Exhibit 10.16
CREDIT
AGREEMENT
THIS CREDIT AGREEMENT
(the “Agreement”), dated
as of March 5, 2004 (the “Effective Date”), is by and
between INFINITY PROPERTY AND CASUALTY, an Ohio corporation
(the “Borrower”) and REGIONS BANK, an Alabama
banking corporation (the “Lender”).
R E C I T A L
S:
A. Borrower has requested a line of
credit loan from Lender in the principal amount of up to Twenty
Million Dollars and No/100 ($20,000,000).
B. Lender is willing to make such
servicing line of credit available to Borrower on the terms and
conditions set forth herein.
AGREEMENT:
NOW, THEREFORE,
the parties agree as
follows:
ARTICLE I
DEFINITIONS
1.1 In addition to the terms defined
in the introductory paragraph hereof, the following terms shall
have the following respective meanings:
“Advance”
means a disbursement by Lender to
Borrower of principal of the Loan pursuant to Article 2
hereof.
“Advance Request
Form” means the
form attached hereto as Exhibit A .
“Amortizing
Payment” means (i)
all accrued but unpaid interest plus (ii) a principal payment equal
to the outstanding principal balance of the Loan as of the last day
of the Interest Term divided by thirty-six (36).
“Amortizing
Term” means from
the end of the Interest Term until the Extended Maturity
Date.
“Base
Rate” means the
rate of interest designated by Lender periodically as its Base
Rate. The Base Rate is not necessarily the lowest rate charged by
Lender.
“Business
Day” means any day
(other than a Saturday or Sunday) upon which Lender is open for
business.
“Closing
Date” means the
date of this Agreement.
“Default”
means an event, which with the
giving of notice or lapse of time or both, will constitute an Event
of Default.
“Default
Rate” means two
percent (2%) in excess of either the LIBOR Rate or Base Rate, as
applicable.
“Employee
Plan” means any
plan subject to Title IV of ERISA and maintained in whole or in
part for employees of Borrower.
“ERISA”
means the Employee Retirement
Income security Act of 1974, together with all amendments from time
to time thereto, including any rules or regulations promulgated
thereunder.
“Event of
Default” means the
events described in Section 7.1 hereof.
“Extended Maturity
Date” means May 30,
2008.
“GAAP”
means, as in effect from time to
time, generally accepted accounting principles consistently applied
with respect to a Person conducting a business the same as or
similar to that of Borrower.
“Interest
Term” means from
the Effective Date of this Agreement until the Initial Maturity
Date, during which time the Lender shall make Advances from the
Loan in accordance with the terms and conditions of this
Agreement.
“Initial Maturity
Date” means May 30,
2005.
“Internal Revenue
Code” means the
Internal Revenue Code of 1986, together with all amendments from
time to time thereto, including any rules or regulations
promulgated thereunder.
“LIBOR
Rate” means a per
annum rate of interest equal to the sum of (a) the “London
Interbank Offered Rate (LIBOR)” for a thirty (30) day period
as quoted on Telerate (or other source selected by Lender for rate
quotations for LIBOR if such a rate index is at any time not
available from Telerate), for each applicable 30 Day LIBOR Period,
as effective for contracts entered into on the first day of each 30
Day LIBOR Period (expressed as a decimal), plus (b) one hundred
seventy-five (175) basis points (1.75%).
“Lien”
means any voluntary or involuntary
mortgage, security deed, deed of trust, lien, pledge, assignment,
charge, security interest, title retention agreement, financing
lease, levy, execution, seizure, judgment, attachment, garnishment,
charge or other encumbrance of any kind.
“Loan”
means the $20,000,000 credit
facility available to Borrower pursuant to Article 2 of this
Agreement, with accrued interest on such principal and other agreed
charges as shall be outstanding at any given time.
“Loan
Documents” means
this Agreement, the Note and any other documents or instruments now
or hereafter executed evidencing, securing, or relating to the
Loan.
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“Loan
Obligations” means
the aggregate of all principal and interest owing from time to time
under the Note and all expenses, charges and other amounts from
time to time owing under the Note, this Agreement, or the other
Loan Documents and all covenants, agreements and other obligations
from time to time owing to, or for the benefit of, Lender pursuant
to the Loan Documents, including, but not limited to, amounts paid
or expended by Lender to cure or attempt to cure any
“Default” or “Event of Default” pursuant
to, and as defined in, the documents evidencing or securing the
Loan, or to pay all or any part of the Loan, with interest,
following such a “Default” or “Event of
Default” thereunder, and any expenses incurred or paid in
connection with such “Default” or “Event of
Default.”.
“Maturity Extension
Conditions” means
(i) no Default or Event of Default exists as to this Agreement and
(ii) Borrower has requested to Lender in writing thirty (30) days
prior to the end of the Initial Maturity Date requesting that the
maturity of the Loan be extended to the Extended Maturity Date
since as of the Initial Maturity Date the Loan shall have an
outstanding principal outstanding.
“Note”
means that certain Line of Credit
Promissory Note, dated of even dates herewith, in the principal
amount of $20,000,000 executed and delivered by Borrower to Lender,
evidencing the liability of Borrower to pay the Loan to Lender or
its order, as the same may hereafter be renewed, extended,
modified, or amended.
“Organizational
Documents” means
Borrower’s Articles of Incorporation, By-laws, certificates
of existence and good standing, resolutions and incumbency
certificates with all amendments thereto.
“Person”
means an individual, corporation,
partnership, association, joint-stock company, trust, business
trust, unincorporated organization or joint venture, or a court or
governmental authority.
“Unused Line
Fee” means ten
basis points (0.10%) times the average daily amount of the
unadvanced portion of the Loan divided by four (4).
1.2 Singular terms shall include the
plural forms and vice versa, as applicable, of the terms
defined.
1.3 Terms contained in this
Agreement shall, unless otherwise defined herein or unless the
context otherwise indicates, have the meanings, if any, assigned to
them by Uniform Commercial Code in effect in the State of
Alabama.
1.4 All accounting terms used in
this Agreement shall be construed in accordance with GAAP, except
as otherwise defined.
1.5 All references to other
documents or instruments shall be deemed to refer to such documents
or instruments as they may hereafter be extended, renewed,
modified, or amended and all replacements and substitutions
therefor.
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ARTICLE II
THE LOAN
2.1 Disbursement of
Advances . Subject to the terms and conditions of this
Agreement, Lender agrees to make Advances to Borrower from time to
time during the Interest Term, in an aggregate principal amount at
any time outstanding not to exceed $20,000,000. During the Interest
Term, Borrower may borrow, repay and reborrow the principal of the
Loan, all in accordance with the terms and conditions of this
Agreement. Each Advance shall be disbursed by Lender’s
depositing the amount of such Advance into a checking account of
Borrower maintained with Lender or otherwise disbursed in a manner
acceptable to Lender and Borrower. During the Amortizing Term,
Borrower shall not be allowed to receive any Advances under the
Loan.
2.2 The Note . The
Loan shall be evidenced by the Note. The Note shall represent the
obligation of Borrower to pay the aggregate amount of Advances
outstanding under the Loan from time to time outstanding, plus
interest thereon and agreed charges as herein provided. Lender is
hereby authorized to enter the date and amount of each Advance and
each payment of principal and interest on the Loan on a schedule to
be annexed to and constituting a part of the Note, and such entries
shall constitute prima facie evidence of the accuracy of
information so entered. In lieu of endorsing said schedule as
hereinabove provided, Lender is hereby authorized, at its option,
to record such Advances and such payments of principal and interest
in its books and records, and such books and records shall
constitute prima facie evidence of the accuracy of the
information contained therein. The Note shall (a) be dated the date
of this Agreement, (b) be stated to mature on the Initial Maturity
Date, unless the Maturity Extension Conditions have been satisfied
then which the Note shall mature on the Extended Maturity Date and
(c) bear interest from the date of each Advance on the outstanding
Advances made from time to time at the applicable interest rate per
annum specified in Section 2.5 hereof.
2.3 Rate Information and
Advance Request Forms . The Borrower shall provide to the
Lender a completed Advance Request Form.
2.4 Payments
.
(a) On April 1, 2004, and on the
first (1 st ) day of each month thereafter,
Borrower shall pay to Lender all accrued but unpaid interest shall
be due and payable.
(b) On the Initial Maturity Date,
Borrower shall pay to Lender all accrued but unpaid interest and
the outstanding principal balance shall be due and
payable.
(c) If the Maturity Extension
Conditions are satisfied then on May 30, 2005, Borrower shall pay
to Lender all accrued but unpaid interest and on the last day of
each calendar quarter thereafter the Borrower shall pay to the
Lender an Amortizing Payment.
(d) On April 30, 2004, July 30,
2004, October 30, 2004, January 30, 2005, April 30, 2005, Borrower
shall pay to Lender the Unused Line Fee.
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(e) The Loan shall mature and be
payable in full upon the Extended Maturity Date, at which time all
accrued but unpaid interest and the outstanding principal balance
shall be due and payable.
2.5 Interest Rate; Interest
Calculation; Late Charge; Default Rate .
(a) The Loan shall bear interest at
the LIBOR Rate.
(b) Borrower agrees that if at any
time Lender determines, in accordance with reasonable and ordinary
commercial standards, that its acquisition of funds in the London
interbank market would be unsafe, impractical or in violation of
any law, regulation, guideline or order, Lender may so notify
Borrower in writing or by telephone, and upon the giving of such
notice, any LIBOR Rate shall immediately terminate and the
outstanding principal balance hereof shall thereupon commence to
bear interest at the Base Rate. Borrower further agrees that,
notwithstanding the fact that Lender may have elected to base the
interest rate applicable hereunder upon Lender’s cost of
funds in the London interbank market, Lender shall not be required
actually to obtain funds from such sources at any time.
(c) All rates of interest to be
applied to the principal of the Loan shall be calculated on the
basis of a 360-day year by multiplying the outstanding principal
amount by the applicable per annum rate, multiplying the product
thereof by the actual number of days elapsed, and dividing the
product so obtained by 360.
(d) Borrower shall pay to Lender a
late charge equal to five percent (5%) of any payment which is not
received by Lender within ten (10) days of the due date therefor in
order to cover the additional expenses incident to the handling and
processing of delinquent payments.
(e) Notwithstanding Section 2.5,
above, while an Event of Default exists, interest shall accrue at
the Default Rate.
2.6 Prepayment .
Advances may be prepaid in whole or in part without any penalty or
premium. All prepayments will be applied first to interest then due
and payable and any balance shall be applied to reduce the
outstanding principal balance.
ARTICLE III
CONDITIONS PRECEDENT TO MAKING
ADVANCES
3.1 The obligations of Lender to
make any Advance to Borrower shall be subject to the satisfaction
by Borrower of the following conditions precedent, as of the date
of the requested Advance:
(a) There shall exist no Event of
Default or Default.
(b) The representations and
warranties of Borrower made in this Agreement or in any certificate
executed and delivered pursuant hereto shall be true and accurate
in all material respects.
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(c) Borrower shall have performed or
observed all agreements, covenants, and conditions required by
Lender to be performed or observed by Borrower.
(d) Borrower shall have duly
executed the Loan Documents, together with any and all other
documents that Lender or its legal counsel, in its reasonable
discretion, shall deem necessary to complete the transactions
contemplated hereunder.
(e) Any proceedings taken in
connection with the performance and observance of the provisions of
this Agreement shall be reasonably satisfactory to Lender and its
legal counsel.
(f) Prior to the first Advance,
Lender shall have received, in form and substance satisfactory to
Lender and its counsel:
(i) Copies of the Organizational Documents of the
Borrower, certified on the Closing Date by the appropriate Person
on behalf of Borrower.
(ii) Certificates of Existence for Borrower,
certified on or within thirty (30) days of the Closing Date by the
Secretary of State of the state of Borrower’s
incorporation.
(iii) Copies of the resolutions of the Board of
Directors of Borrower, certified as of the Closing Date by the
appropriate Person(s) on behalf of the Borrower, authorizing (A)
the transactions contemplated by this Agreement and (B) the
execution, delivery and performance by the Borrower of the Loan
Documents and the execution and delivery of all other documents to
be delivered by the Borrower in connection with the transactions
herein contemplated.
(iv) Such other agreements, instruments, approvals,
opinions and other documents as Lender may reasonably
request.
Each request for Advance shall constitute
Borrower’s representation and warranty that each of the
foregoing conditions is satisfied on the date of such request, and
will continue to be satisfied on the date the requested Advance is
made.
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES
To induce Lender to enter into this
Agreement and to make Advances hereunder, Borrower represents and
warrants to Lender that:
4.1 Existence, Power and
Qualification . Borrower is duly organized and validly
existing under the laws of the State of Ohio, and has the power and
authority and the legal right to own its property and to conduct
its business in the manner in which it is now conducted or
hereafter contemplates conducting its business.
4.2 Authority to Borrow
Hereunder . Borrower has the power and authority and the
legal right to make, deliver and perform the Loan Documents.
Borrower has taken all necessary
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action on its part to authorize the execution,
delivery and performance of the Loan Documents, and the borrowing
contemplated thereby. No consent or authorization of, or filing
with, any federal, state, county or municipal government, or any
department or agency of any such government, is required of
Borrower in connection with the execution, delivery, performance,
validity or enforceability of the Loan Documents, or the borrowing
contemplated hereby.
4.3 Due Execution and
Enforceability . The Loan Documents have been duly executed
and delivered on behalf of the Borrower, and constitute the legal,
valid and binding obligations of Borrower enforceable against
Borrower in accordance with its respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally, and general
principles of equity which may limit the availability of equitable
remedies.
4.4 No Conflict . The
execution, delivery and performance of the Loan Documents, and the
consummation of the transactions contemplated therein, will not (a)
conflict with or be in contravention of any law, regulation, rule,
order or judgment applicable to the Borrower or its respective
Organizational Documents, or any other agreement, instrument,
mortgage, deed of trust, lien, lease, judgment, decree or order to
which Borrower is a party or is subject or by which the Borrower or
its properties is bound or affected, or (b) result in the creation
of any Lien upon any of the properties of the Borrower.
4.5 Material Claims .
There is no litigation, claim, lawsuit, investigation, action or
other proceeding pending or, to the knowledge of the Borrower,
threatened before any court, agency, arbitrator or other tribunal
which individually or in the aggregate might result in any material
adverse change in the financial condition, operations, businesses
or prospects of the Borrower.
4.6 Financial Statements
Accurate . All financial statements heretofore or hereafter
provided by the Borrower are and will be true and complete in all
material respects as of its respective dates and will fairly
present the financial condition of the Borrower, and there are no
liabilities, direct or indirect, fixed or contingent, as of the
dates of such statements which are not reflected therein or in the
notes thereto or in a written certificate delivered with such
statements. There has been no material adverse change in the
financial condition, operations, or prospects of the Borrower,
since the date of such statements except as fully disclosed in
writing with the delivery of such statements.
4.7 No Defaults or
Restrictions . There is no declared default under any
agreement or instrument nor does there exist any restriction in the
Borrower’s Organizational Documents that causes or would
cause a material adverse effect on the business, properties,
operations or condition, financial or otherwise, of
Borrower.
4.8 Necessary Permits,
Etc . Borrower possesses all franchises, trademarks,
permits, licenses, consents, agreements and governmental approvals
that are necessary or required by any authority to carry on its
businesses as now conducted. The Borrower has not received any
notice of default nor termination of any material agreement or any
notice of noncompliance with any law, rule or regulation by which
it is bound, which would cause a material adverse effect upon the
business, properties, operations or condition, financial or
otherwise, of Borrower.
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4.9 Disclosure .
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