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EXHIBIT 10.95
LOAN AGREEMENT
THIS LOAN AGREEMENT, is made this 16th day of December, 1998, by and
between Bankers Insurance Group, Inc. (herein, "Borrower"), and Western
International Insurance Company (herein, "Lender").
IN CONSIDERATION OF Lender's agreement to loan to Borrower the sum of twelve
Million (U.S. $12,000,000.00) Dollars in United States currency, all in
accordance with the terms and conditions of this Agreement, as well as for other
good and valuable consideration, the parties hereto do covenant and agree as
follows:
1. Definitions.
a) "Affiliate" shall mean any party who controls, is controlled by, or
is under common control with another party.
b) "Corporate Principal" shall mean any shareholder, director or
officer of Borrower.
c) "Event Of Default" shall mean any of the events or conditions
described in the subsequent paragraph hereof captioned, "Event Of
Default" and "Events Of Default" shall refer collectively thereto.
d) "Loan" shall mean the loan established pursuant to paragraph 2
hereof.
e) "Net Proceeds" shall mean the net cash proceeds received by Venture
Capital Corporation, a Cayman Islands company (herein, "VCC") from
the public sale of the Stock in excess of the expenses of VCC
attributable to the sale all as provided for and described in that
certain Agreement for Satisfaction of Debt and Capitalization of
Subsidiary dated of even date herewith made by and between Lender
and VCC.
f) "Note" shall mean the Promissory Note required and described in
paragraph 2 hereof.
g) "Obligations" shall mean any and all indebtedness, liabilities and
obligations of Borrower to Lender whatsoever, including by way of
illustration and not by way of limitation, any indebtedness,
liability or obligation of Borrower to Lender under Note, under
this Agreement, under any loan made to Borrower by Lender prior to
the date hereof and any and all extensions or renewals thereof in
whole or in part; any indebtedness, liability or obligation of
Borrower to Lender arising hereunder or as a result hereof, and any
and all extensions or renewals thereof in whole or in part; any
indebtedness, liability or obligation of
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Borrower to Lender under any later or future advances or loans made
by Lender to Borrower, and any and all extensions or renewals
thereof in whole or in part; and any and all future or additional
indebtedness, liabilities or obligations of Borrower to Lender
whatsoever and in any event, whether existing as of the date hereof
or hereafter arising, whether arising under a loan, line of credit,
letter of credit or other form of financing, and whether direct,
indirect, absolute or contingent, as maker, endorser, guarantor,
surety or otherwise, and whether evidenced by, arising out of, or
relating to a promissory note, bill of exchange, check, draft,
letter of credit, guaranty agreement, banker's acceptance, foreign
exchange contract, security agreement, loan agreement or otherwise.
h) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated
organization, joint venture, court or government or political
subdivision or agency thereof.
i) "Prime Rate" shall mean the rate published in the Wall Street
Journal as the base rate on corporate loans posted by at least 75%
of the nation's 30 largest banks.
j) "Subsidiary" shall mean any corporation of which more than fifty
(50%) percent of the outstanding voting securities shall, at the
time of the termination, be owned directly, or indirectly, through
one or more intermediaries, by Borrower. Voting shares which would
be attributed to Borrower pursuant to Section 318 of the Internal
Revenue Code of 1986, as the same may be hereafter, from time to
time, amended, shall be deemed to be owned by Borrower.
2. Loan.
a) Upon the execution of this Agreement and compliance with its
terms and conditions, and the receipt by Lender of the Net Proceeds,
Lender agrees to loan to Borrower the sum of Twelve Million (U.S.
$12,000,000.00) Dollars in United States currency. Said loan shall
be videnced by Borrower's good and sufficient Promissory Note of
even date herewith which shall bear interest from the date hereof at
the rate of Prime Rate per annum until maturity on the balance of
the principal from time to time remaining unpaid. No payments shall
be made during the first two years of the loan. The Note shall
contain the following repayment provision:
Commencing on the first day of January 2001 equal
principal payments of One Million Four Hundred Seventy
Thousand Two Hundred Ninety Nine and 32/100 Dollars
($1,470,299.32) shall be due and payable together with
accrued interest in semiannual payments, payments being
made on the first day of January
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and July of each and every year. All unpaid principal and
interest shall be due and payable in full on January 1,
2004.
b) All indebtedness evidenced by the Note together with all accrued
interest thereon, however such indebtedness may be created,
extended, renewed or evidenced shall at all times and in all
respects be subordinate and junior in right of payment to any and
all indebtedness of Borrower to any of its other creditors (other
than creditors who are Affiliates with the Borrower), whether
secured or unsecured.
c) No payments shall be due under the Note at any time when the debt
to equity ratio of the Borrower is 1.5 or higher.
d) No payments shall be due under the Note to the extent that such
payment would result in a fixed charge coverage ratio of 1.1
or lower. Payments shall be made to the extent that they would not
result in a fixed charge coverage ratio of 1.1 or lower. That
is, partial payments otherwise required under this paragraph 2
shall be due and payable. For this purpose, "fixed charge coverage
ratio" shall be determined by dividing (i) total cash inflows
projected for payment for the six month period immediately
following the due date for a payment under the Note by (ii) the
total cash outflows projected for payment for the six month period
immediately following the due date for a payment under the Note,
such projections to be determined in good faith by the Chief
Financial Officer of the Borrower.
e) All payments that are otherwise due and payable but are not paid by
reason of the application of subparagraphs 2. c) or d) hereof:
Shall bear interest either at the rate of Prime Rate plus
5% per annum until paid in full or at the highest rate
permitted by law, whichever is lower; and
Shall be added to and paid at the time of the due date of
the next payment due under the Note until paid in full.
3. Conditions Precedent. Prior to there being any advances by Lender to
Borrower pursuant to this Agreement and as a condition precedent to
any of Lender's other obligations under this Agreement, Borrower shall
execute and deliver to Lender or shall cause to be executed and
delivered to Lender each of the following:
a) Note;
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b) The good and sufficient Resolution of the Board of Directors of the
Borrower authorizing its officers to enter into this Agreement;
4. Affirmative Covenants. Borrower hereby covenants with Lender that for
so long as any Obligations remain outstanding and unless Lender
notifies Borrower in writing it dispenses with any one or more of the
following requirements, Borrower will:
a) Do or cause to be done all things necessary to keep in full force
and effect its corporate existence and all rights, franchises,
licenses, authorizations, permits and qualifications to carry on
business in all jurisdictions where qualifications may be
necessary;
b) Give prompt written notice to Lender upon becoming aware of the
occurrence of any Event Of Default or event which, by passage of
time or the giving of notice or both would constitute an Event Of
Default;
c) As soon as practicable, and in any event within fifteen (15) days
after the end of each calendar quarter, furnish to Lender a
quarterly unaudited financial statement of Borrower, including
balance sheets and income statements, for the calendar quarter just
ended, and for the calendar year to date, certified by a duly
authorized officer of Borrower;
d) As soon as practicable, and in any event within one hundred fifty
(150) days after the end of each fiscal year, furnish to Lender the
annual audit report of Borrower, certified without material
qualification by independent certified public accountants selected
by Borrower and acceptable to Lender, prepared in accordance with
generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved, together
with relevant financial statements of Borrower for the twelve (12)
month period just ended;
e) Notify Lender immediately, but in any event within five (5) days of
any fact or facts which might materially and adversely affect
Borrower's financial condition;
f) Notify Lender immediately, but in any event within five (5) days
after Borrower should become a party, or be threatened to be made a
party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative;
g) Pay or cause to be paid when due all amounts necessary to fund, in
accordance with its terms, all pension plans presently in existence
or hereafter created;
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h) Borrower will maintain, or cause to be maintained, public liability
insurance and fire and extended coverage insurance on all assets
owned by it, all in such form and amounts as are consistent with
industry practices and with such insurers as may be satisfactory to
Lender. Borrower will furnish to Lender such evidence of insurance
as Lender may require. Borrower hereby agrees that, in the event it
fails to pay or cause to be paid the premium on any such insurance,
Lender may do so and be reimbursed by Borrower therefor. Borrower
hereby assigns to Lender any return or unearned premiums that may
be due the Borrower upon cancellation of such policies for any
reason whatsoever and directs the insureds to pay Lender any
amounts due. Lender is hereby appointed Borrower's
Attorney-in-Fact, with full power of substitution and revocation
(without requiring Lender to act as such) to endorse any check
which may be payable to Borrower to collect such returned or
unearned premiums or the proceeds of such insurance, and any amount
so collected may be applied to Lender toward satisfaction of any of
the Obligations;
i) Borrower will collect its accounts and sell its inventory only in
the ordinary course of business;
j) Borrower will pay when due (or within applicable grace periods) all
indebtedness due third Persons, except when the amount thereof is
being contested in good faith by appropriate proceedings and with
adequate reserves therefor being set aside on the books of
Borrower. If default be made by Borrower in the payment of any
principal (or installment thereof) of, or interest on, any such
indebtedness, Lender shall have the right, in its discretion (but
it shall not be under any requirement), to pay such interest or
principal for the account of Borrower and be reimbursed by Borrower
therefor;
k) Borrower will notify Lender thirty (30) days in advance of any
change in the location of any of its businesses or of the
establishment of any new, or the discontinuance of any existing,
place of business;
l) From the date hereof, Borrower will use the Property in full
compliance with all applicable environmental laws and regulations
including the removal or clean-up of any hazardous substance (as
defined by state or federal law) required by any agency.
5. Negative Covenants. Borrower covenants to Lender that from and after
the date hereof and for so long as any Obligations remain unpaid, it
will not, without the prior written consent of Lender:
a) Guaranty. Guaranty, endorse, become surety with respect to, or
otherwise become directly or contingently liable for and in
connection with the obligations of any other person, firm or
corporation, except
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endorsements for negotiable instruments for collection in the
ordinary course of business;
b) Reorganization. Enter into any merger, reorganization or
consolidation or make any substantial change in the basic type of
business conducted by Borrower as of the date hereof;
c) Untrue Statements. Furnish Lender any certificate or other document
that will contain any untrue statement of material fact or that
will omit to state a material fact necessary to make it not
misleading in the light of circumstances under which it was
furnished;
d) Change Business. Materially alter or change the principal business
in which Borrower is engaged or the manner in which Borrower
conducts its business affairs.
6. Warranties. Borrower represents and warrants to Lender that:
a) Correct Financials. Any financial statements heretofore delivered
to Lender are true and correct in all respects, have been prepared
in accordance with generally accepted accounting practices and
fairly represent the respective financial conditions of the subject
thereof as of the respective dates thereof, do not fail to disclose
any fact or facts which might materially or adversely affect
Borrower's financial condition, no material adverse changes have
occurred in the financial conditions reflected therein since the
respective dates thereof and no additional borrowings have been
made by Borrower since the date thereof other than the borrowing
contemplated hereby or borrowings approved by Lender;
b) No Actions, Suits, etc. There are no actions, suits or proceedings
pending or, to the knowledge of Borrower, threatened against or
affecting it whether civil, criminal, administrative or
investigative, and it is not in default with respect to any
judgment, decision, order, writ, injunction, decree or demand of
any court or governmental authority other than those matters
reflected in Borrower's audited financial statement;
c) No Breach or Violation. The consummation of the transactions hereby
contemplated in performance of this Agreement or of any Obligation
will not result in any breach of or constitute a default under any
mortgage, deed of trust, lien, bank loan or credit agreement,
corporate charter, by-law or other instrument to which Borrower is
a party, or by which it is bound or affected;
d) Good Standing. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Florida; each
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Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation;
Borrower and its Subsidiaries have the lawful power to own their
properties and to engage in the business they conduct, and each is
duly qualified and in good standing as a foreign corporation in the
jurisdictions wherein the nature of the business transacted by it
or property owned by it make such qualification necessary; the
addresses of all places of business of Borrower and each Subsidiary
are as have been previously represented to Lender; the states in
which Borrower and each Subsidiary are qualified to do business are
as have been previously represented to Lender; the percentage of
Borrower's ownership of the outstanding stock of each Subsidiary
are as have been previously represented to Lender; neither Borrower
nor any Subsidiary has changed its name, been the surviving
corporation in a merger, acquired any business, or changed its
principal executive office except as has been previously
represented to Lender;
e) No Commissions. Neither Borrower nor any Subsidiary has made any
agreement or has taken any action which may cause anyone to become
entitled to a commission or finder's fee as a result of making the
within described loan;
f) Pension Plan. All defined benefit pension plans, as defined in the
Employee Retirement Income Security Act of 1974, as amended,
("ERISA") of Borrower and each Subsidiary meet, as of the date
hereof, the minimum funding standards of Section 302 of ERISA, and
no Reportable Event or Prohibited Transaction, as defined in ERISA,
has occurred with respect to any such Plan;
g) Environmental Compliance. Borrower has no knowledge, either actual
or constructive, of any use of the Property, either in the past or
present, which would violate state or federal environmental laws,
and hereby represents that no proceedings have been commenced, or
notices received, concerning any alleged violations of
environmental laws;
h) Warranties Survive. All of the representations and warranties set
forth in this paragraph 0 shall survive until all Obligations are
satisfied in full.
7. Events of Default. The following occurrences shall constitute Events Of
Default hereunder:
a) Non-Payment. Non-payment of any sum due under Note or under any
other Obligation or non-performance of any obligation to be
performed under this Agreement or any other agreement between
Lender and Borrower, whether now in existence or hereafter
executed;
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b) Breach of Warranty. Any warranty, representation, statement,
affirmative covenant and negative covenant made or furnished to
Lender by or on behalf of Borrower or any guarantor of Borrower's
Obligation proves to have been false in any material respect when
made or furnished or is breached, violated or not complied with;
c) Change of Financial Condition. Any material adverse change in the
financial condition of Borrower or any guarantor of any of
Obligations;
d) Dissolution/Bankruptcy. Dissolution, termination of existence,
insolvency (failure to pay its debts as they mature or the failure
to maintain the fair saleable value of its assets in an amount
greater than its liabilities, whichever shall first occur), a
business failure, appointment of a receiver, assignment for the
benefit of creditors or the commencement of any proceedings under
any bankruptcy or insolvency law by or against Borrower or any
guarantor or the making by either Borrower or any guarantor of any
offer or settlement, exchange or composition to their respective
unsecured creditors generally. For purposes of this Agreement, any
guarantor shall mean any party required by this Agreement to
guaranty Obligations and any party whose guaranty of Obligations is
tendered to Lender to induce Lender to make this loan;
e) Attach Liens. The issuance or filing against Borrower or any
guarantor of a tax lien or the issuance or filing of any
attachment, injunction, execution or judgment which is not removed
within fifteen (15) days after issuance of filing;
f) Waste. Lender shall at any time deem itself insecure or unsafe or
shall fear diminution, removal or waste of collateral;
g) Third Party Debt. Borrower shall fail to pay any indebtedness due
any third (3rd) Persons and such failure shall continue beyond any
applicable grace period, or Borrower shall suffer to exist any
other Event Of Default under any agreement binding the Borrower;
h) Judgment. Borrower shall suffer final judgments for payment of
money aggregating in excess of and shall not discharge the same
within a period of thirty (30) days (unless, pending further
proceedings, execution has not been commenced, or if commenced has
been effectively stayed) or a judgment creditor of Borrower shall
obtain possession of any of the Collateral by any means, including,
without limitation, levy, distraint, replevin or self help;
8. Default Remedies. Upon any Event Of Default, all or any portion of
Obligations due or to become due from Borrower to Lender whether under
this Agreement or otherwise, shall, at the option of Lender, without
notice, demand, presentment or
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dishonor, all of which Borrower hereby waives, become at once due and
payable. Further, on the occurrence of any Event Of Default, Lender
may also, with or without proceeding with sale or foreclosure or
demanding payment of a debt owing by Borrower to Lender, without
notice, terminate further performance under this Agreement or any
other agreement between Lender and Borrower and may also, at any time
appropriate and apply on said Obligations owing by Borrower to Lender
any and all balances, credits, deposits, accounts, reserves,
indebtedness or other monies due or owing to Borrower or held by
Lender hereunder or under any other agreement or otherwise, whether
accrued or not. The failure or delay of Lender to exercise or enforce
any rights, liens, powers or remedies hereunder or under any of the
aforesaid agreements or other documents shall not operate as a waiver
of such liens, rights, powers and remedies, but all such liens,
rights, powers and remedies shall continue in full force and effect
until all loans and advances and all Obligations owing or to become
owing from Borrower to Lender shall have been fully satisfied and all
liens, rights, powers and remedies herein provided are cumulative and
none is exclusive.
9. Further Assurances. From time to time, Borrower will execute and
deliver to Lender such additional documents and will provide such
additional information as Lender may reasonably require to carry out
the terms of this Agreement and be informed of Borrower's status and
affairs.
10. Waiver by Lender. Enforcement and Waiver by Lender. Lender shall have
the right at all times to enforce the provisions of this Agreement and
any other loan documents executed pursuant hereto in strict accordance
with the terms hereof and thereof, notwithstanding any conduct or
custom on the part of Lender in refraining from so doing at any time
or times. The failure of Lender at any time or times to enforce its
rights under such provisions, strictly in accordance with the same,
shall not be construed as having created a custom in any way or manner
contrary to specific provisions of this Agreement or as having in any
way or manner modified or waived the same. All rights and remedies of
Lender are cumulative and concurrent and the exercise of one right or
remedy shall not be deemed a waiver or release of any other right or
remedy.
11. Inspection of Records. Lender (or any person or persons designated by
it) shall, in its sole discretion, have the right to call at any place
of business of Borrower at any reasonable time, and without hindrance
or delay, inspect, audit, check and make extracts from Borrower's
books, records, journals, orders, receipts and any correspondence and
other data relating to Borrower's business or any other transactions
between the parties hereto.
12. Costs/Expenses. All costs and expenses of this loan shall be paid by
Borrower, including but not limited to, out-of-pocket expenses for
payment of taxes, governmental fees, legal fees and expenses of
counsel appointed by the Lender,
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any applicable sales tax together with any interest and penalties for
the late payment thereof, all of which amounts shall be payable at the
time of the execution of this Agreement or upon demand in the event
they are hereafter incurred.
13. Subordinated Indebtedness. All indebtedness evidenced by the Note
together with all accrued interest thereon, however such indebtedness
may be created, extended, renewed or evidenced shall at all times and
in all respects be subordinate and junior in right of payment to any
and all indebtedness (herein, "Senior Debt") of Borrower to any of its
other creditors, whether secured or unsecured except for indebtedness
to affiliates of Borrower.
IN WITNESS WHEREOF, the parties hereto have set their hands
and seals, the day and year first above written.
WITNESSES: WESTERN INTERNATIONAL INSURANCE
COMPANY
/s/ John E. Smith, Secretary BY: /s/ Barry B. Benjamin
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Barry B. Benjamin, President
WITNESSES: BANKERS INSURANCE GROUP, INC.
BY: /s/ G. Kristin Delano
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G. Kristin Delano, Secretary
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