Exhibit 10

 

 

 

AMENDED AND RESTATED

CREDIT AGREEMENT

Dated as of August 31, 2008

Between

INFINITY PROPERTY AND CASUALTY CORPORATION

and

REGIONS BANK, as Lender

Relating to a

$50,000,000 Revolving Loan

 

 

 

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TABLE OF CONTENTS

 

Article 1 Rules of Construction and Definitions

   1

Section 1.1

   General Rules of Construction.    1

Section 1.2

   Definitions.    2

Article 2 Credit to be Extended Under this Agreement

   6

Section 2.1

   Revolving Loan.    6

Section 2.2

   Revolving Note.    6

Section 2.3

   Interest.    7

Section 2.4

   Prepayments.    7

Section 2.5

   Extension of Termination Date.    7

Section 2.6

   Place and Time of Payments.    7

Section 2.7

   Facility Fee.    8

Article 3 Representations and Warranties

   8

Section 3.1

   Organization, Powers, etc.    8

Section 3.2

   Authorization of Borrowing, etc.    9

Section 3.3

   Litigation.    9

Section 3.4

   Agreements.    9

Section 3.5

   Federal Reserve Board Regulations.    9

Section 3.6

   Investment Company Act.    9

Section 3.7

   ERISA.    9

Section 3.8

   Enforceability.    10

Section 3.9

   Consents, Registrations, Approvals, etc.    10

 

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Section 3.10

   Financial Condition.    10

Section 3.11

   No Misleading Information.    10

Section 3.12

   Taxes.    11

Section 3.13

   Patents, Trademarks.    11

Section 3.14

   Hazardous Substances.    11

Section 3.15

   Solvency.    11

Article 4 Conditions of Lending

   11

Section 4.1

   Representations and Warranties.    11

Section 4.2

   No Default.    12

Section 4.3

   Automatic Representations and Warranties.    12

Section 4.4

   Required Items.    12

Section 4.5

   Authorized Representative Certificates.    12

Section 4.6

   Other Supporting Documents.    12

Article 5 Covenants

   13

Section 5.1

   Existence.    13

Section 5.2

   Continuation of Current Business.    13

Section 5.3

   Sale of Assets, Consolidation, Merger.    13

Section 5.4

   Accounting Records.    13

Section 5.5

   Reports to the Lender.    13

Section 5.6

   Maintenance.    14

Section 5.7

   Insurance.    14

Section 5.8

   Payment of Indebtedness, Taxes, etc.    15

Section 5.9

   Litigation Notice.    15

 

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Section 5.10

   Visitation.    15

Section 5.11

   Notice of Default.    15

Section 5.12

   Further Assurances.    15

Section 5.13

   Transactions with Related Persons.    15

Section 5.14

   Use of Credit Proceeds.    15

Section 5.15

   Financial Covenants.    16

Section 5.16

   [Intentionally omitted].    17

Section 5.17

   PATRIOT Act Compliance.    17

Article 6 Events of Default

   17

Section 6.1

   Events of Default.    17

Section 6.2

   Lender's Remedies on Default.    19

Article 7 Miscellaneous

   19

Section 7.1

   Notices.    19

Section 7.2

   Expenses.    21

Section 7.3

   Independent Obligations.    21

Section 7.4

   Successors and Assigns; Participation.    21

Section 7.5

   Governing Law.    22

Section 7.6

   Date of Agreement.    22

Section 7.7

   Separability Clause.    22

Section 7.8

   Counterparts.    22

Section 7.9

   No Oral Agreements.    22

Section 7.10

   Waiver and Election.    22

Section 7.11

   No Obligations of Lender; Indemnification.    23

 

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Section 7.12

   Set-off.    23

Section 7.13

   [Intentionally omitted].    23

Section 7.14

   Submission to Jurisdiction.    23

Section 7.15

   Usury Laws.    24

Section 7.16

   Termination.    24

Section 7.17

   WAIVER OF JURY TRIAL.    25

Section 7.18

   USA PATRIOT Act Notice.    25

Section 7.19

   Amendment and Restatement.    25

 

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AMENDED AND RESTATED

CREDIT AGREEMENT

THIS AMENDED AND RESTATED CREDIT AGREEMENT (“this Agreement”) dated as of
August 31, 2008 is between INFINITY PROPERTY AND CASUALTY CORPORATION, an Ohio
corporation (the “Borrower”) and REGIONS BANK, an Alabama banking corporation
(the “Lender”).

Recitals

A. The Borrower and the Lender have heretofore entered into that certain Credit
Agreement dated as of August 31, 2005 (the “Existing Credit Agreement”),
pursuant to which the Lender has made certain credit facilities available to the
Borrower as more particularly described therein.

B. The parties have elected to enter into this Agreement to effectuate certain
changes to the Existing Credit Agreement, it being their intention that this
Agreement shall amend and restate the Existing Credit Agreement in its entirety.

Agreement

NOW, THEREFORE, in consideration of the foregoing Recitals, and to induce the
Lender to extend Credit to the Borrower under this Agreement and the other
Credit Documents, the Borrower and the Lender hereby agree that the Existing
Credit Agreement is hereby amended and restated in its entirety as follows:

ARTICLE 1

Rules of Construction and Definitions

SECTION 1.1 General Rules of Construction. For the purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:

(a) Words of masculine, feminine or neuter gender include the correlative words
of other genders. Singular terms include the plural as well as the singular, and
vice versa.

(b) All references herein to designated “Articles,” “Sections” and other
subdivisions or to lettered Exhibits are to the designated Articles, Sections
and subdivisions hereof and the Exhibits annexed hereto unless expressly
otherwise designated in context. All Article, Section, other subdivision and
Exhibit captions herein are used for reference only and do not limit or describe
the scope or intent of, or in any way affect, this Agreement.

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(c) The terms “include,” “including,” and similar terms shall be construed as if
followed by the phrase “without being limited to.”

(d) The terms “herein,” “hereof” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section, other subdivision or Exhibit.

(e) All Recitals set forth in, and all Exhibits to, this Agreement are hereby
incorporated in this Agreement by reference.

(f) No inference in favor of or against any party shall be drawn from the fact
that such party or such party’s counsel has drafted any portion hereof.

(g) All references in this Agreement to a separate instrument are to such
separate instrument as the same may be amended or supplemented from time to time
pursuant to the applicable provisions thereof.

SECTION 1.2 Definitions. As used in this Agreement, the following terms are
defined as follows:

(a) Actual/360 Day Basis means a method of computing interest and other charges
on the basis of an assumed year of 360 days for the actual number of days
elapsed, meaning that the interest accrued for each day will be computed by
multiplying the interest rate applicable on that day by the unpaid principal
balance on that day and dividing the result by 360.

(b) Advance is defined in Section 2.1.

(c) Affiliate of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For purposes of this definition, “control”
when used with respect to any specified person means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” have meanings correlative to the foregoing.

(d) Authorized Representative means the officer or officers of the Borrower that
are duly authorized to act for such entity in the specified capacity under the
Governing Documents of such entity or applicable law.

(e) Borrower shall have the meaning attributed to that term in the preamble to
this Agreement.

(f) Business Day means any day, excluding Saturday and Sunday, on which the
Lender’s main office in Birmingham, Alabama, is open to the public for carrying
on substantially all of its banking business.

 

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(g) Closing Date means August 31, 2008.

(h) Credit means, individually and collectively, all loans, forbearances,
renewals, extensions, advances, disbursements and other extensions of credit now
or hereafter made by the Lender to or for the account of the Borrower under this
Agreement and the other Credit Documents, including the Loans.

(i) Credit Documents means this Agreement and the documents described in Exhibit
A and all other documents now or hereafter executed or delivered in connection
with the transactions contemplated thereby.

(j) Debt of any person means (1) all indebtedness, whether or not represented by
bonds, debentures, notes or other securities, for the repayment of borrowed
money, (2) all capitalized lease obligations, as determined in accordance with
the Financial Accounting Statements Board’s Statement of Financial Accounting
Standards (“FAS”) Number 13 as in effect as of the date of this Agreement,
(3) all indebtedness secured by any Lien on any property of such person, whether
or not indebtedness secured thereby has been assumed, (4) all obligations for
reimbursement of drafts drawn or available to be drawn under all letters of
credit, and (5) all obligations with respect to interest rate swap agreements.

(k) Default Rate means a rate of interest equal to two percentage points (200
basis points) in excess of the Prime Rate, or the maximum rate permitted by law,
whichever is less.

(l) ERISA means the Employee Retirement Income Security Act of 1974, as amended.

(m) Events of Default is defined in Section 6.1. An Event of Default “exists” if
an Event of Default has occurred and is continuing.

(n) Governing Documents means, with respect to any person that is not a natural
person, all organizational and governing documents applicable thereto.

(o) Governmental Authority means any national, state, county, municipal or other
government, domestic or foreign, and any agency, authority, department,
commission, bureau, board, court or other instrumentality thereof.

(p) Governmental Requirements means all laws, rules, regulations, ordinances,
judgments, decrees, codes, orders, injunctions, notices and demand letters of
any Governmental Authority.

(q) Hazardous Substances means all pollutants, effluents, contaminants,
emissions, toxic or hazardous wastes and other substances, the removal of which
is required or the manufacture, use, maintenance, handling, discharge or release
of which is regulated, restricted, prohibited or penalized by any Governmental
Requirement, or even if not so regulated,

 

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restricted, prohibited or penalized, might pose a hazard to the health and
safety of the public or the occupants of the property on which it is located or
the occupants of the property adjacent thereto, including (1) asbestos or
asbestos-containing materials, (2) urea formaldehyde foam insulation,
(3) polychlorinated biphenyls (PCBs), (4) flammable explosives, (5) radon gas,
(6) laboratory wastes, (7) experimental products, including genetically
engineered microbes and other recombinant DNA products, (8) petroleum, crude
oil, natural gas, natural gas liquid, liquefied natural gas, other petroleum
products and synthetic gas usable as fuel, (9) radioactive materials and
(10) any substance or mixture listed, defined or otherwise determined by any
Governmental Authority to be hazardous, toxic or dangerous, or otherwise
regulated, affected, controlled or giving rise to liability under any
Governmental Requirement.

(r) Interest Determination Date means the first day of each month in each year.

(s) LIBOR-Based Rate means the per annum rate of interest most recently
published in such financial information reporting service used by the Lender as
of the close of business on the Closing Date and on each Interest Determination
Date (being the rate quoted for the immediately preceding Business Day) as the
London Interbank Offered Rate for U.S. dollar deposits having a term of one
month, plus the Margin. The Lender shall determine the LIBOR-Based Rate on the
Closing Date and on each Interest Determination Date.

(t) Lien means any mortgage, pledge, assignment, charge, encumbrance, lien,
security title, security interest or other preferential arrangement.

(u) Loans means, collectively, the Revolving Loan and all extensions and
renewals thereof.

(v) Margin means six-tenths of one percent (60 basis points) per annum.

(w) Margin Stock is defined in Regulation U of the Federal Reserve Board, as
amended.

(x) Maximum Facility Amount means $50,000,000.

(y) Obligations means (1) the Revolving Loan and all other obligations and debts
owing to the Lender and arising under the terms of this Agreement, the Revolving
Note, and the other Credit Documents, whether now or hereafter incurred,
existing or arising, including the Revolving Loan; (2) any sums expended by the
Lender in exercising the rights and remedies described in Section 6.2; (3) all
accrued interest on the Revolving Loan, and all costs, fees, charges and
expenses incurred and payable in connection therewith, including fees payable
under the terms of, or in connection with, this Agreement; (4) all other
obligations and debts owing to the Lender arising in connection with, ancillary
to, or in support of the Revolving Loan; (5) the payment and performance of all
other indebtedness, obligations and liabilities of the Borrower to the Lender
(including obligations of performance) of every kind whatsoever, arising
directly between the Borrower and the Lender or acquired outright, as a
participation or as collateral

 

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security from another person by the Lender, direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter incurred, contracted
or arising, joint or several, liquidated or unliquidated, regardless of how they
arise or by what agreement or instrument they may be evidenced or whether they
are evidenced by agreement or instrument, and whether incurred as maker,
endorser, surety, guarantor, general partner, drawer, tort-feasor, account party
with respect to a letter of credit, indemnitor or otherwise; and (6) all
renewals, extensions, modifications and amendments of any of the foregoing,
whether or not any renewal, extension, modification or amendment agreement is
executed in connection therewith.

(z) Obligors means the Borrower, each other person, if any, executing any
Security Document as a grantor, and any other maker, endorser, surety, guarantor
or other person now or hereafter liable for the payment or performance, in whole
or in part, of any of the Obligations.

(aa) Permitted Contest means any appropriate proceeding conducted in good faith
by the Borrower to contest any tax, assessment, charge, Lien or similar claim,
during the pendency of which proceeding the enforcement of such tax, assessment,
charge, Lien or claim is stayed; provided that the Borrower has set aside on its
books or, if required by the Lender, deposited as cash collateral with the
Lender, adequate cash reserves to assure the payment of any such tax,
assessment, charge, Lien or claim.

(bb) Permitted Encumbrances means any Liens and other matters affecting title to
the Property that are described in the Security Documents.

(cc) Person (whether or not capitalized) includes natural persons, sole
proprietorships, corporations, trusts, unincorporated organizations,
associations, companies, institutions, entities, joint ventures, partnerships,
limited liability companies and Governmental Authorities.

(dd) Prime Rate means that rate of interest designated by the Lender from time
to time as its “prime rate,” it being expressly understood and agreed that the
“prime rate” is merely an index rate used by the Lender to establish lending
rates and is not necessarily the Lender’s most favorable lending rate, and that
changes in the “prime rate” are discretionary with the Lender.

(ee) Property means all property, real and personal, that is now or hereafter
conveyed or assigned to the Lender, or in which the Lender is now or hereafter
granted a Lien, as security for any of the Obligations.

(ff) Revolving Loan is defined in Section 2.1.

(gg) Revolving Note is defined in Section 2.2.

(hh) Security Documents means all Credit Documents that now or hereafter grant
or purport to grant to Lender any guaranty, collateral or other security for any
of the Obligations.

 

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(ii) Solvent means, with respect to any person on a particular date, that as of
such date (i) the then fair value of the assets of such person is (a) greater
than the then total amount of liabilities (including contingent liabilities, as
defined according to FAS Number 5, as in effect as of the date of this
Agreement) of such person and (b) greater than the amount that will be required
to pay such person’s probable liability on such person’s then existing debts as
they become absolute and matured, (ii) such person’s capital is not unreasonably
small in relation to its business, and (iii) such person has not incurred and
does not intend to incur, or believe or reasonably should believe that it will
incur, debts beyond its ability to pay such debts as they become due.

(jj) Termination Date means the maturity date of the Revolving Loan (which is
initially August 31, 2011), as such date may be extended from time to time
pursuant to Section 2.5 or accelerated pursuant to Section 6.2.

ARTICLE 2

Credit to be Extended

Under this Agreement

SECTION 2.1 Revolving Loan. From the Closing Date to the Termination Date, the
Lender agrees, upon the terms and subject to the conditions of this Agreement
and subject to the limitations set forth below with respect to the maximum
amount of Advances permitted to be outstanding from time to time, to make a
revolving loan (the “Revolving Loan”) available to the Borrower pursuant to
which the Borrower may from time to time borrow from the Lender and repay and
reborrow, such sums as may be needed by the Borrower for the purposes expressed
in this Agreement, up to a maximum aggregate principal amount at any one time
outstanding not exceeding the Maximum Facility Amount in effect from time to
time. Each advance to the Borrower under the Revolving Loan (an “Advance”) will
be made on at least one Business Day’s prior written notice to the Lender, which
notice shall be signed by an Authorized Representative of the Borrower and shall
set forth the amount of the Advance requested and the date on which the Advance
is to be made. Not later than 2:00 p.m. Birmingham, Alabama time on the date
specified for the Advances, the Lender shall make available the amount of the
Advances to be made by it on such date to the Borrower by depositing the
proceeds thereof into an account with the Lender in the name of the Borrower.
The Advances shall bear interest as provided in Section 2.3. The Lender’s
obligation to make Advances shall terminate, if not sooner terminated pursuant
to the provisions of this Agreement, on the Termination Date. The Lender shall
have no obligation to make Advances if an Event of Default exists.

SECTION 2.2 Revolving Note. All Advances shall be evidenced by a certain amended
and restated revolving note (the “Revolving Note”), payable to the order of the
Lender, duly executed on behalf of the Borrower, dated the date of this
Agreement, in the principal amount of the Maximum Facility Amount and
satisfactory in form and substance to the Lender. The Revolving Note shall be
payable in full as to principal on the Termination Date. The

 

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Revolving Note shall be valid and enforceable as to the aggregate amount of the
Revolving Loan outstanding from time to time, whether or not the full amount of
the Revolving Loan is actually advanced by the Lender to the Borrower.

SECTION 2.3 Interest.

(a) The Revolving Note shall bear interest from its date until payment in full
on the unpaid principal balance at the rate per annum equal to the LIBOR-Based
Rate. If it is impossible or impractical to obtain the LIBOR-Based Rate for a
certain time period, the Revolving Note shall each bear interest at a rate equal
to the Prime Rate during such time period. Such interest shall be payable
monthly in arrears on the first day of each month in each year, commencing on
September 1, 2008, and upon payment in full. Interest will be computed on an
Actual/360 Day Basis.

(b) If an Event of Default exists, the Revolving Note shall bear interest at the
Default Rate commencing with the date on which the Event of Default occurs,
until the earlier of (1) such time as all amounts due hereunder are paid in full
or (2) no such Event of Default exists.

(c) The Borrower agrees to pay to the Lender, on demand, a late charge equal to
five percent (5.0%) of any payment that is not paid within twelve (12) days
after it is due. The late charge shall never be less than $10.00 on each
payment. This provision shall not be deemed to excuse a late payment or be
deemed a waiver of any other right the Lender may have, including the right to
declare the entire unpaid principal and interest immediately due and payable and
the right to collect interest on any late payment at the Default Rate.

SECTION 2.4 Prepayments. The Borrower may at any time prepay all or any part of
the Loans, without premium or penalty. Accrued interest to the date of
prepayment shall be paid on any partial prepayment of the Revolving Note on the
next succeeding monthly interest payment date, and shall be paid on any full
prepayment of the Revolving Note in connection with the termination of this
Agreement on the date of such prepayment.

SECTION 2.5 Extension of Termination Date. The Borrower and the Lender may from
time to time extend the then-current Termination Date to any subsequent
termination date upon which the Borrower and the Lender may agree by executing a
written extension agreement. Upon the execution of such an extension agreement
by the Borrower and the Lender, the maturity date of the Revolving Loan shall be
extended to the agreed-upon termination date, and the agreed-upon termination
date shall become the new “Termination Date” for purposes of this Agreement.

SECTION 2.6 Place and Time of Payments.

(a) All payments by the Borrower to the Lender under this Agreement and the
other Credit Documents shall be made in lawful currency of the United States and
in immediately available funds to the Lender at its Main Office in Birmingham,
Alabama at the hand delivery

 

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address set forth in Section 7.1 or at such other address within the continental
United States as shall be specified by the Lender by notice to the Borrower. Any
payment received by the Lender after 2:00 p.m. (Birmingham, Alabama time) on a
Business Day (or at any time on a day that is not a Business Day) shall be
deemed made by the Borrower and received by the Lender on the following Business
Day.

(b) All amounts payable by the Borrower to the Lender under this Agreement or
any of the other Credit Documents for which a payment date is expressly set
forth herein or therein shall be payable on the specified due date without
notice or demand by the Lender. All amounts payable by the Borrower to the
Lender under this Agreement or the other Credit Documents for which no payment
date is expressly set forth herein or therein shall be payable ten days after
written demand by the Lender to the Borrower. The Lender may, at its option,
send written notice or demand to the Borrower of amounts payable on a specified
due date pursuant to this Agreement or the other Credit Documents, but the
failure to send such notice shall not affect or excuse the Borrower’s obligation
to make payment of the amounts due on the specified due date.

(c) Payments that are due on a day that is not a Business Day shall be payable
on the next succeeding Business Day, and any interest payable thereon shall be
payable for such extended time at the specified rate.

(d) Except as otherwise required by law, payments received by the Lender shall
be applied first to expenses, fees and charges, then to interest and finally to
principal.

SECTION 2.7 Facility Fee. The Borrower shall pay to the Lender a facility fee
(the “Facility Fee”) that begins to accrue on the Closing Date and shall be
computed at the rate of one-eighth of one percent (.125%) per annum times the
Maximum Facility Amount divided by four (4). The Facility Fee shall be payable
in arrears on the last day of each successive November, February, May and August
and on the Termination Date, commencing on November 30, 2008. The Facility Fee
shall be computed on an Actual/360 Day Basis.

ARTICLE 3

Representations and Warranties

The Borrower represents and warrants to the Lender as follows:

SECTION 3.1 Organization, Powers, etc.

(a) It is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization.

(b) It has the corporate power and authority to own its properties and to carry
on its business as now being conducted and is duly qualified to do business in
every jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary.

 

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(c) It has the corporate power to execute, deliver and perform any Credit
Documents to which it is a party.

SECTION 3.2 Authorization of Borrowing, etc. The execution, delivery and
performance of any Credit Documents to which it is a party (a) have been duly
authorized by all requisite corporate action (including any necessary member
action), and (b) will not violate any Governmental Requirement, its Governing
Documents or any indenture, agreement or other instrument to which it is a
party, or by which it or any of its properties are bound, or be in conflict
with, result in a breach of or constitute a default under, any such indenture,
agreement or other instrument, or result in the creation or imposition of any
Lien, upon any of its properties except as contemplated by the Credit Documents.

SECTION 3.3 Litigation. There are no actions, suits or proceedings (whether or
not purportedly on its behalf) pending or, to the best of its knowledge,
threatened against or affecting it, by or before any Governmental Authority,
that involve any of the transactions contemplated by the Credit Documents or the
possibility of any judgment or liability that might reasonably be expected to
result in any material adverse change in the financial condition of the
Borrower.

SECTION 3.4 Agreements. It is not a party to any agreement or instrument, or
subject to any restriction in its Governing Documents that materially and
adversely affects its business, operations, properties or condition, financial
or otherwise, and it is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party, which default might reasonably
be expected to have a material adverse effect upon its business, operations,
properties or condition, financial or otherwise.

SECTION 3.5 Federal Reserve Board Regulations. It does not intend to use any
part of the proceeds of the Credit, and has not incurred any indebtedness to be
reduced, retired or purchased by it out of such proceeds, for the purpose of
purchasing or carrying any Margin Stock, and it does not own and has no
intention of acquiring any such Margin Stock.

SECTION 3.6 Investment Company Act. It is not an “investment company,” or a
company “controlled” by an “investment company,” as such terms are defined in
the Investment Company Act of 1940, as amended.

SECTION 3.7 ERISA.

(a) The execution and delivery of this Agreement and the issuance and delivery
of the Revolving Notes as contemplated hereby will not involve any prohibited
transaction within the meaning of ERISA or Section 4975 of the Internal Revenue
Code, as amended.

(b) Based on ERISA and the regulations and published interpretations thereunder,
it is in compliance in all material respects with the applicable provisions of
ERISA.

 

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(c) No “Reportable Event,” as defined in Section 4043(b) of Title IV of ERISA,
has occurred with respect to any plan maintained by it.

SECTION 3.8 Enforceability. Any Credit Documents to which it is a party
constitute its legal, valid and binding obligations, enforceable in accordance
with their terms.

SECTION 3.9 Consents, Registrations, Approvals, etc. No registration with or
consent or approval of, or other action by, any Governmental Authority is
required for the execution, delivery and performance of any Credit Documents to
which it is a party.

SECTION 3.10 Financial Condition.

(a) Its financial statements that have been furnished to the Lender were
prepared in conformity with generally accepted accounting principles
consistently applied throughout the periods involved, are in accordance with its
books and records, are correct and complete and present fairly its financial
condition as of the date or dates indicated and for the periods involved in
accordance with generally accepted accounting principles applied on a consistent
basis.

(b) Since the date of the financial statements no material adverse change in its
financial condition, business or operations has occurred.

(c) It has no liability, direct or contingent, that would have a material
adverse effect on the financial condition of the Borrower and that is not
reflected in such financial statements.

(d) It has good and marketable title to all its properties and assets reflected
on the financial statements except for properties and assets disposed of since
the date thereof as no longer used or useful in the conduct of its business or
disposed of in the ordinary course of its business.

(e) All such properties and assets are free and clear of all Liens, except as
otherwise permitted or required by the provisions of this Agreement and the
other Credit Documents.

SECTION 3.11 No Misleading Information. To the best knowledge of the Borrower,
neither this Agreement nor any of the other Credit Documents, nor any
certificate, written statement or other document furnished to the Lender by or
on behalf of the Borrower in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading; and there is no fact known to the Borrower that the
Borrower has not disclosed to the Lender that materially adversely affects or,
so far as the Borrower can now reasonably foresee, will materially adversely
affect the properties, or financial or other condition of the Borrower or the
ability of the Borrower to perform its obligations hereunder and under the other
Credit Documents.

 

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SECTION 3.12 Taxes.

(a) It has filed or caused to be filed all tax returns that, to the knowledge of
its officers, are required to be filed with any Governmental Authority, and it
has paid or has caused to be paid all taxes as shown as due on said returns or
on any assessment received by it.

(b) It has reserves that are believed by its officers to be adequate for the
payment of additional taxes for years that have not been audited by the
respective tax authorities.

SECTION 3.13 Patents, Trademarks. It owns, or possesses the right to use, all
the patents, trademarks, service marks, trade names, copyrights, franchises,
consents, authorizations and licenses and rights with respect to the foregoing,
necessary for the conduct of its business as now conducted and proposed to be
conducted, without any known conflict with the rights of others.

SECTION 3.14 Hazardous Substances.

(a) It has never caused or permitted any Hazardous Substance to be placed, held,
located, released or disposed of in violation of any Governmental Requirement
on, under or at any real property legally or beneficially owned, leased or
operated by it, and such property has never been used by it or, to the best of
its knowledge, by any other person as a dump site or permanent or temporary
storage site for any Hazardous Substance, in violation of any Governmental
Requirement.

(b) To the best of its knowledge, it has no liabilities with respect to
Hazardous Substances, and no facts or circumstances exist that could give rise
to liabilities with respect to Hazardous Substances.

SECTION 3.15 Solvency. The Borrower is and will remain Solvent, taking into
account the transactions contemplated by the Credit Documents.

ARTICLE 4

Conditions of Lending

The obligation of the Lender to lend hereunder is subject to the following
conditions precedent:

SECTION 4.1 Representations and Warranties. On and as of the Closing Date and
any later date on which Credit is to be extended hereunder, the representations
and warranties set forth in Article 3 must be true and correct with the same
effect as though they had been made on and as of such date, except to the extent
that they expressly relate to an earlier date.

 

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SECTION 4.2 No Default. On and as of the Closing Date and any later date on
which Credit is to be extended hereunder, the Borrower must be in compliance
with all the terms and provisions set forth in this Agreement on their part to
be observed or performed, and no Event of Default, nor any event that upon
notice or lapse of time or both would constitute an Event of Default, may exist.

SECTION 4.3 Automatic Representations and Warranties. The making of any request
for an Advance shall constitute an automatic representation and warranty by the
Borrower that the representations and warranties contained in Article 3 are true
and correct on and as of the date of such Advance and that no Event of Default,
nor any event that upon notice or lapse of time or both would constitute an
Event of Default, exists.

SECTION 4.4 Required Items. On and as of the Closing Date and any later date on
which Credit is to be extended hereunder, the Lender must have received all
financial statements, reports and other items required as of that date under
Article 2 and Article 5 of this Agreement.

SECTION 4.5 Authorized Representative Certificates. On and as of the Closing
Date the Borrower must have delivered to the Lender the following certificates
executed by the appropriate Authorized Representatives of the Borrower, each of
which certificates must be of a current date and must be satisfactory in form
and substance to the Lender: (a) a certificate confirming compliance by the
Borrower with the conditions precedent set forth in Sections 4.1 and 4.2; (b) a
certificate certifying as in full force and effect resolutions of the members or
other appropriate persons under the Governing Documents and applicable law
authorizing the transactions contemplated by the Credit Documents and
authorizing certain Authorized Representatives of the Borrower to execute the
Credit Documents on behalf of the Borrower and to act on behalf of the Borrower
with respect to the Credit Documents, including the authority to request
disbursements of the proceeds of the Credit and to direct the disposition of
such proceeds; and (c) a certificate certifying as true and correct, as amended,
attached copies of the Governing Documents of the Borrower and the incumbency
and signature of each Authorized Representative of the Borrower specified in
said resolutions. The Lender may conclusively rely on the certified resolutions
described in Section 4.5(b) as to all actions on behalf of the Borrower by the
Authorized Representatives specified therein until the Lender receives further
duly adopted resolutions cancelling or amending the prior resolutions.

SECTION 4.6 Other Supporting Documents. The Lender must receive on or before the
Closing Date the following, each of which must be satisfactory to the Lender in
form and content, (a) such legal opinions, certificates, proceedings,
instruments and other documents as the Lender or its counsel may reasonably
request to evidence (1) compliance by the Borrower and all other parties to the
Credit Documents with legal requirements, (2) the truth and accuracy as of the
Closing Date of the respective representations thereof contained in the Credit
Documents, and (3) the due performance or satisfaction by such parties at or
prior to the Closing Date of all agreements then required to be performed and
all conditions then required to be

 

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satisfied by them pursuant to the Credit Documents, and (b) such additional
supporting documents as the Lender or its counsel may reasonably request.

ARTICLE 5

Covenants

The Borrower covenants and agrees that it shall:

SECTION 5.1 Existence. Do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence, rights and franchises
and comply with all applicable Governmental Requirements.

SECTION 5.2 Continuation of Current Business. Not engage in any business other
than the business now being conducted by it and other businesses directly
related thereto.

SECTION 5.3 Sale of Assets, Consolidation, Merger. Not (a) sell, lease, transfer
or otherwise dispose of all or substantially all of its properties or assets to
any person; or (b) consolidate with, or merge into any other person, or merge
any person into it; provided, however, that the Borrower may merge with any of
its subsidiaries or any other person; if (1) at the time of such transaction and
after giving effect thereto, no Event of Default shall exist and (2) the
surviving entity of such consolidation or merger shall be the Borrower.

SECTION 5.4 Accounting Records. Keep proper books of record and account in which
full, true and correct entries are made in accordance with generally accepted
accounting principles applied on a consistent basis.

SECTION 5.5 Reports to the Lender. Furnish to the Lender:

(a) within 95 days after the end of each fiscal year, consolidated financial
statements (including a balance sheet and the related statements of income, cash
flows and retained earnings) of the Borrower for such fiscal year, together with
statements in comparative form for the preceding fiscal year, all in reasonable
detail, prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, and audited and certified
by independent certified public accountants of recognized standing selected by
the Borrower and satisfactory to the Lender (the form of such certification also
to be satisfactory to the Lender);

(b) within 50 days after the end of each fiscal quarter, in each fiscal year,
consolidated financial statements of the Borrower similar to those referred to
in Section 5.5(a) for such fiscal quarter and for the period beginning on the
first day of the fiscal year and ending on the last day of such fiscal quarter,
unaudited but certified by an Authorized Representative of the Borrower;

 

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(c) together with the financial statements required hereunder, a compliance
certificate duly executed by an Authorized Representative of the Borrower
substantially in the form of Exhibit B attached hereto;

(d) with the financial statements submitted under Section 5.5(a) and 5.5(b), a
certificate signed by the party certifying said statement to the effect that no
Event of Default, nor any event that, upon notice or lapse of time or both,
would constitute an Event of Default, exists or, if any such Event of Default or
event exists, specifying the nature and extent thereof;

(e) promptly upon the filing thereof, copies of all Forms 10Q and 10K that the
Borrower files with the Securities and Exchange Commission;

(f) promptly upon receipt thereof, copies of all other reports, management
letters and other documents submitted to it by independent accountants in
connection with any annual or interim audit of its books made by such
accountants; and

(g) as soon as practical, from time to time, such other information regarding
its operations, business affairs and financial condition as the Lender may
reasonably request.

At the Lender’s option, the Borrower may satisfy its obligations under
subsections (a), (b), (e) and (f) of this Section 5.5 through its timely
submission of such financial statements, Forms 10-Q and 10-K, and any other
documents to the United States Securities and Exchange Commission (the “SEC”).
As of the date of this Agreement, Lender is electing to allow Borrower to
satisfy these obligations through timely submission of these financial
statements, Forms 10-Q and 10-K, and other documents to SEC. Should Lender elect
not to allow Borrower to continue to satisfy its obligations under subsection
(a), (b), (e) and (f) of this Section 5.5 in this manner, Lender will provide
notice to Borrower at least thirty (30) days prior to the end of the calendar
quarter for which such financial statements, Forms 10-Q or 10-K, or other
documents are prepared.

SECTION 5.6 Maintenance. Maintain, preserve and protect its commercially
significant franchises and trade names and preserve all the remainder of its
commercially significant property used or useful in the conduct of its business
and keep the same in good repair, working order and condition, and from time to
time make, or cause to be made, all needful and proper repairs, renewals,
replacements, betterments and improvements thereto, so that the business carried
on in connection therewith may be properly and advantageously conducted at all
times.

SECTION 5.7 Insurance. Maintain (a) adequate insurance on its properties to such
extent and against such risks, including fire, as is customary with companies in
the same or a similar business, (b) necessary worker’s compensation insurance
and (c) such other insurance as may be required by law or the Security Documents
or as may reasonably be required in writing by the Lender.

 

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SECTION 5.8 Payment of Indebtedness, Taxes, etc. (a) Pay its indebtedness and
obligations in accordance with normal terms; (b) pay all taxes, assessments and
governmental charges or levies imposed upon it or upon its income and profits or
upon any of its properties before they become in default, except any such tax,
assessment or governmental charge that is subject to a Permitted Contest; and
(c) pay all lawful claims for labor, materials and supplies or otherwise, which,
if unpaid, might become a Lien upon any of its properties, except any such claim
that is subject to a Permitted Contest.

SECTION 5.9 Litigation Notice. Promptly notify the Lender of any action, suit or
proceeding at law or in equity or by or before any Governmental Authority that,
if adversely determined, might reasonably be expected to impair its ability to
perform its obligations under any of the Credit Documents to which it is a
party, might reasonably be expected to materially impair its right to carry on
its business substantially as now conducted, or might reasonably be expected to
materially and adversely affect its business, operations, properties or
condition, financial or otherwise.

SECTION 5.10 Visitation. Permit representatives of the Lender from time to time
to visit and inspect any of its offices and properties and to examine its assets
and books of account and to discuss its affairs, finances and accounts with and
be advised as to the same by its officers, all at such reasonable times and
intervals as the Lender may desire.

SECTION 5.11 Notice of Default. Promptly notify the Lender of the existence of
any Event of Default, or any event that upon notice or lapse of time or both
would constitute an Event of Default.

SECTION 5.12 Further Assurances. At its cost and expense, upon request of the
Lender, duly execute and deliver, or cause to be duly executed and delivered, to
the Lender such further instruments and do and cause to be done such further
acts as may be reasonably necessary or proper in the opinion of the Lender or
its counsel to carry out more effectively the provisions and purposes of the
Credit Documents.

SECTION 5.13 Transactions with Related Persons. For any transaction that is
expected to materially and adversely affect the financial position of the
Borrower, not, without the prior written consent of the Lender or the approval
of a majority of the independent members of the Board of Directors or a
Committee thereof, enter into any such transaction with any person affiliated
with Borrower other than in the ordinary course of Borrower’s business and on
fair and reasonable terms no less favorable to Borrower than those that Borrower
would obtain in a comparable arms-length transaction with a person not an
Affiliate.

SECTION 5.14 Use of Credit Proceeds. Not, directly or indirectly use any part of
the proceeds of the Credit (a) for any purpose other than working capital and
financing acquisitions or (b) without limiting the generality of the foregoing,
for the purpose of purchasing or carrying any Margin Stock, or of reducing,
retiring or purchasing any indebtedness incurred for such purpose; or take any
other action that would involve a violation of Section 7 of the Securities

 

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Exchange Act of 1934, as amended, or any regulation issued thereunder, including
Regulation U or Regulation X of the Federal Reserve Board, in connection with
the transactions contemplated hereby; provided, however, that nothing set forth
in this Section 5.14 or elsewhere in this Agreement shall be construed as
imposing any duty on the Lender to supervise the use or application of the
Credit proceeds or any liability on the Lender to any person if the Credit
proceeds are not used for the purposes set forth in this Agreement.

SECTION 5.15 Financial Covenants.

(a) Leverage Ratio. Not permit its Leverage Ratio for any twelve consecutive
fiscal months to be greater than or equal to thirty-five percent (35%),
commencing with the twelve consecutive fiscal months ending September 30, 2008.
This ratio will be measured quarterly.

(b) Interest Coverage Ratio. Not permit its Interest Coverage Ratio for any
twelve consecutive fiscal months to be less than 2.0 to 1.0, commencing with the
twelve consecutive fiscal months ending September 30, 2008. This ratio will be
measured quarterly.

(c) Total Adjusted Capital. Maintain, as of December 31 of each calendar year,
not less than 200% of the Authorized Control Level Risk-Based Capital, as
defined by Ala. Code § 27-2B-2, and as calculated in accordance with the
instructions adopted by the National Association of Insurance Commissioners, as
the same may be modified, supplemented or amended from time to time.

(d) Solvency. Continue to be Solvent.

(e) Liens. Not directly or indirectly, create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, other than (a) Liens pursuant to any Credit Document and
(b) other Liens securing Debt not to exceed $50,000,000 in aggregate principal
amount.

(f) Guarantees. Not create, incur, assume or suffer to exist any guarantees,
except:

(1) guarantees in respect of insurance contracts and reinsurance contracts
issued in the ordinary course of business:

(2) guarantees in respect of the extension of guaranties in the ordinary course
of business to insureds of the obligations of insurers under insurance contracts
and reinsurance contracts;

(3) guarantees in respect of the endorsement of instruments for deposit or
collection in the ordinary course of business; and

(4) guarantees in respect of the Debt of its subsidiaries.

 

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(g) Certain Defined Terms. For purposes of this Section 5.15, the following
terms are defined as follows:

 

  (1) “Interest Coverage Ratio” means a fraction in which the numerator is the
sum of the net income of Borrower (excluding extraordinary items) for the
12-month period preceding the applicable date plus the interest expense, plus
federal and state income taxes incurred during such period, and the denominator
is the total interest expense of Borrower for such period.

 

  (2) “Leverage Ratio” means the ratio of total debt of Borrower to the sum of
shareholders’ equity plus debt, less unrealized gains of Borrower.

Accounting terms used in this Agreement shall, unless otherwise defined herein,
have the meanings normally given them by, and shall be calculated, both as to
amounts and classifications of items on a consolidated basis, in accordance with
generally accepted accounting principles.

SECTION 5.16 [Intentionally omitted].

SECTION 5.17 PATRIOT Act Compliance. The Borrower will provide, to the extent
commercially reasonable, such information as is reasonably requested by the
Lender in order to assist the Lender in maintaining compliance with the USA
PATRIOT Act (Title III of Pub. L. 107-56, signed into law October 26, 2001).

ARTICLE 6

Events of Default

SECTION 6.1 Events of Default. The occurrence of any of the following events
shall constitute an event of default (an “Event of Default”) under this
Agreement (whatever the reason for such event and whether or not it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
Governmental Requirement):

(a) any representation or warranty made in this Agreement or in any of the other
Credit Documents shall prove to be false or misleading in any material respect
as of the time made; or

(b) any report, certificate, financial statement or other instrument furnished
in connection with the Credit, this Agreement or any of the other Credit
Documents, shall prove to be false or misleading in any material respect as of
the time furnished; or

(c) default shall be made in the payment when due of any of the Obligations; or

 

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(d) default shall be made in the due observance or performance of any covenant,
condition or agreement on the part of the Borrower to be observed or performed
pursuant to the terms of Sections 5.2, 5.3 and 5.15 hereof; or

(e) default shall be made in the due observance or performance of any covenant,
condition or agreement on the part of the Borrower to be observed or performed
pursuant to the terms of this Agreement (other than any covenant, condition or
agreement, default in the observance or performance of which is elsewhere in
this Section 6.1 specifically dealt with) and such default shall continue
unremedied until the first to occur of (1) the date that is 30 days after
written notice by the Lender to the Borrower or (2) the date that is 30 days
after the Borrower first obtains knowledge thereof; or

(f) failure of Borrower to timely perform any covenant in the Credit Documents
requiring the furnishing of notices, financial reports or other information to
the Lender within five (5) Business Days of when due; or

(g) any default or event of default, as therein defined, shall occur under any
of the other Credit Documents (after giving effect to any applicable notice,
grace or cure period specified therein); or

(h) (1) default shall be made with respect to any Debt (other than the
Obligations) of any Obligor in an aggregate principal amount exceeding
$10,000,000, if the effect of such default is to accelerate the maturity of such
Debt or to permit the holder thereof to cause such Debt to become due prior to
its stated maturity, or (2) any such Debt shall not be paid when due (after
giving effect to any applicable notice, grace or cure periods); or

(i) any Obligor shall (1) apply for or consent to the appointment of a receiver,
trustee, liquidator or other custodian of such Obligor or any of such Obligor’s
properties or assets, (2) fail or admit in writing such Obligor’s inability to
pay such Obligor’s debts generally as they become due, (3) make a general
assignment for the benefit of creditors, (4) suffer or permit an order for
relief to be entered against such Obligor in any proceeding under the federal
Bankruptcy Code, or (5) file a voluntary petition in bankruptcy, or a petition
or an answer seeking an arrangement with creditors or to take advantage of any
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute, or an answer admitting the material allegations of a
petition filed against such Obligor in any proceeding under any such law or
statute, or if corporate action shall be taken by any Obligor for the purpose of
effecting any of the foregoing; or

(j) a petition shall be filed, without the application, approval or consent of
any Obligor in any court of competent jurisdiction, seeking bankruptcy,
reorganization, rearrangement, dissolution or liquidation of such Obligor or of
all or a substantial part of the properties or assets of such Obligor, or
seeking any other relief under any law or statute of the type referred to in
Section 6.1(i)(5) against such Obligor, or the appointment of a receiver,
trustee, liquidator or other custodian of such Obligor or of all or a
substantial part of the

 

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properties or assets of such Obligor, and such petition shall not have been
stayed or dismissed within 30 days after the filing thereof; or

(k) any Obligor shall be dissolved or liquidated or cease to be Solvent or
suspend business; or

(l) any writ of execution, attachment or garnishment shall be issued against the
assets of any Obligor and such writ of execution, attachment or garnishment
shall not be dismissed, discharged or quashed within 30 days of issuance; or

(m) any final judgment for the payment of money in excess of an aggregate of
$10,000,000 shall be rendered against any Obligor and the same shall remain
undischarged for a period of 30 days during which execution shall not be
effectively stayed.

SECTION 6.2 Lender’s Remedies on Default. If an Event of Default exists, or any
event exists that upon notice or lapse of time or both would constitute an Event
of Default, the Lender shall have no obligation to extend any further Credit
hereunder. If an Event of Default exists under Section 6.1(i) or 6.1(j), all of
the Obligations shall automatically become immediately due and payable. If any
other Event of Default exists, the Lender may, by written notice to the
Borrower, declare any or all of the Obligations to be immediately due and
payable, whereupon they shall become immediately due and payable. Any such
acceleration (whether automatic or upon notice) shall be effective without
presentment, demand, protest or other action of any kind, all of which are
hereby expressly waived, anything contained herein or in any of the other Credit
Documents to the contrary notwithstanding. If an Event of Default exists, the
Lender may exercise any of its rights and remedies on default under the Credit
Documents or applicable law.

ARTICLE 7

Miscellaneous

SECTION 7.1 Notices.

(a) Any request, demand, authorization, direction, notice, consent, waiver or
other document provided or permitted by this Agreement or the other Credit
Documents to be made upon, given or furnished to, or filed with, the Borrower or
the Lender must (except as otherwise provided in this Agreement or the other
Credit Documents) be in writing and be delivered by one of the following means:
(1) by personal delivery at the hand delivery address specified below, (2) by
first-class, registered or certified mail, postage prepaid and addressed as
specified below, or (3) if facsimile transmission facilities for such party are
identified below or pursuant to a separate notice from such party, sent by
facsimile transmission to the number specified below or in such notice.

 

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(b) The hand delivery address, mailing address and (if applicable) facsimile
transmission number for receipt of notice or other documents by such parties are
as follows:

Borrower

By hand and mail:

3700 Colonnade Parkway

Birmingham, Alabama 35243

Attention: General Counsel

By facsimile: (205) 803-8098

With a copy to:

Mark A. Weiss

Keating, Muething & Klekamp, P.L.L.

1400 Provident Tower

One East Fourth Street

Cincinnati, Ohio 45202

By facsimile: (513) 579-6457

Lender

By hand and mail:

1900 Fifth Avenue North

Regions Center, Upper Lobby

Birmingham, Alabama 35203

Attention: David A. Simmons

By facsimile: (205) 581-7479

With a copy to:

J. Kris Lowry

Maynard, Cooper & Gale, P.C.

1901 Sixth Avenue North

2400 Regions/Harbert Plaza

Birmingham, Alabama 35203-2618

By facsimile: (205) 254-1999

 

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Any of such parties may change the address or facsimile transmission notice for
receiving any such notice or other document by giving notice of the change to
the other parties named in this Section 7.1.

(c) Any such notice or other document shall be deemed delivered when actually
received by the party to whom directed (or, if such party is not a natural
person, to an officer, director, partner, member or other legal representative
of the party) at the address or number specified pursuant to this Section 7.1,
or, if sent by mail, three Business Days after such notice or document is
deposited in the United States mail, addressed as provided above.

(d) Five Business Days’ written notice to the Borrower as provided above shall
constitute reasonable notification to the Borrower when notification is required
by law; provided, however, that nothing contained in the foregoing shall be
construed as requiring five Business Days’ notice if, under applicable law and
the circumstances then existing, a shorter period of time would constitute
reasonable notice.

SECTION 7.2 Expenses. The Borrower shall promptly on demand pay all costs and
expenses, including the fees and disbursements of counsel to the Lender,
incurred by the Lender in connection with (a) the extension of the Credit and
the administration or collection of the Obligations, (b) the negotiation,
preparation and review of the Credit Documents (whether or not the transactions
contemplated by this Agreement shall be consummated), (c) the enforcement of any
of the Credit Documents, (d) the custody and preservation of the Property,
(e) the protection or perfection of the Lender’s rights and interests under the
Security Documents in the Property, (f) the filing or recording of the Security
Documents or any related financing, continuation or termination statements, or
similar documents (including any stamp, documentary, mortgage, recording and
similar taxes and fees), (g) the exercise by or on behalf of the Lender of any
of its rights, powers or remedies under the Credit Documents, (h) the compliance
by the Lender with any Governmental Requirements with respect to any of the
Credit Documents, any of the Property or any of the Obligations, and (i) the
prosecution or defense of any action or proceeding by or against the Lender, the
Borrower, any Obligor, or any one or more of them, concerning any matter related
to this Agreement or any of the other Credit Documents, any of the Property or
any of the Obligations. All such amounts shall bear interest from the date
demand is made at the Default Rate and shall be included in the Obligations
secured by the Security Documents. The Borrower’s obligations under this
Section 7.2 shall survive the payment in full of the Obligations and the
termination of this Agreement.

SECTION 7.3 Independent Obligations. The Borrower agrees that its obligations to
the Lender under this Agreement may be enforced against the Borrower without the
necessity of joining any other Obligor or any other person, as a party.

SECTION 7.4 Successors and Assigns; Participation. All covenants and agreements
contained in this Agreement shall bind and inure to the benefit of the
respective

 

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successors and assigns of the parties hereto, except that Borrower may not
assign any rights hereunder without the prior written consent of Lender. Lender
may assign to one or more Persons all or any part of or may grant participation
to one or more Persons, in all or any part of the Loans, and to the extent of
any assignment or participation the assignee or participant of such assignment
or participation shall have the rights and benefits hereunder as if it were a
Lender hereunder, except that Borrower shall be entitled to deal exclusively
with Lender and rely upon documents, consents and writings signed solely by
Lender, without the necessity of any such participant joining in. Borrower
authorizes Lender to disclose to any purchaser or participant, or any
prospective purchaser or participant of an interest in the Loans, any financial
or other information pertaining to Borrower.

SECTION 7.5 Governing Law. This Agreement and the other Credit Documents shall
be construed in accordance with the internal laws of the State of Alabama
(without regard to conflict of law principles) except as required by mandatory
provisions of law.

SECTION 7.6 Date of Agreement. The date of this Agreement is intended as a date
for the convenient identification of this Agreement and is not intended to
indicate that this Agreement was executed and delivered on that date.

SECTION 7.7 Separability Clause. If any provision of the Credit Documents shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.

SECTION 7.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed an original, but all
such counterparts shall together constitute but one and the same agreement.

SECTION 7.9 No Oral Agreements. This Agreement is the final expression of the
agreement between the parties hereto, and this Agreement may not be contradicted
by evidence of any prior oral agreement between such parties. All previous oral
agreements between the parties hereto have been incorporated into this Agreement
and the other Credit Documents, and there is no unwritten oral agreement between
the parties hereto in existence.

SECTION 7.10 Waiver and Election. The exercise by the Lender of any option given
under this Agreement shall not constitute a waiver of the right to exercise any
other option. No failure or delay on the part of the Lender in exercising any
right, power or remedy under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power or remedy
preclude any further exercise thereof or the exercise of any other right, power
or remedy. No modification, termination or waiver of any provisions of the
Credit Documents, nor consent to any departure by the Borrower therefrom, shall
be effective unless in writing and signed by an authorized representative of the
Lender, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No notice to or demand on
the Borrower in any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances.

 

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SECTION 7.11 No Obligations of Lender; Indemnification. The Lender does not by
virtue of this Agreement or any of the transactions contemplated by the Credit
Documents assume any duties, liabilities or obligations with respect to any
property now or hereafter granted to it as collateral for any of the Obligations
unless expressly assumed by the Lender under a separate agreement in writing,
and the Credit Documents shall not be deemed to confer on the Lender any duties
or obligations that would make the Lender directly or derivatively liable for
any person’s negligent, reckless or wilful conduct. The Borrower agrees to
indemnify and hold the Lender harmless against and with respect to any damage,
claim, action, loss, cost, expense, liability, penalty or interest (including
attorney’s fees) and all costs and expenses of all actions, suits, proceedings,
demands, assessments, claims and judgments directly or indirectly resulting
from, occurring in connection with, or arising out of: (a) any inaccurate
representation made by the Borrower or any Obligor in this Agreement or any
other Credit Document; and (b) any breach of any of the warranties or
obligations of the Borrower or any Obligor under this Agreement or any other
Credit Document. The provisions of this Section 7.11 shall survive the payment
of the Obligations in full and the termination of this Agreement and the other
Credit Documents, and the satisfaction, release (in whole or in part) and
foreclosure of the Security Documents.

SECTION 7.12 Set-off. While any Event of Default exists, the Lender is
authorized at any time and from time to time, without notice to the Borrower
(any such notice being expressly waived by the Borrower), to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by the Lender to or
for the credit or the account of the Borrower against any and all of the
Obligations, irrespective of whether or not the Lender shall have made any
demand under this Agreement and although such Obligations may be unmatured. The
rights of the Lender under this Section 7.12 are in addition to all other rights
and remedies (including other rights of set-off or pursuant to any banker’s
lien) that the Lender may have.

SECTION 7.13 [Intentionally omitted].

SECTION 7.14 Submission to Jurisdiction. The Borrower irrevocably
(a) acknowledges that this Agreement will be accepted by the Lender and
performed by the Borrower in the State of Alabama; (b) submits to the
jurisdiction of each state or federal court sitting in Jefferson County, Alabama
(collectively, the “Courts”) over any suit, action or proceeding arising out of
or relating to this Agreement or any of the other Credit Documents
(individually, an “Agreement Action”); (c) waives, to the fullest extent
permitted by law, any objection or defense that the Borrower may now or
hereafter have based on improper venue, lack of personal jurisdiction,
inconvenience of forum or any similar matter in any Agreement Action brought in
any of the Courts; (d) agrees that final judgment in any Agreement Action
brought in any of the Courts shall be conclusive and binding upon the Borrower
and may be enforced in any other court to the jurisdiction of which the Borrower
is subject, by a suit upon such judgment; (e) consents to the service of process
on the Borrower in any Agreement Action by the mailing of a copy thereof by
registered or certified mail, postage prepaid, to the Borrower at the

 

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Borrower’s address designated in or pursuant to Section 7.1; (f) agrees that
service in accordance with Section 7.14(e) shall in every respect be effective
and binding on the Borrower to the same extent as though served on the Borrower
in person by a person duly authorized to serve such process; and (g) AGREES THAT
THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY
ANY COURT, SHALL CONSTITUTE “FAIR WARNING” TO THE BORROWER THAT THE EXECUTION OF
THIS AGREEMENT MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR
FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT
ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE
SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF
ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 7.14 shall limit or
restrict the Lender’s right to serve process or bring Agreement Actions in
manners and in courts otherwise than as herein provided.

SECTION 7.15 Usury Laws. Any provision of this Agreement or any of the other
Credit Documents to the contrary notwithstanding, the Borrower and the Lender
agree that they do not intend for the interest or other consideration provided
for in this Agreement and the other Credit Documents to be greater than the
maximum amount permitted by applicable law. Regardless of any provision in this
Agreement or any of the other Credit Documents, the Lender shall not be entitled
to receive, collect or apply, as interest on the Obligations, any amount in
excess of the maximum rate of interest permitted to be charged under applicable
law until such time, if any, as that interest, together with all other interest
then payable, falls within the then applicable maximum lawful rate of interest.
If the Lender shall receive, collect or apply any amount in excess of the then
maximum rate of interest, the amount that would be excessive interest shall be
applied first to the reduction of the principal amount of the Obligations then
outstanding in the inverse order of maturity, and second, if such principal
amount is paid in full, any excess shall forthwith be returned to the Borrower.
In determining whether the interest paid or payable under any specific
contingency exceeds the highest lawful rate, the Borrower and the Lender shall,
to the maximum extent permitted under applicable law, (a) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof, (c) consider all the
Obligations as one general obligation of the Borrower, and (d) “spread” the
total amount of the interest throughout the entire term of the Notes so that the
interest rate is uniform throughout the entire term of the Revolving Note.

SECTION 7.16 Termination. This Agreement shall continue until the Obligations
shall have been paid in full and the Lender shall have no obligation to make any
further Advances or extend any other credit hereunder. This Agreement, and the
obligations of the Borrower hereunder, shall continue to be effective, or be
automatically reinstated, as the case may be, if at any time payment in whole or
in part of any payment made with respect to the Obligations is rescinded or must
otherwise be restored or returned to the person making such payment upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of such

 

24

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person, or upon or as a result of the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to such person or with
respect to any part of the property thereof, or otherwise, all as though such
payment had not been made.

SECTION 7.17 WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY (1) IRREVOCABLY AND
UNCONDITIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
OR COUNTERCLAIM OF ANY TYPE AS TO ANY MATTER ARISING DIRECTLY OR INDIRECTLY OUT
OF OR WITH RESPECT TO THIS AGREEMENT, ANY OF THE OTHER FINANCING DOCUMENTS OR
ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH AND (2) AGREE
THAT ANY PARTY MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED FOR AGREEMENT BETWEEN THE
PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY
OF ANY KIND WHATSOEVER BETWEEN THEM SHALL INSTEAD BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

SECTION 7.18 USA PATRIOT Act Notice. The Lender hereby notifies the Borrower
that, pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L.
107-56, signed into law October 26, 2001, as amended), it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the names and addresses of the Borrower and other information that will
allow such Lender to identify the Borrower in accordance with such Act.

SECTION 7.19 Amendment and Restatement. This Agreement amends and restates the
Existing Credit Agreement in its entirety. All amounts owing on the date hereof
under the Existing Credit Agreement or the notes outstanding thereunder, shall
be treated for all purposes as if the same had been incurred under this
Agreement and shall be payable in accordance with and otherwise governed by the
terms of this Agreement. Effective as of the date hereof, all references in the
Credit Documents to the “Credit Agreement” shall mean the Credit Agreement, as
amended and restated by this Agreement; all references to the “Note” shall mean
such Revolving Note as amended and restated hereby; all references to the
“Credit Documents” shall mean the Credit Documents as modified, amended,
restated or added hereby and all references to other specific Credit Documents
shall mean those documents as modified and amended hereby this Agreement.
Nothing contained in this Agreement shall be deemed to constitute a novation of
the terms of the Credit Documents, nor impair any Liens granted to the Lender
thereunder, nor affect any of the rights, powers or remedies of the Lender under
the Credit Documents, nor constitute a waiver of any provision thereof, except
as specifically set forth in this Agreement.

[Remainder of page intentionally left blank]

 

25

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IN WITNESS WHEREOF, the Borrower and the Lender have caused this Agreement to be
dated as of August 31, 2008 and to be duly executed and delivered.

 

INFINITY PROPERTY AND CASUALTY
CORPORATION, an Ohio corporation By:  

/s/ Roger Smith

Name:   Roger Smith Its:   Executive Vice President and CFO

 

26

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REGIONS BANK By  

/s/ David A. Simmons

  Its Senior Vice President

 

27

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LIST OF EXHIBITS

Exhibit

 

A    Credit Documents B    Compliance Certificate

 

28

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EXHIBIT A

Credit Documents

The “Credit Documents” referred to in this Agreement include this Agreement and
the Revolving Note.

 

A-1

--------------------------------------------------------------------------------

EXHIBIT B

COMPLIANCE CERTIFICATE

 

To: Regions Bank, as Lender in the

Credit Agreement described below

This Compliance Certificate is furnished pursuant to that certain Amended and
Restated Credit Agreement dated August 31, 2008 (as amended, modified, renewed
or extended from time to time, the “Agreement”) between Infinity Property and
Casualty Corporation, an Ohio corporation (the “Borrower”), and Regions Bank, an
Alabama banking corporation (the “Lender”). Unless otherwise defined herein,
capitalized terms used in this Compliance Certificate have the meanings ascribed
thereto in the Agreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

  1. I am the duly elected                      of Borrower.

 

  2. I have reviewed the terms of the Agreement and have made, or have caused to
be made under my supervision, a detailed review of the transactions and
conditions of the Borrower during the accounting period covered by the attached
financial statements.

 

  3. The examinations described in paragraph 2 did not disclose, and I have no
knowledge of, the existence of any condition or event that constitutes a default
or Event of Default during or at the end of the accounting period covered by the
attached financial statements or as of the date of this Certificate, except as
set forth below.

 

  4. Schedule I attached hereto sets forth the financial data and computations
evidencing the Borrower’s compliance with certain covenants of the Agreement,
all of which data and computations are true, complete and correct.

Described below are the exceptions, if any to paragraph 3 listing, in detail,
the nature of the condition or event, the period during which it has existed and
the action the Borrower has taken, is taking or proposes to take with respect to
each such condition or event:

 

 

 

 

The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this      day of             , 20    .

 

 

 

  of Infinity Property and Casualty Corporation

 

B-1

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Infinity Property and Casualty Corporation

Line of Credit – Regions Bank

Compliance Certificate

As of                 , 20    

 

1.   Section 5.15(a) – Leverage Ratio      a.    Total debt   

 

  b.    Shareholders’ equity   

 

  c.    Unrealized gains or losses   

 

  d.    a plus b minus c   

 

  e.    ratio of a to d   

 

  f.    permitted ratio: must be less than or equal to 35%   

 

2.   Section 5.15(b) – Interest Coverage Ratio      a.    Net income of borrower
for twelve month period preceding the applicable date   

 

  b.    Extraordinary items for the twelve month period preceding the applicable
date   

 

  c.    Interest Expense for the twelve month period preceding the applicable
date   

 

  d.    Federal and State income taxes incurred during such period   

 

  e.    a minus b, plus c plus d   

 

  f.    Total interest expense of the borrower for such period   

 

  g.    Ratio of e to f   

 

  h.    permitted ratio: no less than 2.0 to 1.0   

 

3.   Section 5.15(c) – Authorized Control Level RBC     

calculated only at fiscal year end, or December 31

  

 

  a.    Total adjusted capital   

 

  b.    Authorized Control Level Risk Based Capital   

 

  c.    2.0 x b   

 

  d.    a minus c, must be greater than or equal to 0   

 

  e.    must be greater than or equal to 0   

 

 

B-2