Exhibit 10.1
Execution Copy
AMENDED
AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED
CREDIT AGREEMENT (this “ Agreement
”) is entered into as of May 23, 2008, by and
between EMPLOYERS HOLDINGS, INC., a Nevada corporation
(“ Borrower
”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“
Bank
”).
RECITALS
WHEREAS, Borrower is
indebted to Bank pursuant to the terms and conditions of that
certain Credit Agreement, dated as of March 26, 2008 (as
amended, modified or supplemented prior to the date hereof,
the “Existing Credit
Agreement” ), by and between Borrower and
Bank.
WHEREAS,
the
Bank has previously extended a credit facility to Borrower
more particularly described in the Existing Credit
Agreement, including, but not limited to a line of credit in
the maximum principal amount of Fifty Million Dollars
($50,000,000.00) (the “Existing Line of
Credit” ), which is evidenced by that certain
Revolving Line of Credit Note, dated March 26, 2008,
in the original principal amount of Fifty Million Dollars
($50,000,000.00), as amended or modified from time to
time.
WHEREAS, Borrower has
requested that Bank provide the credit accommodations
described below, the proceeds of which shall repay in full
Borrower’s outstanding revolving advances under and in
respect of the Existing Credit Agreement and the Existing
Line of Credit, if any, and for such other purposes as
described below, and Bank has agreed to provide such credit
to Borrower on the terms and conditions contained
herein.
NOW, THEREFORE, for
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Bank and Borrower hereby agree that
the Existing Credit Agreement is hereby amended and restated
in its entirety as follows:
ARTICLE I
CREDIT TERMS
SECTION
1.1. LINE OF
CREDIT.
(a) Line of
Credit . Subject to the terms and
conditions of this Agreement, Bank hereby agrees to make
advances to Borrower from time to time up to and including
March 26, 2011, not to exceed at any time the aggregate
principal amount of (i) prior to May 1, 2009, One
Hundred Fifty Million Dollars ($150,000,000.00) and
(ii) from and after May 1, 2009, Fifty Million
Dollars ($50,000,000.00) (“ Line of Credit
”), the proceeds of which shall be used to repay
outstanding advances under the Existing Line of Credit, if
any, provide financing for Borrower’s acquisition of
AmCOMP Incorporated, and to finance Borrower’s working
capital requirements. Borrower’s obligation
to repay advances under the Line of Credit shall be evidenced
by that certain Amended and Restated Revolving Line of Credit
Note, dated May 23, 2008, executed
by
Borrower and payable to the order of Bank ( “Line of Credit
Note” ), all terms of which are incorporated herein by
this reference.
(b) Letter of
Credit Subfeature . As a subfeature under
the Line of Credit, Bank agrees from time to time during the
term thereof to issue or cause an affiliate to issue standby
letters of credit for the account of Borrower (each, a
“ Letter of Credit
” and collectively, “ Letters of
Credit ”); provided however, that the aggregate
undrawn amount of all outstanding Letters of Credit shall not
at any time exceed Five Million Dollars
($5,000,000.00). The form and substance of each
Letter of Credit shall be subject to approval by Bank, in its
sole discretion. Each Letter of Credit shall be
issued for a term not to exceed three hundred sixty (360)
days, as designated by Borrower; provided however, that no
Letter of Credit shall have an expiration date subsequent to
the maturity date of the Line of Credit. The
undrawn amount of all Letters of Credit shall be reserved
under the Line of Credit and shall not be available for
borrowings thereunder. Each Letter of Credit shall
be subject to the additional terms and conditions of the
Letter of Credit agreements, applications and any related
documents required by Bank in connection with the issuance
thereof. Each drawing paid under a Letter of
Credit shall be deemed an advance under the Line of Credit
and shall be repaid by Borrower in accordance with the terms
and conditions of this Agreement applicable to such advances;
provided however, that if advances under the Line of Credit
are not available, for any reason, at the time any drawing is
paid, then Borrower shall immediately pay to Bank the full
amount drawn, together with interest thereon from the date
such drawing is paid to the date such amount is fully repaid
by Borrower, at the rate of interest applicable to advances
under the Line of Credit. In such event Borrower
agrees that Bank, in its sole discretion, may first debit the
Collection Account (as defined below), and if there are
insufficient funds therein, may then debit any other deposit
account maintained by Borrower with Bank, for the amount of
any such drawing.
(c) Borrowing and
Repayment . Borrower may from time to time
during the term of the Line of Credit borrow, partially or
wholly repay its outstanding borrowings, and reborrow,
subject to all of the limitations, terms and conditions
contained herein or in the Line of Credit Note; provided
however, that the total outstanding borrowings under the Line
of Credit shall not at any time exceed the maximum principal
amount available thereunder, as set forth above.
SECTION
1.2.
INTEREST/FEES.
(a) Interest
. The outstanding principal balance of each credit
subject hereto shall bear interest from the date such drawing
is paid to the date such amount is fully repaid by Borrower,
at the rate of interest set forth in each promissory note or
other instrument or document executed in connection
therewith.
(b) Computation and
Payment . Interest shall be computed on the
basis of a 360-day year, actual days
elapsed. Interest shall be payable at the times
and place set forth in each promissory note or other
instrument or document required hereby.
(c) Unused
Commitment Fee . Borrower shall pay to Bank
a fee equal to one-tenth percent (0.10%) per annum (computed
on the basis of a 360-day year, actual days elapsed) on the
average daily unused amount of the Line of Credit, which fee
shall be calculated on a quarterly
basis
by Bank and shall be due and payable by Borrower in arrears
within ten (10) days after each billing is sent by
Bank.
(d) Letter of
Credit Fees . Borrower shall pay to Bank
(i) fees upon the issuance of each Letter of Credit
equal to (A) prior to May 1, 2009, seventy-five one
hundredths of one percent (0.75%) per annum, and
(B) from and after May 1, 2009, thirty one
hundredths of one percent (0.30%) per annum (in each case,
computed on the basis of a 360-day year, actual days elapsed)
of the face amount thereof, and (ii) fees upon the
payment or negotiation of each drawing under any Letter of
Credit and fees upon the occurrence of any other activity
with respect to any Letter of Credit (including without
limitation, the transfer, amendment or cancellation of any
Letter of Credit) determined in accordance with Bank’s
standard fees and charges then in effect for such
activity.
(e) Commitment
Fee . Borrower shall pay to Bank a
non-refundable commitment fee for the Line of Credit equal to
Three Hundred Seventy-Five Thousand Dollars ($375,000.00),
which fee shall be due and payable in full on May 30,
2008.
SECTION
1.3. COLLECTION OF
PAYMENTS. Borrower authorizes Bank to collect all
principal, interest and fees due under each credit subject
hereto by charging Borrower’s deposit account number
4121458269 with Bank (the “Collection
Account” ), or any other deposit account
maintained by Borrower with Bank, for the full amount
thereof. Should there be insufficient funds in any
such deposit account to pay all such sums when due, the full
amount of such deficiency shall be immediately due and
payable by Borrower.
SECTION
1.4.
COLLATERAL.
As security for all
indebtedness and other obligations of Borrower to Bank
pursuant to the Loan Documents, Borrower hereby grants to
Bank security interests of first priority in Borrower’s
custody account number 22831700 maintained with Wells Fargo
Bank, N.A. Institutional Trust Services (“ Custody Account
”), which Custody Account shall at all times have
deposited to it securities having an aggregate Collateral
Value (as
defined in that certain Amended and Restated Security
Agreement: Securities Account, executed as of
May 23, 2008, by Borrower) not less than
the maximum principal amount available to be advanced to
Borrower under the Line of Credit, as set forth in
Section 1.1(a) hereof.
The foregoing shall be
evidenced by and subject to the terms of such security
agreements, financing statements, deeds or mortgages, control
agreements and other documents as Bank shall reasonably
require, all in form and substance satisfactory to
Bank. Borrower shall pay to Bank immediately upon
demand the full amount of all charges, costs and expenses (to
include fees paid to third parties and all allocated costs of
Bank personnel), expended or incurred by Bank in connection
with any of the foregoing security, including without
limitation, filing and recording fees and costs of
appraisals, audits and title insurance.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower makes the
following representations and warranties to Bank, which
representations and warranties shall survive the execution of
this Agreement and shall continue in full force and effect
until the full and final payment, and satisfaction and
discharge, of all obligations of Borrower to Bank subject to
this Agreement.
SECTION
2.1. LEGAL
STATUS. Borrower is a corporation, duly organized
and existing and in good standing under the laws of Nevada,
and is qualified or licensed to do business (and is in good
standing as a foreign corporation, if applicable) in all
jurisdictions in which such qualification or licensing is
required or in which the failure to so qualify or to be so
licensed could have a material adverse effect on
Borrower.
SECTION
2.2. AUTHORIZATION
AND VALIDITY. This Agreement and each promissory
note, contract, instrument and other document required hereby
or at any time hereafter delivered to Bank in connection
herewith (collectively, the “Loan
Documents” ) have been duly authorized, and upon
their execution and delivery in accordance with the
provisions hereof will constitute legal, valid and binding
agreements and obligations of Borrower or the party which
executes the same, enforceable in accordance with their
respective terms.
SECTION
2.3. NO
VIOLATION. The execution, delivery and performance
by Borrower of each of the Loan Documents do not violate any
provision of any law or regulation (including, without
limitation, any insurance laws or regulations), or contravene
any provision of the Articles of Incorporation or By-Laws of
Borrower, or result in any breach of or default under any
contract, obligation, indenture or other instrument to which
Borrower is a party or by which Borrower may be
bound.
SECTION
2.4.
LITIGATION. There are no pending, or to the best
of Borrower’s knowledge threatened, actions, claims,
investigations, suits or proceedings by or before any
governmental authority, arbitrator, court or administrative
agency which could have a material adverse effect on the
financial condition or operation of Borrower other than those
disclosed by Borrower to Bank in writing prior to the date
hereof.
SECTION
2.5. CORRECTNESS OF
FINANCIAL STATEMENT. The annual financial
statement of Borrower dated December 31, 2007, and all
interim financial statements delivered to Bank since said
date, true copies of which have been delivered by Borrower to
Bank prior to the date hereof, (a) are complete and correct
and present fairly the financial condition of Borrower, (b)
disclose all liabilities of Borrower that are required to be
reflected or reserved against under generally accepted
accounting principles, whether liquidated or unliquidated,
fixed or contingent, and (c) have been prepared in accordance
with generally accepted accounting principles consistently
applied. Since the dates of such financial
statements there has been no material adverse change in the
financial condition of Borrower, nor has Borrower mortgaged,
pledged, granted a security interest in or otherwise
encumbered any of its assets or properties except in favor of
Bank or as otherwise permitted by Bank in
writing.
SECTION
2.6. INCOME TAX
RETURNS. Borrower has no knowledge of any pending
assessments or adjustments of its income tax payable with
respect to any year.
SECTION
2.7. NO
SUBORDINATION. There is no agreement, indenture,
contract or instrument to which Borrower is a party or by
which Borrower may be bound that requires the subordination
in right of payment of any of Borrower’s obligations
subject to this Agreement to any other obligation of
Borrower.
SECTION
2.8. PERMITS,
FRANCHISES. Borrower possesses, and will hereafter
possess, all permits, consents, approvals, franchises and
licenses required and rights to all trademarks, trade names,
patents, and fictitious names, if any, necessary to enable it
to conduct the business in which it is now engaged in
compliance with applicable law.
SECTION
2.9.
ERISA. Borrower is in compliance in all material
respects with all applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended or
recodified from time to time ( “ERISA”
); Borrower has not violated any provision of any defined
employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a “Plan”
); no Reportable Event as defined in ERISA has occurred and
is continuing with respect to any Plan initiated by Borrower;
Borrower has met its minimum funding requirements under ERISA
with respect to each Plan; and each Plan will be able to
fulfill its benefit obligations as they come due in
accordance with the Plan documents and under generally
accepted accounting principles.
SECTION
2.10. OTHER
OBLIGATIONS. Borrower is not in default on any
obligation for borrowed money, any purchase money obligation
or any other material lease, commitment, contract, instrument
or obligation.
SECTION
2.11. ENVIRONMENTAL
MATTERS. Except as disclosed by Borrower to Bank
in writing prior to the date hereof, Borrower is in
compliance in all material respects with all applicable
federal or state environmental, hazardous waste, health and
safety statutes, and any rules or regulations adopted
pursuant thereto, which govern or affect any of
Borrower’s operations and/or properties, including
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal
Resource Conservation and Recovery Act of 1976, and the
Federal Toxic Substances Control Act, as any of the same may
be amended, modified or supplemented from time to
time. None of the operations of Borrower is the
subject of any federal or state investigation evaluating
whether any remedial action involving a material expenditure
is needed to respond to a release of any toxic or hazardous
waste or substance into the environment. Borrower
has no material contingent liability in connection with any
release of any toxic or hazardous waste or substance into the
environment.
SECTION
2.12.
On May 15, 2008, the Nevada Commissioner of Insurance approved the
increased limit for a special dividend to Borrower from Employers
Insurance Company of Nevada to $275,000,000, which dividend has
been distributed to Borrower prior to the date hereof and the
proceeds of which are not subject to any claim, right of set-off,
encumbrance or other limitation of any sort.
ARTICLE III
CONDITIONS
SECTION
3.1. CONDITIONS OF
INITIAL EXTENSION OF CREDIT. The obligation of
Bank to extend any credit contemplated by this Agreement is
subject to the fulfillment to Bank’s satisfaction of
all of the following conditions:
(a) Approval of
Bank Counsel . All legal matters incidental
to the extension of credit by Bank shall be satisfactory to
Bank’s counsel.
(b) Documentation
. Bank shall have received, in form and substance
satisfactory to Bank, each of the following, duly
executed:
| |
(i)
|
This
Agreement and each promissory note or other instrument or
document required hereby.
|
| |
(ii)
|
Certificate
of Incumbency.
|
| |
(iii)
|
Secretary’s
Certificate attaching board resolutions authorizing
transaction.
|
| |
(iv)
|
Amended
and Restated Security Agreement: Securities
Account.
|
| |
(v)
|
Addendum
to Amended and Restated Security Agreement: Securities
Account.
|
| |
(vi)
|
Securities
Account Control Agreement.
|
| |
(vii)
|
Statement
of Purpose.
|
| |
(viii)
|
Disbursement
Order.
|
| |
(ix)
|
Institutional
Trust Services Account Set Up and Disclosures Custody Account
Management Information for Employers Holdings, Inc. Custody
Account (to include an amended authorization allowing internal
Wells Fargo Bank, N.A. disclosure of custody account
information).
|
| |
(x)
|
Custody
Agreement For Non-ERISA Assets.
|
| |
(xi)
|
Institutional
Trust Services Custody Fee Schedule for Employers Holdings,
Inc.
|
| |
(xii)
|
Service
Agreement Trust Portfolio Reporting Service.
|
| |
(xiii)
|
Authorized
Signers List of Employers Holdings, Inc.
|
| |
(xiv)
|
Such
other documents as Bank may require under any other Section of
this Agreement.
|
(c) Legal
Opinion . Bank shall have received, in form
and substance satisfactory to Bank, an executed favorable legal
opinion of counsel to Borrower covering no violation of
applicable laws and regulations.
(d) Financial
Condition . There shall have been no
material adverse change, as reasonably determined by Bank, in
the financial condition or business of Borrower, nor any
material decline, as reasonably determined by Bank, in the
market value of any collateral required hereunder or a
substantial or material portion of the assets of
Borrower.
SECTION
3.2. CONDITIONS OF
EACH EXTENSION OF CREDIT. The obligation of Bank
to make each extension of credit requested by Borrower
hereunder shall be subject to the fulfillment to Bank’s
satisfaction of each of the following
conditions:
(a) Compliance
. The representations and warranties contained
herein and in each of the other Loan Documents shall be true
on and as of the date of the signing of this Agreement and on
the date of each extension of credit by Bank pursuant hereto,
with the same effect as though such representations and
warranties had been made on and as of each such date, and on
each such date, no Event of Default as defined herein, and no
condition, event or act which with the giving of notice or
the passage of time or both would constitute such an Event of
Default, shall have occurred and be continuing or shall
exist.
(b) Documentation
. Bank shall have received all additional
documents which may be required in connection with such
extension of credit.
ARTICLE IV
AFFIRMATIVE COVENANTS
Borrower covenants that
so long as Bank remains committed to extend credit to
Borrower pursuant hereto, or any liabilities (whether direct
or contingent, liquidated or unliquidated) of Borrower to
Bank under any of the Loan Documents remain outstanding, and
until payment in full of all obligations of Borrower subject
hereto, Borrower shall, and shall cause each of
Borrower’s subsidiaries to, unless Bank
otherw
