CREDIT AGREEMENT
This Credit Agreement is made and entered into as of the 3rd day of
April, 1995 by and between Pennsylvania Company, a Delaware corporation
("Lender"), and American Financial Corporation, an Ohio corporation
("Borrower").
WHEREAS, Borrower and Lender wish to enter into this Credit Agreement
pursuant to which Borrower may borrow from Lender up to Six Hundred Seventy-
Five Million Dollars ($675,000,000);
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereby agree as follows:
Section 1. Revolving Loans. From and after the date hereof to
and including April 2, 2005, Lender will make available to the Borrower loans
as requested by Borrower pursuant to the provisions hereof. Each such loan
shall be referred to herein as a "Loan". Borrower may borrow, repay and
reborrow Loans hereunder from time to time so long as the aggregate amount of
Loans outstanding hereunder at any one time does not exceed $675,000,000.
The Lender shall, and is hereby irrevocably authorized by the Borrower to,
endorse on the schedule to the attached Subordinated Promissory Note ("Note")
or a continuation of such schedule, an appropriate notation evidencing
advances and repayments of Loans pursuant to this Credit Agreement.
On March 31, 2005, the outstanding principal balance on the revolving
credit will be converted to a term note which will be repaid in sixteen equal
installments, one of which will be due and payable, along with any accrued
interest under this note, on each April 1, July 1, October 1, and January 1
beginning April 1, 2005 and ending January 1, 2009.
Borrower may pay any and all amounts outstanding hereunder at any time
without penalty.
Section 2. The Note. The absolute and unconditional obligation
of the Borrower to repay to Lender the principal of Loans pursuant to this
Credit Agreement shall be evidenced by a Note in the form attached; provided
that the principal amount and interest on the Note are and shall be
subordinate and junior to all principal of, premium, if any, and interest on
all Senior Debt (as defined in the Note) to the extent set forth in the Note.
Section 3. Procedure for Obtaining Loans. Whenever the
Borrower desires to receive a Loan, the Borrower will furnish to the Lender a
written or telephonic request therefor which shall (1) be received by the
Lender not less than two and not more than ten Business Days prior to the
date of such Loan, (2) state the amount of such Loan, (3) state the bank
account of the Borrower to which payment of the proceeds of such Loan is to
be made. Any telephonic application made by the Borrower pursuant to the
provisions of this Section 3 shall be promptly confirmed in writing.
Section 4. Conditions to each Loan. The obligation of Lender
to make each Loan hereunder shall be subject to the satisfaction, prior
thereto or concurrently therewith, of each of the following conditions
precedent:
(a) Request. Lender shall have received the request therefor as
provided in Section 3 hereof;
(b) No Defaults. There does not exist any Event of Default or any
condition which would or would with the passage of time or lapse of any cure
period constitute an Event of Default, nor shall there exist any "Event of
Default" or any condition which would or would with the passage of time or
lapse of any cure period constitute an "Event of Default" under any debt
instrument of Borrower pursuant to which $10,000,000 or more is outstanding
at the time of default; and
(c) Accuracy. The representations, covenants and warranties
contained in this Credit Agreement are true in all material respects, and the
Borrower has complied in all material respects with all of the covenants
contained in this Credit Agreement.
Section 5. Principal/Interest Payable on Note.
(a) The principal of each Loan shall be repaid according to the
schedule set forth in the Note. Notwithstanding, in the case of an Event of
Default hereunder, the entire principal of the Note may become or be declared
due and payable as provided herein.
(b) Interest shall be paid on the outstanding principal amount of
the Note quarterly on each Interest Payment Date (as defined below) until the
principal sum or the unpaid portion thereof shall have been fully paid as
hereinafter provided. The applicable interest rate shall be 11-5/8% per
annum.
The Borrower will pay interest quarterly on April 1, July 1, October 1
and January 1 of each year or if such date is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"). Interest on
amounts outstanding under the Credit Agreement will accrue from the most
recent date to which interest has been paid; provided that the first Interest
Payment Date shall be July 1, 1995. Interest will be computed on the basis
of a 365 or 366-day year, as appropriate, and actual number of days elapsed.
(c) Each overdue amount payable by the Borrower under this Credit
Agreement shall (to the extent permitted by applicable law) bear interest,
from the date on which such amount shall have first become due and payable by
the Borrower to the date on which such amount shall be paid (whether before
or after judgment), at the lesser of the prime rate announced from time to
time by The Provident Bank in Cincinnati, Ohio plus 4% or the maximum
interest rate permitted by law. The unpaid interest accrued on any overdue
amount in accordance with this subsection (c) shall become and be absolutely
due and payable by the Borrower on demand by the Lender at any time.
Interest on each overdue amount will continue to accrue and will (to the
extent permitted by applicable law) be compounded daily until the obligations
of the Borrower in respect of the payment of such overdue amount are
discharged (whether before or after judgment).
Section 6. Representations and Warranties. To induce the
Lender to make the Loans herein contemplated, the Borrower hereby represents
and warrants as follows:
(a) Organization. The Borrower is a corporation duly organized
and in good standing under the laws of the State of Ohio and has the power
and authority to own and operate its assets and to conduct its business as is
now done.
(b) Litigation, etc. As of the date hereof, there are no
actions, suits, proceedings or governmental investigations pending or, to the
knowledge of the Borrower, its shareholders, directors or officers,
threatened against the Borrower which, if adversely determined could result
in a material adverse change in the financial condition, business or assets
of the Borrower and there is no basis known to the Borrower, its officers,
directors or shareholders for any such actions, suits, proceedings or
investigations.
(c) Taxes. As of the date hereof, the Borrower has filed all
returns and reports that are now required to be filed by it in connection
with any federal, state or local tax, duty or charge levied, assessed or
imposed upon it, or its property, including unemployment, social security and
similar taxes; and all of such taxes have been either paid or adequate
reserves or other provisions have been made therefor.
(d) Authority. The Borrower has full corporate power and
authority to enter into the transactions provided for in this Credit
Agreement and has been duly authorized to do so by appropriate action of its
board of directors. This Credit Agreement, when executed and delivered by
the Borrower, will constitute the legal, valid and binding obligations of the
Borrower enforceable in accordance with their respective terms except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws in effect from time to time affecting
the rights of creditors generally and except as such enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in law or in equity).
(e) Other Defaults. There does not now exist any default or
violation by the Borrower of or under any of the terms, conditions or
obligations of: (i) its Articles of Incorporation or Code of Regulations;
(ii) any indenture, mortgage, or deed of trust, and (iii) any law,
regulation, ruling, order, injunction, decree, condition or other requirement
applicable to or imposed upon it by any law or by any governmental authority,
court or agency; and the consummation of this Credit Agreement and of the
transactions set forth herein will not result in any such default or
violation.
Section 7. Covenants. The Borrower agrees that from the date
of execution of this Credit Agreement until all Loans to the Lender have been
fully paid it will:
(a) Books and Records. Maintain proper books of account
and other records and enter therein complete and accurate entries and records
of all of its transactions in accordance with generally accepted accounting
principles and give representatives of the Lender access thereto at all
reasonable times, including permission to examine, copy and make abstracts
from any of such books and records and such other information which may be
helpful to the Lender in evaluating the status of the Loans as it may from
time to time reasonably request.
(b) Quarterly Statements. Furnish the Lender within 60
days after the end of each fiscal quarter with copies of its financial
statements.
(c) Annual Statements. Furnish the Lender within 120
days after the end of each fiscal year of the Borrower, annual financial
statements, a balance sheet as of the end of such year, a profit and loss
statement, a statement of stockholder equity, and a statement of cash flows
for such year.
(d) Taxes. Pay and discharge when due all tax
indebtedness and all taxes, assessments, charges, levies and other
liabilities imposed upon it, its income, profits, property or business,
except those which currently are being contested in good faith by appropriate
proceedings and for which the Borrower will have set aside adequate reserves
or made other adequate provision with respect thereto, but any such disputed
item will be paid forthwith upon the commencement of any proceeding for the
foreclosure of any lien which may have attached with respect thereto, unless
the Lender will have received an opinion in form and substance and from legal
counsel acceptable to it that such proceeding is without merit.
(e) Operations. Continue in operation in substantially
the same manner as at present, except where such operation is rendered
impossible by a fire, strike or other events beyond its control; keep its
real and personal properties in good operating condition and repair; make all
necessary and proper repairs, renewals, replacements, additions and
improvements thereto and comply with the provisions of all leases to which it
is party or under which it occupies or holds real or personal property so as
to prevent any loss or forfeiture thereof or thereunder.
(f) Compliance with Laws. Comply with all laws and
regulations applicable to the Borrower and to the operation of its business,
including without limitation those relating to environmental and health
matters.
(g) Use of Proceeds. Use the proceeds of the Loans for
the following purposes and for no other purposes:
(1) repayment of outstanding indebtedness;
(2) working capital; and
(3) advances to affiliates.
(h) Maintenance of Existence. Take such action as may
be required to remain in good standing under the laws of the State of Ohio
and to become or remain, as the case may be (i) duly qualified in all
jurisdictions where required by the conduct of its business or ownership of
its assets and (ii) duly licensed to carry on such business in each
jurisdiction where it conducts such business; and
(i) Notice of Default. Notify the Lender in writing
within five days after the Borrower knows or has reason to know of the
occurrence of an Event of Default.
Section 8. Events of Default. The occurrence of any one or
more of the following events shall constitute an "Event of Default"
hereunder.
(a) Note. The non-payment of any principal amount of
the Note when due, whether by acceleration or otherwise, or the nonpayment of
any interest upon the Note within 5 days of when the same is due and payable;
(b) Other Indebtedness. The non-payment of any
principal amount of any indebtedness outstanding of more than $10,000,000
when due, whether by acceleration or otherwise, or the nonpayment of any
interest upon any such indebtedness within 5 days of when the same is due and
payable;
(c) Covenants. The default in the due observance of any
affirmative covenant or agreement to be kept or performed by the Borrower
under the terms of this Credit Agreement and the failure or inability of the
Borrower to cure such default within 30 days of the occurrence thereof;
provided that such 30 day grace period will not apply to any material default
which in the Lender's good faith determination is incapable of cure;
(d) Representations and Warranties. Any representation
or warranty made by the Borrower in this Credit Agreement or in any report,
certificate, financial statement or other instrument furnished in connection
with the transactions contemplated hereby is false or erroneous in any
material respect or any material breach thereof has been committed.
(e) Obligations. Except as provided above, the default
by the Borrower in the due observance of any covenant, negative covenant or
agreement to be kept or performed by the Borrower under the terms of the Loan
and the lapse of any applicable cure period provided with respect to such
default, or, if so defined therein, the occurrence of any Event of Default or
Default under the Note;
(f) Judgments. Unless in the opinion of the Lender the
Borrower is adequately insured or bonded, the entry of a final judgment for
the payment of money involving more than $5,000,000 against the Borrower and
the failure by the Borrower to discharge the same, or cause it to be
discharged, within 10 days from the date of the order, decree or process
under which or pursuant to which such judgment was entered, or to secure a
stay of execution pending appeal of such judgment; the entry of one or more
final monetary or non-monetary judgment(s) or order(s) against the Borrower
which, singly or in the aggregate, does or could reasonably be expected to
(1) cause a material adverse change in the condition (financial or
otherwise), operations or properties of the Borrower, (2) have a material
adverse effect on the ability of the Borrower to perform its obligations
under this Credit Agreement, or (3) have a material adverse effect on the
rights and remedies of the Lender under this Credit Agreement or the Note;
and
(g) Bankruptcy, etc. Borrower dissolves or becomes the
subject of any dissolution, a winding up or liquidation, or the Borrower: (1)
makes a general assignment for the benefit of creditors; (2) files or has
filed against it a petition in bankruptcy, for a reorganization or an
arrangement, or for a receiver, trustee or similar creditors' representative
for the property or assets of the Borrower or any material part thereof, or
any other proceeding under any federal or state insolvency law, and the same
has not been dismissed or discharged within 60 days thereof.
Section 9. Termination of Commitments and Acceleration of
Loans. If any one or more of the Events of Default shall occur:
(a) Lender's obligations to make any Loan hereunder shall be
suspended until such Event of Default is cured.
(b) Notwithstanding any other provision of this Section, Lender
may proceed to protect and enforce all or any of its rights, remedies, power
and privileges under this Credit Agreement or the Note by action at law, suit
in equity or other appropriate proceedings, whether for specific performance
of any covenant contained in this Credit Agreement or the Note.
If an Event of Default occurs and is continuing, the Lender may
declare the principal of and accrued interest on any Loan to be due and
payable. Upon such declaration the principal and interest shall be due and
payable. Upon payment of such principal amount and interest, any interest
payable on overdue payments of principal or interest hereunder, and all other
obligations under the Credit Agreement, all of the Borrower's obligations
under the Credit Agreement shall terminate.
Section 10. Binding Effect. This Credit Agreement shall be
binding upon and inure to the benefit of the Borrower and the Lender and
their respective successors and assigns. The Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Lender.
The Lender shall have the right to assign all or any part of its
obligations to make the loan to any affiliate or subsidiary; provided,
however, such Assignment shall not relieve the Lender of its obligations
hereunder. In the event of such Assignment by the Lender, the assignee, in
addition to the Lender, shall be deemed to have been named the "Lender" in
the first paragraph of this Credit Agreement and all representations,
warranties and covenants of the Borrower made herein shall be deemed to have
been made to and shall inure to the benefit of such assignee.
Section 11. Governing Law. The Loan Documents shall be deemed
to be contracts made under the laws of, executed and delivered in the State
of Ohio, and for all purposes shall be construed in accordance with the laws
of said State.
IN WITNESS WHEREOF, the parties hereto have executed this Credit
Agreement on the day and year first above written.
PENNSYLVANIA COMPANY
By: Robert W. Olson
-----------------------------
Senior Vice President
AMERICAN FINANCIAL CORPORATION
By: Fred J. Runk
----------------------------
Vice President & Treasurer
SUBORDINATED PROMISSORY NOTE
As of April 3, 1995
1. FOR VALUE RECEIVED, the undersigned, AMERICAN FINANCIAL CORPORATION,
an Ohio corporation (the "Company"), hereby promises to pay Pennsylvania
Company (the "Lender"), the aggregate unpaid principal amount of the loans
made by the Lender to the Company pursuant to the Credit Agreement referred
to below. The Company promises to pay daily interest from the date hereof,
computed as provided in such Credit Agreement, on the aggregate principal
amount of such loans from time to time unpaid at the rate of 11-5/8% per
annum and to pay interest on overdue principal and, to the extent not
prohibited by applicable law, on overdue installments of interest and
principal and fees at the rate specified in such Credit Agreement, all such
interest being payable at the time specified in such Credit Agreement, except
that all accrued interest shall be paid at the stated or accelerated maturity
hereof or upon the prepayment in full hereof.
2. Payments hereunder shall be made to Pennsylvania Company at One East
Fourth Street, Cincinnati, Ohio 45202.
3. All Loans made by the Lender pursuant to the Credit Agreement
referred to below and all repayments of the principal thereof shall be
recorded by the Lender and, prior to any transfer hereof, appropriate
notations to evidence the foregoing information with respect to each such
loan then outstanding shall be endorsed by the Lender on the schedule
attached hereto or on a continuation of such schedule attached to and made
part hereof; provided, however, that the failure of the Lender to make any
such recordation or endorsement shall not affect the obligations of the
Company under this Subordinated Promissory Note ("Note") or the Credit
Agreement.
4. This Note evidences borrowings under and is entitled to the benefits
of and is subject to the provisions of the Credit Agreement dated as of April
3, 1995, as from time to time in effect (the "Credit Agreement"), among the
maker and the payee hereof. The principal of this Note is prepayable in any
amount and may be prepaid in whole or from time to time in part. Terms
defined in the Credit Agreement and not otherwise defined herein are used
herein with the meanings so defined.
5. In case an Event of Default shall occur, the entire principal of this
Note may become or be declared due and payable in the manner and
with the effect provided in the Credit Agreement subject to the provisions of
paragraph 6 hereof.
6. The principal amount of and the interest on this Note are and shall
be subordinate and junior in right of payment to all principal of, premium,
if any, and interest on all Senior Debt (as hereinafter defined) of the
Company whether outstanding at the date of this Note or created or incurred
by the Company after the date of this Note but prior to the maturity of this
Note (whether such maturity occurs as a result of lapse of time, acceleration
or otherwise). As used herein, "Senior Debt" shall mean the principal of,
premium, if any, and interest owed by the Company on all present and future
(i) indebtedness of the Company for borrowed money (other than this Note),
whether short-term or long-term, including all indebtedness evidenced by
notes, bonds, debentures or other securities sold by the Company for money,
(ii) indebtedness incurred or assumed by the Company in connection with the
purchase or the acquisition of any property (including any securities of the
Company or any other entity), business or entity, (iii) guarantees by the
Company of indebtedness of others of the type referred to in (i) or (ii)
above, and (iv) renewals, extensions, refundings, deferrals, restructurings,
amendments and modifications of any such indebtedness, obligation or
guarantee, unless in each case by the terms of the instrument creating or
evidencing such indebtedness, obligation or guarantee or such renewals,
extension, refunding, deferral, restructuring, amendment or modification it
is provided that such indebtedness, obligation or guarantee is not superior
in right of payment to this Note. Specifically:
(a) Upon maturity of any Senior Debt by lapse of time,
acceleration or otherwise, then all principal of, premium, if any, and
interest on all such matured Senior Debt shall first be paid in full before
any payment on account of principal or interest is made upon this Note.
(b) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings, or any receivership proceedings
in connection therewith, relative to the Company or its creditors or its
property, and in the event of any proceedings for partial or total
liquidation, dissolution or other winding up of the Company, whether or not
involving insolvency or bankruptcy proceedings, then all principal, premium,
if any, and interest due on Senior Debt shall first be paid in full, or such
payment shall have been provided for, before any payment on account of
principal or interest is made upon this Note. In any of the proceedings
referred to in the first sentence of this subparagraph (b), any payment or
distribution of any kind or
character, whether in cash, property, stock or obligations, which may be
payable or deliverable in respect of the principal amount of or interest on
this Note shall be paid or delivered directly to the holders of Senior Debt
(or to a banking institution selected by the court or person making the
payment or delivery or designated by any holder of Senior Debt) for
application in payment thereof, unless and until all principal of, premium,
if any, and interest on all Senior Debt shall have been paid in full, or such
payment shall have been provided for; provided, however, that in the event
that payment or delivery of such holder of this Note is authorized by an
order of decree giving effect, and stating in such order or decree that
effect is given, to the subordination of this Note to Senior Debt, and made
by a court of competent jurisdiction in a reorganization proceeding under any
applicable bankruptcy or reorganization law, no payment or delivery of such
cash, property, stock or obligations payable or deliverable with respect to
the principal amount of or interest on this Note shall be made to the holders
of Senior Debt.
(c) The Company shall not make any payment of principal of, or
purchase or acquire for value, this Note during the continuance of any
default in the payment of principal, premium, if any, or interest on any
Senior Debt.
(d) No right of any present or future holder of Senior Debt to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any good faith act or failure to act on the part of
the Company or by any good faith act or failure to act by such holders, or by
any non-compliance by the Company with the terms, provisions and covenants of
any agreement relating to Senior Debt, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
(e) Subject to the payment in full of all Senior Debt, the legal
holder of this Note shall be subrogated to the rights of the holders of
Senior Debt to receive payments or distributions of assets of the Company
payable or distributable to the holders of Senior Debt until this Note and
interest hereon shall be paid in full. As between the Company, its creditors
other than the holders of Senior Debt, and the legal holder of this Note (i)
no payments or distributions otherwise payable (or deliverable) in respect of
this Note but, by virtue of the subordination provisions hereof, paid (or
delivered) to the holders of Senior Debt shall be deemed to be a payment by
the Company on account of Senior Debt, and (ii) no payments paid to the legal
holder of this Note by virtue of the subrogation herein provided for shall be
deemed to be a payment by the Company on account of this Note.
The provisions of this paragraph 6 are for the purpose of defining
the relative rights of the holders of the Senior Debt, on the one hand, and
the holder of this Note, on the other hand, and as between the Company and
the holder of this Note, nothing herein shall impair the obligation of the
Company, which is unconditional and absolute, to pay to the legal holder
hereof the principal hereof and interest hereon in accordance with its terms,
nor shall anything herein prevent the legal holder of this Note from
exercising all remedies otherwise permitted by applicable law upon default
hereunder, subject to the rights under this paragraph 6 of holders of Senior
Debt in respect of cash, property, stock or obligations received upon the
exercise of such remedies.
7. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS (OTHER THAN THE CONFLICT OF LAWS RULES) OF THE STATE OF OHIO.
8. The Company hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note, except as specifically otherwise
provided in the Credit Agreement, and assent to extensions of time of
payment, or forbearance or other indulgence without notice.
AMERICAN FINANCIAL CORPORATION
By: Fred J. Runk
-----------------------
Vice President & Treasurer