination Method for a Series of Bonds to a Monthly Rate
pursuant to Section 2.4(a), the initial Monthly Rate for such Series shall be
determined as provided above on the applicable Computation Date.
(d) [Reserved].
(e) Flexible Term Rate. During any Flexible Term Rate Period for the Bonds
of a Series, each of the Bonds of such Series will bear interest at a Flexible
Term Rate. During any Flexible Term Rate Period for the Bonds of a Series, the
Remarketing Agent will determine the Flexible Term Rate and Flexible Term Rate
Period to be applicable to each Bond of such Series by 1:00 p.m., Local Time, on
the applicable Computation Date. For each Flexible Term Rate Bond, the Flexible
Term Rate Period shall be the period which would, in the judgment of the
Remarketing Agent, having due regard to prevailing financial market conditions
for securities of the same general nature as such Bond which are comparable as
to credit and maturity (or period for tender) with the credit and maturity of
such Bond, ultimately produce the lowest overall net interest cost on such Bond
to maturity. No Flexible Term Rate Period applicable to any Bond of a Series may
(A) be less than one or more than 270 days in length, (B) extend beyond any
scheduled Mandatory Purchase Date or the final maturity date of the Bonds of
such Series, or (C) end on a day preceding a non-Business Day. The Remarketing
Agent may assign different Flexible Term Rate Periods to different Flexible Term
Rate Bonds. For each Flexible Term Rate Bond, the Flexible Term Rate shall be
the rate of interest which, if borne by such Bond for its applicable Flexible
Term Rate Period, would, in the judgment of the Remarketing Agent, having due
regard for the prevailing financial market conditions for securities of the same
general nature as such Bond which are comparable as to credit and maturity (or
period for tender) with the credit and maturity of such Bond, be the interest
rate necessary, but would not exceed the interest rate necessary, to enable the
Remarketing Agent to place such Bond at a price of par (plus accrued interest,
if any) on the first Business Day of such Flexible Term Rate Period. If for any
reason the applicable rate is not established as aforesaid by the Remarketing
Agent, no Remarketing Agent shall be serving as such hereunder or the rate so
established is held to be invalid or unenforceable, then the Interest Rate
Determination Method with respect to such Series of Bonds shall be deemed to
have converted to the Weekly Rate on the date such interest rate was (or would
have been) determined as provided above. The Remarketing Agent (or if no
Remarketing Agent is serving as such hereunder, the Trustee) shall notify the
Company, the Trustee and the Applicable Paying Agent immediately by telephone if
such a conversion is deemed to have occurred, with written notice to follow
promptly. In connection with any change in the Interest Rate Determination
Method for a Series of Bonds to a Flexible Term Rate pursuant to Section 2.4,
the initial Flexible Term Rate and Flexible Term Rate Period for each Bond of
such Series shall be determined as provided above on the applicable Computation
Date.
(f) Medium-Term Rate. During any Medium-Term Rate Period in effect for a
Series of Bonds, all Bonds of such Series shall bear interest at the Medium-Term
Rate. The interest rate to be borne by such Bonds from the applicable Conversion
Date to the last day of the applicable Medium-Term Rate Period shall be the rate
determined by the Remarketing Agent on the applicable Computation Date to be the
rate which, if borne by such Bonds would, in the judgment of the Remarketing
Agent having due regard for prevailing market conditions for bonds or other
securities that are comparable to such Bonds, be the interest rate necessary,
but would not exceed the interest rate necessary, to enable the Remarketing
Agent to place such Bonds at a price of par (plus accrued interest, if any) on
the applicable Conversion Date. If for any reason the applicable rate is not
established as aforesaid by the Remarketing Agent, no Remarketing Agent shall be
serving as such hereunder or the rate so established is held to be invalid or
unenforceable, then the Interest Rate Determination Method with respect to such
Series of Bonds shall be deemed to have converted to the Weekly Rate on the date
such interest rate was (or would have been) determined as provided above. The
Remarketing Agent (or if no Remarketing Agent is serving as such hereunder, the
Trustee) shall notify the Company, the Trustee and the Applicable Paying Agent
immediately by telephone if such a conversion is deemed to have occurred, with
written notice to follow promptly.
On the Computation Date with respect to a Medium-Term Rate, the
Remarketing Agent shall determine the applicable Medium-Term Rate Period. Each
Medium-Term Rate Period with respect to a Series of Bonds shall be at least 271
days and shall end no later than the date of maturity of the Bonds of such
Series or, if earlier, on a day immediately preceding a Business Day. If the
Remarketing Agent fails to determine any Medium-Term Rate Period for a Series or
the Medium-Term Rate Period so established for a Series is held to be invalid or
unenforceable, the Medium-Term Rate Period with respect to such Series shall be
(i) if the Interest Rate Determination Method in effect for such Series
immediately prior to such Conversion Date was a Medium-Term Rate, the shorter of
(a) the period equal to the Medium-Term Rate Period for such Medium-Term Rate
(provided, however, that if the last day of such period would not be a day
immediately preceding a Business Day, such period shall be extended to the next
succeeding day that is a day immediately preceding a Business Day) and (b) the
remaining maturity of the Bonds of such Series, or (ii) if the Interest Rate
Determination Method in effect with respect to such Series immediately prior to
such Conversion Date was not a Medium-Term Rate, the shorter of (a) the period
ending on the first date that is a day immediately preceding a Business Day and
is at least 271 days after the Conversion Date and (b) the remaining maturity of
the Bonds of such Series.
If requested in the Conversion Notice by the Company changing the Interest
Rate Determination Method for a Series of Bonds to a Medium-Term Rate, the
Remarketing Agent may also determine on the Computation Date redemption premiums
with respect to such Series of Bonds, different from those set forth in Section
2.18 (or, in the case of any Series of Additional Bonds, different from those
set forth in the supplemental indenture authorizing the issuance of such
Series), for optional redemption of the Bonds of such Series during the
Medium-Term Rate Period. These redemption premiums shall be consistent with the
prevailing market conditions, in the reasonable judgment of the Remarketing
Agent.
(g) Fixed Rate. During any Fixed Rate Period in effect for a Series of
Bonds, all Bonds of such Series shall bear interest at the Fixed Rate
established for such Series under this Section 2.3(g). The interest rate to be
borne by such Bonds from the applicable Fixed Rate Conversion Date to the date
of payment in full of such Bonds shall be the rate determined by the Remarketing
Agent on the applicable Computation Date to be the rate which, if borne by such
Bonds would, in the judgment of the Remarketing Agent having due regard for the
prevailing market conditions for bonds or other securities that are comparable
to such Bonds, be the interest rate necessary, but would not exceed the interest
rate necessary, to enable the Remarketing Agent to place such Bonds at a price
of par (plus accrued interest, if any) on the applicable Fixed Rate Conversion
Date. If for any reason the Fixed Rate is not established as aforesaid by the
Remarketing Agent or no Remarketing Agent shall be serving as such hereunder,
then the provisions of the last paragraph of Section 2.4(e) shall apply; if the
Fixed Rate established by the Remarketing Agent is held to be invalid or
unenforceable, the interest rate to be borne by such Bonds from the applicable
Fixed Rate Conversion Date to the date of payment in full of such Bonds shall be
determined by the Remarketing Agent based on the criteria in the preceding
sentence and avoiding the cause of invalidity or unenforceability.
If requested in the Conversion Notice by the Company changing the Interest
Rate Determination Method for a Series of Bonds to a Fixed Rate, the Remarketing
Agent may also determine on the Computation Date redemption premiums with
respect to such Series, different from those set forth in Section 2.18 (or, in
the case of any Series of Additional Bonds, different from those set forth in
the supplemental indenture authorizing the issuance of such Series), for
optional redemption of the Bonds of such Series during the Fixed Rate Period.
These redemption premiums shall be consistent with the prevailing market
conditions, in the reasonable judgment of the Remarketing Agent.
(h) Notice of Rates and Deemed Conversions. Promptly following the
determination of any Rate for a Series of Bonds, the Remarketing Agent shall
give notice thereof to the Trustee, the Company and the Applicable Paying Agent.
Promptly upon receipt from the Remarketing Agent of any Medium-Term Rate or
Fixed Rate for a Series of Bonds, the Applicable Paying Agent shall give each
Holder of Bonds of such Series notice of the new Rate. Any Holder or Beneficial
Owner may obtain any Rate on or after the applicable Computation Date upon
request to the Remarketing Agent. Promptly upon receipt from the Remarketing
Agent or the Trustee of notice of any deemed conversion of a Series of Bonds to
the Weekly Rate under this Section, the Applicable Paying Agent shall give each
Holder of Bonds of such Series, the Applicable Credit Issuer, and the Rating
Agency, if any, then rating such Series notice of the deemed conversion.
(i) Determination of Rate Conclusive. The determination of any Rate for a
Series by the Remarketing Agent in accordance with the terms of this Indenture
shall be conclusive and binding upon the Company, the Trustee, the Applicable
Paying Agent, the Tender Agent, the Remarketing Agent and the Holders or
Beneficial Owners of such Series.
(j) No Liability. In determining the interest rate or rates that a Series
of Bonds shall bear as provided in this Section, the Remarketing Agent shall
have no liability to the Company, the Trustee, the Tender Agent, the Applicable
Paying Agent, the Registrar, the Applicable Credit Issuer or any Holder or
Beneficial Owner of any of the Bonds of such Series, except for its gross
negligence or willful misconduct.
Section 2.4 Conversion of Interest Rate Determination
Method.
(a) Conversion Notice. The Interest Rate Determination Method for a Series
of Bonds may be changed under this Section from any Short-Term Rate or a
Medium-Term Rate to any other Interest Rate Determination Method or from a
Medium-Term Rate to a new Medium-Term Rate on any Conversion Date by the Company
giving written notice of such change (a "Conversion Notice") to the Remarketing
Agent and the Trustee with a copy to the Tender Agent, the Applicable Paying
Agent, the Rating Agency, if any, rating such Series and the Applicable Credit
Issuer. The Conversion Notice must be received by the Remarketing Agent and the
Trustee at least forty (40) days prior to the proposed Conversion Date.
Each Conversion Notice shall state (i) the Series of Bonds to which such
Conversion Notice applies, (ii) that the Company elects to change the Interest
Rate Determination Method for such Series to a new Interest Rate Determination
Method, or from the interest rate applicable during a Medium-Term Rate Period to
a new interest rate during a new Medium-Term Rate Period, (iii) the proposed
Conversion Date, (iv) the Interest Rate Determination Method to be in effect for
such Series from and after such Conversion Date, (v) the terms of the Credit
Facility to be in effect for such Series from and after such Conversion Date,
and (vi) if a Long-Term Rate is to be in effect for such Series from and after
such Conversion Date, and if redemption premiums different from those set forth
in Section 2.18 (or, in the case of any Series of Additional Bonds, different
from those set forth in the supplemental indenture authorizing the issuance of
such Series) are to be applicable as described in Section 2.3(f) and (g), the
redemption premiums to be applicable during such Long-Term Rate Period.
(b) [Reserved].
(c) Conversion Date. If the Interest Rate Determination Method for a
Series of Bonds prior to a Conversion Date under this Section is:
(i) a Weekly Rate or a Monthly Rate, the Conversion Date must be the
first Business Day of an Interest Period;
(ii) a Flexible Term Rate, the Conversion Date for a change to another
Interest Rate Determination Method must be the first Business Day
immediately following the last Interest Payment Date during the Flexible
Term Rate Period, such Interest Payment Date to be determined at the time
the Conversion Notice is received by the Remarketing Agent; or
(iii) a Medium-Term Rate, the Conversion Date must be the day next
succeeding the last day of the Medium-Term Rate Period.
(d) Notice of Conversions to Holders. The Trustee shall give written
notice of a Conversion Date to the Holders of the Series to which such
Conversion Date applies, which notice shall be in substantially the form
attached to this Indenture as Exhibit B, appropriately completed, and shall be
sent by first-class mail, postage prepaid, at least thirty (30) days prior to
the Conversion Date.
(e) Failure or Revocation of Conversion. If an Event of Default shall have
occurred and be continuing hereunder, the Interest Rate Determination Method for
a Series of Bonds shall not be changed on the Conversion Date and the Trustee
shall immediately notify by telephone the Applicable Credit Issuer, the
Remarketing Agent, the Applicable Paying Agent and the Tender Agent that the
Interest Rate Determination Method for such Series shall not be changed on the
Conversion Date.
Notwithstanding any other provision in this Indenture to the contrary, no
conversion of the Interest Rate Determination Method for a Series of Bonds to
the Fixed Rate shall occur if the Company, not later than 10:00 a.m., Local
Time, on the Business Day immediately preceding the applicable Computation Date,
directs the Remarketing Agent not to change the Interest Rate Determination
Method for such Series to the Fixed Rate by written notice, with a copy to the
Trustee, the Applicable Paying Agent, the Tender Agent, the Remarketing Agent
and the Applicable Credit Issuer.
If a proposed conversion of the Interest Rate Determination Method for a
Series of Bonds is canceled pursuant to the provisions of the two preceding
paragraphs, all Bonds of such Series shall nevertheless be deemed to have been
tendered for purchase on the Conversion Date and shall be purchased on the
Conversion Date. The Bonds of such Series shall continue to bear interest in
accordance with the Interest Rate Determination Method in effect with respect to
such Series prior to the Conversion Date and, in the case of a proposed change
from a Medium-Term Rate, for a Medium-Term Rate Period ending on the first day
that is a day immediately preceding a Business Day and that occurs on or after
the day that is the same number of days after the proposed Conversion Date as
the number of days in the immediately preceding Medium-Term Rate Period (but in
no event later than the maturity of the Bonds of such Series); provided,
however, that the rate of interest that such Series will bear shall be
determined on the Conversion Date.
(f) Failure to Mail Certain Notices. Failure to mail the notice described
in subsection (d), or any defect therein, shall not affect the validity of any
interest rate or change in the Interest Rate Determination Method for a Series
of Bonds or the requirement that such Bonds be tendered pursuant to Section
2.6(e) or extend the period for tendering any of such Bonds for purchase, and
the Trustee shall not be liable to any Holder by reason of its failure to mail
such notice or any defect therein.
(g) Credit Facility Requirements Upon Conversion to Flexible Term Rate or
Long-Term Rate. The Interest Rate Determination Method for a Series of Bonds
shall not be changed to the Flexible Term Rate unless the Credit Facility to be
in effect for such Series immediately following such conversion provides for
drawings with respect to the interest component thereunder to pay at least 271
days of interest on such Bonds at the applicable Ceiling Rate. The Interest Rate
Determination Method for a Series of Bonds may not be converted to a Long-Term
Rate unless the Credit Facility to be in effect for such Series immediately
following such conversion provides for drawings with respect to the interest
component thereunder to pay 210 days of interest on such Bonds at the applicable
Ceiling Rate and for drawings with respect to premium to pay the maximum premium
due in connection with an optional redemption of such Bonds. If one or more
ratings for such Series is to be maintained after a conversion to the Flexible
Term Rate or a Long-Term Rate, the Trustee and the Remarketing Agent must
receive, prior to the effective date of such conversion, written confirmation
from each Rating Agency rating such Series that such rating will not be reduced
or withdrawn.
Section 2.5 [Reserved].
Section 2.6 Tender of Bonds for Purchase.
(a) Optional Tender During Weekly Rate Period or Monthly Rate Period.
During any Weekly Rate Period or Monthly Rate Period in effect for a Series of
Bonds, the Holders of the Bonds of such Series shall have the right to tender
any such Bond (or portion thereof in an Authorized Denomination, provided that
any Bond or portion thereof remaining is also in an Authorized Denomination),
for purchase on any Optional Tender Date, but only upon:
(i) delivery to the Remarketing Agent at its principal office, not
later than 4:00 p.m., Local Time, on or before the seventh (7th) day (or
on the immediately preceding Business Day, if such seventh (7th) day is
not a Business Day) next preceding such Optional Tender Date, of an
irrevocable written, telephonic (followed, if requested by the Remarketing
Agent, by written or facsimile confirmation delivered to the Remarketing
Agent no later than the close of business on the next succeeding Business
Day), facsimile or telegraphic notice (with a written or facsimile copy to
the Tender Agent) stating (1) that such Holder will tender for purchase
all or any portion of his/her Bonds in an Authorized Denomination and the
amount of Bonds to be tendered and (2) the Optional Tender Date on which
such Bonds will be tendered; and
(ii) delivery of such Bond (with an appropriate instrument of transfer
duly executed in blank) to the Tender Agent at its principal office at or
prior to 10:00 a.m., Local Time, on such Optional Tender Date; provided,
however, that no Bond (or portion thereof) shall be purchased unless such
Bond as delivered to the Tender Agent shall conform in all respects to the
description thereof in the aforesaid notice.
(b) [Reserved].
(c) Election to Tender Irrevocable. Any election of a Holder to tender
Bonds for purchase on an Optional Tender Date in accordance with subsection (a)
above shall be irrevocable and shall be binding on the Holder making such
election and on any transferee of such Holder.
(d) Notices. The Remarketing Agent shall give the Tender Agent prompt
notice by telephone of receipt of any tender notice received by it in accordance
with paragraph (i) of subsection (a) above. Upon the receipt of any such notice,
the Tender Agent shall promptly notify the Trustee, the Applicable Paying Agent
and the Applicable Credit Issuer by telephone.
(e) Mandatory Purchase on Mandatory Purchase Date. On any Mandatory
Purchase Date for a Series of Bonds, all Bonds of such Series (or the applicable
portion of the Bonds of such Series during any Flexible Term Rate Period) shall
be subject to mandatory tender for purchase at the Purchase Price thereof.
Notwithstanding the preceding sentence, there shall be no purchase pursuant to
this subsection of Bonds to be redeemed on the Mandatory Purchase Date, nor of
Bonds issued in exchange for or upon the registration of transfer of Bonds to be
redeemed on the Mandatory Purchase Date. Holders of Bonds subject to mandatory
tender shall tender such Bonds to the Tender Agent by 10:00 a.m., Local Time, on
each Mandatory Purchase Date.
(f) Bonds Deemed Tendered. If (i) with respect to a Mandatory Purchase
Date, a Holder fails to deliver Bonds subject to mandatory tender to the Tender
Agent on or before the Mandatory Purchase Date, or (ii) with respect to an
Optional Tender Date, a Holder gives notice pursuant to Section 2.6(a) to the
Remarketing Agent and thereafter fails to deliver such Bonds (or portion
thereof) to the Tender Agent, as required, then such Bond (or portion thereof),
that is not delivered to the Tender Agent, shall be deemed to have been properly
tendered (such Bond being hereinafter referred to as an "Untendered Bond") and,
to the extent that there shall be on deposit with the Applicable Paying Agent on
the date purchase thereof is required as provided herein an amount sufficient to
pay the Purchase Price thereof, such Untendered Bond shall cease to constitute
or represent a right to payment of principal or interest thereon and shall
constitute and represent only the right to the payment of the Purchase Price
payable on such date.
(g) Source of Funds for Purchase of Bonds. On each Optional Tender Date
and each Mandatory Purchase Date there shall be purchased (but solely from funds
set forth below) the Bonds (or portions thereof) of a Series, tendered (or
deemed tendered) to the Tender Agent for purchase in accordance with this
section at the applicable Purchase Price. Funds for the payment of the Purchase
Price for Bonds (or portions thereof) of a Series shall be paid by the
Applicable Paying Agent solely from the following sources and in the following
order of priority:
(i) proceeds of the remarketing of Bonds of such Series (or portions
thereof) pursuant to Section 2.7 that have been transferred to such Paying
Agent pursuant to said Section;
(ii) moneys drawn under the Applicable Credit Facility pursuant to
Section 3.8(a)(ii);
(iii) moneys from the account relating to such Series within the Bond
Purchase Fund constituting Eligible Funds, if any, under clause (i) of the
definition of Eligible Funds that have been transferred to such Paying
Agent pursuant to Section 4.4; and
(iv) any other moneys furnished by or on behalf of the Company for
purchase of Bonds of such Series.
Bonds (or portions thereof) purchased as provided above shall be delivered as
provided in Section 2.8.
(h) Notice of Mandatory Purchase Date. With respect to a Series of Bonds,
not less than thirty (30) days prior to each Mandatory Purchase Date for such
Series occurring as a result of a Credit Modification Date or at the Company's
direction, and not less than three (3) days prior to each Mandatory Purchase
Date occurring at the Applicable Credit Issuer's direction, the Trustee shall
give written notice of such Mandatory Purchase Date to the Remarketing Agent,
the Tender Agent, the Applicable Paying Agent and, by first-class mail, postage
prepaid, the Holders of the Bonds of such Series, which notice shall be in
substantially the form of Exhibits C or D hereto, as the case may be,
appropriately completed. Failure to mail such notice or any defect therein shall
not affect the rights or obligations of Holders and the Trustee shall not be
liable to any Holder by reason of its failure to mail such notice or any defect
therein. With respect to a Mandatory Purchase Date that is a Conversion Date
with respect to any Series of Bonds, the Trustee shall provide notice to the
Holders of the Bonds of such Series as set forth in Section 2.4(d). With respect
to a Mandatory Purchase Date that is the day next succeeding the last day of
each Flexible Term Rate Period, no notice of mandatory tender will be sent to
the Holders.
(i) Purchase Notice. If the Bonds are held in a Book Entry System, a
purchase notice pursuant to Section 2.6(a)(i) may be delivered by a Beneficial
Owner. Such purchase notice must be delivered as set forth in Section 2.6(a)(i)
and must state that such Beneficial Owner will cause its beneficial interest (or
portion thereof in an Authorized Denomination) to be tendered, the Series and
amount of such interest to be tendered, the Optional Tender Date on which such
interest will be tendered and the identity of the Participant through which the
Beneficial Owner maintains its interest. Upon delivery of such notice, the
Beneficial Owner must make arrangements to have its beneficial ownership
interest in the Bonds being tendered transferred to the Tender Agent at or prior
to 10:00 a.m., on the Optional Tender Date, but need not otherwise comply with
Section 2.6(a)(ii).
Section 2.7 Remarketing of Bonds.
(a) Best Efforts to Place Bonds. The Remarketing Agent shall use its best
efforts to place Bonds of a Series (or portions thereof) at a price of par plus
accrued interest, if any, on each date that such Bonds (or portions thereof) are
required to be purchased pursuant to Section 2.6 and if such Bonds are not
placed on such date (such Bonds being hereinafter referred to as "Unremarketed
Bonds"), the Remarketing Agent shall continue to use its best efforts to place
such Unremarketed Bonds at a price of par plus accrued interest, if any. By
12:00 noon, Local Time, on the Business Day prior to each date that the Bonds
(or portions thereof) are required to be purchased pursuant to Section 2.6, the
Remarketing Agent shall give initial notice by telephone (promptly confirmed by
telecopy) of the principal amount of the Bonds of a Series for which it has
arranged placement, together with the principal amount of the Bonds of such
Series, if any (and such other particulars with respect thereto as the Trustee
or Tender Agent may deem necessary), for which it has not arranged placement, to
the Trustee, the Tender Agent, the Company, the Applicable Credit Issuer and the
Applicable Paying Agent.
Such initial notice shall be confirmed by telephone notice by 9:00 a.m.,
Local Time, on the date that such Bonds are to be purchased (such notice to be
promptly confirmed in writing) of the amount of Bonds of a Series not remarketed
and the information necessary to enable the Trustee to prepare new Bond
certificates with respect to the Bonds that were remarketed. By 9:30 a.m., Local
Time, the Remarketing Agent shall transfer to the Applicable Paying Agent the
proceeds of the remarketing of such Bonds. By 10:30 a.m., Local Time, the
Applicable Paying Agent shall notify the Trustee of the amount of remarketing
proceeds it received from the Remarketing Agent.
Notwithstanding anything herein to the contrary, Bonds may be remarketed
only at a price of par.
(b) Draws on Credit Facility. In the event that moneys from the source
described in Section 2.6(g)(i) are insufficient to pay the Purchase Price of
Bonds of a Series that are tendered or deemed tendered on an Optional Tender
Date or a Mandatory Purchase Date, the Trustee shall, by 11:00 a.m., Local Time,
on such Optional Tender Date or Mandatory Purchase Date, take all action
required to cause the Purchase Price of each such Bond, to the extent not
available from the source described in Section 2.6(g)(i), to be paid from the
Applicable Credit Facility. In the event the Purchase Price of Bonds of a Series
is paid from the Applicable Credit Facility as described herein, and the Company
does not reimburse the Applicable Credit Issuer for such Purchase Price, upon
the remarketing of such Bonds as described in Section 2.7(a), the Applicable
Paying Agent shall deliver the proceeds of the remarketing of such Bonds to the
Applicable Credit Issuer.
(c) No Remarketing During Default. The Remarketing Agent shall not be
required to remarket any Bonds pursuant to this Section if it has actual
knowledge that an Event of Default shall have occurred and be continuing
hereunder or if the Remarketing Agent determines, in its sole discretion, that
the remarketing of the Bonds would be unlawful or would be likely to result in
the imposition of liability or damages against the Remarketing Agent, any Paying
Agent, the Tender Agent, the Trustee, any Credit Issuer, or the Company.
(d) Remarketing to Company. If a Credit Facility is then in effect with
respect to a Series of Bonds, the Remarketing Agent shall not remarket any Bonds
to (i) the Company, (ii) any other Person obligated (as guarantor or otherwise)
to make payments on such Series or under any Credit Agreement relating to such
Series, or (iii) an "affiliate" of the Company as defined in Bankruptcy Code ss.
101(2) (if the Remarketing Agent has actual knowledge that such Person is an
"affiliate" at the time of such remarketing), pursuant to this Section prior to
the expiration or earlier termination of the Applicable Credit Facility unless,
prior to such remarketing, the Trustee, the Rating Agency, if any, rating such
Series, and the Remarketing Agent shall have received an unqualified opinion of
Counsel experienced in bankruptcy law matters to the effect that such
remarketing would not result in a preferential payment pursuant to the
provisions of Section 547 of the Bankruptcy Code recoverable from Holders of the
Bonds of such Series pursuant to Section 550 of the Bankruptcy Code in the event
of an Act of Bankruptcy, and if a Rating Agency is rating such Series, such
Rating Agency has confirmed to the Trustee in writing that its rating will not
be withdrawn or reduced as a result of such remarketing.
(e) Notice to Proposed Purchasers of Bonds. The Remarketing Agent will
give any Person to whom Bonds are proposed to be remarketed written notice of
any Mandatory Purchase Date, acceleration of maturity of Bonds or redemption of
Bonds, notice of which has been given to Holders of the Bonds of the same Series
as that of the Bonds proposed to be remarketed, prior to remarketing such Bonds
to such Person.
(f) No Remarketing Under Certain Conditions. Notwithstanding anything to
the contrary herein provided, the Bonds of a Series shall not be remarketed
unless a Credit Facility providing for the payment of the principal of, premium,
if any, and interest on, and Purchase Price of, the Bonds of such Series will be
in effect following the remarketing of such Bonds. Notwithstanding anything to
the contrary herein provided, the Bonds of a Series shall not be remarketed
following a Mandatory Purchase Date for such Series occurring at the Applicable
Credit Issuer's direction unless and until the Remarketing Agent has received
the consent of such Applicable Credit Issuer to such remarketing.
Section 2.8 Delivery of Purchased Bonds. Bonds (or portions thereof)
purchased pursuant to Section 2.6 shall be delivered as follows:
(a) Bonds Purchased from Remarketing Proceeds. Bonds purchased with moneys
described in Section 2.6(g)(i) shall be delivered to the purchasers thereof upon
receipt of payment therefor. Prior to such delivery the Registrar shall provide
for registration of transfer to the Holders, as provided in a written notice
from the Remarketing Agent.
(b) Bonds Purchased from Draws Under Credit Facility. Bonds (or portions
thereof) purchased with moneys drawn under a Credit Facility shall be
surrendered to the Trustee for registration of transfer to the Company and upon
such registration of transfer, the Bonds issued in respect thereof shall be (i)
delivered to and held by the Trustee for the account of the Company, and no such
Bond shall be released, pledged or otherwise transferred or disposed of until
the Trustee shall have received written notice from the Applicable Credit Issuer
that the amounts so drawn under such Credit Facility, together with interest
thereon, if any, due pursuant to any applicable Credit Agreement, have been
reimbursed to such Credit Issuer and that the amount so drawn under such Credit
Facility with respect to such Bonds has been, or upon such release will be,
correspondingly and fully reinstated, and thereupon shall be delivered to, or in
accordance with the written direction of, the Company or (ii) if required
pursuant to any Credit Agreement, issued to a pledge agent for the account of
the Applicable Credit Issuer as pledgee of such Bonds and no such Bond shall be
released, pledged or otherwise transferred or disposed of until the Trustee
shall have received written notice from such Credit Issuer that the amounts so
drawn under such Credit Facility, together with interest thereon, if any, due
pursuant to any Credit Agreement, have been reimbursed to such Credit Issuer and
that the amount so drawn under such Credit Facility with respect to such Bonds
has been, or upon such release will be, correspondingly and fully reinstated.
(c) Bonds Purchased with Other Moneys. Bonds (or portions thereof)
purchased with any other moneys pursuant to Section 2.6(g) shall be delivered to
the Trustee (i) for cancellation and shall be canceled, or (ii) if the Company
requests, for registration of transfer to the Company.
(d) During Book Entry System. Notwithstanding anything herein to the
contrary, so long as the Bonds are held under the Book Entry System, Bonds will
not be delivered as set forth in (a) - (c) above; rather, transfers of
beneficial ownership and pledges of the Bonds to the persons indicated above
will be effected on the books of the Securities Depository and its Participants
pursuant to its rules and procedures.
Section 2.9 Execution. The Bonds shall be executed on behalf of the
Company by the manual or facsimile signature of the President or a Vice
President of the Company and attested by the manual or facsimile signature of
the Secretary or Assistant Secretary of the Company and shall have impressed or
imprinted thereon the seal (or a facsimile thereof), if any, of the Company.
In case an officer of the Company whose manual or facsimile signature
shall appear on the Bonds shall cease to be an officer of the Company before the
delivery of such Bonds, such manual or facsimile signatures shall nevertheless
be valid and sufficient for all purposes.
Section 2.10 Certificate of Authentication. No Bonds shall be secured
hereby or entitled to the benefit hereof or shall be or become valid or
obligatory for any purpose unless there shall be endorsed thereon a certificate
of authentication, substantially in the form as set forth in the form of Bond
referred to in Section 2.11, executed by an authorized signatory of the Trustee;
and such certificate on any Bond issued by the Company shall be conclusive
evidence and the only competent evidence that it has been duly authenticated and
delivered hereunder.
Section 2.11 Form of Bonds.
(a) The Series 1999 Bonds, the Trustee's certificate of authentication to
be endorsed on such Series and the form of assignment shall be in substantially
the form set forth as Exhibit A hereto, with such appropriate variations,
omissions, substitutions and insertions as are permitted or required hereby or
are required by law and may have such letters, numbers or other marks of
identification and such legends and endorsements placed thereon as may be
required to comply with any applicable laws or rules or regulations, or as may,
consistent herewith, be determined by the officers of the Company executing such
Bonds, as evidenced by their execution of the Bonds. Any Series of Additional
Bonds shall be in substantially the form set forth in Exhibit A hereto, with
such appropriate variations, omissions, substitutions and insertions as are
permitted or required under the supplemental indenture authorizing the issuance
of such Series.
(b) The Bonds shall be in either typewritten or printed form, as the
Company shall direct, with approval of the Trustee; provided that any expenses,
including but not limited to expenses of printing, incurred in connection
therewith shall be paid by the Company.
(c) On and after any Mandatory Purchase Date occurring with respect to a
Series of Bonds, Bonds of such Series authenticated and delivered hereunder
shall have omitted from the text thereof such provisions contained in the form
of the Bonds set forth as Exhibit A hereto as are not applicable to such Bonds
on and after such date or shall include such provisions as will become
applicable after such date including, without limitation, any reference to
entitlement to any benefit of a Credit Facility, if then in effect, and any
redemption provisions made applicable as a result of the occurrence of a
Conversion Date relating to a conversion to a Long-Term Rate.
Section 2.12 Delivery of Bonds.
(a) Series 1999 Bonds. Upon the execution and delivery hereof, the Company
shall execute the Series 1999 Bonds and deliver them to the Trustee, and the
Trustee shall authenticate the Series 1999 Bonds and deliver them to such
purchaser or purchasers as shall be directed in writing by the Company as
hereinafter in this Section provided.
Prior to the direction by the Company to the Trustee to deliver any of the
Series 1999 Bonds there shall be filed with the Trustee:
(i) A certified copy of all resolutions adopted and proceedings had by
the Company authorizing execution of the Indenture and the issuance of the
Series 1999 Bonds;
(ii) An original executed counterpart of this Indenture, the Purchase
Agreement and the Remarketing
Agreement;
(iii) An original executed counterpart of the Series 1999 Credit
Agreement and the original executed Series 1999 Credit Facility;
(iv) An opinion of Counsel for the Company to the effect that (A) the
Series 1999 Bonds, this Indenture, the Purchase Agreement, the Remarketing
Agreement and the Series 1999 Credit Agreement have been duly authorized,
executed and delivered by the Company and are legal, valid and binding
agreements of the Company, (B) the Bonds are exempt from registration
pursuant to the Securities Act of 1933, as amended, and this Indenture is
exempt from qualification as an indenture pursuant to the Trust Indenture
Act of 1939, as amended, and (C) that nothing has come to the attention of
Counsel for the Company which would lead them to believe that the
information concerning the Company contained in the Official Statement or
incorporated by reference therein contains any untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) An opinion of Counsel for the Series 1999 Credit Issuer, addressed
to the Company, the Remarketing Agent, the Trustee and the Paying Agent
for such Series to the effect that the Series 1999 Credit Facility has
been duly executed and delivered by such Credit Issuer and is a legal,
valid and binding obligation of such Credit Issuer or, if the Series 1999
Credit Facility is issued by a branch or agency of a foreign commercial
bank, to the effect that the Series 1999 Credit Facility is the legal,
valid and binding obligation of such branch or agency and there shall also
be delivered an opinion of Counsel licensed to practice law in the
jurisdiction in which the main office of such bank is located,
satisfactory to the Trustee, to the effect that the Series 1999 Credit
Facility has been duly executed and delivered by such branch or agency and
is the legal, valid and binding obligation of such bank; and
(vi) A request and authorization to the Trustee on behalf of the
Company and signed by a duly authorized officer of the Company directing
the Trustee to authenticate and deliver the Series 1999 Bonds in such
specified denominations as permitted herein to the initial purchaser or
purchasers upon payment to the Trustee, but for the account of the
Company, of a specified sum of money.
Upon receipt of the foregoing, the Trustee shall authenticate and deliver
the Series 1999 Bonds as provided above.
(b) Additional Bonds. So long as no Event of Default hereunder has
occurred and is continuing, the Company may issue Additional Bonds in one or
more Series. Upon the execution and delivery of a supplemental indenture
authorizing the issuance of a Series of Additional Bonds, the Company shall
execute and deliver to the Trustee, and the Trustee shall authenticate, such
Additional Bonds and deliver them to such purchaser or purchasers as shall be
directed in writing by the Company as hereinafter provided.
Prior to the direction by the Company to the Trustee to deliver a Series
of Additional Bonds, there shall be filed with the Trustee:
(i) An original executed counterpart of a supplemental indenture
executed by the Company:
(A) establishing such Series and the principal amount of the
Additional Bonds to be issued thereunder;
(B) establishing the final maturity date for such Series and
the times and prices, if any, at which such Bonds shall be
subject to mandatory sinking fund redemption;
(C) establishing the authorized denominations of such Series;
(D) specifying the initial Interest Rate Determination Method
to be in effect with respect to such Series;
(E) specifying the initial Interest Payment Date for such
Series;
(F) establishing the Ceiling Rate for such Series;
(G) designating the Paying Agent for such Series;
(H) establishing accounts or subaccounts within
the Bond Fund, the Initial Fund and the Bond
Purchase Fund for such Series and authorizing
the Trustee to disburse the proceeds of such
Series deposited in the Initial Fund to the
Company or to such other Person or Persons
specified therein and specifying any
conditions to such disbursement; and
(I) setting forth any other terms and conditions to the
issuance of such Series;
(ii) A certified copy of all resolutions adopted and proceedings had by
the Company authorizing execution of the supplemental indenture referred
to in (i) above and the issuance of such Series;
(iii) An original executed counterpart of an agreement between the
Company and the Underwriter for such Series, which shall be in form and
substance satisfactory to the Trustee and the Remarketing Agent, providing
for the initial sale of such Series and the determination of the Rate for
the initial Interest Period for such Series;
(iv) An original executed counterpart of the Credit Agreement relating
to such Series and the original executed Credit Facility for such Series;
(v) A certificate signed by an officer of the Company satisfactory to
the Trustee and the Remarketing Agent to the effect that no Event of
Default under this Indenture is then existing or will result from the
issuance of such Series;
(vi) An opinion of Counsel for the Company to the effect that the
Additional Bonds of such Series, the supplemental indenture authorizing
such Series, the placement agreement for such Series, the Remarketing
Agreement and the Credit Agreement for such Series have been duly
authorized, executed and delivered by the Company and are legal, valid and
binding agreements of the Company, (B) the Additional Bonds of such Series
are exempt from registration pursuant to the Securities Act of 1933, as
amended, and the supplemental indenture authorizing such Series is exempt
from qualification as an indenture pursuant to the Trust Indenture Act of
1939, as amended, and (C) that nothing has come to the attention of
Counsel for the Company which would lead them to believe that the
information concerning the Company contained in the official statement
prepared in connection with the sale of the Additional Bonds of such
Series or incorporated by reference therein contains any untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(vii) An opinion of Counsel for the Applicable Credit Issuer, addressed
to the Company, the Remarketing Agent, the Trustee and the Paying Agent
for such Series to the effect that such Credit Facility has been duly
executed and delivered by such Credit Issuer and is a legal, valid and
binding obligation of such Credit Issuer or, if such Credit Facility is
issued by a branch or agency of a foreign commercial bank, to the effect
that such Credit Facility is the legal, valid and binding obligation of
such branch or agency and there shall also be delivered an opinion of
Counsel licensed to practice law in the jurisdiction in which the main
office of such bank is located, satisfactory to the Trustee, to the effect
that such Credit Facility has been duly executed and delivered by such
branch or agency and is the legal, valid and binding obligation of such
bank; and
(viii) A request and authorization to the Trustee on behalf of the
Company and signed by a duly authorized officer of the Company directing
the Trustee to authenticate and deliver such Series in such specified
denominations as permitted under the supplemental indenture to the initial
purchaser or purchasers upon payment to the Trustee, but for the account
of the Company, of a specified sum of money, which sum shall be paid over
to the Trustee and deposited to the credit of the Initial Fund.
Upon receipt of the foregoing, the Trustee shall authenticate and deliver
the Series of Additional Bonds as provided above.
Section 2.13 Mutilated, Lost, Stolen or Destroyed Bonds. If any Bond is
mutilated, lost, stolen or destroyed, the Company may execute and the Trustee
may authenticate and deliver a new Bond of the same Series, maturity, interest
rate, principal amount and tenor in lieu of and in substitution for the Bond
mutilated, lost, stolen or destroyed; provided, that there shall be first
furnished to the Trustee evidence satisfactory to it and the Company of the
ownership of such Bond and of such loss, theft or destruction (or, in the case
of a mutilated Bond, such mutilated Bond shall first be surrendered to the
Trustee), together with indemnity satisfactory to the Trustee and the Company
and compliance with such other reasonable regulations as the Company and the
Trustee may prescribe. If any such Bond shall have matured or a redemption date
pertaining thereto shall have passed, instead of issuing a new Bond the Company
may pay the same without surrender thereof. The Company and the Trustee may
charge the Holder of such Bond with their reasonable fees and expenses in this
connection.
Section 2.14 Exchangeability and Transfer of Bonds; Persons Treated as
Owners. Books for the registration of the Bonds and for the registration of
transfer of the Bonds as provided herein shall be kept by the Registrar.
Any Holder of a Bond, in person or by his/her duly authorized attorney,
may transfer title to his/her Bond on the Register upon surrender thereof at the
principal office of the Trustee, and by providing the Registrar with a written
instrument of transfer (in substantially the form of assignment attached to the
Bond) executed by the Holder or his/her duly authorized attorney, and thereupon,
the Company shall execute and the Trustee shall authenticate and deliver in the
name of the transferee or transferees a new Bond or Bonds of the same Series,
aggregate principal amount and tenor as the Bond surrendered (or for which
transfer of registration has been effected) and of any Authorized Denomination
or Authorized Denominations.
Bonds may be exchanged upon surrender thereof at the principal office of
the Registrar with a written instrument of transfer satisfactory to the
Registrar executed by the Holder or such Holder's attorney duly authorized in
writing, for an equal aggregate principal amount of Bonds of the same Series and
tenor as the Bonds being exchanged and of any Authorized Denomination or
Authorized Denominations. The Company shall execute and the Trustee shall
authenticate and deliver Bonds that the Holder making the exchange is entitled
to receive, bearing numbers not contemporaneously then outstanding with respect
to such Series.
Such registrations of transfer or exchanges of Bonds shall be without
charge to the Holders of such Bonds, but any taxes or other governmental charges
required to be paid with respect to the same shall be paid by the Holder of the
Bond requesting such registration of transfer or exchange as a condition
precedent to the exercise of such privilege. Any service charge made by the
Registrar for any such registration of transfer or exchange and all reasonable
expenses of the Trustee shall be paid by the Company.
The Registrar shall not register any transfer of any Bond, except pursuant
to a tender of Bonds on an Optional Tender Date or a Mandatory Purchase Date,
after notice calling such Bond (or portion thereof) for redemption has been
given and prior to such redemption, except in the case of any Bond to be
redeemed in part, the portion thereof not to be redeemed. In connection with any
such transfer pursuant to a tender of Bonds on an Optional Tender Date or a
Mandatory Purchase Date, the Registrar shall deliver to the transferee a copy of
the applicable notice of redemption.
The person in whose name any Bond shall be registered shall be deemed and
regarded as the absolute owner thereof for all purposes, and payment of or on
account of either principal or interest shall be made only to or upon the order
of the registered owner thereof or his/her duly authorized attorney, but such
registration may be changed as hereinabove provided. All such payments shall be
valid and effectual to satisfy and discharge the liability upon such Bond to the
extent of the sum or sums so paid.
All Bonds issued upon any registration of transfer or exchange of Bonds
shall be legal, valid and binding obligations of the Company, evidencing the
same debt, and entitled to the same security and benefits under this Indenture,
as the Bonds surrendered upon such registration of transfer or exchange.
Notwithstanding the foregoing, for so long as the Bonds are held under the
Book Entry System, transfers of beneficial ownership will be effected pursuant
to rules and procedures established by the Securities Depository.
Section 2.15 Replacement Bonds. Except when the Bonds are held in the Book
Entry System, the Company shall execute and the Trustee shall authenticate and
deliver Replacement Bonds to replace Untendered Bonds. Any such Replacement Bond
shall be executed and authenticated as provided in this Indenture. The Company
shall bear all expenses in connection with the preparation and delivery of the
Replacement Bonds.
Section 2.16 Cancellation. All Bonds that have been surrendered to the
Registrar pursuant to Sections 2.13, 2.14 or 2.15 of this Indenture or for the
purpose of purchase upon an Optional Tender Date or a Mandatory Purchase Date,
or for payment upon maturity or redemption prior to maturity, shall be canceled
and destroyed by the Registrar and a certificate of destruction shall be
delivered to the Company.
Section 2.17 Ratably Secured. All Bonds of a Series issued hereunder are
and are to be, to the extent provided in this Indenture, equally and ratably
secured by this Indenture without preference, priority or distinction on account
of the actual time or times of the authentication, delivery or maturity of the
Bonds of such Series so that subject as aforesaid, all Bonds of such Series at
any time Outstanding shall have the same right, lien and preference under and by
virtue of this Indenture and shall all be equally and ratably secured hereby
with like effect as if they had all been executed, authenticated and delivered
simultaneously on the date hereof, whether the same, or any of them, shall
actually be disposed of at such date, or whether they, or any of them, shall be
disposed of at some future date. Notwithstanding the foregoing, any Bond of a
Series that is registered in the name of the Company or held or required to be
held by the Trustee or any pledge agent under a pledge agreement pursuant to
Section 2.8 shall not be entitled to any benefit of the Applicable Credit
Facility.
Section 2.18 Redemption of Bonds; Partial Redemption of
Bonds.
(a) Optional Redemption. Bonds of a Series then bearing interest at a
Weekly Rate are subject to redemption, at the direction of the Company, in whole
on any Business Day or in part on any Interest Payment Date for such Bonds, at a
redemption price equal to the principal amount of the Bonds to be redeemed plus
accrued interest thereon to the redemption date.
Bonds of a Series then bearing interest at a Monthly Rate are subject to
redemption, at the direction of the Company, in whole on the first Business Day
of any calendar month or in part on any Interest Payment Date for such Bonds, at
a redemption price equal to the principal amount of the Bonds to be redeemed
plus accrued interest thereon to the redemption date.
Bonds of a Series then bearing interest at a Flexible Term Rate are
subject to redemption, at the direction of the Company, in whole or in part on
any Interest Payment Date applicable to the Bonds to be redeemed, at a
redemption price equal to the principal amount of the Bonds to be redeemed plus
accrued interest thereon to the redemption date.
Bonds of a Series then bearing interest at a Long-Term Rate are subject to
redemption, at the direction of the Company, in whole or in part on any Interest
Payment Date for such Bonds occurring on or after the First Day of Redemption
Period for such Bonds as described below, at a redemption price equal to the
principal amount of the Bonds to be redeemed, plus a redemption premium
(expressed as a percentage of principal amount) plus accrued interest thereon to
the redemption date as follows, provided, however, if a Credit Facility is then
in effect with respect to such Bonds, such redemption premium shall be paid only
from Eligible Funds described in clause (i) of the definition of Eligible Funds
on deposit in the Bond Fund, unless such Credit Facility provides for payment of
such premium:
Length of Long-Term
Rate Period From
Conversion Date
Until First Day of Redemption Premium as a
End of Rate Period Redemption Percentage of Principal Amount
(Expressed in Period of Bonds
Years)
More than 7 5th 2% declining by 1% every year Anniversary of
after the 5th Anniversary of the Conversion Date Conversion
Date until reaching
0%, and thereafter 0%.
More than 5 but 4th 1% declining by 1% to 0% the
not more than 7 Anniversary of first year after the 4th
Conversion Date Anniversary of the Conversion Date, and
thereafter 0%.
5 or less Bonds not N/A
redeemable
pursuant to
this paragraph.
The above premiums may be changed for the Bonds of any Series upon the
conversion of such Bonds to a Long-Term Rate in accordance with the provisions
of Section 2.3(f) and (g). The above premiums may also be changed, with respect
to any Series of Additional Bonds, to the extent provided in the supplemental
indenture delivered pursuant to Section 2.12(b) authorizing the issuance of such
Additional Bonds.
(b) [Reserved].
(c) [Reserved].
(d) Mandatory Sinking Fund Redemption. The Series 1999 Bonds shall not be
subject to mandatory sinking fund redemption prior to their final maturity. A
Series of Additional Bonds shall be subject to mandatory sinking fund redemption
to the extent and subject to such related provisions, if any, set forth in the
supplemental indenture authorizing the issuance of such Series.
(e) Selection of Bonds to be Redeemed. If less than all the Outstanding
Bonds of a Series shall be called for redemption, the Registrar or, if the Bonds
are held in the Book Entry System, the Securities Depository shall first select
and call for redemption Bonds of such Series held by the Trustee or a pledge
agent for the account of the Company and pledged to the Credit Issuer for such
Series as contemplated in Section 2.8(b). If, following such selection,
additional Bonds of such Series must be selected and called for redemption, the
Registrar or, if the Bonds are held in the Book Entry System, the Securities
Depository shall select or arrange for the selection, in such manner as it shall
deem fair and equitable and pursuant to its rules and procedures, the Bonds of
such Series, in Authorized Denominations, provided that any Bond or portion
thereof remaining Outstanding shall be in an Authorized Denomination. If there
shall be called for redemption less than the principal amount of a Bond, the
Company shall execute and the Trustee shall authenticate and deliver, upon
surrender of such Bond, without charge to the Holder thereof in exchange for the
unredeemed principal amount of such Bond at the option of such Holder, Bonds of
like Series in any of the Authorized Denominations or, if the Bonds are held in
the Book Entry System, the Securities Depository shall, acting pursuant to its
rules and procedures, reflect in said system the partial redemption and the
Trustee shall (i) either exchange the Bond or Bonds held by the Securities
Depository for a new Bond or Bonds of like Series in the appropriate principal
amount, if such Bond is presented to the Trustee by the Securities Depository,
or (ii) obtain from the Securities Depository a written confirmation of the
reduction in the principal amount of the Bonds of such Series held by such
Securities Depository.
Section 2.19 Notice of Redemption. The Company shall exercise its option
to direct the redemption of Bonds by giving written notice to the Remarketing
Agent, the Trustee, the Applicable Paying Agent and the Applicable Credit
Issuer, not less than forty-five (45) days prior to the date selected for
redemption. To exercise any optional redemption of Bonds of a Series pursuant to
Section 2.18(a) so long as a Credit Facility is in effect with respect to such
Series, then at least one day before the Trustee is to give notice of such
redemption, the Trustee must have received written consent from the Applicable
Credit Issuer to a draw on such Credit Facility in the amount of such redemption
price if moneys in the Bond Fund constituting Eligible Funds under clause (i) of
the definition of Eligible Funds will not be available to reimburse the
Applicable Credit Issuer for such drawing on the date of such redemption. If the
Applicable Credit Issuer does not consent to a drawing for an optional
redemption of Bonds of a Series pursuant to Section 2.18(a), the Trustee may
condition such call for redemption upon the deposit with the Trustee of
sufficient Eligible Funds on or prior to the date selected for redemption to
reimburse the Applicable Credit Issuer for such drawing or to retire the Bonds
to be redeemed if the Applicable Credit Issuer fails to honor such drawing, and
if sufficient Eligible Funds are not so available on the date selected for
redemption, such call for redemption shall be revoked. Notice of redemption
shall be mailed by the Trustee by first-class mail, postage prepaid, at least
thirty (30) days before the redemption date to each Holder of the Bonds of such
Series to be redeemed in whole or in part at his/her last address appearing on
the Register, but no defect in or failure to give such notice of redemption
shall affect the validity of the redemption. A notice of optional redemption
shall describe whether and the conditions under which the call for redemption
shall be revoked. All Bonds properly called for redemption will cease to bear
interest on the date fixed for redemption, provided Eligible Funds for their
redemption have been duly deposited with the Trustee and, thereafter, the
Holders of such Bonds called for redemption shall have no rights in respect
thereof except to receive payment of the redemption price from the Trustee and a
new Bond for any portion not redeemed.
Section 2.20 Book Entry System. Bonds shall be initially issued pursuant
to a Book Entry System administered by the Securities Depository with no
physical distribution of Bond certificates to be made except as provided in this
Section. Any provision of this Indenture or the Bonds requiring physical
delivery of the Bonds shall, with respect to any Bonds held under the Book Entry
System, be deemed to be satisfied by a notation on the Register maintained by
the Registrar that such Bonds are subject to the Book Entry System.
So long as a Book Entry System is being used, one Bond in the aggregate
principal amount of each Series issued hereunder and registered in the name of
the Securities Depository Nominee will be issued and deposited with the
Securities Depository and held in its custody. The Book Entry System will be
maintained by the Securities Depository and the Participants and Indirect
Participants and will evidence beneficial ownership of the Bonds in Authorized
Denominations, with registration of transfers of ownership effected on the
records of the Securities Depository, the Participants and the Indirect
Participants pursuant to rules and procedures established by the Securities
Depository, the Participants and the Indirect Participants. The principal of,
interest and any premium on each Bond shall be payable to the Securities
Depository Nominee or any other person appearing on the Register as the
registered Holder of such Bond or his/her registered assigns or legal
representative at the principal office of the Registrar. So long as the Book
Entry System is in effect, the Securities Depository will be recognized as the
Holder of the Bonds for all purposes (except as provided in Section 2.6(i)).
Transfer of principal, interest and any premium payments or notices to
Participants and Indirect Participants will be the responsibility of the
Securities Depository, and transfer of principal, interest and any premium
payments or notices to Beneficial Owners will be the responsibility of the
Participants and the Indirect Participants. No other party will be responsible
or liable for such transfers of payments or notices or for maintaining,
supervising or reviewing such records maintained by the Securities Depository,
the Participants or the Indirect Participants. While the Securities Depository
Nominee or the Securities Depository, as the case may be, is the registered
owner of the Bonds, notwithstanding any other provisions set forth herein,
payments of principal of, redemption premium, if any, and interest on the Bonds
shall be made to the Securities Depository Nominee or the Securities Depository,
as the case may be, by wire transfer in immediately available funds to the
account of said Holder as may be specified in the Register maintained by the
Registrar or by such other method of payment as the Trustee may determine to be
necessary or advisable with the concurrence of the Securities Depository.
If (i) the Securities Depository determines not to continue to administer
a Book Entry System for the Bonds, or (ii) the Remarketing Agent, with the
consent of the Trustee, elects to remove the Securities Depository, then the
Remarketing Agent, with the consent of the Trustee, may appoint a new Securities
Depository. The Remarketing Agent may elect to remove the Securities Depository
at any time.
If (i) the Securities Depository determines not to continue to administer
a Book Entry System for the Bonds or has been removed and the Remarketing Agent
fails to appoint a new Securities Depository, or (ii) the Remarketing Agent,
with the consent of the Trustee, determines that continuation of a Book Entry
System of evidence and transfer of ownership of the Bonds would adversely affect
the interests of the Beneficial Owners, the Book Entry System will be
discontinued, in which case the Trustee will deliver replacement Bonds in the
form of fully registered certificates in Authorized Denominations in exchange
for the Outstanding Bonds as required by the Trustee and the Beneficial Owners.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY;
CREDIT FACILITY
Section 3.1 Representations, Warranties and Covenants of
the Company. The Company hereby represents, warrants and
covenants that:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia, has legal authority to
enter into and to perform the agreements and covenants on its part contained in
the Bond Documents to which it is a party, and has duly authorized the
execution, delivery and performance of the Bond Documents to which it is a
party.
(b) The issuance of the Bonds, the execution and delivery of the Bond
Documents to which it is a party, the consummation of the transactions
contemplated hereby, and the fulfillment of or compliance with the terms and
conditions hereof do not and will not violate, conflict with or constitute a
breach of or default under or require any consent (except for such consents and
approvals as have heretofore been obtained) pursuant to the Articles of
Incorporation or Bylaws of the Company, any law or regulation of the United
States or the State (other than federal and state securities laws requiring
registration of the Bonds) or, to the best knowledge of the Company, of any
other jurisdiction presently applicable to the Company, any order of any court,
regulatory body or arbitral tribunal or any agreement or instrument to which the
Company is a party or by which it or any of its property is bound.
(c) Assuming due authorization, execution and delivery by the other
parties thereto and due registration and filing under federal and state
securities laws or due exemption from any such requirements, when executed and
delivered, the Bond Documents to which the Company is a party will be the valid
and binding obligations or agreements of the Company enforceable in accordance
with their respective terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and the application of general principles of equity.
(d) There is no action, suit or proceeding, or, to the knowledge of the
Company, any investigation, at law or in equity, or before or by any court,
public board or body or other governmental authority, pending or, to the
knowledge of the Company, threatened against or affecting the Company which, if
determined adversely to the Company, would materially and adversely affect the
condition (financial or otherwise) of the Company or the legality, validity or
enforceability of, or the Company's ability to perform its obligations under,
any of the Bond Documents (other than the Credit Agreements).
(e) The Company has filed all federal, state and local tax returns which
are required to be filed by it and has paid or caused to be paid all taxes as
shown on said returns or on any assessment received by it, to the extent that
such taxes have become due, unless the failure to file such returns or make such
payments could not reasonably be expected to materially adversely affect the
ability of the Company to perform its obligations under any of the Bond
Documents. No controversy in respect of additional income taxes, state or
federal, of the Company is pending or, to the knowledge of the Company,
threatened which has not heretofore been disclosed in writing to the Trustee and
which, if adversely determined, would materially and adversely affect the
transactions contemplated by, the validity of, or the ability of the Company to
perform its obligations under, any of the Bond Documents (other than the Credit
Agreements).
(f) No approval, consent or authorization of, or registration, declaration
or filing (other than registration and filing under federal and state securities
laws) with, any governmental or public body or authority is required in
connection with the valid execution, delivery and performance by the Company of
the Bond Documents to which it is a party which has not heretofore been
obtained.
(g) The Company will cause the proceeds of the Series 1999 Bonds to be
used for general corporate purposes.
All of the above representations, warranties and covenants shall survive
the execution of this Indenture, the issuance of the Series 1999 Bonds and the
issuance of any Series of Additional Bonds.
Section 3.2 Covenant to Pay Bonds. The Company covenants that it will
promptly pay the principal of, premium, if any, and interest on and Purchase
Price of the Bonds at the places, on the dates and in the manner provided herein
and in the Bonds according to the true intent and meaning thereof. The
obligation of the Company to make the payments required under the Bonds shall be
absolute and unconditional. The Company will pay without abatement, diminution
or deduction (whether for taxes or otherwise) all such amounts regardless of any
cause or circumstance whatsoever including, without limitation, any defense,
set-off, recoupment or counterclaim that the Company may have or assert against
the Trustee or any Holder.
Section 3.3 Covenant to Perform Obligations Under This Indenture. The
Company covenants that it will faithfully perform at all times any and all
covenants, undertakings, stipulations and provisions contained in this
Indenture, in the Bonds executed and delivered hereunder and in all proceedings
of the Company pertaining thereto and will faithfully observe and perform at all
times any and all covenants, undertakings, stipulations and provisions of this
Indenture on its part to be observed or performed.
Section 3.4 Corporate Existence, Sale of Assets,
Consolidation or Merger; Notice of Certain Acquisitions of
Control.
(a) Unless the Trustee consents in writing, the Company will maintain its
corporate existence, will not dissolve or otherwise dispose of all or
substantially all of its assets and will not enter into any transaction of
merger or consolidation except where the Company is the surviving corporation;
provided, however, that if a Credit Facility is in effect with respect to every
Series, the Company may take such action if it is permitted by the terms of each
Credit Agreement or consented to by each Credit Issuer.
(b) With respect to each Series of Bonds, the Company hereby covenants to
provide or cause to be provided written notice to the Trustee, the Remarketing
Agent, and the Holders of such Series thirty days prior, where reasonable, and
not more than thirty days subsequent to the consummation of any transaction that
would result in the Company controlling or being controlled by the Applicable
Credit Issuer. The Company acknowledges that the foregoing sentence supercedes
any exemptions from the continuing disclosure requirement pursuant to Rule
15c2-12(b)(5) of the Securities and Exchange Act of 1934.
Section 3.5 Compliance with Laws. The Company shall comply in all material
respects with all applicable laws, regulations and other valid requirements of
any regulatory authority with respect to its operations unless the failure to
comply could not reasonably be expected to have a material adverse effect on the
Company's ability to perform its obligations under any of the Bonds or the Bond
Documents.
Section 3.6 Maintenance of Properties. The Company will cause all
properties used or useful in the conduct of its business to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times, unless the
failure to maintain its properties could not reasonably be expected to have a
material adverse effect on the Company's ability to perform its obligations
under any of the Bonds or the Bond Documents; provided, however, that nothing in
this Section shall prevent the Company from discontinuing the operation or
maintenance of any of such properties if such discontinuance is (i) in the
judgment of the Company, desirable in the conduct of its business and not
disadvantageous in any material respect to the Holders or (ii) if a Credit
Facility is in effect with respect to every Series, permitted by the terms of
each Credit Agreement or consented to by each Credit Issuer.
Section 3.7 Payment of Taxes and Other Claims. The Company will pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon the Company or upon the income, profits or property of the Company,
and (2) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a lien upon the property of the Company, unless the failure
to pay any such taxes or claims could not reasonably be expected to have a
material adverse effect on the Company's ability to perform its obligations
under any of the Bonds or the Bond Documents; provided, however, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings.
Section 3.8 Credit Facility.
(a) Draws on Credit Facility. Except with respect to Bonds of a Series
registered in the name of the Company, or held or required to be held by the
Trustee or any pledge agent under a pledge agreement pursuant to Section 2.8
(which Bonds shall not be entitled to any benefit of the Applicable Credit
Facility) at any time a Credit Facility is in effect with respect to a Series of
Bonds (i) the Trustee shall draw moneys under such Credit Facility to the extent
necessary to make timely payments of principal, premium, if any (if such Credit
Facility provides for payment of such premium), and interest on such Series, in
accordance with Section 4.1, (ii) the Trustee shall draw moneys, in accordance
with Section 2.7, under such Credit Facility to the extent available in
accordance with the terms of such Credit Facility in order to effect the
purchase of Bonds of such Series (or portions thereof in Authorized
Denominations) on a Mandatory Purchase Date or an Optional Tender Date, and
(iii) upon declaration of acceleration of the Bonds of such Series, the Trustee
shall draw on such Credit Facility to the extent available in an amount equal to
the unpaid principal of and accrued interest on the Bonds of such Series.
Notwithstanding anything in this Indenture to the contrary, no Credit Facility
shall be drawn upon for the payment of principal of, premium, if any, interest
on or the Purchase Price of any Bonds except for Bonds of the Series secured by
such Credit Facility. With respect to a Series of Bonds, the Applicable Paying
Agent shall promptly provide notice to the Trustee of any failure to pay
principal of, premium, if any, or interest on such Series or the Purchase Price
thereof.
(b) Reduction of Credit Facility. Upon any redemption or defeasance of any
Bonds of a Series or upon cancellation of any Bonds of a Series upon purchase
thereof as contemplated by Section 2.8, the Trustee shall send notice to the
Applicable Credit Issuer to reduce the amount available to be drawn on the
Applicable Credit Facility (with written notice of the same to the Company) and
the Trustee shall, upon request, confirm to the Applicable Credit Issuer and the
Company the principal amount of Bonds redeemed, canceled or defeased.
(c) Extensions of Credit Facility. In the event that the term of a Credit
Facility is extended, unless it is automatically extended by its terms or is
extended by amendment, the Trustee shall surrender the instrument evidencing
such Credit Facility to the Applicable Credit Issuer in exchange for a new
instrument conforming, in the opinion of Counsel, in all material respects to
the instrument evidencing such Credit Facility being surrendered, except that
the term thereof shall reflect the new term of such Credit Facility. Upon
discharge of the Indenture with respect to a Series of Bonds pursuant to Section
5.1, the Trustee shall promptly surrender the Applicable Credit Facility to the
Applicable Credit Issuer for cancellation. Following the effective date of an
Alternate Credit Facility delivered with respect to a Series of Bonds (or, if
such Alternate Credit Facility results in the occurrence of a Credit
Modification Date, following such Credit Modification Date), the Trustee shall
promptly surrender the Applicable Credit Facility to the Applicable Credit
Issuer for cancellation. If a Series of Bonds is rated by a Rating Agency,
notice of any extension of the Applicable Credit Facility (unless automatically
extended by its terms) shall be furnished to such Rating Agency by the Trustee.
(d) Expiration or Termination of Credit Facility. The Trustee shall give
notice to the Remarketing Agent and the Applicable Paying Agent, in the name of
the Applicable Credit Issuer, of the expiration or earlier termination of any
Credit Facility then in effect, which notice shall specify the date of such
expiration or earlier termination of the Credit Facility. If a Series of Bonds
is rated by a Rating Agency, notice of any such expiration or termination of the
Applicable Credit Facility shall be furnished to such Rating Agency by the
Trustee. With respect to a Series of Bonds, in the event that the expiration or
termination of the Applicable Credit Facility results in the occurrence of a
Credit Modification Date, the Trustee shall not surrender the Applicable Credit
Facility to be terminated until the Trustee shall have made such drawings, if
any, and taken such other actions, if any, thereunder as shall be required under
this Indenture in order to provide sufficient money for payment of the Purchase
Price of Bonds of such Series tendered or deemed tendered on such Credit
Modification Date to the extent necessary pursuant to Section 2.6(g), and shall
have received the proceeds of such drawing from the Applicable Credit Issuer.
Notwithstanding any provision hereof to the contrary, the Company may not cause
a Credit Facility to be terminated prior to its stated expiration date (whether
in connection with the delivery of an Alternate Credit Facility or otherwise) if
such termination would result in the occurrence of a Credit Modification Date
during a Flexible Term Rate Period or a Long-Term Rate Period.
(e) Alternate Credit Facility. At any time, upon at least sixty (60) days
prior written notice to the Trustee, the Applicable Paying Agent, the Rating
Agency, if any, rating the affected Series of Bonds, and the Remarketing Agent,
the Company may, with the consent of the Remarketing Agent, provide for delivery
to the Trustee of an Alternate Credit Facility with respect to a Series of Bonds
in accordance with the terms and conditions contained in this Section. Not less
than thirty (30) days prior to the proposed Alternate Credit Facility Effective
Date (as defined below), the Trustee shall give each Holder of the affected
Series of Bonds notice of the proposed Alternate Credit Facility by first-class
mail, postage prepaid, which notice shall be in substantially the form of
Exhibit E hereto, appropriately completed; provided, however, that if the
provision of an Alternate Credit Facility results in a Credit Modification Date,
the notice provisions of Section 2.6(h) shall apply; provided further, that if
the Alternate Credit Facility Effective Date (as defined below) is also a
Conversion Date, the notice provisions of Section 2.4(d) shall apply.
If the terms and conditions contained in this Section are satisfied, the
Trustee shall accept an Alternate Credit Facility, and such Alternate Credit
Facility shall become effective, on the date such Alternate Credit Facility is
delivered to the Trustee (the "Alternate Credit Facility Effective Date"). If
the Series of Bonds to which the Alternate Credit Facility relates then bears
interest at a Weekly Rate or a Monthly Rate, the Alternate Credit Facility
Effective Date must be either a Credit Modification Date or a day that could be
an Optional Tender Date upon giving of proper notice by a Holder. If the Bonds
of the Series to which the Alternate Credit Facility relates then bear interest
at a Flexible Term Rate, the Alternate Credit Facility Effective Date must be an
Interest Payment Date. If the Bonds of the Series to which the Alternate Credit
Facility relates then bear interest at a Flexible Term Rate or Long-Term Rate,
the Trustee shall not accept any Alternate Credit Facility if the provision
thereof would result in a Credit Modification Date.
An Alternate Credit Facility for a Series of Bonds shall be an
irrevocable, direct-pay letter of credit issued by a commercial bank organized
and doing business in the United States or a branch or agency of a foreign
commercial bank located in the United States and subject to regulation by state
or federal banking regulatory authorities and shall have an expiration date that
shall be at least one (1) year following the effective date thereof or on the
second Business Day following the final maturity date of such Bonds, if sooner.
On or before the date of the delivery of any Alternate Credit Facility for a
Series of Bonds to the Trustee, as a condition to the acceptance of any
Alternate Credit Facility by the Trustee, the Company shall furnish to the
Trustee (i) written evidence that the issuer of such Alternate Credit Facility
is a commercial bank organized and doing business in the United States or a
branch or agency of a foreign commercial bank located and doing business in the
United States and subject to regulation by state or federal banking regulatory
authorities, (ii) an opinion of Counsel satisfactory to the Company, the
Trustee, the Rating Agency, if any, rating such Series, and the Remarketing
Agent to the effect that the Alternate Credit Facility has been duly executed,
issued and delivered by, and is the legal, valid and binding obligation of, the
Credit Issuer (or, in the case of a branch or agency of a foreign commercial
bank, the branch or agency) issuing the same, enforceable in accordance with its
terms, that payments of principal, premium, if any, or Purchase Price of or
interest on the Bonds of such Series from the proceeds of a drawing on the
Alternate Credit Facility will not constitute avoidable preferences under the
Bankruptcy Code and that the Alternate Credit Facility is not subject to the
registration requirements of the Securities Act of 1933, as amended, and (iii)
evidence of written consent of the Remarketing Agent. In the case of an
Alternate Credit Facility issued for a Series of Bonds by a branch or agency of
a foreign commercial bank there shall also be delivered an opinion of Counsel
licensed to practice law in the jurisdiction in which the head office of such
bank is located, satisfactory to the Trustee, the Rating Agency, if any, rating
the Bonds, and the Remarketing Agent, to the effect that the Alternate Credit
Facility has been duly executed, issued and delivered by and is the legal, valid
and binding obligation of such bank enforceable in accordance with its terms.
The Trustee shall accept any such Alternate Credit Facility only in accordance
with the terms, and upon the satisfaction of the conditions, contained in this
Section and any other provisions applicable to acceptance of an Alternate Credit
Facility under this Indenture.
ARTICLE IV
FUNDS
Section 4.1 Establishment and Use of Bond Fund and Current Subaccounts.
There is hereby created and established with the Trustee the Bond Fund and
within such Fund a separate account relating to the Series 1999 Bonds. Within
such account in the Bond Fund relating to the Series 1999 Bonds there is hereby
created and established a special subaccount designated the "Current
Subaccount." Upon issuance of a Series of Additional Bonds, there shall be
created and established within the Bond Fund a separate account relating to such
Series and within each such account relating to such Series a special subaccount
designated the "Current Subaccount." With respect to each Series of Bonds, the
Trustee shall establish with the Applicable Paying Agent a separate subaccount
of the Bond Fund which, while a Credit Facility is in effect with respect to the
Bonds of such Series, shall be used for depositing moneys drawn by the Trustee
under the Applicable Credit Facility for the payment of principal and interest
on the Bonds of such Series. Neither the Trustee nor the Paying Agents shall
commingle proceeds of a drawing under a Credit Facility with any other funds.
With respect to each Series of Bonds, there shall be deposited in the Bond Fund
and credited to the account relating to such Series within the Bond Fund (a) all
moneys received by the Trustee from the Company with respect to such Series for
deposit by the Trustee in the Bond Fund, and (b) all moneys drawn under any
Applicable Credit Facility to pay principal, premium, if any, or interest on the
Bonds of such Series.
Each deposit into an account within the Bond Fund not constituting
Eligible Funds shall be placed in the Current Subaccount within such account
within the Bond Fund and shall not be commingled with other moneys in the Bond
Fund. The Trustee shall establish separate subaccounts within each Current
Subaccount for each deposit (including any investment income thereon) made into
the Bond Fund so that the Trustee may at all times ascertain the date of deposit
of the moneys in each subaccount.
With respect to each Series of Bonds, moneys in the account relating to
such Series within the Bond Fund shall be held in trust for the Holders of the
Bonds of such Series and, except as otherwise expressly provided herein, shall
be used solely for the payment of the interest on the Bonds of such Series and
for the payment of principal of and premium, if any, on the Bonds of such Series
upon maturity, whether stated or accelerated, or upon mandatory or optional
redemption.
With respect to each Series of Bonds, the Company hereby authorizes and
directs the Trustee, and the Trustee hereby agrees, to withdraw from the account
relating to such Series or the subaccount established for such Series with the
Applicable Paying Agent and make available at the principal office of the
Applicable Paying Agent, sufficient funds from the Bond Fund to pay the
principal of, premium, if any, and interest on the Bonds of such Series as the
same become due and payable, but only in the following order of priority:
FIRST: Amounts drawn by the Trustee under the Applicable Credit
Facility then in effect with respect to such Series (provided, however,
that such amounts shall not be used to pay any premium on such Series
unless such Credit Facility provides for the payment of such premium);
SECOND: From the sources provided in clause (i) of the
definition of Eligible Funds; and
THIRD: Any other amounts (whether or not Eligible
Funds) in the account relating to such Series in the Bond
Fund.
If moneys in the Bond Fund available pursuant to items FIRST and SECOND
above are insufficient to make any payment of principal of, premium, if any or
interest on a Series of Bonds, whether due by maturity, acceleration, redemption
or otherwise, or if the Applicable Credit Issuer has dishonored its obligations
under such Credit Facility, the Trustee, on or after the date such payment is to
be made, shall apply any moneys described in item THIRD above.
With respect to each Series of Bonds, to the extent that an Applicable
Credit Facility is drawn on to make a payment to any Holder, the Trustee shall
use any moneys in the account relating to such Series within the Bond Fund not
then needed to make payments to Holders, regardless of whether such moneys
constitute Eligible Funds, to reimburse the Applicable Credit Issuer.
After payment in full of the Bonds, or provision for the payment of the
Bonds having been made pursuant to Section 5.2, and the payment of all other
amounts owing hereunder, any amounts remaining in the account within the Bond
Fund established for a Series of Bonds shall be paid (i) first to the Applicable
Credit Issuer, if there is then any amount owing by the Company to such Credit
Issuer (and such amount shall be credited against the Company's reimbursement
obligations to such Credit Issuer under the Credit Agreement pursuant to which
such Credit Issuer issued its Applicable Credit Facility), and (ii) second to
all other Credit Issuers, if any, in proportion to the respective amounts, if
any, then owing by the Company to such other Credit Issuers, and (iii) third to
the Company.
Section 4.2 Establishment and Use of Initial Fund. There is hereby created
and established with the Trustee the Initial Fund and within such Fund a special
account designated the "Series 1999 Account." The proceeds of the Series 1999
Bonds, as described in Section 4.5, shall be delivered to the Trustee for
deposit into the Series 1999 Account. Funds in the Series 1999 Account shall be
disbursed by the Trustee to the Company on the Issue Date of the Series 1999
Bonds.
Upon the issuance of a Series of Additional Bonds, the supplemental
indenture authorizing the issuance of such Series shall create and establish
with the Trustee a separate account within the Initial Fund for such Series. The
proceeds of such Additional Bonds shall be delivered to the Trustee for deposit
into the account within the Initial Fund established for such Series, which
funds shall then be disbursed by the Trustee as provided in the supplemental
indenture authorizing the issuance of such Series.
After payment in full of a Series of Bonds, or provision for the payment
of such Series having been made pursuant to Section 5.2, and the payment of all
other amounts owing hereunder with respect to such Series, any amounts remaining
in the account within the Initial Fund established for such Series shall be paid
(i) first to the Applicable Credit Issuer, if there is then any amount owing by
the Company to such Credit Issuer (and such amount shall be credited against the
Company's reimbursement obligations to such Credit Issuer under the Credit
Agreement pursuant to which such Credit Issuer issued its Applicable Credit
Facility), and (ii) second to all other Credit Issuers, if any, in proportion to
the respective amounts, if any, then owing by the Company to such other Credit
Issuers, and (iii) third to the Company.
Section 4.3 [Reserved].
Section 4.4 Establishment and Use of Bond Purchase Fund .
There is hereby established and created with the Trustee the Bond Purchase
Fund and within such fund a separate account relating to the Series 1999 Bonds.
Within such account in the Bond Purchase Fund relating to the Series 1999 Bonds
there is hereby created and established a special subaccount designated the
"Current Purchase Subaccount." Upon issuance of a Series of Additional Bonds,
there shall be created and established within the Bond Purchase Fund a separate
account relating to such Series and within such account relating to such Series
a special subaccount designated the "Current Purchase Subaccount."
With respect to each Series of Bonds, there shall be deposited in the Bond
Purchase Fund and credited to the account relating to such Series within the
Bond Purchase Fund all moneys required to be paid by the Company to provide for
the payment of the Purchase Price of Bonds of such Series pursuant to this
Indenture, together with any other moneys received by the Trustee pursuant to
this Indenture or otherwise (including draws under the Applicable Credit
Facility pursuant to Section 3.8(a)(ii)) that are required or directed to be
paid by or on behalf of the Company with respect to such Series into the Bond
Purchase Fund. With respect to each Series of Bonds, the Trustee shall establish
with the Applicable Paying Agent a separate subaccount of the Bond Purchase
Fund, into which the proceeds of the remarketing of Bonds of such Series to
purchasers (other than the Company, any other Person obligated (as guarantor or
otherwise) to make payments on such Series or under any Credit Agreement
relating to such Series or any "affiliate" of the Company as defined in
Bankruptcy Code ss. 101(2)) will be deposited and a separate subaccount of the
Bond Purchase Fund into which all amounts drawn under the Credit Facility in
effect with respect to such Series pursuant to Section 3.8(a)(ii) will be
deposited. Neither the Trustee nor any Paying Agent shall commingle amounts in
any of such subaccounts with any other funds.
Each deposit made with respect to a Series of Bonds into the Bond Purchase
Fund not constituting Eligible Funds shall be placed in the Current Purchase
Subaccount within the account relating to such Series within the Bond Purchase
Fund and shall not be commingled with other moneys in the Bond Purchase Fund.
With respect to each Series of Bonds, moneys in the account relating to
such Series within the Bond Purchase Fund shall be held in trust for the Holders
of the Bonds of such Series and, except as otherwise expressly provided herein,
shall be used solely for the payment of the Purchase Price of the Bonds of such
Series required to be purchased as set forth in Section 2.6(g).
With respect to each Series of the Bonds, the Trustee is hereby authorized
and directed, and the Trustee hereby agrees, to withdraw and to transfer to the
Applicable Paying Agent, sufficient funds from the account relating to such
Series within the Bond Purchase Fund as contemplated by Section 2.6(g) by 9:30
a.m., Local Time, on each date that Bonds of such Series are to be purchased
pursuant to Section 2.6 from the Bond Purchase Fund to pay the Purchase Price of
Bonds of such Series tendered (or deemed tendered) for purchase pursuant to
Section 2.6. The Trustee shall give the Remarketing Agent prompt telephonic
notice of each such transfer.
After payment in full of the Bonds, or provision for the payment of the
Bonds having been made pursuant to Section 5.2, and the payment of all other
amounts owing hereunder, any amounts remaining in the account within the Bond
Purchase Fund established for a Series of Bonds shall be paid (i) first to the
Applicable Credit Issuer, if there is then any amount owing by the Company to
such Credit Issuer (and such amount shall be credited against the Company's
reimbursement obligations to such Credit Issuer under the Credit Agreement
pursuant to which such Credit Issuer issued its Applicable Credit Facility), and
(ii) second to all other Credit Issuers, if any, in proportion to the respective
amounts, if any, then owing by the Company to such other Credit Issuers, and
(iii) third to the Company.
Section 4.5 Deposit of Bond Proceeds. The proceeds from the initial sale
of the Series 1999 Bonds shall be deposited in the Series 1999 Account within
the Initial Fund. The proceeds of any Series of Additional Bonds shall be
delivered to the Trustee for deposit into the account within the Initial Fund
established for such Series.
Section 4.6 Records. The Trustee shall cause to be kept and maintained
records pertaining to the Initial Fund, the Bond Fund and the Bond Purchase Fund
and all disbursements therefrom and shall periodically deliver to the Company
statements of activity and statements indicating the investments made with
moneys in all such funds during the applicable period. The Trustee shall provide
the Company, by July 10 of each year, with a report stating the principal amount
of each Series of Bonds outstanding and a list of the registered owners of the
Bonds as of June 30 of each such year.
The Trustee shall provide the Company with a written report, not later
than January 10 of each year, and not later than thirty (30) days following the
retirement of the last obligation of any Series of Bonds, identifying the
Permitted Investments in which the moneys held as part of the Initial Fund, the
Bond Fund and the Bond Purchase Fund were invested during the preceding period
and the dates of such investment.
Section 4.7 Investment of Initial Fund, Bond Fund and Bond Purchase Fund
Moneys. Moneys held as part of the Initial Fund, the Bond Fund and the Bond
Purchase Fund shall be invested and reinvested in Permitted Investments as
instructed by a Company Representative; provided, however, that (i) any moneys
from a drawing under a Credit Facility and any moneys held by the Trustee to pay
the principal or Purchase Price of, premium, if any, or interest that has become
payable with respect to the Bonds shall not be invested and (ii) no Paying Agent
shall invest any moneys it receives under this Indenture. All Permitted
Investments shall be held by or under the control of the Trustee and shall be
deemed at all times to be a part of the fund, account and subaccount (as
applicable) which was used to purchase the same. All interest accruing thereon
and any profit realized from Permitted Investments shall be credited to the
respective fund or account and any loss resulting from Permitted Investments
shall be similarly charged. The Trustee is authorized to cause to be sold and
reduced to cash a sufficient amount of Permitted Investments whenever the cash
balance in any fund or account hereunder is or will be insufficient to make a
requested or required disbursement. The Trustee shall not be responsible for any
depreciation in the value of any Permitted Investment or for any loss resulting
from such sale, so long as the Trustee performs its obligations hereunder in
accordance with the provisions of Section 7.1(e). Absent specific instructions
from the Company to invest cash balances in Permitted Investments hereunder, the
Trustee shall invest in Permitted Investments constituting obligations of the
U.S. Treasury or its agencies having a term to maturity of not more than 30 days
or any money market fund or similar investment fund that purchases and holds
exclusively obligations of the United States of America or its agencies that
have a term to maturity of not more than 30 days. Notwithstanding anything to
the contrary herein provided, moneys constituting Eligible Funds shall only be
invested in Government Obligations maturing on or before the date such Eligible
Funds will be required for disbursement.
Section 4.8 [Reserved].
Section 4.9 Non-presentment of Bonds. In the event any Bond shall not be
presented for payment when the principal thereof becomes due, either at maturity
or at the date fixed for redemption thereof or tender thereof or otherwise, if
funds sufficient to pay the principal of, premium (if any), and interest on such
Bond shall have been made available to the Trustee for the benefit of the Holder
or Holders thereof, payment of such Bond or portion thereof as the case may be,
shall forthwith cease, terminate and be completely discharged, and thereupon it
shall be the duty of the Trustee, subject to any applicable escheat laws, to
hold such fund or funds uninvested in the Bond Fund, without liability to the
Holder of such Bond for interest thereon, for the benefit of the Holder of such
Bond, who shall thereafter be restricted exclusively to such fund or funds, for
any claim of whatever nature on his/her part on, or with respect to, said Bond,
or portion thereof, or premium, if any.
ARTICLE V
DISCHARGE OF INDENTURE
Section 5.1 Discharge of Indenture. Upon payment in full of a Series of
Bonds or delivery of such Series to the Trustee for cancellation, such Series
shall no longer be Outstanding and will cease to be entitled to any lien,
benefit or security under this Indenture. Upon payment in full of a Series of
Bonds, the Trustee shall return the Applicable Credit Facility to the Applicable
Credit Issuer. Upon payment in full of all of the Bonds, these presents shall
cease, determine and be discharged, and thereupon the Trustee, upon receipt by
the Trustee of an opinion of Counsel stating that all conditions precedent to
the satisfaction and discharge of this Indenture have been complied with shall
(a) cancel and discharge this Indenture; and (b) execute and deliver to the
Company, at the Company's expense, such instruments in writing as shall be
required to cancel and discharge this Indenture, and assign and deliver to the
Company all moneys in any fund established under this Indenture under its
possession or subject to its control, except for moneys and Government
Obligations held in the Bond Fund for the purpose of paying Bonds and except for
moneys held in the Bond Purchase Fund for the purpose of paying the Purchase
Price of the Bonds which have been purchased pursuant to Section 2.6(g);
provided, however, that the cancellation and discharge of this Indenture
pursuant to Section 5.2 shall not terminate the powers and rights granted to the
Trustee, the Registrar, the Tender Agent and each Paying Agent with respect to
the payment, registration of transfer and exchange of the Bonds; provided,
further, that the rights of the Trustee, the Registrar, the Tender Agent and
each Paying Agent to indemnity, non-liability and payment of all reasonable fees
and expenses shall survive the cancellation and discharge of this Indenture
pursuant to this Section or Section 5.2. If a Series of Bonds is rated by a
Rating Agency, notice of payment in full of such Series shall be furnished to
such Rating Agency.
Section 5.2 Provision for Payment of Bonds. A Series of Bonds shall be
deemed to have been paid within the meaning of Section 5.1 if:
(a) there shall have been irrevocably deposited in the Bond Fund:
(i) if such Series does not bear interest at the Fixed Rate,
sufficient Eligible Funds, or
(ii) if such Series bears interest at the Fixed Rate, either (1)
sufficient Eligible Funds, or (2) Government Obligations purchased with
Eligible Funds of such maturities and interest payment dates and bearing
such interest as will, in the opinion of a nationally recognized firm of
certified public accountants, without further investment or reinvestment
of either the principal amount thereof or the interest earnings thereon
(said earnings also to be held in trust), be sufficient together with any
moneys referred to in subsection (a)(ii)(1) above,
for the payment at their respective maturities or redemption or tender dates
prior to maturity of the principal thereof and the redemption premium, if any,
and interest to accrue thereon at such maturity or redemption or tender dates,
as the case may be (assuming that the Bonds of such Series bear interest at the
Ceiling Rate for such Series during any period during which the interest rate on
such Series may change);
(b) there shall have been paid or provision duly made for the payment of
all fees and expenses of the Trustee, the Registrar, the Applicable Paying
Agent, the Remarketing Agent and the Tender Agent with respect to such Series
due or to become due; and
(c) if any Bonds of such Series are to be redeemed on any date prior to
their maturity, the Trustee shall have received in form satisfactory to it
irrevocable instructions from a Company Representative to redeem such Bonds on
such date and either evidence satisfactory to the Trustee that all redemption
notices required by this Indenture have been given or irrevocable power
authorizing the Trustee to give such redemption notices has been granted to the
Trustee.
Limitations set forth elsewhere herein regarding the investment of
moneys held by the Trustee in the Bond Fund shall not be construed to prevent
the depositing and holding in the Bond Fund of the obligations described in
paragraph (a)(ii) of this section for the purpose of defeasing the lien of this
Indenture as to Bonds which have not yet become due and payable. Notwithstanding
any other provision of this Indenture to the contrary, all Eligible Funds
deposited with the Trustee as provided in this Section may be invested and
reinvested, at the direction of the Company, in Government Obligations (or, in
the case of a deposit under paragraph (a)(i) of this section, in a money market
fund that invests solely in Government Obligations and is rated in the highest
category by one of Fitch, Moody's or S&P and, if more than one of such rating
agencies then rates such money market fund, is rated no less than the highest
rating category by each of such rating agencies then rating such money market
fund) maturing in the amounts and times as hereinbefore set forth, and all
income from all Government Obligations (or money market fund) in the hands of
the Trustee pursuant to this Section which is not required for the payment of
the Bonds and interest and redemption premium, if any, thereon with respect to
which such moneys shall have been so deposited shall be deposited in the Bond
Fund as and when realized and collected for use and application as are other
moneys deposited in the Bond Fund. Notwithstanding the foregoing provisions of
this paragraph, if the Bonds of a Series are rated by S&P at the time a deposit
is made under paragraph (a)(i) of this section, such Eligible Funds may be
invested solely in Government Obligations maturing or to be available to be
withdrawn at par no later than the earlier of the maturity date, a mandatory
tender date, redemption date or the next possible Optional Tender Date.
Notwithstanding any other provision of this Indenture to the contrary, if
a Series of Bonds has been deemed to be paid under this section and the Holder
or Beneficial Owner of any Bond of such Series delivers a tender notice with
respect to such Bond that would result in the occurrence of an Optional Tender
Date for such Bond prior to its maturity or redemption date: (1) the Remarketing
Agent shall not remarket such Bond; (2) the Remarketing Agent shall notify the
Trustee, the Paying Agent and the Tender Agent by the third Business Day prior
to such Tender Date for such Bond that it has received a tender notice with
respect to such Bond; (3) the Trustee shall transfer to the Paying Agent, not
later than 9:30 a.m., Local Time, on such Optional Tender Date for such Bond,
Eligible Funds from the deposit made with respect to such Series into the Bond
Fund under paragraph (a)(i) of this section sufficient to pay the Purchase Price
of such Bond; (4) the Paying Agent shall purchase such Bond on such Optional
Tender Date applicable to such Bond; and (5) such Bond shall be delivered to the
Trustee for cancellation and shall be cancelled.
Notwithstanding any other provision of this Indenture to the contrary, if
all Bonds of a Series have been deemed to be paid because a deposit has been
made under paragraph (a)(i) of this section, and such Series is rated by S&P at
the time such deposit is made, then (i) if such deposit is made with proceeds of
one or more drawings under the Applicable Credit Facility, then any excess funds
remaining in the Bond Fund after payment of all of the Bonds of such Series at
their respective maturities or redemption or tender dates shall be returned to
the Applicable Credit Issuer, or (ii) if such deposit is made with Eligible
Funds as described in clause (i) of that definition, then there shall be
delivered a written opinion of Counsel experienced in bankruptcy law matters, in
form satisfactory to S&P, that the portion of such deposit needed to pay
principal of, interest on and Purchase Price of such Series when due will not be
subject to the automatic stay under Section 362 of the Bankruptcy Code in the
event of an Act of Bankruptcy.
Notwithstanding any other provision of this Indenture to the contrary, if
all Bonds of a Series have been deemed to be paid because a deposit has been
made under paragraph (a)(i) of this section, the Interest Rate Determination
Method with respect to such Series may not thereafter be changed by the Company.
Notwithstanding any other provision of this Indenture to the contrary, if
all Bonds of a Series have been deemed to be paid because a deposit has been
made under paragraphs (a)(i) or (a)(ii) of this section with proceeds of one or
more drawings under the Applicable Credit Facility securing such Series, then
the surrender by the Trustee of such Applicable Credit Facility to the
Applicable Credit Issuer for cancellation prior to the maturity or redemption
date of the Bonds of such Series shall not constitute a Credit Modification
Date.
If a Series of Bonds bears interest at the Fixed Rate and is to be rated
by a Rating Agency at or prior to the time provision for payment shall be made
there shall be delivered to such Rating Agency the opinion of nationally
recognized certified public accountants referred to in paragraph (a)(ii) above
and a written opinion of Counsel experienced in bankruptcy law matters and in
form satisfactory to such Rating Agency that the deposit and use of such moneys
will not constitute an avoidable preferential payment pursuant to Section 547 of
the Bankruptcy Code, or an avoidable post-petition transfer pursuant to Section
549 of the Bankruptcy Code, recoverable from Holders of the Bonds of such Series
pursuant to Section 550 of the Bankruptcy Code in the event of an Act of
Bankruptcy.
ARTICLE VI
DEFAULT PROVISIONS AND REMEDIES
Section 6.1 Events of Default. Any one of the following
shall constitute an Event of Default hereunder:
(a) Failure to pay interest on any Bond when and as the
same shall have become due;
(b) Failure to pay the principal of or any premium on any Bond when and as
the same shall become due, whether at the stated maturity or redemption date
thereof or by acceleration;
(c) Failure to pay the Purchase Price of any Bond required to be purchased
hereunder when and as the same shall become due;
(d) Failure to observe or perform any other of the covenants, agreements
or conditions on the part of the Company included in this Indenture or in the
Bonds and the continuance thereof for a period of thirty (30) days after written
notice to the Company and each Applicable Credit Issuer has been given by the
Trustee; provided, however, that if such default cannot be fully remedied within
such 30-day period, but can reasonably be expected to be fully remedied, such
default shall not constitute an Event of Default if the Company shall
immediately upon receipt of such notice commence the curing of such default and
shall thereafter prosecute and complete the same with due diligence and
dispatch; provided, further, that no default under this subsection shall
constitute an Event of Default unless any Applicable Credit Issuer shall have
consented to the same constituting an Event of Default;
(e) Any representation or warranty of the Company contained herein, or in
any document, instrument or certificate delivered pursuant hereto or in
connection with the issuance and sale of the Bonds of any Series, shall be
false, misleading or incomplete in any material respect on the date as of which
made; provided, however, that no default under this subsection shall constitute
an Event of Default unless any Applicable Credit Issuer shall have consented to
the same constituting an Event of Default;
(f) The commencement by the Company of a voluntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or the
consent by it to, or its acquiescence in the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Company or of any substantial part of its property, or
the making by it of or the consent by it to any assignment for the benefit of
creditors, or the taking of any action by the Company in furtherance of any of
the foregoing;
(g) The commencement against the Company of an involuntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or of
any action or proceeding for the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of the Company
or for any substantial part of its property, or for the winding-up or
liquidation of its affairs and the continuance of any such case, action, or
proceeding unstayed and in effect for a period of sixty (60) consecutive days;
(h) The Company defaults in the payment of principal or interest on any
other indebtedness for money borrowed (other than the indebtedness under the
Bonds or otherwise arising hereunder) if the outstanding principal balance of
such indebtedness at the time of the default exceeds $1,000,000 in the aggregate
beyond any period of grace provided with respect thereto, or in performance of
any other agreement, term or conditions contained in any agreement under which
any such obligation is created, if the effect of such default is to cause, or
permit the holder or holders of such obligation to cause such obligation to
become due prior to its stated maturity; provided, however, that no default
under this subsection shall constitute an Event of Default unless any Applicable
Credit Issuer shall have consented to the same constituting an Event of Default;
(i) The Trustee shall have received a written notice from a Credit Issuer
of the occurrence and continuance of an Event of Default as defined in the
Credit Agreement pursuant to which such Credit Issuer issued its Credit
Facility, together with a written request from such Credit Issuer that the
Series of Bonds secured by such Credit Facility be accelerated; or
(j) The Trustee shall have received, within ten (10) calendar days
following a drawing under any Credit Facility to pay interest on any Bonds,
written notice from the Applicable Credit Issuer thereof that it has not been
reimbursed for the amount of such drawing together with interest, if any, due
pursuant to the Credit Agreement pursuant to which such Credit Facility was
issued and that the amount of such drawing will not be reinstated as provided in
such Credit Facility.
Section 6.2 Acceleration. Upon the occurrence of any Event of Default
hereunder the Trustee may and upon (i) the written request of the Holders of not
less than twenty-five percent (25%) in aggregate principal amount of Bonds then
Outstanding or (ii) the occurrence of an Event of Default under Section 6.1(a),
(b), (c), (i) or (j), the Trustee immediately shall, by notice in writing sent
to the Company, each Paying Agent, the Tender Agent, and each Credit Issuer,
declare the principal of all Bonds then Outstanding (if not then due and
payable) and the interest accrued thereon to be due and payable immediately,
and, upon said declaration, such principal and interest shall become and be
immediately due and payable; provided, however, the Trustee shall not accelerate
any Series of Bonds (other than a Series with respect to which such payment
default occurred or a Series secured by a Credit Facility issued by a Credit
Issuer who consented to or gave notice of such default or of non-reinstatement)
unless the Applicable Credit Issuer consents to such acceleration.
Upon any declaration of acceleration of a Series of Bonds hereunder, the
Trustee shall immediately draw upon the Credit Facility for such Series as
provided in Section 3.8(a)(iii). If the Applicable Credit Issuer honors the
drawing under the Applicable Credit Facility upon a declaration of acceleration
of such Series, interest on such Series of the Bonds shall accrue only to the
date of such declaration and the Trustee shall pay the principal of and interest
on such Series to the Holders thereof immediately following the receipt of funds
from such drawing. If no Credit Facility is in effect with respect to a Series
of Bonds, or if the Applicable Credit Issuer fails to honor the drawing under
the Applicable Credit Facility upon acceleration of such Series, then interest
on the Bonds of such Series shall cease to accrue as provided in Section 6.7.
Immediately following any such declaration of acceleration of a Series of
Bonds, the Trustee shall cause to be mailed notice of such declaration by
first-class mail, postage prepaid, to each Holder of a Bond of such Series at
his/her last address appearing on the Register. Any defect in or failure to give
such notice of such declaration shall not affect the validity of such
declaration.
Section 6.3 Other Remedies; Rights of Holders. Upon the happening and
continuance of an Event of Default hereunder the Trustee may, with or without
taking action under Section 6.2, pursue any available remedy to enforce the
performance of or compliance with any other obligation or requirement of this
Indenture; provided, however, the Trustee shall not pursue any remedy with
respect to a Series of Bonds (other than a Series with respect to which such
payment default occurred or a Series secured by a Credit Facility issued by a
Credit Issuer who consented to or gave notice of such default or of
non-reinstatement) unless the Applicable Credit Issuer consents to such action.
Upon the happening and continuance of an Event of Default, and if
requested to do so by the Holders of at least twenty-five percent (25%) in
aggregate principal amount of Bonds then Outstanding and if the Trustee is
indemnified as provided in Section 7.1, the Trustee shall exercise such of the
rights and powers conferred by this Section and by Section 6.2 as the Trustee,
being advised by Counsel, shall deem most effective to enforce and protect the
interests of the Holders and, except to the extent inconsistent with the
interests of the Holders, each Credit Issuer; provided, however, the Trustee
shall not exercise such rights with respect to a Series of Bonds (other than a
Series with respect to which such payment default occurred or a Series secured
by a Credit Facility issued by a Credit Issuer who consented to or gave notice
of such default or of non-reinstatement) unless the Applicable Credit Issuer
consents to such exercise.
No remedy by the terms of this Indenture conferred upon or reserved to the
Trustee (or to the Holders) is intended to be exclusive of any other remedy, but
each and every such remedy shall be cumulative and shall be in addition to any
other remedy given to the Trustee or to the Holders hereunder or now or
hereafter existing.
No delay or omission to exercise any right or power accruing upon any
default or Event of Default shall impair any such right or power or shall be
construed to be a waiver of any such default or Event of Default or acquiescence
therein and every such right and power may be exercised from time to time and as
often as may be deemed expedient.
No waiver of any default or Event of Default hereunder, whether by the
Trustee or by the Holders, shall extend to or shall affect any subsequent
default or Event of Default or shall impair any rights or remedies consequent
thereon.
Section 6.4 Right of Holders and Credit Issuer to Direct Proceedings.
Anything in this Indenture to the contrary notwithstanding, and subject to the
rights of the Applicable Credit Issuer as provided in Sections 6.2 and 6.3, the
Holders of a majority in aggregate principal amount of Bonds of a Series then
Outstanding shall have the right at any time, by an instrument or instruments in
writing executed and delivered to the Trustee, to direct the method and place of
conducting all proceedings to be taken in connection with the enforcement of the
terms and conditions of this Indenture, or any other proceedings hereunder with
respect to such Series; provided that such direction shall not be otherwise than
in accordance with the provisions of law and of this Indenture, and provided
that the Trustee shall be indemnified to its satisfaction and the Trustee may
take any other action deemed proper by the Trustee that is not inconsistent with
such direction. No Holder shall individually have the right to present a draft
to, or otherwise make a demand on, a Credit Issuer to collect amounts available
under a Credit Facility.
No Holder of a Bond of a Series shall have the right to institute any
proceeding for the enforcement of this Indenture unless such Holder has given
the Trustee and the Company written notice of an Event of Default, the Holders
of a majority in aggregate principal amount of the Bonds of such Series then
Outstanding shall have requested the Trustee in writing to institute such
proceeding, the Trustee shall have been afforded a reasonable opportunity to
exercise its powers or to institute such proceeding, there shall have been
offered to the Trustee indemnity satisfactory to it against the cost, expense
and liability to be incurred in connection with such request and the Trustee
shall have thereafter failed or refused to exercise such powers or to institute
such proceeding within sixty days (60) after receipt of notice with no
inconsistent direction given during such sixty days (60) by the Holders of a
majority in aggregate principal amount of the Bonds of such Series then
Outstanding. Nothing in this Indenture shall affect or impair any right of any
Holder to enforce (i) the payment of the principal of and premium, if any, and
interest on Bonds at and after the maturity thereof, or (ii) the obligation of
the Company to pay the principal of, premium, if any, and interest on Bonds to
such Holder at the time, place, from the sources and in the manner as provided
in this Indenture.
Section 6.5 Discontinuance of Default Proceedings. Prior to the drawing on
a Credit Facility pursuant to Section 3.8(a)(iii), in case the Trustee shall
have proceeded to enforce any right under this Indenture by the appointment of a
receiver or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely, then and in
every such case the Applicable Credit Issuer and the Trustee shall be restored
to their former positions and rights hereunder and all rights, remedies and
powers of the Trustee and such Credit Issuer shall continue as if no such
proceedings had been taken subject to the limits of any adverse determination.
Section 6.6 Waiver. With respect to a Series of Bonds, the Trustee, with
the consent of the Applicable Credit Issuer, may waive any default or Event of
Default hereunder and its consequences and rescind any declaration of
acceleration of maturity of principal, and shall do so upon the written request
of the Applicable Credit Issuer; provided, however, that there shall be no such
waiver or rescission unless the Purchase Price and all principal, premium, if
any, and interest on the Bonds of such Series in arrears, together with interest
thereon (to the extent permitted by law) at the applicable rate of interest
borne by the Bonds of such Series and all fees and expenses of the Trustee
relating to such Series shall have been paid or provided for. The Trustee may
not waive any default or Event of Default until the Trustee has received notice
in writing from the Applicable Credit Issuer that the amount available to be
drawn under the Applicable Credit Facility then in effect in respect of the
principal and Purchase Price of and interest on such Series of Bonds has been
reinstated in full.
Section 6.7 Application of Moneys. All moneys received by the Trustee for
a Series of Bonds pursuant to any right given or action taken under the
provisions of this Article shall be deposited in the Bond Fund and, after
payment (out of moneys derived from a source other than the Applicable Credit
Facility, Eligible Funds, moneys held for the purchase of Untendered Bonds,
moneys held for the redemption of Bonds and proceeds from the remarketing of
Bonds) of the cost and expenses of the proceedings resulting in the collection
of such moneys and of the expenses, liabilities and advances incurred or made by
the Trustee, including reasonable attorneys' fees, and all other outstanding
fees and expenses of the Trustee, and thereafter any fees, expenses, liabilities
and advances due to, or incurred or made by, the Applicable Paying Agent, the
Tender Agent and the Registrar, such moneys shall be applied in the order set
forth below:
(a) Unless the principal of all Bonds of such Series shall have become or
been declared due and payable, all such moneys shall be applied:
FIRST: To the payment of all installments of interest then due on the
Bonds of such Series in order of priority first to installments past due for the
greatest period and, if the amount available shall not be sufficient to pay in
full any particular installment, then to the ratable payment of the amounts due
on such installment; and
SECOND: To the payment of the unpaid principal of and premium, if any, of
the Bonds of such Series which shall have become due (other than Bonds called
for redemption for the payment of which moneys are held pursuant to the
provisions of this Indenture), with interest on such Bonds from the respective
dates upon which they became due (at the rate borne by the Bonds, to the extent
permitted by law) and, if the amount available shall not be sufficient to pay in
full Bonds due on any particular date, together with such premium, then to the
ratable payment of the amounts due on such date.
(b) If the principal of all the Bonds of such Series shall have become or
been declared due and payable, all such moneys shall be applied to the payment
of the principal, premium, if any, and interest then due and unpaid upon the
Bonds of such Series, without preference or priority as to the Bonds of such
Series or as between principal, premium, interest, installments of interest on
Bonds of such Series, ratably according to the amounts due respectively for
principal, premium and interest to the persons entitled thereto.
(c) If the principal on all Bonds of such Series shall have been declared
due and payable, and if such declaration shall thereafter have been rescinded
under this Article then, subject to subsection (b) of this Section in the event
that the principal of all the Bonds of such Series shall again become or be
declared due and payable, the moneys shall be applied in accordance with
subsection (a) of this Section.
Notwithstanding the foregoing, (a) except with respect to a Credit
Facility that permits drawings to pay premium with respect to Bonds, the Trustee
shall be obligated to apply moneys received under a Credit Facility then in
effect only to principal and Purchase Price of, and interest on the Series of
Bonds secured by such Credit Facility (except Bonds of such Series that are not
entitled to any benefit of a Credit Facility as provided in Section 3.8); and
(b) proceeds of a drawing under a Credit Facility shall be applied solely to the
payment of principal, interest, Purchase Price and premium (but only to the
extent such Credit Facility permits drawings to pay premium) of the Bonds of the
Series specifically secured by such Credit Facility. Whenever moneys (other than
moneys received under a Credit Facility) are to be applied pursuant to this
Section, the Trustee shall fix the date which shall be not more than seven (7)
calendar days after such acceleration upon which such application is to be made
and upon such date interest on the principal amount of Bonds to be paid on such
dates shall cease to accrue. The Trustee shall give such notice as it may deem
appropriate of the deposit with it of any such moneys and of the fixing of any
such date. As provided in Section 6.2, moneys received under a Credit Facility
in effect with respect to a Series of Bonds upon declaration of acceleration of
such Series are to be applied as soon as is practicable following receipt to pay
the principal of and interest on such Bonds to the Holders thereof.
Section 6.8 Rights of a Credit Issuer. All rights of a Credit Issuer under
this Indenture to consent to certain extensions, remedies, waivers, actions and
amendments hereunder shall, with respect to such Credit Issuer, be suspended (i)
for so long as such Credit Issuer wrongfully dishonors any draft (or other
appropriate form of demand) presented in strict conformity with the requirements
of its Credit Facility and has not honored a subsequent draft (or other
appropriate form of demand), if any, thereunder or (ii) if no Credit Facility
issued by such Credit Issuer is in effect or any Credit Facility issued by such
Credit Issuer terminates in accordance with its terms.
ARTICLE VII
THE TRUSTEE; THE PAYING AGENT; THE TENDER AGENT;
THE REGISTRAR; THE UNDERWRITER; THE REMARKETING AGENT
Section 7.1 Appointment of Trustee. The Trustee is hereby appointed and
does hereby agree to act in such capacity, and to perform the duties of the
Trustee under this Indenture, but only upon and subject to the following express
terms and conditions (and no implied covenants or other obligations shall be
read into this Indenture against the Trustee):
(a) The Trustee may execute any of its trusts or powers hereunder and
perform any of its duties by or through attorneys, agents, receivers or
employees and shall not be held liable for their actions if such agents are
selected with reasonable care. The Trustee shall be entitled to advice of
Counsel concerning all matters hereunder, and may in all cases pay such
reasonable compensation to all such attorneys, agents, receivers and employees.
The Trustee may act upon the opinion or advice of Counsel, accountants,
engineers or surveyors selected by it in the exercise of reasonable care. The
Trustee shall not be responsible for any loss or damage resulting from any
action or non-action in good faith in reliance upon such opinion or advice.
(b) The Trustee shall not be responsible for any recital herein or in the
Bonds, or for the recording, re-recording, filing or re-filing of this
Indenture, of any financing statements or continuation statements, or for the
validity of this Indenture or of any supplements hereto or instruments of
further assurance, or for the sufficiency of the security for the Bonds issued
hereunder or intended to be secured hereby. The Trustee shall not be liable to
the Company, any Holder, any Beneficial Owner or any other Person for any loss
suffered in connection with any investment of funds made by it in accordance
with Section 4.7. The Trustee shall not be liable to the Company for any loss
suffered as a result of or in connection with any investment of funds made by
the Trustee in good faith as instructed by or approved by a Company
Representative. The Trustee shall have no duty or responsibility to examine or
review and shall have no liability for the contents of any documents submitted
to or delivered to any Holder in the nature of a preliminary or final placement
memorandum, official statement, offering circular or similar disclosure
document.
(c) The Trustee shall not be accountable for the use of any Bonds
authenticated or delivered hereunder after such Bonds shall have been delivered
in accordance with instructions of the Company or for the use by the Company of
the proceeds of the Bonds advanced to the Company as provided in this Indenture
or for the use or application of any moneys received by any Paying Agent. The
Trustee may become the owner of Bonds secured hereby with the same rights as any
other Holder.
(d) The Trustee shall be protected in acting upon opinions of Counsel and
upon any notice, request, consent, certificate, order, affidavit, letter,
telegram or other paper or document believed to be genuine and correct and to
have been signed or sent by the proper person or persons. Any action taken by
the Trustee pursuant to this Indenture upon the request or authority or consent
of any person who at the time of making such request or giving such authority or
consent is the Holder of any Bond shall be conclusive and binding upon all
future Holders of the same Bond and upon Bonds issued in exchange therefor or in
place thereof. The Trustee may conclusively rely upon a certificate furnished by
a Credit Issuer as to amounts owing under the Credit Agreement to which such
Credit Issuer is a party.
(e) The permissive right of the Trustee to do things enumerated in this
Indenture shall not be construed as duties. The Trustee shall only be
responsible for the performance of the duties expressly set forth herein and
shall not be answerable for other than its negligence or bad faith in the
performance of those express duties.
(f) The Trustee shall not be required to give any bond or surety in
respect of the execution of the said trust and powers or otherwise in respect of
the premises.
(g) Before taking any action requested hereunder by the Holders (except
for acceleration of the Bonds as required by Section 6.2, for drawing on any
Credit Facility as required by Section 3.8(a) and with respect to the payment of
principal, interest and Purchase Price to Holders), the Trustee may require
satisfactory security or indemnity bond for the reimbursement of all expenses to
which it may be put and to protect it against all liability, except liability
which is adjudicated to have resulted from its own gross negligence or bad faith
by reason of any action so taken.
(h) All moneys received by the Trustee or any Paying Agent, until used or
applied or invested as herein provided, shall be held as special trust funds for
the purposes specified in this Indenture and for the benefit and security of the
Holders of the Bonds and each Credit Issuer as herein provided. Such moneys need
not be segregated from other funds except to the extent required by law or
herein provided, and neither the Trustee nor any Paying Agent shall otherwise be
under any liability for interest on any moneys received hereunder except such as
may be agreed upon.
(i) The Trustee shall not be bound to ascertain or inquire as to the
performance of the obligations of the Company under this Indenture, and shall
not be deemed to have, or be required to take, notice of default under this
Indenture (other than under Section 6.1(a), (b) or (c) if notice thereof has
been received from a Paying Agent or under Section 6.1(i) or (j)), except (i) in
the event of an insufficient amount in the Bond Fund (or any account therein) to
make a principal or interest payment on the Bonds, (ii) written notification of
such default by two or more Holders with combined holdings of not less than
twenty-five percent (25%) of the principal amount of Outstanding Bonds or (iii)
written notification from a Credit Issuer pursuant to Section 6.1, and in the
absence of such notice the Trustee may conclusively presume there is no default
except as aforesaid. The Trustee may nevertheless require the Company to furnish
information regarding performance of its obligations under this Indenture, but
is not obligated to do so.
(j) The Trustee shall, prior to any Event of Default and after the curing
of all Events of Default which may have occurred, perform such duties and only
such duties of the Trustee as are specifically set forth in this Indenture. The
Trustee shall, during the existence of any Event of Default which has not been
cured, exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of his/her own
affairs. The foregoing shall not limit the Trustee's obligations under Section
3.8(a) or Section 6.2.
(k) Each Paying Agent, the Tender Agent and the Registrar shall each be
entitled to the same rights and immunities with respect to their respective
duties under this Indenture as the Trustee is under this Section 7.1 with
respect to its duties hereunder.
(l) In addition to the Trustee's other duties hereunder, the Trustee shall
authenticate and cancel Bonds as provided herein, keep such books and records
relating to such duties as shall be consistent with prudent industry practice
and make such books and records available for inspection by the Company at all
reasonable times. All Bonds shall be made available for authentication, exchange
and registration of transfer at the principal office of the Trustee.
Section 7.2 Compensation and Indemnification of Trustee, Paying Agent,
Tender Agents and Registrar; Trustee's Prior Claim. The Company agrees to pay
the reasonable fees and expenses of the Trustee, the Tender Agent, each Paying
Agent, each Underwriter, the Remarketing Agent and the Registrar under this
Indenture and all other amounts which may be payable to the Trustee, each Paying
Agent, Registrar or Tender Agent under this Section, and the reasonable fees and
expenses of the Remarketing Agent, such fees and expenses to be paid when due
and payable by the Company directly to the Trustee, Tender Agent, each Paying
Agent, Registrar, each Underwriter and the Remarketing Agent, respectively, for
their own account.
The Company shall (a) pay the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust), (b) pay each Paying Agent, the Tender Agent and the Registrar and any
other agent of the Company acting hereunder (each Paying Agent, the Tender Agent
and the Registrar and any other agent of the Company being herein referred to as
a "Company Agent") reasonable compensation, (c) pay or reimburse each of the
Trustee and any Company Agent upon request for all reasonable expenses,
disbursements and advances incurred or made, in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
reasonable expenses and disbursements of its Counsel and of all agents and other
persons not regularly in its employ), except to the extent that any such
expense, disbursement or advance is due to its own gross negligence or bad
faith, and (d) indemnify each of the Trustee and any Company Agent for, and to
hold it harmless against, any loss, liability or expense incurred by it, arising
out of or in connection with the acceptance or administration of this Indenture
or the trusts hereunder or the performance of its duties hereunder, including
the reasonable costs and expenses of defending itself against or investigating
any claim of liability in the premises, except to the extent that any such loss,
liability or expense was due to its own gross negligence or bad faith. Such
additional indebtedness shall be a senior claim to that of the Bonds upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the Holders of the Bonds, funds held with respect to
Untendered Bonds and unredeemed Bonds for which notice of redemption has been
given. Notwithstanding the foregoing, neither the Trustee nor any Company Agent
shall have any claim upon or shall be paid, prior to any Holder, from any Credit
Facility, Eligible Funds or proceeds from the remarketing of Bonds, or the
proceeds thereof, with respect to any such compensation, payment, reimbursement
or indemnity. "Trustee", "Company Agent", "Paying Agent", "Tender Agent" and
"Registrar" for purposes of this Section shall include (i) officers, directors,
employees or agents of any such party and (ii) any predecessor Trustee, Company
Agent, Paying Agent, Tender Agent and Registrar but the gross negligence or bad
faith of any Trustee, Company Agent, Paying Agent, Tender Agent or Registrar
shall not affect the indemnification of any other Person. The obligations of the
Company under this Section shall survive the termination of this Indenture.
Section 7.3 Intervention in Litigation. In any judicial proceedings to
which the Company is a party, the Trustee may intervene on behalf of Holders,
and shall intervene if requested in writing by the Holders of at least
twenty-five percent (25%) in aggregate principal amount of Bonds then
Outstanding.
Section 7.4 Resignation; Successor Trustees. The Trustee and any successor
Trustee may resign only upon giving sixty (60) days prior written notice to the
Company, each Credit Issuer, and each Holder of Bonds then Outstanding as shown
on the Register. Such resignation shall take effect only upon the appointment of
a successor Trustee by the Company with the written consent of each Credit
Issuer, if any, and the acceptance of such appointment by the successor Trustee.
If no successor is appointed within sixty (60) days after the notice of
resignation, the resigning party may appoint a successor or petition any court
of competent jurisdiction to appoint a successor. Upon appointment of a
successor Trustee, the resigning Trustee shall assign all of its right, title
and interest in this Indenture, including its right, title and interest in any
Credit Facility then in effect and the Indenture, to the successor Trustee. The
successor Trustee shall be a national banking association or a bank or trust
company with trust powers organized under the laws of the United States of
America or any state of the United States, or the District of Columbia, having a
combined capital stock, surplus and undivided profits aggregating at least
$50,000,000. Any successor Trustee shall accept in writing its duties and
responsibilities hereunder and such writing shall be filed with the Company and
each Credit Issuer, if any.
Section 7.5 Removal of Trustee. The Trustee may be removed at any time (a)
by an instrument or concurrent instruments in writing delivered to the Trustee,
the Company and each Credit Issuer, and signed by the Holders of a majority in
aggregate principal amount of Bonds then Outstanding, and (b) if no Event of
Default has occurred and is continuing, by an instrument or concurrent
instruments in writing delivered to the Trustee and each Credit Issuer and
signed by the Company. Such removal shall take effect only upon the appointment
of a successor Trustee by the Company with the written consent of each Credit
Issuer and the acceptance of such appointment by the successor Trustee. Upon
such removal, the Trustee shall assign to the successor Trustee all of its
right, title and interest in this Indenture in the same manner as provided in
Section 7.4. If a Series of Bonds is rated by a Rating Agency, notice concerning
any change in the Trustee shall be furnished to such Rating Agency.
Section 7.6 Paying Agent. The Bank of New York, is hereby appointed by the
Company as the initial Paying Agent with respect to the Series 1999 Bonds. The
supplemental indenture authorizing the issuance of a Series of Additional Bonds
shall designate the initial Paying Agent for such Series, subject to the
conditions set forth in Section 7.8. The Company shall appoint any successor
Paying Agent for a Series of Bonds, with the approval of the Remarketing Agent
and the Applicable Credit Issuer, subject to the conditions set forth in Section
7.8. Each Paying Agent shall designate to the Company and the Trustee its
principal office for all purposes hereof and signify its acceptance of the
duties imposed upon it hereunder by a written instrument of acceptance delivered
to the Issuer and the Trustee under which such Paying Agent shall agree,
particularly:
(a) to hold all sums held by it for the payment of the principal of,
premium, if any, or interest on a Series of Bonds in trust for the benefit of
the Holders of such Series of Bonds until such sums shall be paid to such
Holders of such Bonds or otherwise disposed of as herein provided;
(b) to perform its obligations under this Indenture; and
(c) to keep such books and records relating to its duties as Paying Agent
as shall be consistent with prudent industry practice and to make such books and
records available for inspection by the Company and the Trustee at all
reasonable times.
The Company shall cooperate with the Trustee and each Paying Agent to cause the
necessary arrangements to be made and to be thereafter continued whereby:
(i) funds derived from the sources specified in this Indenture will be
made available at the principal office of such Paying Agent for the timely
payment of principal, premium, if any, and interest on the Series of Bonds
for which such Paying Agent is serving hereunder; and
(ii) each Paying Agent shall be furnished such records and other
information, at such times, as shall be required to enable such Paying
Agent to perform the duties and obligations imposed upon it hereunder.
In carrying out its responsibilities hereunder each Paying Agent will act
for the benefit of the Holders of the Series of Bonds for which such Paying
Agent is serving hereunder. Notwithstanding anything to the contrary in this
Indenture, no Paying Agent shall invest any moneys it receives from a draw on
any Credit Facility.
No purchase of Bonds by a Paying Agent shall constitute a redemption of
Bonds or any extinguishment of the debt represented thereby or constitute a
Paying Agent the owner of such Bonds for any purpose whatsoever.
Section 7.7 Tender Agent. Wachovia Bank, N.A., is hereby appointed by the
Company as the initial Tender Agent. The Company, with the approval of the
Remarketing Agent and each Credit Issuer, shall appoint any succeeding Tender
Agent for the Bonds, subject to the conditions set forth in Section 7.8. The
Tender Agent shall designate to the Company and the Trustee its principal office
for all purposes hereof and signify its acceptance of the duties imposed upon it
hereunder by a written instrument of acceptance delivered to the Company and the
Trustee under which the Tender Agent shall agree, particularly:
(a) to hold all sums held by it for the payment of the principal of,
premium, if any, or interest on the Bonds in trust for the benefit of the
Holders of the Bonds until such sums shall be paid to such Holders of the Bonds
or otherwise disposed of as herein provided;
(b) to perform its obligations under this Indenture; and
(c) to keep such books and records relating to its duties as Tender Agent
as shall be consistent with prudent industry practice and to make such books and
records available for inspection by the Company and the Trustee at all
reasonable times.
The Company shall cooperate with the Trustee to cause the necessary
arrangements to be made and to be thereafter continued whereby the Tender Agent
shall be furnished such records and other information, at such times, as shall
be required to enable the Tender Agent to perform the duties and obligations
imposed upon it hereunder.
No delivery of Bonds to the Tender Agent shall constitute a redemption of
Bonds or any extinguishment of the debt represented thereby or constitute the
Tender Agent the owner of such Bonds for any purpose whatsoever.
Section 7.8 Qualifications of Paying Agents and Tender
Agent; Resignation; Removal; Successors.
(a) Each Paying Agent and the Tender Agent shall each be a bank or trust
company with trust powers duly organized under the laws of the United States of
America or any state or territory thereof, having a combined capital stock,
surplus and undivided profits of at least $15,000,000 and authorized by law to
perform all the duties imposed upon it by this Indenture. The principal office
of each Paying Agent and the Tender Agent for all purposes hereof shall be the
office of such Paying Agent or the Tender Agent, as the case may be, at which
all deliveries to it hereunder shall be made and any and all notices and other
communications in connection herewith shall be delivered. Each Paying Agent or
the Tender Agent may at any time resign and be discharged of its duties and
obligations created by this Indenture by giving at least sixty (60) days' notice
to the Company and the Trustee. Each Paying Agent or the Tender Agent may be
removed at any time by an instrument signed by the Company, filed with such
Paying Agent or Tender Agent, as the case may be, and with the Trustee.
(b) In the event of the resignation or removal of a Paying Agent or the
Tender Agent, such Paying Agent or the Tender Agent, as the case may be, shall
deliver any moneys and any Bonds and any related books and records held by it in
such capacity to its successor or, if there be no successor, to the Trustee.
(c) In the event that a Paying Agent or the Tender Agent shall resign or
be removed, or be dissolved, or if the property or affairs of a Paying Agent or
the Tender Agent shall be taken under the control of any state or federal court
or administrative body because of bankruptcy or insolvency, or for any other
reason, and the Company shall not have appointed a successor Paying Agent or
Tender Agent, as the case may be, the Trustee shall ipso facto be deemed to be
the Paying Agent (with respect to the applicable series of Bonds) or Tender
Agent, as the case may be, for all purposes of this Indenture until the
appointment by the Company of a successor Paying Agent or Tender Agent, as the
case may be.
Section 7.9 Instruments of Holders. Any instrument required by this
Indenture to be executed by Holders may be in any number of writings of similar
tenor and may be executed by Holders in person or by agent appointed in writing.
Proof of the execution of any such instrument or of the writing appointing any
such agent and of the ownership of Bonds given in any of the following forms
shall be sufficient for any of the purposes of this Indenture:
(a) A certificate of any officer in any jurisdiction who by law has power
to take acknowledgments within such jurisdiction that the person signing such
writing acknowledged before him/her the execution thereof; or
(b) A certificate executed by any trust company or bank stating that at
the date thereof the party named therein did exhibit to an officer of such trust
company or bank, as the property of such party, the Bonds therein mentioned.
The Trustee may rely on such an instrument of Holders unless and until the
Trustee receives notice in the form specified in (a) or (b) above that the
original such instrument is no longer reliable. In the event that the Trustee
shall receive conflicting directions from two or more groups of Holders, each
with combined holdings of not less than twenty-five percent (25%) of the
principal amount of Outstanding Bonds, the directions given by the group of
Holders which holds the largest percentage of Bonds shall be controlling and the
Trustee shall follow such directions to the extent required herein.
Section 7.10 Power to Appoint Co-Trustees. At any time or times, for the
purpose of meeting any legal requirements of any jurisdiction in which the
Company may at the time be doing business, the Company and the Trustee shall
have power to appoint and, upon the request of the Trustee or of the Holders of
a majority of the aggregate principal amount of the Bonds then Outstanding, the
Company shall for such purpose join with the Trustee in the execution, delivery
and performance of all instruments and agreements necessary or proper to
appoint, one or more persons approved by the Trustee and the Company either to
act as co-trustee or co-trustees, jointly with the Trustee, or to act as
separate trustee or separate co-trustees, and to vest in such person or persons,
in such capacity, such rights, powers, duties, trusts or obligations as the
Company and the Trustee may consider necessary or desirable, subject to the
remaining provisions of this section.
The Trustee and co-trustee, if any, may by written instrument between them
designate and assign either the Trustee or the co-trustee or both of them to
perform all or any part of the responsibilities and duties of the Trustee under
this Indenture.
If the Company shall not have joined in such appointment within thirty
(30) days after the receipt by it of a written request to do so, or in case an
Event of Default shall have occurred and be continuing, the Trustee and the
Company shall have the power to make such appointment.
The Company shall execute, acknowledge and deliver all such instruments as
may be required by any such co-trustee or separate trustee for more fully
confirming such title, rights, powers, trusts, duties and obligations to such
co-trustee or separate trustee.
Every co-trustee or separate trustee appointed pursuant to this section,
to the extent permitted by law or any applicable contract, shall be subject to
the following terms, namely:
(a) This Indenture shall become effective at the time the Bonds shall be
authenticated and delivered, and thereupon such co-trustee or separate trustee
shall have all rights, powers, trusts, duties and obligations by this Indenture
conferred upon the Trustee in respect of the custody, control or management of
moneys, papers, securities and other personal property.
(b) All rights, powers, trusts, duties and obligations conferred or
imposed upon the trustees shall be conferred or imposed upon and exercised or
performed by the Trustee, or by the Trustee and such co-trustee or co-trustees,
or separate trustee or separate trustees, as shall be provided in the instrument
appointing such co-trustee or co-trustees or separate trustee or separate
trustees, except to the extent that, under the law of any jurisdiction in which
any particular act or acts are to be performed, the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such act or acts
shall be performed by such co-trustee or co-trustees or separate trustee or
separate trustees.
(c) Any request in writing by the Trustee to any co-trustee or separate
trustee to take or to refrain from taking any action hereunder shall be
sufficient warrant for the taking, or the refraining from taking, of such action
by such co-trustee or separate trustee.
(d) Any co-trustee or separate trustee, to the extent permitted by law,
may delegate to the Trustee the exercise of any right, power, trust, duty or
obligation, discretionary or otherwise.
(e) The Trustee at any time, by an instrument in writing, with the
concurrence of the Company evidenced by a resolution, may accept the resignation
of any co-trustee or separate trustee appointed under this Section, and, in case
an Event of Default shall have occurred and be continuing, the Trustee shall
have power to accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Company. Upon the request of the
Trustee, the Company shall join with the Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to effectuate
such resignation or removal. A successor to any co-trustee or separate trustee
so resigned or removed may be appointed in the manner provided in this Section.
(f) No co-trustee or separate trustee hereunder shall be personally liable
by reason of any act or omission of any other trustee hereunder.
(g) Any moneys, paper, securities or other items of personal property
received by any such co-trustee or separate trustee hereunder shall forthwith,
so far as may be permitted by law, be turned over to the Trustee.
Upon the acceptance in writing of such appointment by any such co-trustee
or separate trustee, it or he shall be vested with such rights, powers, duties,
trusts or obligations, as shall be specified in the instrument of appointment
jointly with the Trustee (except insofar as applicable law makes it necessary
for any such co-trustee or separate trustee to act alone) subject to all the
terms of this Indenture. Every such acceptance shall be filed with the Trustee.
If a Series of Bonds is rated by a Rating Agency, any co-trustee or separate
trustee shall be a bank or trust company with trust powers.
In case any co-trustee or separate trustee shall die, become incapable of
acting, resign or be removed, all rights, powers, trusts, duties and obligations
of said co-trustee or separate trustee shall, so far as permitted by law, vest
in and be exercised by the Trustee unless and until a successor co-trustee or
separate trustee shall be appointed in the same manner as provided for with
respect to the appointment of a successor Trustee pursuant to Section 7.4
hereof.
Section 7.11 Underwriters for Additional Bonds. The Company shall appoint
an Underwriter for each Series of Additional Bonds, provided that such
Underwriter shall be a financial institution or registered broker/dealer
authorized by law to perform all the duties imposed upon it as Underwriter.
Section 7.12 Remarketing Agent. The Company hereby appoints Wachovia
Securities, Inc. as the initial Remarketing Agent. The Company, with the consent
of each Credit Issuer, which consent shall not be unreasonably withheld, shall
appoint any successor Remarketing Agent for the Bonds (except for assignees
permitted under the following sentence), subject to the conditions set forth in
Section 7.13. To the extent permitted by any Remarketing Agreement then in
effect, the Remarketing Agent may at any time transfer all of its duties and
obligations as Remarketing Agent hereunder to an affiliate of such Remarketing
Agent that satisfies the conditions set forth in Section 7.13 and, upon such
transfer, such affiliate shall automatically become the Remarketing Agent
hereunder without any further action.
Any Remarketing Agent shall designate to the Company and the Trustee its
principal office for purposes hereof, which shall be the office of such
Remarketing Agent at which all notices and other communications in connection
herewith may be delivered to it, and signify its acceptance of the duties and
obligations imposed upon it hereunder by a written instrument of acceptance
delivered to the Company, the Trustee and each Credit Issuer under which such
Remarketing Agent shall agree particularly (i) to hold all Bonds delivered to it
hereunder in trust for the benefit of the respective Holders of Bonds that
delivered such Bonds until moneys representing the Purchase Price of such Bonds
are delivered to or for the account of or to the order of such Holders of Bonds;
(ii) to hold all moneys delivered to it hereunder for the purchase of Bonds in
trust for the benefit of the person or entity that has delivered such moneys
until the Bonds purchased with such moneys are delivered to or for the account
of such person or entity; and (iii) to keep books and records with respect to
its activities hereunder available for inspection by the Company, the Trustee
and each Credit Issuer at all reasonable times.
Section 7.13 Qualifications of Remarketing Agent; Resignation; Removal.
The Remarketing Agent shall be a financial institution or registered
broker/dealer authorized by law to perform all the duties imposed upon it by
this Indenture. The Remarketing Agent may at any time resign and be discharged
of its duties and obligations created by this Indenture by giving at least
thirty (30) days' notice to the Company, the Tender Agent, each Paying Agent,
the Trustee and each Credit Issuer; provided, however, that if no successor
Remarketing Agent has been appointed in accordance with Section 7.12 and this
Section on or prior to the effective date of such resignation, the resigning
Remarketing Agent shall give written notice to Holders on the effective date of
such resignation that all optional tender notices under Sections 2.6(a) and (b)
should be delivered to the Tender Agent and the Trustee until a successor
Remarketing Agent has been appointed. The Remarketing Agent may be removed at
any time, upon not less than thirty (30) days' notice by an instrument signed by
the Company and filed with the Remarketing Agent, the Trustee, each Paying
Agent, the Tender Agent and each Credit Issuer; provided that no such removal
shall be effective until a successor Remarketing Agent has been appointed in
accordance with Section 7.12 and this Section and such successor Remarketing
Agent has accepted such appointment.
Section 7.14 Several Capacities. Anything in this Indenture to the
contrary notwithstanding, the same entity may serve hereunder as the Trustee,
the Credit Issuer with respect to one or more Series of Bonds, the Paying Agent
with respect to one or more Series of Bonds, the Tender Agent, the Registrar,
the Remarketing Agent and the Underwriter with respect to one or more Series of
Bonds, and in any other combination of such capacities, to the extent permitted
by law.
Section 7.15 Trustee Not Responsible for Duties of Remarketing Agent,
Tender Agent, Registrar and Paying Agents. Notwithstanding anything to the
contrary in this Indenture, the Trustee shall not be liable or responsible for
any of the duties or obligations of the Remarketing Agent, the Tender Agent, the
Registrar or any Paying Agent under this Indenture (or be liable or responsible
for the acts or omissions of any Paying Agent, the Tender Agent, the Registrar
or the Remarketing Agent or any action taken by the Trustee or failure to act in
reasonable reliance upon any action or failure to act by any Paying Agent, the
Tender Agent, the Registrar or the Remarketing Agent) except for the duties
imposed upon, or the acts and omissions of, the Trustee as the Tender Agent or
any Paying Agent after receipt of the written notice provided for in Section
7.8(c) to the effect that a successor agent has not been appointed by the
Company. The Trustee shall not be bound to ascertain or inquire as to the truth
or accuracy of any information provided to it by any Paying Agent, the Tender
Agent, the Registrar or the Remarketing Agent but may for any purpose
conclusively rely upon any information given to the Trustee by any Paying Agent,
the Tender Agent, the Registrar or the Remarketing Agent.
Section 7.16 Cooperation of the Trustee, the Tender Agent, the Registrar
and the Paying Agents. The Trustee, the Tender Agent, the Registrar and each
Paying Agent shall cooperate in all respects and shall provide to the other in a
timely fashion the information and knowledge each possesses so that the Trustee
and each of such parties may faithfully exercise their respective obligations
hereunder.
ARTICLE VIII
AMENDMENTS, SUPPLEMENTAL INDENTURES
Section 8.1 Supplemental Indentures. The Company and the Trustee, with the
consent of each Credit Issuer, but without the consent of or notice to any
Holders (except in the case of supplemental indentures described in (j) below,
in which case prior notice shall be given to Holders by the Trustee), may enter
into an indenture or indentures supplemental to this Indenture that do not
materially adversely affect the interest of the Holders for one or more of the
following purposes:
(a) to grant to or confer upon the Trustee for the benefit of the Holders
and the Credit Issuers, any additional rights, remedies, powers or authority
that may lawfully be granted to or conferred upon the Holders or the Trustee;
(b) to grant or pledge to the Trustee for the benefit of Holders and the
Credit Issuers, any additional security other than that granted or pledged under
this Indenture; provided that no additional security shall be granted or pledged
to the Trustee for the benefit of a Credit Issuer unless such Credit Issuer
agrees that the Trustee shall hold such security in trust for the equal or
ratable benefit of such Credit Issuer, on the one hand, and the Holders, on the
other hand;
(c) to modify, amend or supplement this Indenture or any indenture
supplemental hereto in such manner as to permit the qualification thereof under
the Trust Indenture Act of 1939 or any similar federal statute then in effect or
to permit the qualification of the Bonds for sale under the securities laws of
any of the states of the United States;
(d) to appoint a successor Trustee, separate trustees or co-trustees in
the manner provided in Article VII hereof;
(e) to modify, amend or supplement this Indenture for the purpose of
obtaining or retaining a rating on one or more Series of Bonds from a Rating
Agency;
(f) to modify, amend or supplement this Indenture to permit a transfer of
Bonds from one Securities Depository to another or the discontinuance of the
Book Entry System and issuance of replacement Bonds to the Beneficial Owners;
(g) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture that may be defective or
inconsistent with any provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under this Indenture which shall not materially adversely affect the
interest of the Holders or the Credit Issuers;
(h) to modify, amend or supplement this Indenture to permit any Paying
Agent, the Tender Agent or the Registrar to assume any administrative duties of
the Trustee hereunder (except any duties of the Trustee with respect to the
acceptance, modification, reduction or release of or drawing on, any Credit
Facility) or for the Trustee to assume any administrative duties of any Paying
Agent or the Registrar hereunder;
(i) to make any change to the administrative provisions hereof, to
accommodate the provisions of an Alternate Credit Facility, bond insurance or a
liquidity facility;
(j) to provide for the issuance of a Series of Additional Bonds pursuant
to Section 2.12(b) and for the inclusion of any additional security in
connection therewith; and
(k) to modify, amend or supplement this Indenture or any indenture
supplemental hereto in such manner as to increase or accommodate the increase of
the Ceiling Rate applicable to a Series of Bonds pursuant to Section 2.3(a).
When requested by the Company, and if all conditions precedent under this
Indenture have been met, the Trustee shall join the Company in the execution of
any such supplemental indenture unless it imposes additional obligations on the
Trustee or adversely affects the Trustee's rights and immunities under this
Indenture or otherwise. A copy of all such supplemental indentures shall be
promptly furnished to each Credit Issuer and each Paying Agent, and the Tender
Agent and the Registrar shall be promptly advised of any modifications of their
rights, duties and obligations hereunder.
The Trustee shall file copies of all such supplemental indentures with the
Company and, if a Series of Bonds is rated by a Rating Agency, shall forward
copies of all such supplemental indentures to such Rating Agency.
Section 8.2 Amendments to Indenture; Consent of Holders and the Credit
Issuers. Exclusive of supplemental indentures covered by Section 8.1 and subject
to the terms and provisions contained in this Section, and not otherwise, the
Holders of a majority in aggregate principal amount of the Bonds then
Outstanding and affected by such indenture or indentures supplemental hereto,
with the consent of each Credit Issuer, shall have the right, from time to time,
anything contained in this Indenture to the contrary notwithstanding, to consent
to and direct the execution by the Trustee of such other indenture or indentures
supplemental hereto as shall be consented to by the Company in its sole
discretion for the purpose of modifying, altering, amending, adding to or
rescinding, in any particular, any of the terms or provisions contained in this
Indenture or in any supplemental indenture; provided, however, that nothing
contained in this Section shall permit, or be construed as permitting, without
the consent of the Holders of all Outstanding Bonds of a Series, (a) an
extension of the maturity of the principal of, or the mandatory redemption date
of, or interest on, any Bond of such Series, (b) a reduction in the principal
amount of, or the premium or the rate of interest on, any Bond of such Series,
or (c) a preference or priority of any Bond or Bonds over any other Bond or
Bonds of such Series; provided further, however, that nothing contained in this
Section shall permit, or be construed as permitting, without the consent of the
Holders of all Outstanding Bonds, (y) a reduction in the aggregate principal
amount of the Bonds required for any consent to any supplemental indenture, or
(z) a modification or change in the duties of the Trustee hereunder without the
consent of the Trustee. The giving of notice to and consent of the Holders to
any such proposed supplemental indenture shall be obtained pursuant to Section
8.4.
If a Series of Bonds is rated by a Rating Agency, the Trustee shall
furnish copies of all such supplemental indentures to such Rating Agency.
Section 8.3 Amendments, Changes and Modifications to a Credit Facility.
Except as otherwise provided in this Indenture, subsequent to the initial
issuance of a Series of Bonds and prior to payment of the Bonds of such Series
in full (or provision for the payment thereof having been made in accordance
with the provisions of this Indenture), the Applicable Credit Facility may not
be effectively amended, changed or modified without the prior written consent of
the Trustee and the Applicable Paying Agent. The Trustee may, without the
consent of the Holders of the Bonds of such Series, consent to any amendment of
the Applicable Credit Facility that, in the Trustee's and the Applicable Paying
Agent's judgment, does not prejudice in any material respect the interests of
the Holders of Bonds of such Series, as may be required (a) to extend the term
thereof; (b) to increase the amount available to be drawn thereunder in respect
of the interest on the Bonds of such Series (or the portion of the Purchase
Price of such Bonds corresponding to interest); (c) for purposes of curing any
ambiguity, formal defect or omission; or (d) for obtaining or retaining a rating
on such Series from a Rating Agency. Except for such amendments, and as
otherwise provided herein, the Applicable Credit Facility may be amended only
with the consent of the Company, the Trustee and the Holders of a majority in
aggregate principal amount of the Outstanding Bonds of such Series, except that
no such amendment may be made that would reduce the amounts required to be paid
thereunder, change the time for payment of such amounts or accelerate the
expiration date of such Credit Facility without the written consent of the
Holders of all Outstanding Bonds of such Series. The foregoing shall not limit
the Trustee's obligation to send notice to a Credit Issuer to reduce amounts
available to be drawn under a currently effective Credit Facility under the
circumstances set forth therein.
The Trustee shall file copies of all such amendments, changes or
modifications with the Rating Agency, if any, rating such Series of Bonds.
Section 8.4 Notice to and Consent of Holders. If consent of the Holders is
required under the terms of this Indenture for the amendment of this Indenture
or the Credit Facility or for any other similar purpose, the Trustee shall cause
notice of the proposed execution of the amendment or supplemental indenture to
be given by first-class mail, postage prepaid, (a) in the case of an amendment
to a Credit Facility in effect for a Series of Bonds, to the Holders of the
Outstanding Bonds of such Series then shown on the Register, or (b) in any other
case, to the Holders of all the Outstanding Bonds then shown on the Register.
Such notice shall briefly set forth the nature of the proposed amendment,
supplemental indenture or other action and shall state that copies of any such
amendment, supplemental indenture or other document are on file at the principal
office of the Trustee for inspection by Holders. If, within sixty (60) days or
such longer period as shall be prescribed by the Trustee following the mailing
of such notice, the Holders of a majority or all, as the case may be, of the
principal amount of the Bonds Outstanding (or, in the case of an amendment to a
Credit Facility in effect for a Series of Bonds, the principal amount of the
Bonds Outstanding for such Series) by instruments filed with the Trustee shall
have consented to the amendment, supplemental indenture or other proposed
action, then the Trustee may execute such amendment, supplemental indenture or
other document or take such proposed action and the consent of the Holders shall
thereby be conclusively presumed.
ARTICLE IX
MISCELLANEOUS
Section 9.1 [Reserved].
Section 9.2 Limitation of Rights. With the exception of rights herein
expressly conferred, nothing expressed or mentioned in or to be implied from
this Indenture or the Bonds is intended or shall be construed to give to any
Person other than the parties hereto, the Holders and the Credit Issuers any
legal or equitable right, remedy or claim under or in respect to this Indenture
or any covenants, conditions and provisions herein contained; this Indenture and
all of the covenants, conditions and provisions herein being intended to be and
being for the sole and exclusive benefit of the parties hereto, the Holders and
the Credit Issuers as herein provided.
Section 9.3 Severability. If any provision of this Indenture is held to be
in conflict with any applicable statute or rule of law or is otherwise held to
be unenforceable for any reason whatsoever, such circumstances shall not have
the effect of rendering the other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatsoever.
The invalidity of any one or more phrases, sentences, clauses or sections
of this Indenture, shall not affect the remaining portions of this Indenture or
any part thereof.
Section 9.4 Notices. Except as otherwise provided herein, all notices,
approvals, consents, requests, and other communications hereunder shall be in
writing and shall be deemed to have been given when the writing is delivered if
given or delivered by hand, overnight delivery service or facsimile transmitter
(with confirmed receipt) to the address or facsimile number set forth below and
shall be deemed to have been given on the date deposited in the mail, if mailed,
by first-class, registered or certified mail, postage prepaid, addressed as set
forth below. Where required herein, notice shall be given by telephone, and
promptly confirmed in writing, and shall be deemed given when given by telephone
to the telephone numbers set forth below. The Company, each Credit Issuer, the
Trustee, the Tender Agent, the Remarketing Agent and each Paying Agent may, by
written notice given hereunder, designate any different addresses, phone numbers
and facsimile numbers to which subsequent notices, certificates, approvals,
consents, requests or other communications shall be sent.
To the Company: Atlantic American Corporation
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319-3000
Attention: Mr. Edward L. Rand, Jr.
Telephone: (404) 266-5500 (ext.
5535)
Facsimile: (404) 266-5702
To the Trustee: The Bank of New York
100 Ashford Center North, Suite 520
Atlanta, Georgia 30338
Attention: Corporate Trust
Department
Telephone: (770) 698-5190
Facsimile: (770) 698-5195
To the Series 1999 Wachovia Bank, N.A.
Credit Issuer: International Operations
Standby Letters of Credit, NC-30034
401 Linden Street
Winston-Salem, North Carolina 27101
Telephone: (800) 522-9487
Facsimile: (336) 735-0950
With a copy to: Wachovia Bank, N.A.
Mail Code GA-3940
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Mr. William J. Darby
Telephone: (404) 332-1371
Facsimile: (404) 332-5016
To any other Credit Issuer: As provided in the
supplemental indenture authorizing
such Series of Bonds
To the Remarketing Agent:Wachovia Securities, Inc.
100 North Main Street
Winston-Salem, North Carolina 27101
Attention: Fixed Income Sales and
Trading/
Money Market Desk
Telephone: (336) 732-4646
Facsimile: (336) 732-6744
To the Series 1999 Paying Agent: The Bank of New York
100 Ashford Center North, Suite 520
Atlanta, Georgia 30338
Attention: Corporate Trust
Department
Telephone: (770) 698-5190
Facsimile: (770) 698-5195
To any other Paying Agent: As provided in the
supplemental indenture authorizing
such Series of Bonds
To the Tender Agent: Wachovia Bank, N.A.
100 North Main Street
Winston-Salem, North Carolina 27101
Attention: Fixed Income Sales and
Trading/
Money Market Desk
Telephone: (336) 732-4646
Facsimile: (336) 732-6744
To the Rating Agency (if a Series Standard & Poor's
Ratings Services
of Bonds is rated by S&P): 55 Water Street
New York, New York 10041-0003
Section 9.5 Payments Due on Non-Business Days. In any case where the date
of maturity of interest on or premium, if any, or principal of the Bonds or the
date fixed for redemption of any Bonds shall not be a Business Day, then payment
of such interest, premium or principal need not be made on such date but shall
be made on the next succeeding Business Day, with the same force and effect as
if made on the date of maturity or the date fixed for redemption, and, in the
case of such payment, no interest shall accrue for the period from and after
such date.
Section 9.6 Binding Effect. This instrument shall inure to the benefit of
and shall be binding upon the Company and the Trustee and their respective
successors and assigns, subject, however, to the limitations contained in this
Indenture.
Section 9.7 Captions. The captions or headings in this Indenture are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions or sections of this Indenture.
Section 9.8 Governing Law. This Indenture shall be
governed by and interpreted in accordance with the laws of the
State.
Section 9.9 Notices to Rating Agency. If a Series of Bonds is rated by a
Rating Agency, the Trustee shall provide written notice to such Rating Agency
with respect to (i) the appointment of any successor Trustee, Remarketing Agent
or Tender Agent, (ii) the appointment of any agent by the Trustee to perform any
material duties of the Trustee under this Indenture, (iii) any material
amendment or supplement to this Indenture, the Remarketing Agreement or the
Tender Agent Agreement, (iv) the appointment of a successor Paying Agent for
such Series, (v) the expiration, termination, extension (other than an automatic
extension) or substitution of any Credit Facility in effect for such Series,
(vi) any Fixed Rate Conversion Date for such Series or any conversion of such
Series to a Long-Term Rate, (vii) any Mandatory Purchase Date (except Conversion
Dates) for such Series, (viii) any material amendment or supplement to the
Credit Facility in effect for such Series or the Credit Agreement pursuant to
which such Credit Facility was issued, (ix) acceleration of such Series, and (x)
the payment in full of all of the Bonds of such Series (whether at stated
maturity or upon redemption, acceleration or defeasance). Failure of the Trustee
to provide any such notice shall not have any effect on the occurrence of such
event.
Section 9.10 Execution in Counterparts. This Indenture may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
[The remainder of this page is left blank intentionally]
IN WITNESS WHEREOF, the Company has caused this Indenture to be executed
in its name and on its behalf by its President and Chief Executive Officer and
its seal affixed and attested by its Secretary and the Trustee has caused this
Indenture to be executed, sealed and attested in its name by its duly authorized
officers, all as of the day and year first above written.
ATLANTIC AMERICAN CORPORATION
(SEAL) By:
- ------------------------------------
Hilton H. Howell, Jr.
President and Chief Executive
Officer
ATTEST:
- -------------------------
Janie L. Ryan
Secretary
THE BANK OF NEW YORK,
as Trustee
(SEAL) By:
- ------------------------------------
Janet F. Holton
Authorized Agent
ATTEST:
- -------------------------
Name:____________________
__________ Secretary
A-10
C-585247v05!.15121.00011
EXHIBIT "A"
- --------------------------------------------------------------------
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to issuer or its agent for registration of
transfer, exchange, or payment and any certificate issued is
registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
- --------------------------------------------------------------------
Atlantic American Corporation
Taxable Variable Rate Demand Bonds
Series 1999
No. R-__
Interest Rate Maturity Date Issue Date CUSIP
As Stated Below June 1, 2009 June __, 1999
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: Twenty-Five Million Dollars ($25,000,000)
FOR VALUE RECEIVED, Atlantic American Corporation, a corporation duly
organized and existing under the laws of the State of Georgia (the "Company"),
hereby promises to pay to the Holder specified above, or registered assigns,
upon surrender hereof, at the principal office of the Paying Agent named below,
on the Maturity Date specified above, unless redeemed prior thereto, the
Principal Amount specified above, together with interest thereon at the rates
determined as set forth herein from the Issue Date specified above, but only
from the sources and in the manner hereinafter provided on the first day of each
month during any Weekly Rate Period or Monthly Rate Period, on the first
Business Day immediately following the last day of each Flexible Term Rate
Period (but only as to Bonds for which such Flexible Term Rate Period is
applicable) or on each June 1 and December 1 during any Medium-Term Rate Period
or Fixed Rate Period (an "Interest Payment Date") until the principal hereof is
paid or duly provided for upon redemption or maturity. Payment of the principal
and redemption premium, if any, and interest on this Bond shall be made in
lawful money of the United States of America which on the respective dates of
payment thereof shall be legal tender for the payment of public and private
debts. Unless other arrangements are made pursuant to the Indenture (hereinafter
defined), interest is payable by check or draft drawn upon The Bank of New York,
as Paying Agent (the "Paying Agent"), mailed on the Interest Payment Date (or,
if such day is not a Business Day, the next succeeding Business Day) to the
Holder hereof at the close of business on the Record Date immediately preceding
each Interest Payment Date at the address of such Holder as it appears on the
Register. Interest on this Bond shall be computed on the basis of a 360-day year
for the actual days elapsed during any Short-Term Rate Period (calculated by
multiplying the principal amount of Bonds by the interest rate, dividing that
sum by 360, and multiplying that amount by the actual days elapsed) and a
360-day year consisting of twelve months of thirty days each during any
Long-Term Rate Period. In any case where the date of maturity of interest on or
premium, if any, or principal of this Bond or the date fixed for redemption of
this Bond shall not be a Business Day, then payment of such interest, premium or
principal need not be made on such date but shall be made on the next succeeding
Business Day, with the same force and effect as if made on the date of maturity
or the date fixed for redemption, and, in the case of such payment, no interest
shall accrue for the period from and after such date.
This Bond is one of the Bonds of a duly authorized issue of Taxable
Variable Rate Demand Bonds of the Company in the aggregate principal amount of
$25,000,000 known as Atlantic American Corporation Taxable Variable Rate Demand
Bonds, Series 1999 (herein called the "Bonds"), dated as of the Issue Date
referenced above. All of the Bonds are issued under and pursuant to an Indenture
of Trust (as amended or supplemented from time to time, the "Indenture"), dated
as of June 1, 1999, by and between the Company and The Bank of New York, as
Trustee (the "Trustee"). Reference is hereby made to the Indenture for the
provisions, among others, with respect to the custody and application of the
proceeds of the Bonds, the collection and disposition of revenues, a description
of the funds charged with and pledged to the payment of the principal of and
redemption premium, if any, and interest on the Bonds, the nature and extent of
the security for the Bonds, the terms and conditions under which the Bonds are
or may be issued, the rights, duties and obligations of the Company and of the
Trustee and the rights of the Holders of the Bonds, and, by the acceptance of
this Bond, the Holder hereof assents to all of the provisions of the Indenture.
Capitalized terms used herein and not defined shall have the meaning ascribed to
them in the Indenture.
The Bonds are secured by an irrevocable, direct-pay letter of credit (the
"Original Credit Facility") from Wachovia Bank, N.A. (the "Credit Issuer"), in
the amount of the aggregate principal amount of the Bonds outstanding from time
to time, plus 52 days interest computed at an assumed interest rate of 12% per
annum, which Original Credit Facility will expire on July 5, 2000, unless
extended or earlier terminated in accordance with its terms. Under certain
circumstances described in the Indenture, the Company may obtain an Alternate
Credit Facility in substitution for the Original Credit Facility.
The Bonds are issuable as fully registered Bonds in the principal amount
of $100,000 and integral multiples thereof (during any Short-Term Rate Period or
Medium-Term Rate Period, an "Authorized Denomination"). This Bond, upon
surrender hereof at the principal office of the Registrar with a written
instrument of transfer satisfactory to the Registrar executed by the Holder
hereof or his/her attorney duly authorized in writing, may, at the option of the
Holder hereof, be exchanged for an equal aggregate principal amount of Bonds of
the same aggregate principal amount and tenor as the Bonds being exchanged and
of any Authorized Denomination. This Bond may be registered as transferred as
provided in the Indenture, subject to certain limitations therein contained,
only upon the Register, and only upon surrender of this Bond for registration of
transfer to the Registrar accompanied by a written instrument of transfer (in
substantially the form of the assignment attached hereto) duly executed by the
Holder hereof or his/her duly authorized attorney. Thereupon, one or more new
Bonds of any Authorized Denomination and in the same aggregate principal amount
and tenor as the Bond surrendered (or for which registration of transfer has
been effected) will be issued to the designated transferee or transferees.
1. Interest Rates on Bonds.
(a) Initial Rate -- General. This Bond shall bear interest as provided in
the Indenture from the Issue Date to the date of payment in full hereof.
Interest accrued on this Bond shall be paid on each Interest Payment Date (or,
if such day is not a Business Day, the next succeeding Business Day) commencing
on July 1, 1999. The interest rate on this Bond will be determined as provided
in the Indenture; provided, that no Rate shall exceed the lesser of (i) the
Ceiling Rate and (ii) the maximum rate permitted by applicable law. The Bonds
shall bear interest at the Weekly Rate from the Issue Date until the date, if
any, on which the Interest Rate Determination Method is changed as described in
the Indenture. The Weekly Rate for the initial Interest Period shall be
determined by the Underwriter on the Issue Date.
(b) Determination of Rate. After the determination of the Weekly Rate for
the initial Interest Period, the applicable Rate shall be determined by the
Remarketing Agent at the time and in the manner specified in the Indenture;
provided, that if for any reason such Rate is not established by the Remarketing
Agent, no Remarketing Agent shall be serving as such under the Indenture or the
rate so established is held to be invalid or unenforceable, then the applicable
Rate shall be determined as provided in the Indenture. The determination of any
Rate in accordance with the terms of the Indenture shall be conclusive and
binding.
2. Tender of Bonds for Purchase.
(a) Optional Tender. Except as set forth in the Indenture, during any
Weekly Rate Period or Monthly Rate Period, the Holders of the Bonds shall have
the right to tender any such Bond (or portion thereof in an Authorized
Denomination, provided that any Bond or portion thereof remaining is also in an
Authorized Denomination) for purchase on any Optional Tender Date, but only
upon:
(1) delivery to the Remarketing Agent at its principal office, not
later than 4:00 p.m., Local Time, on the seventh (7th) day (or on the
immediately preceding Business Day if such seventh (7th) day is not a
Business Day) next preceding such Optional Tender Date, of an irrevocable
written, telephonic (followed, if requested by the Remarketing Agent, by
written or facsimile confirmation delivered to the Remarketing Agent no
later than the close of business on the next succeeding Business Day),
facsimile or telegraphic notice (with a written or facsimile copy to the
Tender Agent) stating (i) that such Holder will tender for purchase all or
any portion of his/her Bonds in an Authorized Denomination and the amount
of Bonds to be tendered, and (ii) the Optional Tender Date on which such
Bonds will be tendered; and
(2) delivery of such Bond (with an appropriate instrument of transfer
duly executed in blank) to the Tender Agent at its principal office at or
prior to 10:00 a.m., Local Time, on such Optional Tender Date; provided,
however, that no Bond (or portion thereof) shall be purchased unless such
Bond as delivered to the Tender Agent shall conform in all respects to the
description thereof in the aforesaid notice.
Any election of a Holder to tender a Bond for purchase on an Optional
Tender Date in accordance with the Indenture shall be irrevocable and shall be
binding on the Holder making such election and on any transferee of such Holder.
(b) Certain Required Tenders for Purchase. All Bonds are subject to
mandatory tender for purchase as provided in the Indenture on any Mandatory
Purchase Date (i.e., certain Conversion Dates, any Credit Modification Date and
certain dates designated by the Credit Issuer or the Company) at the Purchase
Price thereof.
(c) Bonds Deemed Tendered. If (1) with respect to a Mandatory Purchase
Date, a Holder fails to deliver such Bond to the Tender Agent on or before the
Mandatory Purchase Date, or (2) with respect to an Optional Tender Date, a
Holder gives notice pursuant to Section 2.6(a) of the Indenture to the
Remarketing Agent and thereafter fails to deliver such Bonds (or portion
thereof), to the Tender Agent, as required, then such Bond (or portion thereof),
that is not delivered to the Tender Agent shall be deemed to have been properly
tendered (such Bond being hereinafter referred to as an "Untendered Bond") and,
to the extent that there shall be on deposit with the Paying Agent on the date
purchase thereof is required as provided in the Indenture, an amount sufficient
to pay the Purchase Price thereof, such Untendered Bond shall cease to
constitute or represent a right to payment of principal or interest thereon and
shall constitute and represent only the right to the payment of the Purchase
Price payable on such date.
(d) Purchase Notice. If the Bonds are held in a Book Entry System, a
purchase notice pursuant to 2(a)(1) above may be delivered by a Beneficial
Owner. Such purchase notice must be delivered as set forth in 2(a)(1) above and
must state that such Beneficial Owner will cause its beneficial interest (or
portion thereof in an Authorized Denomination) to be tendered, the amount of
such interest to be tendered, the Optional Tender Date on which such interest
will be tendered and the identity of the Participant through which the
Beneficial Owner maintains its interest. Upon delivery of such notice, the
Beneficial Owner must make arrangements to have its beneficial ownership
interest in the Bonds being tendered transferred to the Tender Agent at or prior
to 10:00 a.m., on the Optional Tender Date, but need not otherwise comply with
2(a)(2) above.
3. Conversion of the Interest Rate Determination Method for the Bonds. The
Indenture provides that the Company may change the Interest Rate Determination
Method for the Bonds, subject to the terms and conditions set forth therein.
4. Issuance of Alternate Credit Facility. The Indenture provides that the
Company may arrange for the issuance of an Alternate Credit Facility with
respect to the Bonds, subject to the terms and conditions set forth therein.
5. Optional Redemption.
(a) During a Short-Term Rate Period. During any Weekly Rate Period, the
Bonds are subject to redemption, at the direction of the Company, in whole on
any Business Day or in part on any Interest Payment Date at a redemption price
equal to the principal amount of the Bonds to be redeemed plus accrued interest
thereon to the redemption date. During any Monthly Rate Period the Bonds are
subject to redemption, at the direction of the Company, in whole, on the first
Business Day of any calendar month or in part on any Interest Payment Date at a
redemption price equal to the principal amount of the Bonds to be redeemed plus
accrued interest thereon to the redemption date. During any Flexible Term Rate
Period, each of the Bonds is subject to redemption, at the direction of the
Company, in whole or in part on any Interest Payment Date applicable to such
Bond to be redeemed, at a redemption price equal to the principal amount of such
Bond to be redeemed plus accrued interest thereon to the redemption date.
(b) During a Long-Term Rate Period. During any Long-Term Rate Period, the
Bonds are subject to redemption, at the direction of the Company, in whole or in
part, on any Interest Payment Date occurring on or after the First Day of
Redemption Period as described below, at a redemption price equal to the
principal amount thereof, plus a redemption premium (expressed as a percentage
of principal amount) plus accrued interest thereon to the redemption date as
follows, provided, however, if a Credit Facility is then in effect with respect
to the Bonds, such redemption premium shall be paid only from Eligible Funds
described in clause (i) of the definition of Eligible Funds on deposit in the
Bond Fund, unless such Credit Facility provides for payment of such premium:
[Remainder of this page left blank intentionally]
Length of Long-Term
Rate Period From
Conversion Date
Until First Day of Redemption Premium as a
End of Rate Period Redemption Percentage of Principal Amount
(Expressed in Period of Bonds
Years)
More than 7 5th 2% declining by 1% every year Anniversary of
after the 5th Anniversary of the Conversion Date Conversion
Date until reaching
0%, and thereafter 0%.
More than 5 but 4th 1% declining by 1% to 0% the
not more than 7 Anniversary of first year after the 4th
Conversion Date Anniversary of the Conversion Date, and
thereafter 0%.
5 or less Bonds not N/A
redeemable
pursuant to
this paragraph.
The above premiums may be changed upon the conversion to a Long-Term Rate
in accordance with the provisions of Section 2.3(f) and (g) of the Indenture.
6. Notice of Redemption. Notice of redemption shall be mailed by the
Trustee by first-class mail, postage prepaid, at least thirty (30) days before
the redemption date to each Holder of the Bonds to be redeemed in whole or in
part at his/her last address appearing on the Register, but no defect in or
failure to give such notice of redemption shall affect the validity of the
redemption. A notice of optional redemption may state that redemption of the
Bonds is conditioned upon the deposit with the Trustee of sufficient Eligible
Funds on or prior to the date selected for redemption to reimburse the Credit
Issuer for the drawing under the Credit Facility to redeem the Bonds or to
retire the Bonds to be redeemed if the Credit Issuer fails to honor such
drawing, and that if sufficient Eligible Funds are not so available on the date
selected for redemption, such call for redemption shall be revoked. All Bonds so
called for redemption will cease to bear interest on the date fixed for
redemption, provided funds for their redemption have been duly deposited with
the Trustee pursuant to the Indenture and, thereafter, the Holders of such Bonds
called for redemption shall have no rights in respect thereof except to receive
payment of the redemption price from the Trustee and a new Bond for any portion
not redeemed.
7. Miscellaneous.
Under certain circumstances as described in the Indenture, the principal
of all the Bonds may be declared due and payable in the manner and with the
effect provided in the Indenture.
Modifications or alterations to the Indenture or the Credit Facility may
be made only to the extent and in the circumstances permitted by the Indenture.
The Holder of this Bond shall have no right to enforce the provisions of
the Indenture, or to institute action to enforce the covenants therein, or to
take any action with respect to a default under the Indenture, or to institute,
appear in or defend any suit or other proceedings with respect thereto, except
as provided under certain limited circumstances described in the Indenture;
provided, however, that nothing contained in the Indenture shall affect or
impair any right of the Holder hereof to enforce (i) the payment of the
principal of and premium, if any, and interest on this Bond at and after the
maturity hereof, or (ii) the obligation of the Company to pay the principal of
and premium, if any, and interest on this Bond to the Holder hereof at the time,
place, from the source and in the manner as provided in the Indenture.
It is hereby certified that all acts, conditions and things required to
happen, exist and be performed under the Indenture precedent to and in the
issuance of this Bond have happened, exist and have been performed as so
required and that the issuance, authentication and delivery of this Bond have
been duly authorized by the Company.
Unless the certificate of authentication hereon has been executed by the
Trustee by manual signature of one of its authorized signers, this Bond shall
not be entitled to any benefit under the Indenture, or be valid or obligatory
for any purpose.
[Signatures appear on next page.]
IN WITNESS WHEREOF, Atlantic American Corporation has caused this Bond to
be executed in its name and on its behalf by the manual or facsimile signature
of its President and Chief Executive Officer and its seal to be impressed or
imprinted hereon and attested by manual or facsimile signature of the Secretary
of the Company, all as of the Issue Date referenced above.
ATLANTIC AMERICAN CORPORATION
(SEAL) By:
- ----------------------------------
Hilton H. Howell, Jr.
President and Chief
Executive Officer
ATTEST:
By: ________________________
Janie L. Ryan
Secretary
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Series 1999 Bonds issued under the provisions of
the within-mentioned Indenture.
THE BANK OF NEW YORK
By:
------------------------------------
Authorized Agent
Dated: ______________________
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ______________________________________ (Please print or typewrite the Name
and Address, including the Zip Code of the Transferee, and the federal taxpayer
identification or social security number) the within Bond and all rights
thereunder, and hereby irrevocably constitutes and appoints
_______________________ attorney to transfer the within Bond on the books kept
for registration and transfer thereof, with full power of substitution in the
premises.
Dated: _____________________
- -----------------------------------------
NOTICE: The signature on this Assignment must correspond with the name as it
appears upon the face of the within-mentioned Bond in every particular, without
alteration or enlargement or any change whatever.
Signature Guaranteed
By: ______________________________
NOTICE: Signature(s) must be guaranteed by
a member firm of the STAMP, SEMP or MSP signature
guaranty medallion program.
EXHIBIT "B"
CONVERSION NOTICE
[Name and Address of Holder]
This Conversion Notice is delivered pursuant to that certain Indenture of
Trust dated as of June 1, 1999, between The Bank of New York, as trustee (the
"Trustee"), and Atlantic American Corporation (the "Company"), relating to the
Company's $_____________ principal amount Taxable Variable Rate Demand Bonds,
Series _____ (the "Bonds"). You are hereby notified that:
1. The Company has elected to change the Interest Rate Determination
Method pertaining to the Bonds to a new Interest Rate Determination Method (or
the interest rate applicable during a Medium-Term Rate Period to a new interest
rate during a new Medium-Term Rate Period).
2. The Conversion Date shall be _______________.
3. As a result of a conversion, a Mandatory Purchase Date, as defined in
the Indenture, shall occur and the Bonds shall be subject to mandatory tender
for purchase at the Purchase Price thereof, as defined in the Indenture.
4. If certain conditions set forth in the Indenture are not satisfied or
if the conversion is revoked, the Interest Rate Determination Method shall not
be changed, and all Bonds shall be deemed to have been tendered for purchase on
the Mandatory Purchase Date.
5. All Bonds should be presented to the Tender Agent at Wachovia Bank,
N.A., Attention: Fixed Income Sales and Trading/Money Market Desk, 100 North
Main Street, Winston-Salem, North Carolina 27101.
6. Holders have no right to retain Bonds subject to mandatory tender. The
Bonds will be remarketed by Wachovia Securities, Inc. as Remarketing Agent.
Holders interested in repurchasing Bonds on the Conversion Date may contact the
Remarketing Agent at (336) 732-4646.
7. All capitalized terms not otherwise defined herein shall have the
meaning given to such terms in the Indenture.
Very truly yours,
------------------------------------------
[Trustee]
EXHIBIT "C"
NOTICE OF CREDIT MODIFICATION DATE
[Name and Address of Holder]
This Notice of Credit Modification Date is delivered pursuant to that
certain Indenture of Trust dated as of June 1, 1999, between The Bank of New
York, as trustee (the "Trustee"), and Atlantic American Corporation (the
"Company"), relating to the Company's $___________ principal amount Taxable
Variable Rate Demand Bonds, Series _____ (the "Bonds"). You are hereby notified
that:
1. The undersigned Trustee is Trustee under the Indenture.
2. A Credit Modification Date, as defined in the Indenture, shall occur on
__________ __, ____. Bonds shall be subject to mandatory tender for purchase at
the Purchase Price thereof, as defined in the Indenture.
3. The rating, if any, assigned to the Bonds could be lowered or
eliminated following the Credit Modification Date.
4. All Bonds should be presented to the Tender Agent at Wachovia Bank,
N.A., Attention: Fixed Income Sales and Trading/Money Market Desk, 100 North
Main Street, Winston-Salem, North Carolina 27101.
5. Holders have no right to retain Bonds subject to mandatory tender. The
Bonds will be remarketed by Wachovia Securities, Inc. as Remarketing Agent.
Holders interested in repurchasing Bonds on the Credit Modification Date may
contact the Remarketing Agent at (336) 732-4646.
6. All capitalized terms not otherwise defined herein shall have the
meaning given to such terms in the Indenture.
Very truly yours,
------------------------------------------
[Trustee]
EXHIBIT "D"
NOTICE OF MANDATORY PURCHASE DATE
[Name and Address of Holder]
This Notice of Mandatory Purchase Date is delivered pursuant to that
certain Indenture of Trust dated as of June 1, 1999, between The Bank of New
York, as trustee (the "Trustee"), and Atlantic American Corporation (the
"Company"), relating to the Company's $_____________ principal amount Taxable
Variable Rate Demand Bonds Series _____ (the "Bonds"). You are hereby notified
that:
1. The undersigned Trustee is Trustee under the Indenture.
2. [The Company, with the consent of the Remarketing Agent and the Credit
Issuer, if any, has designated ______________ as a Mandatory Purchase Date.]
[The Applicable Credit Issuer has notified the Trustee that an event of default
under the Credit Agreement pursuant to which such Credit Issuer issued its
Applicable Credit Facility has occurred and is continuing and has requested that
the Bonds be required to be tendered for purchase. Under the terms of the
Indenture, _____________ has been designated as a Mandatory Purchase Date.] The
Bonds are subject to mandatory tender for purchase at the Purchase Price
thereof, as defined in the Indenture, on such date.
3. All Bonds should be presented to the Tender Agent at Wachovia Bank,
N.A., Attention: Fixed Income Sales and Trading/Money Market Desk, 100 North
Main Street, Winston-Salem, North Carolina 27101.
4. Holders have no rights to retain Bonds subject to
mandatory tender. [The Bonds will be remarketed by Wachovia
Securities, Inc. as Remarketing Agent. Holders interested in
repurchasing Bonds on the Mandatory Purchase Date may contact the
Remarketing Agent at (336) 732-4646.]
5. All capitalized terms not otherwise defined herein shall have the
meaning given to such terms in the Indenture.
Very truly yours,
- ------------------------------------------
[Trustee]
EXHIBIT "E"
NOTICE OF ALTERNATE CREDIT FACILITY
[Name and Address of Holder]
This Notice of Alternate Credit Facility is being sent to you as a Holder
of Atlantic American Corporation Taxable Variable Rate Demand Bonds, Series
_____ (the "Bonds"), issued pursuant to that certain Indenture of Trust dated as
of June 1, 1999, between The Bank of New York, as trustee (the "Trustee"), and
Atlantic American Corporation (the "Company"). You are hereby notified that:
1. The undersigned is the Trustee under the Indenture.
2. The Company has delivered notice pursuant to the Indenture that on
___________ (the "Alternate Credit Facility Effective Date"), the Company, with
the consent of the Remarketing Agent, intends to deliver to the Trustee an
Alternate Credit Facility with respect to the Bonds issued by
- ------------------------.
3. Under the terms of the Indenture, the Bonds are NOT subject to
mandatory tender for purchase on the proposed Alternate Credit Facility
Effective Date[, but Holders have the right to tender Bonds for purchase on
____[describe optional tender date(s) for applicable Rate Period]___________ in
accordance with the Indenture].
4. In the event that certain conditions set forth in the Indenture are not
satisfied, the Trustee shall not accept the Alternate Credit Facility.
5. [The anticipated rating(s) from _______________ will be ______ upon
issuance of the Alternate Credit Facility.] or [The Bonds will not be rated.]
6. All capitalized terms not otherwise defined herein shall have the
meaning given to such terms in the Indenture.
Very truly yours,
---------------------------------
(TRUSTEE)
REIMBURSEMENT AND SECURITY AGREEMENT
between
ATLANTIC AMERICAN CORPORATION
and
WACHOVIA BANK, N.A.
Dated as of June 1, 1999
Relating To $25,000,000
Atlantic American Corporation Taxable Variable Rate Demand Bonds,
Series 1999
REIMBURSEMENT AND SECURITY AGREEMENT
THIS REIMBURSEMENT AND SECURITY AGREEMENT, dated as of June 1, 1999, is
made and entered into by and between ATLANTIC AMERICAN CORPORATION, a Georgia
corporation (the "Company"), and WACHOVIA BANK, N.A., a national banking
association (the "Bank").
W I T N E S S E T H:
WHEREAS, the Company intends to issue its Taxable Variable Rate Demand
Bonds, Series 1999 in the aggregate principal amount of $25,000,000 (the
"Bonds") pursuant to an Indenture of Trust dated as of even date herewith (as
the same may be supplemented pursuant to its terms, the "Indenture"), between
the Issuer and The Bank of New York, as trustee (together with any successors in
trust, the "Trustee"); and
WHEREAS, to provide additional security for the payment of the Bonds, the
Company has requested that the Bank issue an irrevocable, direct-pay letter of
credit substantially in the form of Exhibit A attached hereto and by this
reference made a part hereof (as the same may be amended from time to time, the
"Letter of Credit"); and
WHEREAS, the Bank is willing to issue the Letter of Credit
subject to the following terms and conditions;
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Defined Terms. In addition to the words and terms defined
above, the following terms when used herein shall have the following respective
meanings:
"Affiliate" means, as to any Person, (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 or otherwise.
"Agreement" means this Reimbursement and Security Agreement, as the same
may be amended, modified, supplemented or restated from time to time.
"Alternate Credit Facility" has the meaning ascribed thereto
in Article I of the Indenture.
"Business Day" means any day on which the offices of the Bank at which
drawings on the Letter of Credit are made, the Trustee, the Paying Agent, the
Tender Agent, the Registrar (as each such term is defined in the Indenture) and
the Remarketing Agent are each open for business and on which The New York Stock
Exchange is not closed.
"Collateral" means all the collateral described in the
Pledge Agreement and all of the Pledged Bond Collateral.
"Credit Agreement" means the Credit Agreement to be entered into between
the Company and the Bank in the form of Exhibit C attached hereto, as amended,
restated, supplemented or otherwise modified from time to time. References to
the Credit Agreement, and to any Section thereof or definitions contained
therein, shall be determined without regard to whether the Credit Agreement is
ever executed by the Company or the Bank, and without giving effect to any
termination thereof and shall be effective regardless of whether Loans (as
defined therein) are outstanding thereunder or the Commitment (as defined
therein) is in effect thereunder.
"Date of Issuance" means the date on which the Bonds are
initially issued.
"Default" means any event that, with the passage of time or giving of
notice, or both, would constitute an Event of Default.
"Default Rate" means a per annum interest rate equal to the lesser of (i)
the Prime Rate plus two percent (2%) per annum, or (ii) the maximum rate
permitted by applicable law.
"Environmental Law" means any federal, state or local law, statute,
ordinance, rule, regulation, permit, license, approval, interpretation, order,
guidance or other legal requirement (including without limitation any subsequent
enactment, amendment or modification) relating to the protection of human health
or the environment, including, but not limited to, any requirement pertaining to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transportation, handling, reporting, licensing, permitting, investigation or
remediation of materials that are or may constitute a threat to human health or
the environment.
"Event of Default" means any of the events specified in
Section 8.7 hereof.
"Expiration Date" means the Initial Expiration Date or, if the stated term
of the Letter of Credit is extended as contemplated in Section 2.2(b) hereof,
the last day of each Successive Extension Period.
"Fee Percentage" means (i) on or prior to the Initial Expiration Date,
1.80% per annum, and (ii) after the Initial Expiration Date, either (A) 1.80%
per annum, or (B) the figure to which the Fee Percentage has been adjusted by
the Bank pursuant to Section 2.4(b) hereof.
"Generally Accepted Accounting Principles" means generally accepted
accounting principles, as recognized by the American Institute of Certified
Public Accountants, consistently applied and maintained on a consistent basis
for the Company and its Subsidiaries on a consolidated basis throughout the
period indicated and consistent with the financial practice of the Company and
its Subsidiaries after the date hereof; provided, however, that, in the event
that changes in Generally Accepted Accounting Principles shall be mandated by
the Financial Accounting Standards Board, or any similar accounting body of
comparable standing, or shall be recommended by the Company's certified public
accountants, to the extent that such changes would modify accounting terms used
in this Agreement or the interpretation or computation thereof, such changes
shall be followed in defining such accounting terms only from and after the date
this Agreement shall have been amended to the extent necessary to reflect any
such changes in the financial covenants and other terms and conditions of this
Agreement.
"Governmental Authority" means any nation or government, any state,
department, agency or other political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government, and any corporation or other
entity owned or controlled (through stock or capital ownership or otherwise) by
any of the foregoing.
"Hazardous Material" means any substance or material meeting any one or
more of the following criteria: (i) it is or contains a substance designated as
a hazardous waste, hazardous substance, pollutant, contaminant or toxic
substance under any Environmental Law; (ii) it is toxic, explosive, corrosive,
ignitable, infectious, radioactive, mutagenic or otherwise hazardous, (iii) its
presence requires investigation or remediation under an Environmental Law or
common law; (iv) it constitutes a danger, nuisance, trespass or health or safety
hazard to persons or property; and/or (v) it is or contains, without limiting
the foregoing, petroleum hydrocarbons.
"Initial Expiration Date" means August 5, 2000.
"Letter of Credit Amount" means, at any time, the aggregate of the Letter
of Credit - Principal Component and the Letter of Credit - Interest Component,
subject to reduction or reinstatement as provided in the Letter of Credit.
"Letter of Credit - Interest Component" has the meaning ascribed thereto
in Section 2.1 hereof.
"Letter of Credit - Principal Component" has the meaning ascribed thereto
in Section 2.1 hereof.
"Lien" means any interest in property securing an obligation owed to, or
claim by, a Person other than the owner of such property, whether such interest
arises by virtue of contract, statute or common law, including but not limited
to the lien or security interest arising from a mortgage, security agreement,
pledge, lease, conditional sale, consignment or bailment for security purposes
or from attachment, judgment or execution. The term "Lien" shall include any
easements, covenants, restrictions, conditions, encroachments, reservations,
rights-of-way, leases and other title exceptions and encumbrances affecting real
property. For the purpose of this Agreement, the Company shall be deemed to own,
subject to a Lien, any proceeds of a sale with recourse of accounts receivable,
any asset leased under any "sale and lease back" or similar arrangement and any
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, financing lease or other title
retention agreement relating to such asset.
"Material Adverse Effect" or "Material Adverse Change" means a material
adverse effect upon, or a material adverse change in, any of (i) the financial
condition, operations, business or properties of the Company and its
Subsidiaries, taken as a whole; (ii) the ability of the Company or any
Subsidiary to perform under this Agreement or any Related Document in any
material respect; (iii) the legality, validity or enforceability of this
Agreement or any Related Document; or (iv) the perfection or priority of the
Liens of the Bank granted under this Agreement or any Related Document or the
rights and remedies of the Bank under this Agreement or any Related Document
(other than a change resulting from any act or omission by the Bank).
"Moody's" means Moody's Investors Service, Inc. and any
successor thereto which is a nationally recognized rating agency.
"Notice of Adjustment" has the meaning ascribed thereto in
Section 2.4(b) hereof.
"Notice of Non-Extension" means a written notice delivered by the Bank to
the Trustee, the Company and the Rating Agency to the effect that the Letter of
Credit will not be extended for a Successive Extension Period.
"Official Statement" means collectively the Preliminary Official Statement
and the Official Statement with respect to the initial offering and sale of the
Bonds.
"Payment Date" means March 31, June 30, September 30 and December 31 of
each year, commencing September 30, 1999.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Pledge Agreement" means the Pledge Agreement of even date herewith
executed by the Company in favor of the Bank, as the same may be amended,
restated, supplemented or otherwise modified from time to time.
"Pledged Bond Collateral" has the meaning set forth in
Section 8.1 hereof.
"Pledged Bonds" means those Bonds which have been purchased from monies
drawn under the Letter of Credit pursuant to Section 2.6(g)(ii) of the Indenture
and not remarketed by the Remarketing Agent pursuant to Section 2.7 of the
Indenture.
"Prime Rate" means that rate of interest 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, which lends at rates
above and below the Prime Rate. For purposes of calculating any interest rate
hereunder which is based on the Prime Rate, such interest rate shall be adjusted
automatically on the effective date of any change in the Prime Rate.
"Purchase Agreement" means the Purchase Agreement as defined
in the Indenture.
"Purchase Price" has the same meaning given that term in Article I of the
Indenture.
"Rating Agency" means Moody's, Standard & Poor's and any other national
rating service acceptable to the Trustee, the Remarketing Agent, the Bank and
the Company that has a rating of the Bonds in effect at that time.
"Reimbursement Note" means the promissory note dated as of even date
herewith from the Company to the Bank evidencing all Tender Advances, if any, to
be made under this Agreement, which note shall be substantially in the form of
Exhibit B attached hereto and by this reference made a part hereof.
"Reimbursement Obligations" means any one or more of the obligations of
the Company to the Bank under this Agreement and the Reimbursement Note,
including but not limited to the obligations specified in Section 2.5 of this
Agreement.
"Related Documents" means the Bonds, the Indenture, the Pledge Agreement,
the Purchase Agreement, the Remarketing Agreement, the Reimbursement Note and
any other instrument, document, agreement or certificate relating thereto or
otherwise executed and delivered in connection with the issuance of the Bonds or
the Letter of Credit.
"Remarketing Agent" means Wachovia Securities, Inc. and its
successors appointed and serving in such capacity under the
Indenture.
"Remarketing Agreement" means the Remarketing Agreement as
defined in the Indenture.
"Standard & Poor's" means Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, and any successor thereto which is a nationally
recognized rating agency.
"Subsidiary" means any corporation, partnership, limited liability
company, association or other business entity of which the Company owns,
directly or indirectly, more than fifty percent (50%) of the voting securities
thereof.
"Successive Extension Period" has the meaning ascribed
thereto in Section 2.2(b) hereof.
"Tender Advance" means a loan by the Bank to the Company made pursuant to
Section 2.6 hereof and evidenced by the Reimbursement Note, the proceeds of
which are used to reimburse the Bank for the amount of a corresponding Tender
Drawing.
"Tender Agent" has the meaning ascribed thereto in Article I
of the Indenture.
"Tender Drawing" means a drawing under the Letter of Credit to pay the
portion of the Purchase Price of the Bonds allocable to principal.
"Termination Date" means the earliest of (i) the close of business on the
Expiration Date, (ii) the date on which the principal amount of and interest on
the Bonds shall have been paid in full, (iii) the close of business on the
second Business Day following conversion of the interest rate on the Bonds to a
Fixed Rate (as defined in the Indenture), (iv) the date on which the Bank honors
the draft drawn on the Letter of Credit pursuant to Section 3.8(a)(iii) of the
Indenture following the occurrence of an Event of Default (as defined in the
Indenture) and an acceleration, (v) the date on which the Bank honors the draft
drawn on the Letter of Credit to purchase the Bonds following receipt by the
Trustee of written notice from the Bank that an Event of Default has occurred
and is continuing and a written request from the Bank that the Bonds be required
to be tendered for purchase, (vi) the date the Letter of Credit is surrendered
to the Bank by the Trustee for cancellation following the acceptance by the
Trustee of an Alternate Credit Facility in accordance with Section 3.8(e) of the
Indenture or (vii) the date the Bank honors the final drawing available under
the Letter of Credit.
"Underwriter" means Wachovia Securities, Inc., in its capacity as
underwriter under the Purchase Agreement.
Section 1.2 Accounting Terms. Any accounting terms used in this Agreement
that are not specifically defined shall have the meanings customarily given them
in accordance with Generally Accepted Accounting Principles.
Section 1.3 Singular/Plural. Unless the context otherwise requires, words
in the singular include the plural and words in the plural include the singular.
Section 1.4 Other Terms. All other terms contained in this Agreement
shall, when the context so indicates, have the meanings provided for by the
Uniform Commercial Code of the State of Georgia to the extent the same are used
or defined therein.
ARTICLE II.
THE LETTER OF CREDIT
Section 2.1 Agreement to Issue Letter of Credit. Subject to the terms and
conditions hereinafter set forth, the Bank hereby agrees to issue the Letter of
Credit on the Date of Issuance. The Letter of Credit shall be issued in an
amount equal to the sum of (i) the aggregate principal amount of the Bonds (the
"Letter of Credit - Principal Component"), plus (ii) an amount equal to
fifty-two (52) days' interest on the Bonds, computed as though the Bonds bore
interest at the rate of twelve percent (12%) per annum, notwithstanding the
actual rate borne by the Bonds from time to time, based on a 360-day year for
the actual number of days elapsed (the "Letter of Credit - Interest Component").
Section 2.2 Term of the Letter of Credit; Extensions of the Stated Term;
Cancellation or Replacement of the Letter of Credit.
(a) The term of the Letter of Credit shall end on the Termination Date.
(b) The initial term of the Letter of Credit is stated to expire, subject
to earlier termination, on the Initial Expiration Date. The Initial Expiration
Date will be automatically extended, subject to earlier termination, for
successive additional periods of one calendar month each ("Successive Extension
Periods") until the fifth day of the thirteenth calendar month following the
calendar month during which the Company, the Trustee, and the Rating Agency
receive a Notice of Non-Extension from the Bank. The Bank's decision to deliver
a Notice of Non-Extension shall be made in its sole discretion and no course of
dealing or other circumstance shall be deemed to require the Bank to refrain
from delivering a Notice of Non-Extension. The Company shall provide prior
written notice to the Trustee of any amendment or modification of this Section
2.2(b).
(c) The Letter of Credit may be cancelled or replaced at any time without
penalty or premium at the request of the Company upon satisfaction of all
conditions specified in subsections (i), (ii) and (iii) hereof:
(i) the Company shall have given not less than thirty (30) days'
prior written notice to the Bank that the Company desires to cancel or
replace the Letter of Credit;
(ii) the Letter of Credit shall have been returned to the Bank for
cancellation; and
(iii)all Reimbursement Obligations (including all Letter of Credit
fees) shall have been paid in full.
Upon the cancellation or replacement of the Letter of Credit in accordance
with this Section, the Bank will within ten (10) days of the effective date of
such cancellation or replacement refund to the Company any unearned portion of
the letter of credit fee previously paid by the Company to the Bank pursuant to
Section 2.4(a).
Section 2.3 Reduction of Letter of Credit Amount; Restoration of Letter of
Credit Amount. Without limiting the provisions of the Letter of Credit, the
Letter of Credit Interest Component shall be reduced in an amount equal to any
draw to pay interest on the Bonds (including interest constituting a portion of
the Purchase Price of Bonds), but shall be reinstated automatically ten (10)
calendar days after drawing unless the Bank shall have notified the Trustee that
(i) the Bank has not been reimbursed for said drawing or (ii) that an Event of
Default has occurred and is continuing. In addition, and without limiting the
provisions of the Letter of Credit, the Letter of Credit - Principal Component
shall be reduced in an amount equal to any draw to pay principal of the Bonds
(including any Tender Drawing), but, with respect to any Tender Drawing, such
amount will be reinstated upon receipt by the Trustee of notice from the Bank
that the Tender Advance applicable thereto has been repaid.
Section 2.4 Fees Relating to Letter of Credit.
(a) The Company hereby agrees to pay to the Bank quarterly in advance
commencing on the Date of Issuance and thereafter on each Payment Date a letter
of credit fee in an amount equal to one-quarter (.25) of the product of the
Letter of Credit Amount in effect on the date of such payment (after giving
effect to any reduction in the Letter of Credit Amount resulting from a
redemption of Bonds on such date) multiplied by the Fee Percentage. The letter
of credit fee shall be computed on the basis of the actual number of days
elapsed over a 360-day year. If a Tender Advance is outstanding on any Payment
Date, the Company shall pay to the Bank an additional letter of credit fee on
any date when all or a portion of the principal amount of such Tender Advance is
repaid equal to the product of the principal amount of the Tender Advance being
repaid, multiplied by (1) the Fee Percentage, and (2) the number of days from
the date of such repayment until the next Payment Date divided by 360.
(b) The Bank shall have the right from time to time, by written notice
delivered to the Company not less than sixty (60) days prior to the Initial
Expiration Date or prior to each successive anniversary of the Initial
Expiration Date (each a "Notice of Adjustment"), to adjust the Fee Percentage.
Any such adjustment of the Fee Percentage shall become effective beginning on
the day following the Initial Expiration Date or the next succeeding anniversary
of the Initial Expiration Date, as the case may be, immediately succeeding the
delivery of the related Notice of Adjustment and shall continue to be effective
until a subsequent Notice of Adjustment is delivered in accordance with this
subsection.
(c) If, after the date hereof, any law or regulation shall be adopted or
any change in any law or regulation or in the interpretation thereof by any
Governmental Authority shall occur, which adoption or change shall either: (i)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against letters of credit issued by, or assets held by, or deposits
in or for the account of, the Bank, or (ii) impose on the Bank any other
condition relating, directly or indirectly, to this Agreement, the Reimbursement
Note or the Letter of Credit, and the result of any event referred to in clause
(i) or (ii) of this subsection shall be to increase the cost to the Bank of
issuing or maintaining the Letter of Credit, then the Company shall pay to the
Bank, upon demand therefor by the Bank, such additional amounts as the Bank
shall reasonably determine are necessary to compensate the Bank for such
increased cost, and which accrued within 90 days immediately prior to such
demand, together with interest on such amount calculated at the Default Rate
from the date of such demand until payment in full if such amount is not paid in
full within thirty (30) days after such demand. The Bank shall deliver to the
Company a certificate as to such increased cost incurred by the Bank as a result
of any event mentioned in this subsection, setting forth in reasonable detail
the basis therefor and the manner of calculation thereof, as soon as practicable
after the Bank becomes aware of such change, which certificate shall be
conclusive (absent manifest error) as to the amount set forth therein.
(d) If after the date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority, or
compliance by the Bank with any request or directive regarding capital adequacy
(whether or not having the force of law) of any Governmental Authority, has or
would have the effect of reducing the rate of return on the Bank's capital as a
consequence of its obligations under the Letter of Credit 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), then the Company shall pay to the Bank, upon demand therefor by the
Bank, such additional amounts as the Bank shall reasonably determine are
necessary to compensate the Bank for such reduced rate of return, and which
accrued within 90 days immediately prior to such demand, together with interest
on such amount calculated at the Default Rate from the date of such demand until
payment in full if such amount is not paid in full within thirty (30) days after
such demand. The Bank shall deliver to the Company a certificate as to such
reduced rate of return incurred by the Bank as a result of any event mentioned
in this subsection, setting forth in reasonable detail the basis therefor and
the manner of calculation thereof, as soon as practicable after the Bank becomes
aware of such change, which certificate shall be conclusive (absent manifest
error) as to the amount set forth therein. In determining such amount, the Bank
may use any reasonable averaging and attribution methods.
(e) The Company hereby agrees to pay to the Bank upon each drawing under
the Letter of Credit in accordance with its terms a drawing fee equal to $100.00
per drawing, unless the Bank or one of its Affiliates is serving as Paying Agent
pursuant to the terms of the Indenture on the date of such drawing. Such fee is
due and payable on the date each drawing under the Letter of Credit is made.
Section 2.5 Reimbursement of Drawings under Letter of
Credit.
(a) The Company hereby agrees to pay to the Bank immediately after and on
the same Business Day as any amount is drawn and paid under the Letter of Credit
a sum equal to the amount so drawn; provided, however, that if the Bank makes a
Tender Advance pursuant to Section 2.6 on account of a Tender Drawing, the
Company's obligation to reimburse the Bank for the amount of such Tender Drawing
shall be deemed satisfied by the Bank's application of the proceeds of such
Tender Advance.
(b) If the Company fails to pay to the Bank any amount when due under this
Agreement, interest shall accrue on any and all such amounts at the Default Rate
(in the case of interest on interest, to the maximum extent permitted by law),
commencing the day after such amounts first became due until payment in full,
and the Company hereby agrees to pay such accrued interest to the Bank upon
demand.
Section 2.6 Tender Advances, Prepayments, Interest
Computations and Notices.
(a) The Bank agrees to make Tender Advances to the Company for the purpose
of paying Tender Drawings arising from time to time (other than a Tender Drawing
upon conversion of the interest rate on the Bonds to a "Fixed Rate" as defined
in the Indenture) without further notice or request from the Company, subject to
the following conditions precedent: (i) the representations and warranties
contained in Article V hereof shall be true and correct on and as of the date of
such Tender Drawing as if made on and as of such date; and (ii) after giving
effect to the foregoing clause (i), no Default or Event of Default under this
Agreement shall have occurred and be continuing. Each Tender Advance shall be in
an amount equal to a corresponding Tender Drawing and the proceeds of such
Tender Advance shall be applied by the Bank automatically to the payment in full
of such Tender Drawing. The Company hereby agrees to pay to the Bank the
aggregate unpaid principal amount of all Tender Advances, together with all
accrued and unpaid interest thereon, on the Termination Date. The Tender
Advances shall be made against and evidenced by and repayable as provided in the
Reimbursement Note. The Company hereby authorizes the Bank to endorse on the
schedule attached to the Reimbursement Note (or any continuation thereof) the
amount of each Tender Advance made by the Bank to the Company hereunder, the
date such Tender Advance is made and the amount of each payment or prepayment of
principal of such Tender Advance received by the Bank; provided, however, that
any failure by the Bank to make any such endorsement shall not limit, modify or
affect the obligations of the Company hereunder or under the Reimbursement Note
in respect of such Tender Advances.
(b) The Company hereby promises to pay to the Bank interest at a rate per
annum equal to the Prime Rate plus two percent (2%) on the unpaid principal
amount of each Tender Advance for the period commencing on the date of such
Tender Advance to, but excluding, the date such Tender Advance is paid in full;
provided, however, that if the Company fails to pay any portion of the principal
of or accrued interest on any Tender Advance when due, interest on the unpaid
principal amount of each Tender Advance shall accrue and be payable in
accordance with the provisions of Section 2.5(b). Accrued interest on each
Tender Advance shall be payable (i) on each Payment Date, (ii) upon the payment
or prepayment thereof (but only on the principal so paid or prepaid), and (iii)
on the Termination Date.
(c) All Tender Advances may be prepaid: (i) at any time by the Company on
one (1) Business Day's notice stating the amount to be prepaid (which shall be
$5,000 or a whole number multiple thereof); and (ii) at any time on behalf of
the Company on one (1) Business Day's notice from the Company or the Remarketing
Agent directing the Bank to deliver (or, if the Bonds are then maintained in
book-entry form, authorize the release of) a specified principal amount of
Pledged Bonds held by or for the benefit of the Bank for remarketing pursuant to
Section 2.7 of the Indenture. Each such notice of prepayment shall be
irrevocable and shall specify the Tender Advance to be prepaid and the amount of
the Tender Advance to be prepaid and the date of prepayment (which date shall be
a Business Day). Upon payment to the Bank of the amount to be prepaid pursuant
to clause (i) or (ii) above, together with accrued interest, as set forth in
Section 2.6(b)(ii) hereof, to the date of such prepayment on the amount to be
prepaid, the outstanding obligations of the Company under the Reimbursement Note
shall be reduced by the amount of such prepayment, interest shall cease to
accrue on the amount prepaid, and the Bank shall release or authorize the
release from the pledge and security interest created under Section 8.1 hereof a
principal amount of Pledged Bonds equal to the amount of such prepayment. Such
Bonds shall be delivered to (or, if the Bonds are then maintained in book-entry
form, registered for the account of) the Company, in the event of a prepayment
pursuant to clause (i) above, or the Remarketing Agent pursuant to Section 2.7
of the Indenture, in the event of a prepayment pursuant to clause (ii) above, as
appropriate.
Section 2.7 Form and Place of Payments; Computation of Interest. All
payments by the Company to the Bank hereunder shall be made in lawful currency
of the United States and in immediately available funds at the Bank's office
located at 191 Peachtree Street N.E., Atlanta, Georgia 30303. Whenever any
payment hereunder shall be due on a day which is not a Business Day, the date
for payment thereof shall be extended to the next succeeding Business Day, and
any interest payable thereof shall be payable for such extended time at the
specified rate. All interest (including, without limitation, interest on Tender
Advances) and fees hereunder shall be computed on the basis of the actual number
of days elapsed over a 360-day year and shall include the first day but exclude
the last day of the relevant period.
ARTICLE III.
OBLIGATIONS ABSOLUTE
Section 3.1 Obligations Absolute, Unconditional and Irrevocable. The
obligations of the Company under this Agreement and the Related Documents shall
be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms hereof and thereof, under all circumstances
whatsoever, irrespective of any of the following circumstances:
(a) any lack of validity or enforceability of this Agreement, the Letter
of Credit, the Bonds or any of the other Related Documents;
(b) any amendment or waiver of or any consent to departure from this
Agreement, the Letter of Credit, the Bonds or all or any of the other Related
Documents (except to the extent such amendment or waiver expressly relieves the
Company of an obligation under this Agreement or the Related Documents);
(c) the existence of any claim, setoff, defense or other rights which the
Company or any other Person may have at any time against the Trustee, the
Underwriter, the Remarketing Agent, the Paying Agent, the Tender Agent, any
beneficiary or any transferee of the Letter of Credit (or any Person for whom
the Trustee, the Underwriter, the Remarketing Agent, the Paying Agent, the
Tender Agent, any such beneficiary or any such transferee may be acting), the
Bank, or any other Person, whether in connection with this Agreement, the Letter
of Credit, the Bonds or any of the other Related Documents or any unrelated
transaction;
(d) any statement or any other document presented under the Letter of
Credit proves to be forged, fraudulent or invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect whatsoever
(absent gross negligence or willful misconduct by the Bank);
(e) payment by the Bank under the Letter of Credit against presentation of
a draft or certificate that does not comply with the terms of the Letter of
Credit (absent gross negligence or willful misconduct by the Bank); and
(f) any other circumstance or happening whatsoever whether or not similar
to any of the foregoing.
Nothing contained herein shall act as a waiver of any rights or claims the
Company may have against the Bank or any other party listed in Section 3.1(c)
above.
ARTICLE IV.
CONDITIONS PRECEDENT TO ISSUANCE OF LETTER OF CREDIT
Section 4.1 Conditions Precedent to Issuance of Letter of Credit. Each of
the following is a condition precedent to the obligation of the Bank to issue
the Letter of Credit.
(a) On or before the Date of Issuance, the Bank shall have received the
following documents, instruments, opinions and certificates, each in form and
substance satisfactory to the Bank:
(i) the duly executed original Reimbursement Note, together with a
duly executed original counterpart of this Agreement and each of the other
Related Documents;
(ii) the opinion of counsel for the Company dated the Date of Issuance,
addressed to it, in substantially the form attached to the Purchase
Agreement as Exhibit "A";
(iii) a certificate, dated the Date of Issuance, signed by the Secretary
or an Assistant Secretary of the Company, certifying: (1) that attached
thereto is a copy of the articles or certificate of incorporation of the
Company and all amendments thereto certified as of a recent date by the
appropriate Governmental Authority in its jurisdiction of incorporation,
and that such organizational documents have not been amended since such
date; (2) that attached thereto is a true and complete copy of the bylaws
of the Company as in effect on the Date of Issuance; (3) that attached
thereto is a true and complete copy of resolutions adopted by the Board of
Directors of the Company, authorizing the execution, delivery and
performance of this Agreement and the Related Documents, as applicable;
and (4) as to the incumbency and genuineness of the signature of each
officer of the Company executing this Agreement or any of the Related
Documents;
(iv) a certificate of good standing for the Company from the State of
Georgia.
(v) a certificate, dated the Date of Issuance, signed by authorized
officers of the Company, certifying that there is no action, suit,
proceeding, inquiry or investigation known to the Company before or by any
court, public board or body pending or threatened against or affecting the
Company wherein an unfavorable decision, ruling or finding would
materially adversely affect (1) the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under this
Agreement or the Related Documents, or (2) the transactions contemplated
thereby;
(vi) a certificate, dated the Date of Issuance, signed by authorized
officials of the Company, certifying that (1) the representations and
warranties of the Company contained in this Agreement are true and
accurate in all material respects on and as of the Date of Issuance, (2)
that the Company is not in violation of any of the covenants contained in
this Agreement as of the Date of Issuance, (3) no Default or Event of
Default has occurred and is continuing or would result from the issuance
of the Letter of Credit, and (4) the Company has complied or is presently
in compliance with all agreements and satisfied all conditions on its part
to be observed or satisfied under the Related Documents at or prior to the
Date of Issuance;
(vii) certified copies of all approvals, authorizations, or consents of,
or notices to or registrations with, any Governmental Authority required
to be obtained, given or effected by the Company with respect to the Bonds
or any of the Related Documents; and
(viii) such other documents, instruments, opinions, certificates,
approvals or consents as the Bank may reasonably request.
(b) As of the Date of Issuance the Bank shall be satisfied that there has
been no Material Adverse Change, and that all information, representations and
materials submitted to the Bank by the Company in connection with the issuance
of the Letter of Credit are accurate and complete in all material respects.
(c) On or before the Date of Issuance:
(i) the Company and the Trustee shall have duly authorized and
executed the Indenture and the Indenture shall be in full force and
effect;
(ii) all conditions precedent to the issuance of the Bonds (and to
their sale under the Purchase Agreement as specified therein) shall have
occurred; and
(iii) the Company shall have duly executed, issued and delivered the
Bonds.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Bank as of the date of this
Agreement (and on the date of each Tender Advance, if any, made pursuant to this
Agreement) as follows:
Section 5.1 Representations and Warranties in the Credit Agreement. Each
of the representations and warranties of the Company set forth in Article IV of
the Credit Agreement is complete, true and correct as if made on and as of the
date this representation and warranty is made or deemed made; provided that (i)
references to the "Agreement" in Article IV of the Credit Agreement, and in any
definitions of capitalized terms used in such Article, shall be deemed to be
references to this Agreement, (ii) references to the "Loan Documents" in Article
IV of the Credit Agreement, and in any definitions of capitalized terms used in
such Article, shall be deemed to be references to the Related Documents, (iii)
references to the "Note" in Article IV of the Credit Agreement, and in any
definitions of capitalized terms used in such Article, shall be deemed to be
references to the Reimbursement Note, (iv) references to "Default" or "Event of
Default" in Article IV of the Credit Agreement, and in any definitions of
capitalized terms used in such Article, shall be deemed to be references to a
Default or an Event of Default under this Agreement, (v) references to "Closing
Date" in Article IV of the Credit Agreement, and in any definitions of
capitalized terms used in such Article (other than the definition of the
capitalized term "Subsidiary"), shall be deemed to be references to the Date of
Issuance, and (vi) the representation and warranty contained in Section 4.04(b)
of the Credit Agreement shall not be made or deemed to be made at any time prior
to the Closing Date (as such term is defined in the Credit Agreement).
Section 5.2 Official Statement. The information relating to the Company
contained or incorporated by reference in the Official Statement or otherwise
supplied by the Company in writing for inclusion therein does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
ARTICLE VI.
COVENANTS
Until the Letter of Credit has terminated and all Reimbursement
Obligations have been paid in full, the Company:
Section 6.1 Covenants in the Credit Agreement. Shall observe and perform
each of the covenants set forth in Article V of the Credit Agreement; provided
that (i) references to the "Agreement" in Article V of the Credit Agreement, and
in any definitions of capitalized terms used in such Article, shall be deemed to
be references to this Agreement, (ii) references to the "Loan Documents" in
Article V of the Credit Agreement, and in any definitions of capitalized terms
used in such Article, shall be deemed to be references to the Related Documents,
(iii) references to the "Note" in Article V of the Credit Agreement, and in any
definitions of capitalized terms used in such Article, shall be deemed to be
references to the Reimbursement Note, and (iv) references to "Default" or "Event
of Default" in Article V of the Credit Agreement, and in any definitions of
capitalized terms used in such Article, shall be deemed to be references to a
Default or an Event of Default under this Agreement.
Section 6.2 Modifications. Will not enter into or consent to any
alteration, modification, supplement or amendment to, or accept the benefit of
any waiver of any provision of, the Bonds or any Related Document.
ARTICLE VII.
EVENTS OF DEFAULT; REMEDIES
Section 7.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default hereunder:
(a) The Company shall fail to pay within 5 days following the date when
due any amount payable under this Agreement or under the Reimbursement Note;
(b) The Company shall fail to observe or perform (i) any covenant
incorporated by reference from the Credit Agreement pursuant to Section 6.1 of
this Agreement (and if a notice or knowledge requirement and/or cure period is
associated with such covenant under the Credit Agreement prior to any violation
thereof becoming an Event of Default under the Credit Agreement, such notice or
knowledge requirement shall have been met and/or such cure period shall have
expired, as applicable), or (ii) the covenant contained in Section 6.2 of this
Agreement;
(c) Any representation, warranty, certification or statement made or
deemed made by the Company in Article V of this Agreement, in any Related
Document, or in any certificate, financial statement or other document delivered
pursuant to this Agreement or any Related Document shall prove to have been
incorrect in any material respect when made or deemed made;
(d) An Event of Default under the Credit Agreement shall occur and be
continuing (provided that the reference to Material Adverse Effect contained in
Section 6.01(n) of the Credit Agreement shall be determined as if the reference
to "Loan Documents" in the definition of Material Adverse Effect contained in
the Credit Agreement was a reference to this Agreement or any Related Document);
or
(e) A default or event of default as defined in any Related Document shall
occur and be continuing.
Section 7.2 Remedies. Upon the occurrence and during the
continuance of any Event of Default:
(a) Acceleration of Indebtedness. The Bank may, in its sole discretion,
(i) declare all Tender Advances and all other amounts due hereunder and all
interest accrued thereon to be immediately due and payable, and upon such
declaration the same shall become and be immediately due and payable, without
presentment, protest or other notice of any kind, all of which are, except as
expressly provided herein, hereby waived by the Company, (ii) notify the Trustee
in writing that an Event of Default has occurred and is continuing and request
that (1) the Bonds be accelerated pursuant to Section 6.2 of the Indenture, or
(2) all of the Bonds be required to be tendered for purchase, and (iii) pursue
all remedies available to it by contract, at law or in equity, including but not
limited to its rights under the Pledge Agreement.
(b) Right of Set-off. The Bank may, and is hereby authorized by the
Company, at any time and from time to time, to the fullest extent permitted by
applicable laws, without advance notice to the Company (any such notice being
expressly waived by the Company), to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and any other indebtedness at any time owing by, the Bank or any of its
Affiliates, to or for the credit or the account of the Company against any or
all of the obligations of the Company under this Agreement now or hereafter
existing, whether or not such obligations have matured. The Bank agrees promptly
to notify the Company after any such set-off or application; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application.
(c) Rights and Remedies Cumulative; Non-Waiver; etc. The enumeration of
the Bank's rights and remedies set forth in this Agreement is not intended to be
exhaustive and the exercise by the Bank of any right or remedy shall not
preclude the exercise of any other rights or remedies, all of which shall be
cumulative, and shall be in addition to any other right or remedy given
hereunder, under any Related Documents or under any other agreement between the
Company and the Bank or that may now or hereafter exist in law or in equity or
by suit or otherwise. No delay or failure to take action on the part of the Bank
in exercising any right, power or privilege shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power or privilege
preclude other or further exercise thereof or the exercise of any other right,
power or privilege or shall be construed to be a waiver of any Event of Default.
No course of dealing between the Company and the Bank or their agents or
employees shall be effective to change, modify or discharge any provision of
this Agreement or any of the Related Documents or to constitute a waiver of any
Event of Default.
ARTICLE VIII.
PLEDGED BONDS
Section 8.1 The Pledge. The Company hereby pledges, assigns, hypothecates,
transfers, and delivers to the Bank all its right, title and interest to, and
hereby grants to the Bank a first lien on, and security interest in, all right,
title and interest of the Company in and to the following (hereinafter
collectively called the "Pledged Bond Collateral"):
(i) all Pledged Bonds;
(ii) all income, earnings, profits, interest, premium or other payments
in whatever form in respect of the Pledged Bonds; and
(iii) all proceeds (cash and non-cash) arising out of the sale,
exchange, collection, enforcement or other disposition of all or any
portion of the Pledged Bonds.
The Pledged Bond Collateral shall serve as security for the payment and
performance when due of the Reimbursement Obligations. The Company shall
deliver, or cause to be delivered, the Pledged Bonds to the Bank or to a pledge
agent designated by the Bank immediately upon receipt thereof or, in the case of
Pledged Bonds held under a book-entry system administered by The Depository
Trust Company ("DTC"), New York, New York (or any other clearing corporation),
the Company shall cause the Pledged Bonds to be reflected on the records of DTC
(or such other clearing corporation) as a position held by the Bank (or a pledge
agent acceptable to the Bank) as a DTC participant (or a participant in such
other clearing corporation) and the Bank (or its pledge agent) shall reflect on
its records that the Pledged Bonds are owned beneficially by the Company subject
to the pledge in favor of the Bank.
Section 8.2 Remedies Upon Default. If any Event of Default shall have
occurred and be continuing, the Bank, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon the Company or any other
person (all and each of which demands, advertisements and/or notices are hereby
expressly waived), may forthwith collect, receive, appropriate and realize upon
the Pledged Bond Collateral, or any part thereof, and/or may forthwith sell,
assign, give option or options to purchase, contract to sell or otherwise
dispose of and deliver said Pledged Bond Collateral, or any part thereof, in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or at any of the Bank's offices or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk,
with the right to the Bank upon any such sale or sales, public or private, to
purchase the whole or any part of said Pledged Bond Collateral so sold, free of
any right or equity of redemption in the Company, which right or equity is
hereby expressly waived and released. The Bank shall apply the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred therein
or incidental to the care, safekeeping or otherwise of any and all of the
Pledged Bond Collateral or in any way relating to the rights of the Bank
hereunder, including reasonable attorneys' fees and legal expenses, to the
payment in whole or in part of the Reimbursement Obligations in such order as
the Bank may elect, the Company remaining liable for any deficiency remaining
unpaid after such application, and only after so applying such net proceeds and
after the payment by the Bank of any other amount required by any provision of
law, including, without limitation, Section 9-504(1)(c) of the Uniform
Commercial Code, need the Bank account for the surplus, if any, to the Company.
The Company agrees that the Bank need not give more than ten (10) days' notice
of the time and place of any public sale or of the time after which a private
sale or other intended disposition is to take place and that such notice is
reasonable notification of such matters. No notification need be given to the
Company if it has signed after Default a statement renouncing or modifying any
right to notification of sale or other intended disposition. In addition to the
rights and remedies granted to the Bank in this Agreement and in any other
instrument or agreement securing, evidencing or relating to any of the
Reimbursement Obligations, the Bank shall have all the rights and remedies of a
secured party under the Uniform Commercial Code in effect in the State of
Georgia at that time.
If the Bank sells any of the Pledged Bond Collateral pursuant to this
Section 8.2, the Bank agrees that it will reinstate the Letter of Credit in an
amount sufficient to cover all principal and accrued interest on the Bonds so
sold for up to fifty-two (52) days at twelve percent (12%) per annum (computed
on the basis of a 360-day year).
Section 8.3 Valid Perfected First Lien. The Company covenants that the
pledge, assignment and delivery of the Pledged Bond Collateral hereunder will
create a valid, perfected, first priority security interest in all right, title
or interest of the Company in or to such Pledged Bond Collateral, and the
proceeds thereof, subject to no prior pledge, lien, mortgage, hypothecation,
security interest, charge, option or encumbrance or to any agreement purporting
to grant to any third party a security interest in the property or assets of the
Company which would include the Pledged Bond Collateral. The Company covenants
and agrees that it will defend the Bank's right, title and security interest in
and to the Pledged Bond Collateral and the proceeds thereof against the claims
and demands of all persons whomsoever.
Section 8.4 Release of Pledged Bonds. Pledged Bonds shall be released from
the security interest created hereunder upon satisfaction of the Reimbursement
Obligations with respect to such Pledged Bonds as provided in Section 2.8 of the
Indenture.
ARTICLE IX.
MISCELLANEOUS
Section 9.1 Costs, Expenses and Taxes. The Company agrees to pay on demand
all reasonable out-of-pocket expenses of the Bank, including reasonable fees and
disbursements of counsel, in connection with: (i) the preparation, execution,
delivery, and filing, if required, of this Agreement, the Letter of Credit, the
Related Documents and otherwise in connection with the issuance of the Bonds,
(ii) any amendments, supplements, consents or waivers hereto or thereto, and
(iii) the enforcement of this Agreement, the Bonds, the Letter of Credit and the
Related Documents and any other documents which may be delivered in connection
herewith or therewith. In addition, the Company shall pay any and all stamp and
other taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement and the Related
Documents and agrees to save the Bank harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees. It is the intention of the parties hereto that the
Company shall pay amounts referred to in this Section directly. In the event the
Bank pays any of the amounts referred to in this Section directly, the Company
will reimburse the Bank for such advances and interest on such advance shall
accrue, if not reimbursed within 10 days of notice from the Bank, until
reimbursed at the Default Rate.
Section 9.2 Indemnification. From and at all times after the date of this
Agreement, and in addition to all of the Bank's other rights and remedies
against the Company, the Company agrees to indemnify, defend and hold harmless
the Bank, and each director, officer, employee, agent, successor, assign and
affiliate of the Bank from and against the following (collectively "Costs"): any
and all claims (whether valid or not), losses, damages, actions, suits,
inquiries, investigations, administrative proceedings, judgments, liens,
liabilities, penalties, fines, amounts paid in settlement, requirements of
Governmental Authorities, punitive damages, interest, damages to natural
resources and other costs and expenses of any kind or nature whatsoever
(including without limitation reasonable attorneys' fees and expenses actually
incurred, court costs and fees, and consultant and expert witness fees and
expenses) arising in any manner, directly or indirectly, out of or by reason of
(a) the negotiation, preparation, execution or performance of this Agreement or
the Related Documents, or any transaction contemplated herein or therein,
whether or not the Bank or any other party protected under the indemnity
agreement under this paragraph is a party to any action, proceeding or suit in
question, or the target of any inquiry or investigation in question; provided,
however, that no indemnified party shall have the right to be indemnified
hereunder for any liability resulting from the willful misconduct or gross
negligence of such indemnified party (as finally determined by a court of
competent jurisdiction), (b) any breach of any of the covenants, warranties or
representations of the Company hereunder or under any Related Document, (c) any
violation or alleged violation of any Environmental Law, federal or state
securities law, common law, equitable requirement or other legal requirement by
the Company or with respect to any property owned, leased or operated by the
Company (in the past, currently or in the future), (d) by reason of any untrue
statement or alleged untrue statement of any material fact contained or
incorporated by reference in the Official Statement, or in any supplement or
amendment thereto, or the omission to state therein a material fact necessary to
make such statements, in the light of the circumstances under which they are or
were made, not misleading (other than statements or information supplied by the
Bank for incorporation in the Official Statement); (e) by reason of or in
connection with the execution and delivery or transfer of, or payment or failure
to pay under, the Letter of Credit (unless such Cost was caused by the willful
misconduct or gross negligence of the Bank); and/or (f) any presence,
generation, treatment, storage, disposal, transport, movement, release,
suspected release or threatened release of any Hazardous Material on, in, to or
from any property (or any part thereof including without limitation the soil and
groundwater thereon and thereunder) owned, leased or operated by the Company (in
the past, currently or in the future).
All of the foregoing Costs and obligations of the Company shall be
additional obligations hereunder. In the event the Bank or any other indemnified
party shall suffer or incur any Costs, the Company shall pay to the indemnified
party the total of all such Costs suffered or incurred by the party, and fulfill
its other obligations hereunder, on demand.
Without limiting the foregoing, the Company shall be obligated to pay, on
demand, the costs of any investigation, monitoring, assessment, enforcement,
removal, remediation, restoration or other response or corrective action
undertaken by the Bank or any other indemnified party, or their respective
agents, with respect to any property owned, leased or operated by the Company.
It is expressly understood and agreed that the obligations of the Company
under this Section shall not be limited to any extent by the term of the Letter
of Credit or this Agreement and shall remain in full force and effect unless and
until expressly terminated by Bank in writing.
Section 9.3 Notices. All demands, notices, approvals, consents, requests,
and other communications hereunder shall be in writing and shall be deemed to
have been given when the writing is delivered, if given or delivered by hand,
overnight delivery service or facsimile transmitter (with confirmed receipt), or
five (5) days after being mailed, if mailed by first class, registered or
certified mail, postage prepaid, to the address or telecopy number set forth
below:
Party Address
Company Atlantic American Corporation
4370 Peachtree Street N.E.
Atlanta, Georgia 30319-3000
Attention:Hilton H. Howell, Jr.
President and Chief Executive
Officer
Telephone:(404) 266-5505
Telecopy: (404) 231-2123
with a copy to: Mark L. Hanson, Esq.
Jones, Day, Reavis & Pogue
3500 SunTrust Plaza
303 Peachtree Street
Atlanta, Georgia 30308
Telephone:(404) 521-3939
Telecopy: (404) 581-8330
Bank Wachovia Bank, N.A.
191 Peachtree Street N.E.
Atlanta, Georgia 30303-1757
Attention:William J. Darby
Telephone:(404) 332-1371
Telecopy: (404) 332-5016
with copies to:Wachovia Bank, N.A.
International Operations
Standby Letters of Credit, NC-30034
401 Linden Street
Winston-Salem, North Carolina 27101
Wachovia Securities, Inc.
100 North Main Street
Winston-Salem, North Carolina 27101
Attention: Fixed Income Sales and
Trading/Money Market Desk
Trustee The Bank of New York
100 Ashford Center North, Suite 520
Atlanta, Georgia 30338
Attention:Corporate Trust Department
Telephone:(770) 698-5190
Facsimile:(770) 698-5195
The Company, the Bank or the Trustee may, by notice given hereunder, designate
any further or different addresses or telecopy numbers to which subsequent
demands, notices, approvals, consents, requests or other communications shall be
sent or persons to whose attention the same shall be directed.
Section 9.4 Payment from Bank's Funds. The Bank hereby covenants and
agrees that any payments under the Letter of Credit will be made with the Bank's
own funds and not with funds of the Issuer or the Company.
Section 9.5 Limited Liability of the Bank. As between the Company and the
Bank, the Company agrees to assume, absent gross negligence or willful
misconduct by the Bank, all risk of the acts or omissions of the Trustee (and
any transferee of the Letter of Credit) with respect to its use of the Letter of
Credit. Neither the Bank nor any of its officers or directors shall be liable or
responsible for: (a) the use which may be made of the Letter of Credit or for
any acts or omissions of the Trustee (or transferee) and any beneficiary in
connection therewith; (b) the validity, or genuineness of documents, or of any
endorsement(s) thereon, accepted by the Bank in good faith, even if such
documents should in fact prove to be in any or all respects invalid, fraudulent
or forged; or (c) any other circumstances whatsoever in making or failing to
make payment under the Letter of Credit, except that the Company shall have a
claim against the Bank, and the Bank shall be liable to the Company, to the
extent, but only to the extent, of any direct, as opposed to consequential,
damages suffered by the Company which were caused by: (y) the Bank's willful
misconduct or gross negligence in determining whether documents presented under
the Letter of Credit comply with the terms thereof; or (z) the Bank's willful
failure to pay under the Letter of Credit after the presentation to it by the
Trustee (or a successor trustee under the Indenture to whom the Letter of Credit
has been transferred in accordance with its terms) of a draft and certificate
strictly complying with the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, the Bank may in good faith
accept documents that appear on their face to be in order without responsibility
for further investigation.
Section 9.6 Continuing Obligations; Revival of Obligations. The
obligations of the Company under this Agreement shall continue until all amounts
due and owing to the Bank hereunder as of the Termination Date shall have been
paid in full; provided, however, that the obligations of the Company pursuant to
Sections 9.1 and 9.2 hereof shall survive the termination of this Agreement. The
Company further agrees that to the extent the Company makes a payment to the
Bank, which payment or any part thereof is subsequently invalidated, declared to
be fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver, or any other party under any bankruptcy, insolvency or other similar
state or federal statute, common law or principles of equity, then, to the
extent of such repayment by the Bank, the Reimbursement Obligations or part
thereof intended to be satisfied by such payment shall be revived and continued
in full force and effect as if such payment had not been received by the Bank.
Section 9.7 Confirmation of Lien. The Company hereby grants to the Bank,
to secure payment by the Company of sums due hereunder, a lien on moneys or
instruments (at such times as they become payable to the Company under the
Indenture) which the Company has an interest in or title to pursuant to Sections
4.1, 4.2 or 4.4 of the Indenture, now or hereafter held in the Bond Fund,
Initial Fund or Bond Purchase Fund (as such terms are defined in the Indenture)
or otherwise by the Trustee under any provision of the Indenture and in the
right of the Company to receive any such moneys or instruments. The Bank hereby
confirms that such lien is and shall be junior and subordinate to the lien on
such moneys in favor of the holders of the Bonds and the Trustee.
Section 9.8 Notice of Certain Controlling Acquisitions. The Bank shall
provide or cause to be provided written notice to the Trustee, the Remarketing
Agent, and the Holders (as defined in the Indenture) thirty days prior, where
reasonable, and not more than thirty days subsequent to the consummation of any
transaction that would result in the Company controlling or being controlled by
the Bank. The Bank acknowledges that the foregoing sentence supercedes any
exemptions from the continuing disclosure requirement pursuant to Rule
15c2-12(b)(5) of the Securities and Exchange Act of 1934.
Section 9.9 Controlling Law. This Agreement has been executed, delivered
and accepted at, and shall be deemed to have been made in, the State of Georgia
and shall be interpreted in accordance with the internal laws (as opposed to
conflicts of laws provisions) of the State of Georgia.
Section 9.10 Successors and Assigns. This Agreement shall be binding upon
the Company, its successors and assigns and all rights against the Company
arising under this Agreement shall be for the sole benefit of the Bank.
Section 9.11 Assignment and Sale. Without the prior written consent of the
Bank, the Company may not sell, assign or transfer this Agreement or any of the
Related Documents or any portion hereof or thereof, including without limitation
the Company's rights, title, interests, remedies, powers, and duties hereunder
or thereunder.
Section 9.12 Amendment. This Agreement can be amended or modified only by
an instrument in writing signed by the parties. The Company must provide the
Trustee with written notice of any amendment or modification of this Agreement,
including but not limited to an amendment or modification of Section 2.2(b).
Section 9.13 Severability. In the event that any provision of this
Agreement shall be determined to be invalid or unenforceable by any court of
competent jurisdiction, such determination shall not invalidate or render
unenforceable any other provision hereof.
Section 9.14 Entire Agreement. THIS AGREEMENT AND THE DOCUMENTS AND
INSTRUMENTS EXECUTED AND DELIVERED CONTEMPORANEOUSLY HEREWITH EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND SUPERSEDE ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, VERBAL OR WRITTEN, RELATING TO
THE SUBJECT MATTER HEREOF. THIS AGREEMENT AND THE DOCUMENTS AND INSTRUMENTS
EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
Section 9.15 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which, together
shall constitute but one and the same instrument.
Section 9.16 Captions. The captions to the various sections and
subsections of this Agreement have been inserted for convenience only and shall
not limit or affect any of the terms hereof.
[The remainder of this page is left blank intentionally.]
IN WITNESS WHEREOF, the parties hereto have caused this Reimbursement and
Security Agreement to be duly executed and delivered by their respective duly
authorized officers as of the date first above written.
ATLANTIC AMERICAN CORPORATION
By:
___________________________________(SEAL)
Name:___________________________________
Title:
-----------------------------------
WACHOVIA BANK, N.A.
By:
___________________________________(SEAL)
Name:___________________________________
Title:
-----------------------------------
(Reimbursement and Security Agreement)
EXHIBIT A
IRREVOCABLE LETTER OF CREDIT
No. LC ___-______
June 24, 1999
The Bank of New York, as Trustee
100 Ashford Center North, Suite 520
Atlanta, Georgia 30338
Attention: Corporate Trust Department
Ladies and Gentlemen:
1. We hereby establish, at the request and for the account of Atlantic
American Corporation, a Georgia corporation (the "Company"), in your favor, as
Trustee, for the benefit of the holders of the Bonds (as hereinafter defined),
under the Indenture of Trust dated as of June 1, 1999 (the "Indenture") between
the Company and the Trustee, pursuant to which $25,000,000 in aggregate
principal amount of the Company's Taxable Variable Rate Demand Bonds, Series
1999 (the "Bonds") are being issued, our Irrevocable Letter of Credit No. LC
___-______ (the "Letter of Credit"), in the amount of $25,433,334 (as more fully
described below), effective immediately and expiring on the earliest to occur of
any of the following (the "Termination Date"): (i) the close of business on July
5, 2000, or, if such date is extended pursuant to Section 2.2(b) of the
Reimbursement and Security Agreement dated as of June 1, 1999 between the
Company and us (the "Reimbursement Agreement"), the date as so extended, (ii)
the date on which the principal amount of and interest on the Bonds shall have
been paid in full, (iii) the close of business on the second Business Day
following conversion of the interest rate on the Bonds to a Fixed Rate (as
defined in the Indenture), (iv) the date on which we honor the draft drawn
hereunder pursuant to Section 3.8(a)(iii) of the Indenture following the
occurrence of an Event of Default under the Indenture and an acceleration, (v)
the date on which we honor a draft drawn hereunder to purchase the Bonds
following your receipt of written notice from us that an Event of Default under
the Reimbursement Agreement has occurred and is continuing and a written request
from us that the Bonds be required to be tendered for purchase, (vi) the date
this Letter of Credit is surrendered to us by you for cancellation following the
acceptance by you of an Alternate Credit Facility (as defined in the Indenture)
in accordance with Section 3.8(e) of the Indenture, or (vii) the date we honor
the final drawing available hereunder.
2. We hereby irrevocably authorize you to draw on us in accordance with
the terms and conditions, and subject to reductions in amount and reinstatement,
as hereinafter set forth, by your drafts, an aggregate amount not exceeding
$25,433,334 (the "Letter of Credit Amount"), of which an aggregate amount not
exceeding $25,000,000 may be drawn upon with respect to payment of principal of
the Bonds or that portion of the purchase price of Bonds tendered for purchase
("Purchase Price") corresponding to principal (the "Letter of Credit
Amount-Principal Component"), and of which an aggregate amount not exceeding
$433,334 (but no more than an amount equal to accrued interest on the Bonds for
the immediately preceding fifty-two (52) days, computed as though the Bonds bore
interest at the rate of twelve percent (12%) per annum notwithstanding the
actual rate borne by the Bonds from time to time, based on a 360-day year) may
be drawn upon with respect to payment of interest on the Bonds or that portion
of the Purchase Price of Bonds corresponding to interest (the "Letter of Credit
Amount-Interest Component"). The foregoing maximum amounts comprising the Letter
of Credit Amount-Principal Component and the Letter of Credit Amount-Interest
Component will be reduced upon redemption of any Bonds as provided in Section
2.18 of the Indenture or upon payment of Bonds at maturity or upon defeasance of
any Bonds pursuant to Article V of the Indenture, and in such circumstances you
shall deliver to us a certificate in the form of Exhibit 5 attached hereto.
3. Only you, as Trustee may make drawings under this Letter of Credit.
Upon the payment to you or your account of the amount specified in a draft drawn
hereunder, we shall be fully discharged of our obligation under this Letter of
Credit with respect to such draft, and we shall not thereafter be obligated to
make any further payments under this Letter of Credit in respect of such draft
to you or to any other person who may have made to you or who makes to you a
demand for purchase of, or payment of principal of or interest on any Bond.
Bonds that are registered in the name of, or held by or for the account of the
Company or are held or required to be held for our benefit pursuant to Section
2.8(b) of the Indenture ("Pledged Bonds") shall not be entitled to any benefit
of this Letter of Credit.
4. The Letter of Credit Amount-Principal Component and the Letter of
Credit Amount-Interest Component, as the case may be, shall be reduced
immediately following our honoring any draft drawn hereunder to pay principal
of, or interest on, the Bonds, to pay the interest portion of the Purchase Price
of the Bonds, or to pay the principal portion of the Purchase Price of the Bonds
(a "Tender Drawing"), in each case by an amount equal to the amount of such
draft.
5. On the tenth calendar day following each drawing hereunder to pay
interest on the Bonds (including interest constituting a portion of the Purchase
Price of Bonds), the amount so drawn shall be reinstated to the Letter of Credit
Amount-Interest Component unless you shall have theretofore received written
notice from us to the effect that (i) we have not been reimbursed in full by the
Company for the amount of such drawing, together with interest, if any, owing
thereon pursuant to the Reimbursement Agreement and the amount of such drawing
will not be reinstated or (ii) an Event of Default under the Reimbursement
Agreement between the Company and us has occurred and is then continuing and a
written request that (1) the Bonds be accelerated pursuant to Section 6.2 of the
Indenture, or (2) all of the Bonds be required to be tendered for purchase.
6. Immediately upon our written notice to you that we have been reimbursed
for any loan or advance made by us to the Company, the proceeds of which loan or
advance were used by the Company to reimburse us for a Tender Drawing hereunder,
the amount so drawn shall be restored, as of the date of the Tender Drawing, to
the Letter of Credit Amount-Principal Component.
7. Subject to the provisions of Paragraphs 5 and 6 hereof, drawings
hereunder honored by us shall not, in the aggregate, exceed the Letter of Credit
Amount, as reduced from time to time pursuant to the terms hereof.
8. Funds under this Letter of Credit are available to you against (a) your
draft payable on the date such draft is drawn on us, stating on its face: "Drawn
under Wachovia Bank, N.A. Irrevocable Letter of Credit No. LC ___-______"; (b)
if the drawing is being made with respect to payment of principal of the Bonds,
a certificate signed by you in the form of Exhibit 1 attached hereto
appropriately completed; (c) if the drawing is being made with respect to
payment of interest on the Bonds, a certificate signed by you in the form of
Exhibit 2 attached hereto appropriately completed; (d) if the drawing is a
Tender Drawing, a certificate signed by you in the form of Exhibit 3 attached
hereto appropriately completed; and (e) simultaneously with any Tender Drawing
being made hereunder, a certificate signed by you in the form of Exhibit 4
attached hereto appropriately completed regarding the portion of the Purchase
Price of the Bonds corresponding to interest. Such draft(s) and certificate(s)
shall be dated the date of presentation, which shall be made at our office
located at 401 Linden Street, Winston-Salem, North Carolina 27101, Attention:
International Operations, Standby Letters of Credit, NC-30034 (or any other
office which may be designated by us by written notice delivered to you). If we
receive your draft(s) and certificate(s) at such office, all in strict
conformity with the terms and conditions of this Letter of Credit, at or prior
to 11:00 a.m., Winston-Salem, North Carolina time, on a Business Day on or prior
to the Termination Date, we will honor the same no later than 1:00 p.m.,
Winston-Salem, North Carolina time, on the same Business Day in accordance with
your payment instructions. Presentation of drawings to pay the Purchase Price of
Bonds also may be made by a telecopy transmission of the documents described in
the applicable subparagraphs (a) through (e) above to Telecopier No. (336)
735-0950 (with transmission confirmed by call to Telephone No. (800) 522-9487)
or such other telecopier and telephone numbers that we hereafter designate by
written notice delivered to you. If we receive your drafts and certificates (as
referenced in subparagraphs (a) through (e) above) after 11:00 a.m.,
Winston-Salem, North Carolina time, on a Business Day, on or prior to the
Termination Date, we will honor the same no later than 11:00 a.m.,
Winston-Salem, North Carolina time, on the next succeeding Business Day. Advance
notification of drawings to pay principal of and interest on the Bonds under
this Letter of Credit also may be made by a telecopy transmission of the
documents described in the applicable subparagraphs (a) through (e) above not
less than one Business Day prior to the date of presentation to the telecopier
number set forth above (with transmission confirmed by call to the telephone
number set forth above) or such other telecopier and telephone numbers that we
hereafter designate by written notice delivered to you. If presentation of a
drawing to pay Purchase Price of Bonds or an advance notification of a drawing
to pay principal of and interest on the Bonds is made by telecopier, it must
contain an additional certification by you that the originals of the draft and
the certificate on your letterhead manually signed by one of your officers will
be concurrently forwarded to us by express courier to reach us by the next
Business Day or the date of payment, as the case may be. Payment under this
Letter of Credit will be made out of our funds and, if requested by you, will be
made by wire transfer of federal funds to your account with any bank which is a
member of the Federal Reserve System, or by deposit of immediately available
funds into a designated account that you maintain with us.
9. As used herein, the term "Business Day" shall mean any day on which our
office at which drawings on this Letter of Credit are made and the offices of
the Trustee, the Paying Agent, the Tender Agent, the Registrar and the
Remarketing Agent (as each term is defined in the Indenture) are each open for
business and on which The New York Stock Exchange is not closed.
10. Communications with respect to this Letter of Credit shall be in
writing and shall be addressed to us at our office address set forth in or
designated pursuant to Paragraph 8 above and shall specifically refer to the
number of this Letter of Credit.
11. This Letter of Credit is transferable in its entirety (but not in
part) to any transferee who has succeeded you as Trustee under the Indenture and
may be successively so transferred. Transfer of the available balance under this
Letter of Credit to such transferee shall be effected by the presentation to us
of this Letter of Credit accompanied by a certificate substantially in the form
of Exhibit 6 attached hereto and payment of our customary transfer fee.
12. This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds, the Indenture and the Reimbursement
Agreement), except the forms of the certificates and the drafts referred to
herein, and any such reference (except as aforesaid) shall not be deemed to
incorporate herein, any document, instrument or agreement except for such
certificates or drafts.
13. This Letter of Credit shall be governed by the Uniform Customs and
Practice for Documentary Credits, 1993 Revision, International Chamber of
Commerce Publication No. 500 or by subsequent Uniform Customs and Practice for
Documentary Credits fixed by subsequent Congresses of the International Chamber
of Commerce (the "UCP") and, to the extent not inconsistent with the UCP, the
laws of the State of Georgia.
Very truly yours,
WACHOVIA BANK, N.A.
By:
-----------------------------------------
Authorized Officer
EXHIBIT 1
CERTIFICATE FOR THE PAYMENT OF PRINCIPAL OF THE
ATLANTIC AMERICAN CORPORATION
TAXABLE VARIABLE RATE DEMAND BONDS, SERIES 1999
The undersigned, a duly authorized officer of The Bank of New York (the
"Trustee"), hereby certifies as follows to Wachovia Bank, N.A. (the "Bank") with
reference to Irrevocable Letter of Credit No. LC ___-______ (the "Letter of
Credit") issued by the Bank in favor of the Trustee. Any capitalized term used
herein and not defined shall have its respective meaning as set forth in the
Letter of Credit.
(1) The Trustee is the Trustee under the Indenture.
(2) The Trustee is making a drawing under the Letter of Credit with
respect to the payment of principal of the Bonds in accordance with
Section 3.8 of the Indenture.
(3) The amount of principal of the Bonds which is due and payable (or
which has been declared to be due and payable) is $____________, and
the amount of the draft accompanying this Certificate does not exceed
such amount of principal.
(4) The amount of the draft accompanying this Certificate does not
include any amount in respect of the principal amount of any Pledged
Bonds, does not exceed the amount available to be drawn under the
Letter of Credit in respect of payment of principal of the Bonds and
was computed in accordance with the terms and conditions of the Bonds
and the Indenture.
[(5) The draft accompanying this certificate is the final draft to be
drawn under the Letter of Credit with respect to principal and, upon
the honoring of such draft, the Letter of Credit will expire in
accordance with its terms and the Trustee will surrender the Letter
of Credit to the Bank.]*
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _______ day of _______________, _____.
THE BANK OF NEW YORK,
as Trustee
By:
-----------------------------------------
[Name and Title]
* To be used only upon stated or accelerated maturity or optional or mandatory
redemption of the Bonds as a whole.
EXHIBIT 2
CERTIFICATE FOR THE PAYMENT OF INTEREST ON THE
ATLANTIC AMERICAN CORPORATION
TAXABLE VARIABLE RATE DEMAND BONDS, SERIES 1999
The undersigned, a duly authorized officer of The Bank of New York (the
"Trustee"), hereby certifies as follows to Wachovia Bank, N.A. (the "Bank") with
reference to Irrevocable Letter of Credit No. LC ___-______ (the "Letter of
Credit") issued by the Bank in favor of the Trustee. Any capitalized term used
herein and not defined shall have its respective meaning as set forth in the
Letter of Credit.
(1) The Trustee is the Trustee under the Indenture.
(2) The Trustee is making a drawing under the Letter of Credit with
respect to the payment of interest accrued on the Bonds in accordance
with Section 3.8 of the Indenture.
(3) The amount of interest on the Bonds which is due and payable (or
which has been declared to be due and payable) is $____________, and
the amount of the draft accompanying this Certificate does not exceed
such amount of interest.
(4) The amount of the draft accompanying this Certificate does not
include any amount in respect of the interest on any Pledged Bonds,
does not exceed the amount available to be drawn under the Letter of
Credit in respect of payment of interest accrued on the Bonds, and
was computed in accordance with the terms and conditions of the Bonds
and the Indenture.
[(5) The draft accompanying this certificate is the final draft to be
drawn under the Letter of Credit with respect to interest and, upon
the honoring of such draft, the Letter of Credit will expire in
accordance with its terms and the Trustee will surrender the Letter
of Credit to the Bank.]*
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ______ day of _______________.
THE BANK OF NEW YORK,
as Trustee
By:
-----------------------------------------
[Name and Title]
- --------------
* To be used only upon stated or accelerated maturity or optional or mandatory
redemption of the Bonds as a whole.
EXHIBIT 3
CERTIFICATE FOR THE PAYMENT OF THAT PORTION OF
THE PURCHASE PRICE OF BONDS CORRESPONDING TO
PRINCIPAL OF THE ATLANTIC AMERICAN CORPORATION
TAXABLE VARIABLE RATE DEMAND BONDS, SERIES 1999
The undersigned, a duly authorized officer of The Bank of New York (the
"Trustee"), hereby certifies as follows to Wachovia Bank, N.A. (the "Bank") with
reference to Irrevocable Letter of Credit No. LC ___-______ (the "Letter of
Credit") issued by the Bank in favor of the Trustee. Any capitalized term used
herein and not defined shall have its respective meaning as set forth in the
Letter of Credit.
(1) The Trustee is the Trustee under the Indenture.
(2) The Trustee is making a Tender Drawing under the Letter of Credit
pursuant to Section 3.8(a)(ii) of the Indenture with respect to the
purchase of Bonds corresponding to the principal of Bonds tendered or
deemed tendered pursuant to Section 2.6 of the Indenture and not
remarketed by the Remarketing Agent on or before the date such Bonds
are to be purchased.
(3) The amount of Purchase Price corresponding to principal of such Bonds
less the amount of monies on deposit in the Bond Purchase Fund and
available for the purchase of such Bonds as contemplated in Section
2.6(g)(i) of the Indenture is $____________ and the amount of the
draft accompanying this Certificate does not exceed such amount of
principal.
(4) The amount of the draft accompanying this Certificate does not exceed
the amount available to be drawn under the Letter of Credit in
respect of the Purchase Price corresponding to principal of such
Bonds and was computed in accordance with the terms and conditions of
the Bonds and the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ______ day of _______________.
THE BANK OF NEW YORK,
as Trustee
By:
------------------------------------------
[Name and Title]
EXHIBIT 4
CERTIFICATE FOR THE PAYMENT OF THAT PORTION OF
THE PURCHASE PRICE OF BONDS CORRESPONDING TO
INTEREST ON THE ATLANTIC AMERICAN CORPORATION
TAXABLE VARIATE RATE DEMAND BONDS, SERIES 1999
The undersigned, a duly authorized officer of The Bank of New York (the
"Trustee"), hereby certifies as follows to Wachovia Bank, N.A. (the "Bank") with
reference to Irrevocable Letter of Credit No. LC ___-______ (the "Letter of
Credit") issued by the Bank in favor of the Trustee. Any capitalized term used
herein and not defined shall have its respective meaning as set forth in the
Letter of Credit.
(1) The Trustee is the Trustee under the Indenture.
(2) The Trustee is making a Tender Drawing under the Letter of Credit
pursuant to Section 3.8(a)(ii) of the Indenture simultaneously
herewith with respect to the purchase of Bonds corresponding to
principal on Bonds tendered or deemed tendered pursuant to Section
2.6 of the Indenture and not remarketed by the Remarketing Agent on
or before the date such Bonds are to be purchased.
(3) A portion of the Purchase Price of Bonds corresponding to interest on
such Bonds less the amount of monies on deposit in the Bond Purchase
Fund and available for the purchase of such Bonds as contemplated in
Section 2.6(g)(i) of the Indenture is $____________ and the amount of
the draft accompanying this Certificate does not exceed such amount
of interest.
(4) The amount of the draft accompanying this Certificate does not exceed
the amount available to be drawn under the Letter of Credit in
respect of the Purchase Price corresponding to interest on such Bonds
and was computed in accordance with the terms and conditions of the
Bonds and the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ______ day of ______________, _____.
THE BANK OF NEW YORK,
as Trustee
By:
------------------------------------------
[Name and Title]
EXHIBIT 5
CERTIFICATE FOR THE PERMANENT
REDUCTION OF LETTER OF CREDIT AMOUNT
The undersigned, a duly authorized officer of The Bank of New York (the
"Trustee"), hereby certifies as follows to Wachovia Bank, N.A. (the "Bank") with
reference to Irrevocable Letter of Credit No. LC ___-______ (the "Letter of
Credit") issued by the Bank in favor of the Trustee. Any capitalized term used
herein and not defined shall have its respective meaning as set forth in the
Letter of Credit.
(1) The Trustee is the Trustee under the Indenture.
(2) The aggregate principal amount of the Bonds Outstanding (as defined
in the Indenture) has been reduced to
$-----------.
(3) The Letter of Credit Amount-Principal Component is hereby
correspondingly reduced to $___________.
(4) The Letter of Credit Amount-Interest Component is hereby reduced to
$____________ [calculated by multiplying the amount of the principal
amount in the last line of paragraph (2) hereof by 12% and
multiplying the product thereof by the quotient of 52 divided by 360]
to reflect the amount of interest allocable to the reduced amount of
principal set forth in paragraph (3) hereof.
IN WITNESS WHEREOF, the Trustee has executed this Certificate as of the
______ day of _______________, ____.
THE BANK OF NEW YORK,
as Trustee
By:
-----------------------------------------
[Name and Title]
EXHIBIT 6
INSTRUCTION TO TRANSFER
---------------, -----
Wachovia Bank, N.A.
International Operations
Standby Letters of Credit, NC-30034
401 Linden Street
Winston-Salem, North Carolina 27101
Re: Irrevocable Letter of Credit No. LC ___-______
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
instructs you to transfer to:
-----------------------------------
(Name of Transferee)
-----------------------------------
(Address)
all rights of the undersigned beneficiary to draw under the above-captioned
Letter of Credit (the "Letter of Credit"). The transferee has succeeded the
undersigned as Trustee under the Indenture of Trust dated as of June 1, 1999
between Atlantic American Corporation and The Bank of New York, as trustee.
By this transfer, all rights of the undersigned beneficiary in the Letter
of Credit are transferred to the transferee and the transferee shall hereafter
have the sole rights as beneficiary thereof; provided, however, that no rights
shall be deemed to have been transferred to the transferee until such transfer
complies with the requirements of the Letter of Credit pertaining to transfers.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____ day of _____________, ___.
THE BANK OF NEW YORK,
as Trustee
By:
------------------------------------------
[Name and Title]
EXHIBIT B
June 1, 1999
PROMISSORY NOTE
1. FOR VALUE RECEIVED, the undersigned, ATLANTIC AMERICAN CORPORATION, a
corporation organized and existing under the laws of the State of Georgia (the
"Company"), promises to pay to the order of WACHOVIA BANK, N.A. (the "Bank"), at
the office of the Bank in Atlanta, Georgia, or at such other place as the Bank
hereafter may direct in writing, in legal tender of the United States of
America, the principal sum of $25,000,000 or so much thereof as may be disbursed
and remain outstanding from time to time hereafter as Tender Advances (as
defined below) on the Termination Date (as defined below) with interest thereon
(computed on the daily outstanding principal balance, for the actual number of
days outstanding and a 360-day year) on each advance made hereunder from date of
advance until paid in full at a rate per annum equal to the Prime Rate (as
defined below) plus two percent (2%) with any change in such interest rate
resulting from a change in the Prime Rate to become effective as of the opening
of business on each date on which such change in the Prime Rate has occurred;
provided, however, that if the Company fails to pay any portion of the principal
of or accrued interest on any Tender Advance when due, interest on the unpaid
principal amount of each Tender Advance shall accrue and be payable at the
Default Rate (as defined below) from the date of such default until paid in
full. Each Tender Advance may be endorsed on the schedule attached hereto and by
this reference incorporated herein by the Bank (provided, however, that any
failure by the Bank to make any such endorsement shall not limit, modify or
affect the obligations of the Company hereunder). Accrued interest on the unpaid
principal balance hereof from time to time outstanding shall be due and payable
(i) on each Payment Date (as defined below), and (ii) upon payment or prepayment
of any Tender Advance (but only on the principal so paid or prepaid), and (iii)
at maturity. All principal hereunder shall be due and payable on the Termination
Date.
2. This Promissory Note evidences borrowings under, is subject to and
secured by, and shall be paid and enforced in accordance with, the terms of that
certain Reimbursement and Security Agreement dated as of even date herewith
between the Bank and the Company (such Agreement as it may be amended or
supplemented from time to time is hereinafter called the "Reimbursement
Agreement"), the terms and provisions of which are hereby incorporated herein by
reference and made a part hereof, and is the "Reimbursement Note" as that term
is defined in Section 1.1 of the Reimbursement Agreement.
3. Nothing herein shall limit any right granted to the Bank by any other
instrument or by law or equity.
4. The Company hereby waives 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 provided for in the Reimbursement Agreement.
5. The Company may prepay any Tender Advance at any time or from time to
time without penalty or premium, provided that the Company shall give the Bank
notice of each prepayment as set forth in the Reimbursement Agreement.
6. The Company agrees that if the Company fails to pay any amount when due
under this Promissory Note and any such amount is thereafter collected by law or
through an attorney at law, the Company shall pay all reasonable costs of
collection, including, without limitation, reasonable attorneys' fees, all as
set forth in the Reimbursement Agreement.
As used herein, the terms "Tender Advance", "Termination Date", "Prime
Rate", "Default Rate" and "Payment Date" shall have the same meaning given each
such term in Article I of the Reimbursement Agreement.
IN WITNESS WHEREOF, the Company has caused this Promissory Note to be duly
executed under seal as of the day and year first above written.
ATLANTIC AMERICAN CORPORATION
By:
__________________________________(SEAL)
Name:__________________________________
Title:
----------------------------------
SCHEDULE
AMOUNT OF TENDER AMOUNT OF PAYMENT OR
DATE ADVANCE PREPAYMENT
(10.3)
CREDIT AGREEMENT
dated as of
July 1, 1999
between
ATLANTIC AMERICAN CORPORATION
and
WACHOVIA BANK, N.A.
TABLE OF CONTENTS
CREDIT AGREEMENT
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions...................................................1
SECTION 1.02. Accounting Terms and Determinations..........................12
SECTION 1.03. Use of Defined Terms.........................................13
SECTION 1.04. Terminology..................................................13
SECTION 1.05. References...................................................13
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Make Loans....................................13
SECTION 2.02. Method of Borrowing Tranche B Loan...........................13
SECTION 2.03. Notes........................................................14
SECTION 2.04. Repayment of the Loans.......................................14
SECTION 2.05. Interest Rates...............................................15
SECTION 2.06. Fees.........................................................15
SECTION 2.07. Optional Prepayments.........................................16
SECTION 2.08. General Provisions as to Payments............................16
SECTION 2.09. Computation of Interest......................................17
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to Funding on Closing Date........................17
SECTION 3.02. Other Conditions to Funding Tranche B Loan...................18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power................................19
SECTION 4.02. Corporate and Governmental Authorization; No Contravention...19
SECTION 4.03. Binding Effect...............................................19
SECTION 4.04. Financial Information........................................19
SECTION 4.05. Litigation...................................................20
SECTION 4.06. Compliance with ERISA........................................20
SECTION 4.07. Taxes........................................................20
SECTION 4.08. Subsidiaries.................................................20
SECTION 4.09. Not an Investment Company....................................21
SECTION 4.10 Public Utility Holding Company Act............................21
SECTION 4.11. Ownership of Property; Liens.................................21
SECTION 4.12. No Default...................................................21
SECTION 4.13. Full Disclosure..............................................21
SECTION 4.14. Environmental Matters.......................................21
SECTION 4.15. Compliance with Laws.........................................22
SECTION 4.16. Capital Stock................................................22
SECTION 4.17. Margin Stock.................................................22
SECTION 4.18. Insolvency...................................................22
SECTION 4.19. Shareholder Debt.............................................22
ARTICLE V
COVENANTS
SECTION 5.01. Information..................................................23
SECTION 5.02. Inspection of Property, Books and Records....................24
SECTION 5.03. Ratio of Funded Debt to Consolidated Total Capitalization....25
SECTION 5.04. Restricted Payments.........................................25
SECTION 5.05. Ratio of Cash Flow to Debt Service...........................25
SECTION 5.06. Capital Expenditures.........................................25
SECTION 5.07. Loans or Advances............................................25
SECTION 5.08. Investments..................................................26
SECTION 5.09. Negative Pledge..............................................26
SECTION 5.10. Maintenance of Existence.....................................26
SECTION 5.11. Dissolution..................................................26
SECTION 5.12. Consolidations, Mergers and Sales of Assets..................26
SECTION 5.13. Use of Proceeds..............................................27
SECTION 5.14. Compliance with Laws; Payment of Taxes.......................27
SECTION 5.15. Insurance....................................................27
SECTION 5.16. Change in Fiscal Year........................................27
SECTION 5.17. Maintenance of Property......................................27
SECTION 5.18. Environmental Notices........................................28
SECTION 5.19. Environmental Matters........................................28
SECTION 5.20. Environmental Release........................................28
SECTION 5.21 Additional Covenants, Etc.....................................28
SECTION 5.22. Transactions with Affiliates.................................29
SECTION 5.23. Modification of Shareholder Debt.............................29
SECTION 5.24. Maintenance of Authorized Control Level Risk-Based Capital...29
SECTION 5.25. Maintenance of Statutory Surplus.............................29
SECTION 5.26. Limitation on Debt...........................................29
SECTION 5.27. Minimum Investment in NAIC Rated Bonds; Maximum Investment in
Investment Properties.................................................30
SECTION 5.28. Debt Conversion Documents....................................30
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default............................................30
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Notices......................................................33
SECTION 7.02. No Waivers...................................................34
SECTION 7.03. Expenses; Documentary Taxes; Indemnification; Increased Cost
and Reduced Return....................................................34
SECTION 7.04. CONSEQUENTIAL DAMAGES........................................35
SECTION 7.05. Setoffs......................................................35
SECTION 7.06. Amendments and Waivers.......................................35
SECTION 7.07. Successors and Assigns.......................................35
SECTION 7.08. Confidentiality..............................................37
SECTION 7.09. Survival of Certain Obligations..............................37
SECTION 7.10. Georgia Law..................................................37
SECTION 7.11. Severability.................................................37
SECTION 7.12. Interest.....................................................37
SECTION 7.13. Interpretation...............................................38
SECTION 7.14. Consent to Jurisdiction......................................38
SECTION 7.15. Counterparts.................................................38
EXHIBIT A... Tranche A Note
EXHIBIT B Form of Opinion of Counsel for the Borrower and the
Debt Holders
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 Borrowing
CREDIT AGREEMENT
AGREEMENT dated as of July 1, 1999 between ATLANTIC AMERICAN
CORPORATION and WACHOVIA BANK, N.A.
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:
"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.
"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 Commitment Fee Rate" has the meaning set forth in
Section 2.06(a).
"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.
"Authorized Control Level Risk-Based Capital" means, at any time and
as to any Insurance Subsidiary, the amount of "Authorized Control Level
Risk-Based Capital" 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.
"Authority" has the meaning set forth in Section 7.02.
"Bank" means Wachovia Bank, N.A., 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.
"Borrowing" means a borrowing hereunder consisting of a Loan made to
the Borrower by the Bank. A Borrowing is a "Base Rate Borrowing" if such Loan is
a Base Rate Loan and a "Euro-Dollar Borrowing" if such Loan is a Euro-Dollar
Loan.
"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(d).
"Closing Date" means July 1, 1999.
"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 $30,000,000, as such amount may be reduced from
time to time pursuant to Section 2.07.
"Commitment Fee Determination Date" has the meaning set forth in
Section 2.06(a).
"Commitment Fee Payment Date" means each March 31, June 30,
September 30 and December 31.
"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.
"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; provided, that for purposes of this
Agreement, American Southern Insurance Company and its Subsidiaries shall be
deemed to be "Consolidated Subsidiaries" of the Borrower as of the Closing 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 surplus resulting from any write-up of assets
subsequent to December 31, 1998 (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, including without limitation
goodwill (whether representing the excess of cost over book value of assets
acquired, or otherwise), trademarks, tradenames, copyrights, patents and
technologies, and unamortized debt discount and expense; 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, any
amount at which shares of capital stock of the Borrower appear as an asset on
the balance sheet of the Borrower and its Consolidated Subsidiaries;
(D) To the extent not included in (B) of this definition,
deferred expenses, other than deferred acquisition costs, as determined in
accordance with GAAP; and
(E) 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.
"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.
"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 2% plus the then
highest interest rate (including the Applicable Margin) which may be applicable
to any Loans hereunder (irrespective of whether any such type of Loans are
actually outstanding hereunder).
"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.
"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.
"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.
"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.
"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 is not by its terms subordinate and junior to other Debt of the Borrower,
(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.
"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.
"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.
"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.
"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.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the first, second, third or sixth month
thereafter, as the Borrower may elect in the applicable Notice of Borrowing;
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
Termination Date and would otherwise end after the Termination Date.
(2) with respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing and ending 30 days thereafter; provided that:
(a) any Interest Period (subject to clause (b) below) which would
otherwise end on a day which is not a Domestic Business Day shall be extended to
the next succeeding Domestic Business Day; and
(b) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
"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 a Base Rate Loan or a Euro-Dollar Loan and "Loans"
means Base Rate Loans or Euro-Dollar Loans, or any or all of them, as the
context shall require.
"Loan Documents" means this Agreement, the Note, the Pledge
Agreement, any other document evidencing, relating to or securing the Loans, and
any other document or instrument delivered from time to time in connection with
this Agreement, the Notes or the Loans, 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.
"Mission Critical Equipment" means equipment of the Borrower and its
Subsidiaries which, if such systems failed to operate, would cause a Material
Adverse Effect.
"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 Loans.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Officer's Certificate" has the meaning set forth in Section
3.01(e).
"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 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.
"Pledge Agreement" means the Pledge Agreement dated as of June 24,
1999 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: 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 Termination Date either
(i) mandatorily redeemable (by sinking fund or similar payments or otherwise) or
(ii) redeemable at the option of the holder thereof.
"Reimbursement Agreement" means the Reimbursement and Security
Agreement dated as of June 1, 1999, between the Borrower and the Bank, as
amended, restated, supplemented or otherwise modified from time to time.
"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.
"Risk-Based Capital" means, at any time and for any Insurance
Subsidiary, the amount of "Risk-Based Capital" 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 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.
"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 any Redeemable
Preferred Stock of the Borrower or any of its Consolidated Subsidiaries.
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.
"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; provided,
that, for purposes of this Agreement, Association Casualty Insurance Company and
its Subsidiaries shall be deemed to be "Subsidiaries" of the Borrower as of the
Closing Date.
"Taxes" has the meaning set forth in Section 2.11(c).
"Termination Date" means July 1, 2004.
"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).
"Unused Commitment" means at any date an amount equal to the
Commitment less the aggregate outstanding principal amount of the Loans.
"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.
"Y2K Plan" has the meaning set forth in Section 4.19.
"Year 2000 Compliant and Ready" as used herein means that (a) the
Borrower's and its Subsidiaries' Mission Critical Equipment with respect to the
operation of its business and its general business plan will: (i) handle date
information involving any and all dates before, during and/or after January 1,
2000, including accepting input, providing output and performing date
calculations in whole or in part; (ii) operate, accurately without interruption
on and in respect of any and all dates before, during and/or after January 1,
2000 and without any change in performance; and (iii) store and provide date
input information without creating any ambiguity as to the century, and (b) the
Borrower has developed alternative plans to ensure business continuity in the
event of the failure of any or all of items (i) through (iii) above.
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 that is not
an Insurance 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.
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. Commitments to Make Loans. The Bank hereby agrees, on
the terms and conditions set forth herein, to make Loans to the Borrower from
time to time before the Termination Date; provided that, immediately after each
such Loan is made, the aggregate outstanding principal amount of the Loans will
not exceed the Commitment. Each Borrowing shall be in an aggregate principal
amount of $500,000 or any larger multiple of $100,000 (except that any Borrowing
may be in the amount of the Unused Commitment). Within the foregoing limits, the
Borrower may borrow under this Section, repay or, to the extent permitted by
Section 2.09, prepay Loans and reborrow under this Section at any time before
the Termination Date.
SECTION 2.02. Method of Borrowing Loans. (a) The Borrower shall give
the Bank notice in the form attached hereto as Exhibit G (a "Notice of
Borrowing") prior to 11:00 A.M. (Atlanta, Georgia time) on or before the date of
each Base Rate Borrowing and at least 3 Euro-Dollar Business Days before each
Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Base Rate Borrowing and a Euro-Dollar Business Day in the
case of a Euro-Dollar Borrowing;
(ii) the aggregate amount of each Borrowing;
(iii) whether the Loan comprising such Borrowing is a Base Rate Loan
or a Euro-Dollar Loan; and
(iv) in the case of a Euro-Dollar Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the definition
of Interest Period.
(b) If the Bank makes a new Loan hereunder on a day on which the
Borrower is to repay all or any part of an outstanding Loan, the Bank shall
apply the proceeds of the new Loan to make such repayment and only an amount
equal to the difference (if any) between the amount being borrowed and the
amount being repaid shall be made available by the Bank to the Borrower or
remitted by the Borrower to the Bank as provided in Section 2.11, as the case
may be.
(c) Notwithstanding anything to the contrary contained in this
Agreement, no Euro-Dollar Borrowing may be made if there shall have occurred a
Default or an Event of Default, which Default or Event of Default shall not have
been cured or waived in writing.
(d) In the event that a Notice of Borrowing fails to specify whether
the Loan comprising such Borrowing is to be a Base Rate Loan or a Euro-Dollar
Loan, such Loan shall be made as a Base Rate Loan. If the Borrower is otherwise
entitled under this Agreement to repay any Loan maturing at the end of an
Interest Period applicable thereto with the proceeds of a new Borrowing, and the
Borrower fails to repay such Loan using its own moneys and fails to give a
Notice of Borrowing in connection with such new Borrowing, a new Borrowing shall
be deemed to be made on the date such Loan matures in an amount equal to the
principal amount of the Loan so maturing, and the Loan comprising such new
Borrowing shall be a Base Rate Loan.
(e) Notwithstanding anything to the contrary contained herein, (i)
there shall not be more than [7] different Interest Periods outstanding at the
same time (for which purpose Interest Periods described in different numbered
clauses of the definition of the term "Interest Period" shall be deemed to be
different Interest Periods even if they are coterminous) and (ii) the proceeds
of any Base Rate Borrowing shall be applied first to repay the unpaid principal
amount of all Base Rate Loans (if any) outstanding immediately before such Base
Rate Borrowing.
SECTION 2.03. Notes. (a) The Loans shall be evidenced by the
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 Loans 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.
SECTION 2.04. Maturity of Loans. Each Loan included in a Borrowing
shall mature, and the principal amount thereof shall be due and payable, on the
last day of the Interest Period applicable to such Borrowing.
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 Loans Euro-Dollar Loans
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Greater than or equal to 30% 0% 2.25%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Greater than or equal to 25% but 0% 2.00%
less than 30%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Greater than or equal to 20% but 0% 1.75%
less than 25%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Less than 20% 0% 1.50%
- -------------------------------------------------------------------------------
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 Base Rate
Loans and 2.00% for Euro-Dollar Loans (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 Banks 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 on the immediately
succeeding Rate Determination Date, the Applicable Margin shall be determined as
if the ratio of Funded Debt to Consolidated Total Capitalization was more than
30% 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 each 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.
(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 for each Interest Period on
the last day thereof. 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. Such interest 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.
"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
Loans hereunder. 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 Loans (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. Commitment Fees. (a) The Borrower shall pay to the
Bank a commitment fee equal to the product of: (i) the daily average amount of
the Bank's Unused Commitment, times (ii) a per annum percentage equal to the
Applicable Commitment Fee Rate. Such commitment fee shall accrue from and
including the Closing Date to and including the Termination Date. Commitment
fees shall be payable quarterly in arrears on the first Commitment Fee Payment
Date following each Commitment Fee Determination Date and on the Termination
Date; provided that should the Commitment be terminated at any time prior to the
Termination Date for any reason, the entire accrued and unpaid commitment fee
shall be paid on the date of such termination. The "Applicable Commitment Fee
Rate" 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 Applicable Commitment Fee
Capitalization Rate
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Greater than or equal to .30% .375%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Greater than or equal to 25% but less than 30% .375%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Greater than or equal to 20% but less than 25% .250%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Less than 20% .250%
- -------------------------------------------------------------------------------
The Applicable Commitment Fee Rate shall be determined effective as of the date
(herein, the "Commitment Fee 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 for such Fiscal
Quarter, and the Applicable Commitment Fee Rate so determined shall remain
effective from such Commitment Fee Determination Date until the date which is 60
days after the last day of the Fiscal Quarter in which such Commitment Fee
Determination Date falls (which latter date shall be a new Commitment Fee
Determination Date); provided that (i) for the period from and including the
Closing Date to but excluding the Commitment Fee Determination Date next
following the Closing Date, the Applicable Commitment Fee Rate shall be .375%;
(ii) in the case of any Applicable Commitment Fee Rate determined for the fourth
and final Fiscal Quarter of a Fiscal Year, the Commitment Fee Determination Date
shall be the date which is 120 days after the last day of such final Fiscal
Quarter and such Applicable Commitment Fee Rate shall be determined based upon
the annual audited financial statements for the Fiscal Year ended on the last
day of such final Fiscal Quarter, and (iii) if on any Commitment Fee
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 Commitment Fee Determination Date,
then for the period beginning on such Commitment Fee Determination Date and
ending on the earlier of (A) the date on which the Borrower shall deliver to the
Bank the financial statements to be delivered pursuant to Section 5.01(b) with
respect to such Fiscal Quarter or any subsequent Fiscal Quarter, and (B) the
date on which the Borrower shall deliver to the Bank annual financial statements
required to be delivered pursuant to Section 5.01(a) with respect to the Fiscal
Year which includes such Fiscal Quarter or any subsequent Fiscal Year, the
Applicable Commitment Fee Rate shall be determined as if the ratio of Funded
Debt to Consolidated Total Capitalization was more than 30% at all times during
such period.
(b) On the Closing Date the Borrower shall pay to the Bank an
underwriting fee equal to $50,000.
SECTION 2.07. Optional Termination or Reduction of Commitments. The
Borrower may, upon at least 3 Domestic Business Days' notice to the Bank,
terminate at any time, or proportionately reduce from time to time by an
aggregate amount of at least $500,000 or any larger multiple of $100,000, the
Commitment; provided, however, no such termination or reduction shall be in an
amount greater than the Unused Commitment on the date of such termination or
reduction. If the Commitment is terminated in its entirety, all accrued fees (as
provided under Section 2.06(a)) shall be payable on the effective date of such
termination.
SECTION 2.08. Mandatory Termination of Commitment. The Commitment
shall terminate on the Termination Date and any Loans then outstanding (together
with accrued interest thereon) shall be due and payable on such date.
SECTION 2.09. 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 2.10. Mandatory Prepayments. On each date on which the
Commitment is reduced or terminated pursuant to Section 2.07 or Section 2.08,
the Borrower shall repay or prepay such principal amount of the outstanding
Loans, if any (together with interest accrued thereon and any amounts due under
Section 7.05(a)), as may be necessary so that after such payment the aggregate
unpaid principal amount of the Loans does not exceed the amount of the
Commitment as then reduced.
SECTION 2.11. General Provisions as to Payments. (a) The Borrower
shall make each payment of principal of, and interest on, the Bank's Loans 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 Loans 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 Loans 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.
(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 2.11, it will pay to the Borrower the amount
of such refund promptly upon receipt thereof; provided, however, it 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 2.11 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 Notes.
SECTION 2.12. Computation of Interest. Interest on Base Rate Loans
and the commitment fee 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.
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to First Borrowing. The obligation of
the Bank to make a Loan on the occasion of the first Borrowing 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 an opinion (together with any opinions of
local counsel relied on therein) of Jones, Day, Reavis & Pogue, counsel
for the Borrower, dated as of the Closing Date, substantially in the form
of Exhibit B hereto and covering such additional matters relating to the
transactions contemplated hereby as the Bank may reasonably request;
(d) 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;
(e) 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 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 Boards of Directors of the Borrower
authorizing the Borrower's execution, delivery and performance of the Loan
Documents to which it is a party;
(f) receipt by the Bank of the Pledge Agreement and UCC Financing
Statements in form and substance satisfactory to the Bank in its sole
discretion, duly executed by the Borrower, granting to the Bank a first
priority security interest in the stock or other equity interests held by
the Borrower in all Subsidiaries of the Borrower, and receipt of any stock
certificates or evidence of the registration of the Bank's security
interest in the corporate records of such Subsidiaries all as required by
the Pledge Agreement;
(g) 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, 1998; and
(h) such other items as the Bank or its counsel may reasonably
request.
SECTION 3.02. Conditions to All Borrowings. The obligation of
the Bank to make a Loan on the occasion of each Borrowing is subject to the
satisfaction of the following conditions:
(a) receipt by the Bank of Notice of Borrowing as required by
Section 2.02;
(b) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing;
(c) (other than with respect to a Loan the proceeds of which shall
be used exclusively to repay maturing Loans) 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 date of such Borrowing; and
(d) the fact that, immediately after such Borrowing, the aggregate
outstanding principal amount of the Loans will not exceed the amount of the
Commitment.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the truth and accuracy of the
facts specified in clauses (b), (c) and (d) of this Section; provided that (i)
such Borrowing shall not be deemed to be such a representation and warranty to
the effect set forth in Section 4.04(d) as to any event, act or condition having
a Material Adverse Effect which has theretofore been disclosed in writing by the
Borrower to the Bank and (ii) such Borrowing shall not be deemed to be a
representation and warranty by the Borrower as to the truth and accuracy of the
fact specified in clause (c) of this Section, if in either case the aggregate
outstanding principal amount of the Loans immediately after such Borrowing will
not exceed the aggregate outstanding principal amount thereof immediately before
such Borrowing.
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, except that the Borrower's execution and
delivery of the Pledge Agreement requires the approval of the Departments of
Insurance of the States of Georgia and Texas, which approval has 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 Notes 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.
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, 1998 and the related consolidated statements of income,
shareholders' equity and cash flows for the Fiscal Year then ended, reported on
by Arthur Andersen LLP, copies of which have been delivered to the Bank, and the
unaudited consolidated financial statements of the Borrower for the interim
period ended March 31, 1999, 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) As of the Closing Date, the statutory and annual statements of
Association Casualty Insurance Company as of December 31, 1998, reported on by
Ernst & Young, LLP, copies of which have been delivered to the Bank, fairly
present, in all material respects, the statutory financial condition of
Association Casualty Insurance Company, taken as a whole, at December 31, 1998,
and the statutory results of its operations and other data contained therein for
1998, and were prepared in conformity with statutory accounting practices
prescribed or permitted by the Texas Department of Insurance (which have been
applied on a consistent basis). As of the Closing Date, the unaudited balance
sheet of Association Risk Management General Agency, Inc. as of December 31,
1998 and the related unaudited G/L profit and loss statement for the year then
ended, copies of which have been delivered to the Bank, have been prepared from
and are in complete accordance with the books and records of Association Risk
Management General Agency, Inc., and fairly present, in all material respects,
the financial position and results of operation of Association Risk Management
General Agency, Inc., taken as a whole as of the date thereof.
(c) The Annual Statements of the Insurance Subsidiaries together
with supplemental schedules thereto, dated as of December 31, 1998, and the
Quarterly Statements of the Insurance Subsidiaries together with supplemental
schedules thereto, dated as of March 31, 1999, copies of which have been
delivered to the Bank, fairly present the respective financial positions of the
Insurance Subsidiaries as of such dates.
(d) Since March 31, 1999 there has been no event, act, condition or
occurrence having a Material Adverse Effect.
SECTION 4.05. Litigation. 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.
SECTION 4.08. Subsidiaries. (a) Each of the Borrower's Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of 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.
(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 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.
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 owned by the Borrower free
and clear of any Lien or adverse claim. At least a majority of the issued shares
of 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.
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.
SECTION 4.18. Insolvency. After giving effect to the execution and
delivery of the Loan Documents and the making of the Loans 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. Compliance with Year 2000 Plan. The Borrower has
developed and has delivered to the Bank a comprehensive plan (the "Y2K Plan")
for insuring that the Borrower's and its Subsidiaries' Mission Critical
Equipment which impact or affect in any way the business operations of the
Borrower and its Subsidiaries will be Year 2000 Compliant and Ready. The
Borrower and its Subsidiaries have met the Y2K Plan milestones such that all
Mission Critical Equipment be Year 2000 Compliant and Ready in accordance with
the Y2K Plan.
SECTION 4.20 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.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as the Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to the
Bank:
(a) (i) as soon as available and in any event within 90 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 Arthur
Andersen LLP or other independent public accountants 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 60 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;
(b) (i) as soon as available and in any event within 45 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 45 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, 5.25, 5.26 and 5.28 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) simultaneously with the delivery of each set of annual financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements to the
effect that nothing has come to their attention to cause them to believe
that any Default existed on the date of such financial statements;
(e) 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;
(f) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) 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;
(h) 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;
(i) 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 $100,000 or more in excess of
amounts covered in full by applicable insurance;
(j) promptly after the Borrower knows of the commencement, notice
of any Forfeiture Proceeding;
(k) simultaneously with the delivery of each set of annual and
quarterly financial statements referred to in clauses (a) and (b) above, a
statement of the chief executive officer, chief financial officer, or
chief technology officer of the Borrower to the effect that nothing has
come to his/her attention to cause him/her to believe that the Y2K Plan
milestones have not been met in a manner such that the Borrower's and its
Subsidiaries' Mission Critical Equipment will not be Year 2000 Compliant
and Ready in accordance with the Y2K Plan;
(l) within five (5) Domestic Business Days after the Borrower
becomes aware of any material deviations from the Y2K Plan which would
cause compliance with the Y2K Plan to be substantially delayed or not
achieved, a statement of the chief executive officer, chief financial
officer, or chief technology officer of the Borrower setting forth the
details thereof and the action which the Borrower is taking or proposes to
take with respect thereto;
(m) promptly upon the receipt thereof, a copy of any third party
assessments of the Borrower's Y2K Plan together with any recommendations
made by such third party with respect to Year 2000 compliance; and
(n) 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 (or, 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 (i) for the period from and including the Closing
Date to and including December 31, 2000, 40%; and (ii) for any period on or
after January 1, 2001, 35%.
SECTION 5.04. 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 consistently 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.
SECTION 5.05. Ratio of Funded Debt to EBITDA. As of the end of each
Fiscal Quarter beginning with the Fiscal Quarter ending June 30, 1999, 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 (a) 4.5 to 1.0 for
each Fiscal Quarter ending on or before December 31, 1999, (b) 4.0 to 1.0 for
each Fiscal Quarter ending after December 31, 1999, and on or before December
31, 2000 and (c) 3.5 to 1.0 for each Fiscal Quarter thereafter.
SECTION 5.06. Ratio of EBITDA to Consolidated Interest Expense. At
the end of each Fiscal Quarter beginning with the Fiscal Quarter ending June 30,
1999, the ratio of EBITDA for the period of 4 consecutive Fiscal Quarters then
ended to Consolidated Interest Expense for the period of 4 consecutive Fiscal
Quarters then ended shall be greater than (a) 3.0 to 1.0 for each Fiscal Quarter
ending on or before December 31, 2000 and (b) 4.0 to 1.0 for each Fiscal Quarter
thereafter.
SECTION 5.07. Capital Expenditures. Capital Expenditures will not
exceed in the aggregate in any Fiscal Year the sum of $1,000,000; 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; and (ii) deposits required by
government agencies or public utilities; provided that after giving effect to
the making of any loans, advances or deposits permitted by clause (i) or (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 Moody's 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 Moody's
Investors Service, Inc., (v) contemplated by Section 5.14(b) and/or (vi)
constituting Permitted Acquisitions in an aggregate amount not exceeding
$5,000,000; 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.
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 Reimbursement Agreement;
(k) Liens created under the Pledge Agreement; and
(l) 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.
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.
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 (i) such Person
was organized under the laws of the United States of America or one of its
states, (ii) the Borrower is the corporation surviving such merger and (iii)
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. (a) No portion of the proceeds of the
Loans 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 and the acquisition contemplated in Section 5.14(b)), (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.
(b) A portion of the proceeds of the Loans may be used to acquire
Association Casualty Insurance Company.
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.
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.
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. Y2K Plan. The Borrower will meet the milestones
contained in the Y2K Plan and will have all Mission Critical Equipment Year 2000
Compliant and Ready (including all internal and external testing) on or before
August 1, 1999.
SECTION 5.25. Maintenance of Authorized Control Level Risk-Based
Capital. The Borrower shall maintain, or cause to be maintained, at all times
the Authorized Control Level Risk-Based Capital for each Insurance Subsidiary in
an amount equal to or greater than 400% of the Authorized Control Level
Risk-Based Capital for such Insurance Subsidiary.
SECTION 5.26. 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 5.27. Limitation on Debt. The Borrower shall not, nor shall
it permit any Subsidiary to, create, incur or permit to exist at any time any
Debt (other than Debt arising under this Agreement) without the prior written
consent of the Bank, except:
(a) Debt in existence on the Closing Date and more particularly
described on Schedule 5.27 attached hereto, together with any extension or
renewal of such Debt, if the payment terms and interest applicable to such Debt
as extended or renewed are at least as favorable to the Borrower or such
Subsidiary, as the case may be, as the payment terms and interest rate
applicable to such Debt on the date of extension or renewal thereof;
(b) Trade indebtedness incurred in the ordinary course of business;
(c) The Borrower may enter into a transaction or series of
transactions pursuant to which the Borrower sells and leases back computer
equipment provided that the total aggregate Debt incurred by the Borrower in
such transaction or transactions shall not exceed $2,000,000; and
(d) Debt not otherwise permitted by the foregoing clauses of this
Section in an aggregate principal amount at any time outstanding not to exceed
$5,000,000.
SECTION 5.28. 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 70% of the Aggregate
Value of Total Investments; or (ii) the aggregate value of Investment Properties
to exceed 5% of the Aggregate Value of Total Investments.
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 any
Loan or shall fail to pay any interest on any 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 5.25 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 Notes) when due or within any applicable
grace period; or
(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
(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. Mack
Robinson 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 or Bankers Fidelity Life
Insurance Company shall fail to maintain an AM Best rating of "B+" or
better, or American Southern Insurance Company or any Subsidiary of
American Southern Insurance Company shall fail to maintain an AM Best
rating of "A-" 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, Atlantic American Life Insurance
Company, Georgia Casualty & Surety Company, Bankers Fidelity Life
Insurance Company and, after its acquisition by the Borrower as
contemplated by this Agreement, 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(j); 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.
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
Loans specified in such notice shall be suspended. Unless the Borrower notifies
the Bank at least 2 Domestic Business Days before the date of any Borrowing of a
Euro-Dollar Loan for which a Notice of Borrowing has previously been given that
it elects not to borrow on such date, such Borrowing shall instead be made as a
Base Rate Borrowing.
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 make, 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 make 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.
. (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 make 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 make Euro-Dollar Loans;
and the result of any of the foregoing is to increase the cost to the Bank (or
its Lending Office) of making or 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.
(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.
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 2.09, Section
2.10, 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 for the Euro-Dollar Borrowing of which such Euro-Dollar Loan is a part
specified in the applicable Notice of Borrowing 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.
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.
(b) The Borrower agrees, to the fullest extent it may effectively do
so under applicable law, that any holder of a participation in a 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 Documents 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
related Loan or Loans, (iii) the change of the principal of the related Loan or
Loans, (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 Loans, or (vi) the release of
any guaranty given to support payment of the Loans. If the Bank sells a
participating interest in any 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.
(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 Loans or Commitment subject to such assignment (determined as of the
effective date of the assignment) shall be equal to or greater than $5,000,000,
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 Loans 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
Loans 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).
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 all
Loans.
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.
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]
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.
ATLANTIC AMERICAN CORPORATION
ATTEST:
__________________________ By: ___________________________(SEAL)
________, Secretary Title:
4370 Peachtree Street, N.E.
[CORPORATE SEAL] Atlanta, Georgia 30319-3000
Attention: Hilton H. Howell, Jr.,
President and Chief Executive
Officer
Telecopy number: (404) 231-2123
Telephone number: (404) 266-5505
WACHOVIA BANK, N.A.
By: ___________________________(SEAL)
Title:
Lending Office
Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: William J. Darby
Telecopy number: (404) 332-5016
Telephone number: (404) 332-1371
A#
SCHEDULE 4.08A
EXISTING INSURANCE SUBSIDIARIES
Name of Subsidiary Jurisdiction of
Incorporation
American Southern Insurance Company Georgia
Bankers Fidelity Life Insurance Company Georgia
Georgia Casualty and Surety Company Georgia
SCHEDULE 4.08B
EXISTING SUBSIDIARIES WHICH
ARE NOT INSURANCE SUBSIDIARIES
Name of Subsidiary Jurisdiction of
Incorporation
Self-Insurance Administrators, Inc. Georgia
SCHEDULE 5.27
DEBT EXISTING ON CLOSING DATE
- -------------------------------------------------------------------------------
Principal Amount
Holder Outstanding Interest Maturity Date Amortization
Rate
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Publicly held $25,000,000(1) Variable July 1, 2009 None
rate
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
J. Mack Robinson $13,4000,000 of 9.00% Not None
and Family Series B redeemable(2)
Preferred Stock
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Atlantic American $11,375,000 7.25% Perpetual None
Corporation(3)
- -------------------------------------------------------------------------------
EXHIBIT A
NOTE
$30,000,000 Atlanta, Georgia
July 1, 1999
For value received, ATLANTIC AMERICAN CORPORATION, a Georgia
corporation (the "Borrower"), promises to pay to the order of WACHOVIA BANK,
N.A. (the "Bank"), for the account of its Lending Office, the principal sum of
Thirty Million and No/100 Dollars ($30,000,000), or such lesser amount as shall
equal the unpaid principal amount of the Loans 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 191 Peachtree Street, N.E., Atlanta, Georgia
30303, or such other address as may be specified from time to time pursuant to
the Credit Agreement.
The Loans made by the Bank, the respective maturities 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 July 1, 1999 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.
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:
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- -------------------------------------------------------------------------------
Amount Amount of
Type of Interest of Principal Maturity Notation
Date Loan(4) Rate Loan Repaid Date Made
By
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT B
OPINION OF COUNSEL FOR THE BORROWER
[Dated as provided in Section 3.01 of the Credit Agreement]
[To be furnished by Counsel to Borrower]
EXHIBIT C
CLOSING CERTIFICATE
OF
ATLANTIC AMERICAN CORPORATION
Reference is made to the Credit Agreement (the "Credit Agreement")
dated as of July 1, 1999, between Atlantic American Corporation (the "Borrower")
and Wachovia Bank, N.A. (the "Bank"). Capitalized terms used herein have the
meanings ascribed thereto in the Credit Agreement.
Pursuant to Section 3.01(e) 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 1st day of July, 1999.
ATLANTIC AMERICAN CORPORATION
By: ________________________________
Name:
Title:
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 July 1, 1999 (the "Credit Agreement") between the Borrower
and Wachovia Bank, N.A. 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
___________ __, 19__ 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
1st day of July, 1999.
--------------------------------
Name:
Title:
EXHIBIT E
FORM OF COMPLIANCE CERTIFICATE
To be provided by the Borrower prior to the Closing Date.
3
A#
EXHIBIT F
ASSIGNMENT AND ACCEPTANCE
Dated ________________ __, ____
Reference is made to the Credit Agreement dated as of July 1, 1999
(together with all amendments and modifications thereto, the "Credit Agreement")
between Atlantic American Corporation, a Georgia corporation (the "Borrower")
and Wachovia Bank, N.A. (the "Bank"). Terms defined in the Credit Agreement are
used herein with the same meaning.
Wachovia Bank, N.A. (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].(5)
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](6).
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.
WACHOVIA BANK, N.A.
By:____________________________________
Title:
[NAME OF ASSIGNEE]
By:____________________________________
Title:
Lending Office:
[Address]
ATLANTIC AMERICAN CORPORATION(1)
By:____________________________________
Title:
A#
EXHIBIT G
NOTICE OF BORROWING
----------, ----
Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention:_________________
Re: Credit Agreement (as amended and modified from time to time,
the "Credit Agreement") dated as of July 1, 1999 between
Atlantic American Corporation and Wachovia Bank, N.A.
Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings attributable thereto in the Credit Agreement.
This Notice of Borrowing is delivered to you pursuant to Section 2.02
of the Credit Agreement.
The Borrower hereby requests a [Euro-Dollar Borrowing][Base Rate
Borrowing] in the aggregate principal amount of $___________ to be made on
________, ____ and for interest to accrue thereon at the rate established by the
Credit Agreement for [Euro-Dollar Loans][Base Rate Loans]. The duration of the
Interest Period with respect thereto shall be [1 month][2 months][3months][6
months][30 days].
The Borrower has caused this Notice of Borrowing to be executed and
delivered by its duly authorized officer this ___ day of ____, ____.
ATLANTIC AMERICAN CORPORATION
By:______________________
Title:
- --------
(1) Publicly traded bond backed by letter of credit from Wachovia Bank,
N.A.
(2) Series B preferred stock is redeemable only by the Borrower (3)
Atlantic American Corporation will hold a surplus note issued by
Association Casualty Insurance Company ("ACIC") in connection with the
acquisition of ACIC and its affiliated entity. This note eliminates in
the consolidation of Atlantic American Corporation and its
subsidiaries.
(4) I.e., a Base Rate or Euro-Dollar Loan
(5) If the Assignee is organized under the laws of a jurisdiction outside
the United States.
(6) If the Assignee is not an Affiliate of the Bank and a Default has not
occurred and is continuing..
(99.1)
NEWS RELEASE
For Immediate Release
Atlantic American Corporation ISSUES
$25 MILLION IN TAXABLE VARIABLE RATE DEMAND BONDS
ATLANTA, Georgia, June 24, 1999 - Atlantic American Corporation (Nasdaq:AAME)
today announced it has issued $25 million in Taxable Variable Rate Demand Bonds,
Series 1999, to replace the Company's existing bank debt facility in
anticipation of its previously-announced acquisition of Association Casualty
Insurance Company and its affiliate, Association Risk Management General Agency,
Inc. The acquisition of the Texas-based workers' compensation insurance
underwriter is scheduled to be completed in early July. In connection with that
acquisition, Atlantic American expects to enter into a new credit facility to be
used in part to fund the cash portion of the purchase price.
The bond offering will lower overall interest costs and the proceeds will be
used to pay off the majority of an existing $ 26 million term loan. Rated
AA/A-1+ by Standard & Poor's, the bonds will mature July 1, 2009, will pay a
variable interest rate that approximates 30-day LIBOR, and are backed by a
Letter of Credit issued by Wachovia Bank, N.A. The cost of the Letter of Credit
and its associated fees will be 180 basis points, making the effective cost to
the company approximately LIBOR plus 180 basis points, which is currently
approximately 6.8 percent.
Note regarding Private Securities Litigation Reform Act: Except for historical
information contained herein, this press release contains forward-looking
statements that involve a number of risks and uncertainties. Actual results
could differ materially from those indicated by such forward-looking statements
due to a number of factors and risks detailed from time to time in statements
and reports that Atlantic American Corporation has filed with the Securities and
Exchange Commission.
Atlantic American is an insurance holding company involved in specialty markets
of the life, health, property and casualty insurance industries. Its principal
subsidiaries include American Southern Insurance Company, American Safety
Insurance Company, Bankers Fidelity Life Insurance Company, Georgia Casualty &
Surety Company and Self-Insurance
Administrators, Inc.
For further information contact:
Edward L. Rand, Jr., VP and Treasurer Janice Kuntz
Atlantic American Corporation Fleishman-Hillard
(404) 266-5500 (404) 659-4446
NEWS RELEASE
For Immediate Release
ATLANTIC AMERICAN CORPORATION COMPLETES ACQUISITION OF ASSOCIATION
CASUALTY INSURANCE COMPANY AND ASSOCIATION RISK MANAGEMENT
GENERAL AGENCY, INC.
Expands Operations Into Texas, New Mexico And Arizona/Adds Depth To Management
Team
- -------------------------------------------------------------------------------
ATLANTA, Georgia, July 6, 1999--Atlantic American Corporation (NASDAQ:AAME)
today announced that, effective July 1, it has completed its acquisition of 100%
of the outstanding stock of Association Casualty Insurance Company (Association
Casualty) and its affiliate Association Risk Management General Agency, Inc.
(ARMGA), both of Austin, Texas. The total consideration for the transaction was
$32.5 million with $8.5 million paid in the form of common stock of Atlantic
American Corporation, and the remaining $24.0 million paid in cash obtained from
borrowings under credit facilities and other available funds. Of the total
consideration, $21.1 million will be paid to acquire Association Casualty and
$11.4 million will be paid to acquire ARMGA.
Association Casualty specializes in underwriting workers' compensation insurance
in the State of Texas, and is rated A- ("Excellent") by A.M. Best Company. ARMGA
operates as a general agency providing workers' compensation coverage through
independent agents, insuring a broad range of business interests, as well as
placing all other property and casualty lines of coverage for Propane Gas
Dealers of Texas. By leveraging the experience and expertise of Atlantic
American's subsidiary, Georgia Casualty & Surety Company, Atlantic American will
aid in Association Casualty's expansion into underwriting other property and
casualty lines of business.
"This acquisition expands Atlantic American's coverage outside the Southeast and
builds on our concept of developing a portfolio of specialized, regional
insurance companies," stated Hilton H. Howell, Jr., president and chief
executive officer of Atlantic American. "Not only will this transaction provide
us with a number of cross-marketing opportunities, it adds years of industry
knowledge and expertise to our management team."
Harold Fischer, founder and president of both Association Casualty and ARMGA,
will continue with the companies he founded and will also be joining the board
of directors of Atlantic American Corporation. Atlantic American plans to work
with the existing management team to develop cross marketing opportunities with
Atlantic American's other insurance operations.
Atlantic American is an insurance holding company involved in specialty markets
of the life, health, property and casualty insurance industries. Its principal
subsidiaries include American Southern Insurance Company, American Safety
Insurance Company, Bankers Fidelity Life Insurance Company, Georgia Casualty &
Surety Company and Self-Insurance
Administrators, Inc.
Note regarding Private Securities Litigation Reform Act: Except for historical
information contained herein, this press release contains forward-looking
statements that involve a number of risks and uncertainties. Actual results
could differ materially from those indicated by such forward-looking statements
due to a number of factors and risks detailed from time to time in statements
and reports that Atlantic American Corporation has filed with the Securities and
Exchange Commission.
For further information contact:
Hilton H. Howell, President and
Chief Executive Officer Janice Kuntz
Atlantic American Corporation Fleishman-Hillard
(404) 266-5500 (404) 659-4446