Exhibit 10.8
NEGATIVE PLEDGE AGREEMENT
 
Borrower: UTG, INC
                  5250 South Sixth Street
                  Springfield, IL 62703
 
Lender: First Tennessee Bank National Association
              Financial Institutions
              845 Crossover Lane, Suite 150
              Memphis, TN 38117
 
THIS NEGATIVE PLEDGE AGREEMENT dated December 8, 2006, is made and executed
between UTG, Inc. (“Borrower”) and First Tennessee Bank National Association
(“Lender”) on the following terms and conditions and in connection with Lender’s
extension of credit to Borrower in the original principal amount of A)
18,000,000.00 and B) $5,000,000.00 evidenced by the Notes and further evidenced
by Loan Agreement between Lender and Borrower (“Loan Agreement”) of even date
herewith.  Unless otherwise defined in this Agreement, capitalized terms used
herein shall have the meanings ascribed to them in the Loan Agreement.  Borrower
understands and agrees that: (A) in granting, renewing, or extending any Loans,
Lender is relying upon Borrower’s representations, warranties, and agreements as
set forth in this Agreement, and (B) all such Loans shall be and remain subject
to the terms and conditions of this Agreement.
TERM. This Agreement shall be effective as of December 8, 2006, and shall
continue in full force and effect until such time as all of Borrower’s Loans in
favor of Lender have been paid in full, including principal, interest, costs,
expenses, attorneys’ fees, and other fees and charges, or until such time as the
parties may agree in writing to terminate this Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
Organization. Borrower is a corporation for profit which is, and at all times
shall be, duly organized, validly existing, and in good standing under and by
virtue of the laws of the State of Delaware. Borrower is duly authorized to
transact business in all other states in which Borrower is doing business,
having obtained all necessary filings, governmental licenses and approvals for
each state in which Borrower is doing business. Specifically, Borrower is, and
at all times shall be, duly qualified as a foreign corporation in all states in
which the failure to so qualify would have a material adverse effect on its
business or financial condition. Borrower has the full power and authority to
own its properties and to transact the business in which it is presently engaged
or presently proposes to engage. Borrower maintains its principal office at 5250
South Sixth Street, Springfield , IL. Unless Borrower has designated otherwise
in writing, this is the principal office at which Borrower keeps its books and
records including its records concerning the Collateral. Borrower will notify
Lender prior to any change in the location of Borrower’s state of organization
or any change in Borrower’s name. Borrower shall do all things necessary to
preserve and to keep in full force and effect its existence, rights and
privileges, and shall comply with all regulations, rules, ordinances, statutes,
orders and decrees of any governmental or quasi-governmental authority or court
applicable to Borrower and Borrower’s business activities.
Authorization. Borrower’s execution, delivery, and performance of this Agreement
and all the Related Documents have been duly authorized by all necessary action
by Borrower and do not conflict with, result in a violation of, or constitute a
default under (1) any provision of (a) Borrower’s articles of incorporation or
organization, or bylaws, or (b) any agreement or other instrument binding upon
Borrower or (2) any law, governmental regulation, court decree, or order
applicable to Borrower or to Borrower’s properties.
Financial Information. Each of Borrower’s financial statements supplied to
Lender truly and completely disclosed Borrower’s financial condition as of the
date of the statement in accordance with generally accepted accounting
principles, consistently applied (“GAAP”), and there has been no material
adverse change in Borrower’s financial condition subsequent to the date of the
most recent financial statement supplied to Lender. Borrower has no material
contingent obligations required to be disclosed in accordance with GAAP except
as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
Borrower is required to give under this Agreement when delivered will constitute
legal, valid, and binding obligations of Borrower enforceable against Borrower
in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously disclosed
in Borrower’s financial statements or in writing to Lender and as accepted by
Lender, and except for property tax liens for taxes not presently due and
payable, Borrower owns and has good title to all of Borrower’s properties free
and clear of all Security Interests, and has not executed any security documents
or financing statements relating to such properties as of the date of this
Agreement.
NEGATIVE COVENANTS, Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
Transfer and Liens. Fail to continue to own all of Borrower’s assets, except for
routine transfers, use or depletion in the ordinary course of Borrower’s
business. Borrower agrees not to create or grant to any person, except Lender,
any lien, security interest, encumbrance, cloud on title, mortgage, pledge or
similar interest in any of the common stock of American Capitol Insurance
Company owned by Borrower or Borrower’s direct or indirect subsidiaries.
 
Agreements. Borrower will not enter into any agreement containing any provisions
which would be violated or breached by the performance of Borrower’s obligations
under this Agreement or in connection herewith.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower’s accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower may open in
the future. However, this does not include any IRA or Keogh accounts, or any
trust accounts for which setoff would be prohibited by law. Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all sums
owing on the Indebtedness against any and all such accounts, and, at Lender’s
option, to administratively freeze all such accounts to allow Lender to protect
Lender’s charge and setoff rights provided in this paragraph.
Right to Cure. If an Event of Default, other than a default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been given a
notice of a similar default within the preceding twelve (12) months, it may be
cured if Borrower or Grantor, as the case may be, after receiving written notice
from Lender demanding cure of such default: (l) cure the default within thirty
(30) days; or (2) if the cure requires more than thirty (30) days, immediately
initiate steps which Lender deems in Lender’s sole discretion to be sufficient
to cure the default and thereafter continues and completes all reasonable and
necessary steps sufficient to produce compliance as soon as reasonably
practical.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes the
entire understanding and agreement of the parties as to the matters set forth in
this Agreement. No alteration of or amendment to this Agreement shall be
effective unless given in writing and signed by the party or parties sought to
be charged or bound by the alteration or amendment.
Governing Law. This Agreement will be governed by federal law applicable to
Lender and, to the extent not preempted by federal law, the laws of the State of
Tennessee without regard to its conflicts of law provisions. This Agreement has
been accepted by Lender in the State of Tennessee.
Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender’s request to
submit to the jurisdiction of the courts of Shelby County, State of Tennessee.
Attorneys’ Fees; Expenses. Borrower agrees to pay upon demand all of Lender’s
costs and expenses, including Lender’s attorneys’ fees and Lender’s legal
expenses, incurred in connection with the enforcement of this Agreement. Lender
may hire or pay someone else to help enforce this Agreement, and Borrower shall
pay the costs and expenses of such enforcement. Costs and expenses include
Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit,
including attorneys’ fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals and any anticipated post-judgment collection services. Borrower also
shall pay all court costs and such additional fees as may be directed by the
court.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under
this Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall operate as
a waiver of such right or any other right. A waiver by Lender of a provision of
this Agreement shall not prejudice or constitute a waiver of Lender’s right
otherwise to demand strict compliance with that provision or any other provision
of this Agreement. No prior waiver by Lender, nor any course of dealing between
Lender and Borrower, shall constitute a waiver of any of Lender’s rights or of
any of Borrower’s obligations as to any future transactions. Whenever the
consent of Lender is required under this Agreement, the granting of such consent
by Lender in any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may be
granted or withheld in the sole discretion of Lender.
Notices. Any notice required to be given under this Agreement shall be given in
writing, and shall be effective when actually delivered, when actually received
by telefacsimile (unless otherwise required by law), when deposited with a
nationally recognized overnight courier, or, if mailed, when deposited in the
United States mail, as first class, certified or registered mail postage
prepaid, directed to the addresses shown near the beginning of this Agreement.
Any party may change its address for notices under this Agreement by giving
formal written notice to the other parties, specifying that the purpose of the
notice is to change the party’s address. For notice purposes, Borrower agrees to
keep Lender informed at all times of Borrower’s current address. Unless
otherwise provided or required by law, if there is more than one Borrower, any
notice given by Lender to any Borrower is deemed to be notice given to all
Borrowers.
Successors and Assigns. All covenants and agreements by or on behalf of Borrower
contained in this Agreement or any Related Documents shall bind Borrower’s
successors and assigns and shall inure to the benefit of Lender and its
successors and assigns. Borrower shall not, however, have the right to assign
Borrower’s rights under this Agreement or any interest therein, without the
prior written consent of Lender.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:
Agreement. The word “Agreement” means this Negative Pledge Agreement, as this
Negative Pledge Agreement may be amended or modified from time to time, together
with all exhibits and schedules attached to this Negative Pledge Agreement from
time to time.
Borrower. The word “Borrower” means UTG, Inc. and includes all co-signers and
co-makers signing the Note.
Collateral. The word “Collateral” means all property and assets granted as
collateral security for the Loans, whether real or personal property, whether
granted directly or indirectly, whether granted now or in the future, and
whether granted in the form of a security interest, mortgage,  assignment,
pledge, or any other security or lien interest whatsoever, whether created by
law, contract, or otherwise.
Event of Default. The words “Event of Default” have the meaning set forth in the
Loan Agreement.
Grantor. The word “Grantor” means each and all of the persons or entities
granting a Security Interest in any Collateral for the Loans, including without
limitation all Borrowers granting such a Security Interest.
Guarantor. The word “Guarantor” means any guarantor, surety, or accommodation
party of any or all of the Loans.
Indebtedness. The word “Indebtedness” means the indebtedness evidenced by the
Note or Related Documents, including all principal and interest together with
all other indebtedness and costs and expenses for which Borrower is responsible
under this Agreement or under any of the Related Documents.
Lender. The word “Lender” means First Tennessee Bank National Association, its
successors and assigns.
Loans. The word “Loans” means any and all loans and financial accommodations
from Lender to Borrower whether now or hereafter existing, and however
evidenced, including without limitation those loans and financial accommodations
described herein or described on any exhibit or schedule attached to this
Agreement from time to time.
Related Documents. The words “Related Documents” mean all promissory notes, loan
agreements, guaranties, security agreements, and all other instruments,
agreements and documents, whether now or hereafter existing, executed in
connection with the Loan.
Security Interest. The words “Security Interest” mean, without limitation, any
and all types of collateral security, present and future, whether in the form of
a lien, assignment, pledge, or any other security or lien interest whatsoever
whether created by law, contract, or otherwise.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS NEGATIVE PLEDGE
AGREEMENT AND BORROWER AGREES TO ITS TERMS.
BORROWER:
UTG, INC.
 
By:_/s/ Theodore C. Miller________
Title:_Sr. Vice President__________
 
LENDER:
 
FIRST TENNESSE BANK NATIONAL ASSOCIATION
 
By:_/s/ G. Porter Robinson__________
Title:_Sr. Vice President____________