[LOGO] CITY NATIONAL BANK REVOLVING NOTE
(INTEREST TIED TO PRIME)
________Note No.
$20,000,000.00 Head Office
Beverly Hills, California
September 30, 1994
On July 1, 1995, the undersigned, Zenith Insurance Corp., a Delaware
corporation ("Borrower"), promises to pay to the order of City National Bank, a
national banking association ("CNB"), at its office in this city, in lawful
money of the United States of America and in immediately available funds, the
principal sum of Twenty Million Dollars ($20,000,000.00), or so much thereof as
may be advanced and be outstanding, with interest thereon to be computed on each
advance from the date of its disbursement at a rate computed on the basis of a
360-day year, actual days elapsed, equal to the Prime Rate of CNB, as it exists
from time to time, minus fifty-five one hundredths of one percent (0.55%) per
year. Any change in the Prime Rate shall become effective on the same business
day on which the Prime Rate shall change, without prior notice to Borrower.
All or any portion of the principal of this Note may be borrowed, repaid
and reborrowed from time to time prior to maturity, provided at the time of any
borrowing no Event of Default (as herein defined) exists, and provided further
that the total borrowings outstanding at any one time shall not exceed Twenty
Million Dollars ($20,000,000.00). Each borrowing and repayment hereunder shall
be noted in the books and records of CNB. The excess of borrowings over
repayments shall evidence the principal due hereon from time to time and at any
time. Borrowings hereunder shall be conclusively presumed to have been made to
or for the benefit of Borrower when made as noted in such books and records.
Interest accrued on this Note shall be payable on the first day of each
calendar quarter, commencing January 1, 1995.
A facility fee equal to $56,250.00 shall be payable in three (3) equal
consecutive installments, each in the amount of $18,750.00 on November 15, 1994,
February 15, 1995, and May 15, 1995.
The occurrence of any of the following with respect to Borrower shall
constitute an "Event of Default" hereunder:
1. The failure to make any payment of principal or interest when due under
this Note, when such failure continues for ten (10) days after notice from
CNB;
2. The filing of a petition by or against Borrower under any provisions of the
BANKRUPTCY CODE;
3. The appointment of a receiver or an assignee for the benefit of Borrower's
creditors;
4. The commencement of dissolution or liquidation proceedings or the
disqualification of Borrower, whether a corporation, partnership, joint
venture or any other type of entity;
5. Any financial statement provided by Borrower to CNB is false or misleading;
6. Any material default in the payment or performance of any obligation, or
any material default under any provisions of any material contract or
instrument pursuant to which Borrower has incurred any obligation for
borrowed money, any purchase obligation or any other liability of any kind
to any person or entity, including CNB;
7. Any sale or transfer of all or a substantial material part of the assets of
Borrower other than in the ordinary course of business; or
8. Any material violation, breach or default under any letter agreement or any
other contract or instrument executed in connection with this Note or
securing this Note.
Upon the occurrence of any Event of Default, CNB, at its option, may
declare all sums of principal and interest outstanding hereunder to be
immediately due and payable without presentment, demand, protest or notice of
dishonor all of which are expressly waived by Borrower, and CNB shall have no
obligation to make any further advances hereunder. Borrower agrees to pay all
costs and expenses, including reasonable attorneys' fees, expended or incurred
by the holder (or allocable to the holder's in-house counsel) in connection with
the enforcement of this Note or the collection of any sums due hereunder and
irrespective of whether suit is filed. Any principal or interest not paid when
due hereunder shall thereafter bear additional interest from its due date at a
rate of two percent (2.0%) per year higher than the interest rate as determined
and computed above, and continuing thereafter until paid.
Should more than one person or entity execute this Note as a Borrower, the
obligations of each such Borrower shall be joint and several.
This Note and all matters relating thereto, shall be governed by the laws
of the State of California.
Zenith National Insurance Corp., a
Delaware corporation
By: /s/ Stanley R. Zax
-----------------------------------------
Stanley R. Zax, Chairman of the
Board/President