Document:

Negative Pledge Agreement

 

    
      NEGATIVE
        PLEDGE
        AGREEMENT

       

      Borrower: UTG, INC

                       
5250 South Sixth Street

                       
Springfield, IL62703

       

      Lender: First Tennessee Bank National
        Association

                 
  Financial Institutions

                 
  845 Crossover Lane, Suite 150

                   
Memphis, TN38117

       

      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
        ShelbyCounty, 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____________Revolving Credit Line

 

    
      First Tennessee Bank
        National Association

       

      REVOLVING CREDIT
        NOTE

       

      $5,000,000.00
                                                                                                      
December 8, 2006

                                                                                                                                 
        Memphis, Tennessee

                 
FOR VALUE RECEIVED,
        UTG, Inc., a Delaware Corporation, (“Borrower”),
        promises to pay to the order of FIRST TENNESSEE BANK NATIONAL ASSOCIATION, 
Memphis, Tennessee (“Lender”; Lender and any subsequent holder[s] hereof
        are hereinafter collectively referred to as “Holder”), the principal sum
        of Five Million and 00/100 DOLLARS ($5,000,000.00), together with interest
        thereon, on so much thereof as shall remain outstanding from time to time,
        at
        the rates hereinafter provided.

                 
Borrower will pay this
        loan in one payment of all outstanding principal plus all
        accrued interest on December 7, 2007.  In addition, Borrower will pay
        regular quarterly payments of all accrued interest due as of each payment
        date,
        beginning March 8, 2007, with all subsequent interest payments to be due
        on the
        same day of each quarter after that.  Unless otherwise agreed or required
        by applicable law, payments will be applied first to accrued unpaid interest,
        then to principal, and any remaining amount to any unpaid collection
        costs.

                 
The interest rate on
        the Note is subject to change from time to time based on
        changes in an independent index which is the LIBOR Rate (as hereinafter
        defined), adjusted and determined as of the opening of business on the first
        date of the month in which the Note is dated (the “Initial Pricing Date”) and on
        the 1st day of every third month hereafter (the “Interest Rate Change
        Date”).  The “LIBOR RATE” shall mean the London Interbank Offered Rate of
        interest for an interest period of three (3) months, as reported in the Wall
        Street Journal published on each Interest Rate Change Date.  Each change in
        the Index which results from a change in the LIBOR Rate shall become effective,
        without notice to the Borrower, on each Interest Rate Change Date following
        any
        change in the LIBOR Rate; provided, however, that if The Wall Street Journal
        is
        not published on such date, the LIBOR Rate shall be determined by reference
        to
        The Wall Street Journal last published immediately preceding such date (the
        “Index”).  The Index is not necessarily the lowest rate charged by Lender
        on its Loans.  If the Index becomes unavailable during the term of this
        loan, Lender may designate a substitute index after notice to Borrower. 
Lender will tell Borrower the current Index upon Borrower’s request.  The
        interest rate change will not occur more often than every third month. 
Borrower understands the Lender  may make loans based on other rates as
        well.  The Index is currently 5.35% per annum.  The interest
        rate  to be applied to the unpaid principal balance of this Note will be at
        a rate of 1.80 percentage points over the Index, resulting in an initial
        rate of
        7.15% per annum.  Notwithstanding anything else in this instrument
        to the contrary, in no event shall the maximum rate of interest payable in
        respect to the indebtedness evidenced hereby exceed the maximum rate of interest
        allowed to be charged by applicable law.

                 
Place of Payment.  All payments
        in respect of the indebtedness
        evidenced by this Note shall be payable in lawful money of the United States
        of
        America, at the office of Lender, 845 Crossover Lane, Suite 150, Memphis,
        Tennessee, 38117 or such other place as the Holder of this Note may designate
        in
        writing.  Interest shall be calculated on a 365/365 basis; that is, 
by applying the ratio of the annual interest rate over a year of 365 days,
        multiplied by the outstanding principal balance, multiplied by the actual
        number
        of days the principal balance is outstanding.

                 
Late Charge.  Borrower shall
        pay a “late charge” equal to the lesser
        of (i) One Hundred Dollars ($100.00) or (ii) five percent (5%) of any payments
        of principal and/or interest due when paid more than ten (10) days after
        the due
        date thereof (provided that in no event shall said “late charge” result in the
        payment of interest in excess of the maximum interest permitted by law) to
        cover
        the extra expenses involved in handling delinquent payments.

                 
Prepayments.
 The
        indebtedness evidenced hereby may be
        prepaid, in whole or in part, at any time without penalty.  Any prepayment
        shall be applied first to accrued and unpaid interest on the outstanding
        principal balance, and the remainder, if any, shall be applied to reduce
        the
        outstanding principal balance of this Note in the sequential order of its
        maturity.

                 
Security.  This Note is
        secured by, among other things, the lien and
        provisions of a certain Commercial Pledge Agreement, dated of even date
        herewith, executed and delivered by Borrower to Lender, covering certain
        Collateral as described therein.

                 
Loan
        Agreement.  The proceeds of this Note are being
        advanced pursuant to the terms of that certain Loan Agreement (“the Loan
        Agreement”) of even date herewith by and between Borrower and Lender.  Any
        default under the terms of said Loan Agreement shall constitute a default
        hereunder.

      In the event that any
        one
        or more of the Events of Default specified in the Loan Agreement shall have
        happened, the Holder of this Note may proceed to protect and enforce its
        rights
        either by suit in equity and/or by action at law, or by other appropriate
        proceedings, whether for the specific performance of any covenant or agreement
        contained in this Note, the Loan Agreement, the Negative Pledge
        Agreement, or the Commercial Pledge Agreement or in aid of the exercise of
        any
        power or right granted by this Note, the Loan Agreement, the
        Negative Pledge Agreement, or the Commercial Pledge Agreement  or proceed
        to enforce the payment of this Note or to enforce any other legal or equitable
        right of the Holder of this Note.  

      Upon the occurrence
        of any
        Event of Default as set forth herein, at the option of Holder and without
        notice
        to Borrower, all accrued and unpaid interest, if any, shall be added to the
        outstanding principal balance hereof, and the entire outstanding principal
        balance, as so adjusted, shall bear interest thereafter until paid at the
        lesser
        of (a) fourteen percent (14%) per annum or (b) the maximum effective contract
        rate which it is lawful for the holder hereof to charge. (the “Default
        Rate”) regardless of whether there has been an acceleration of the payment
        of principal as set forth herein.  All such interest shall be paid at the
        time of and as a condition precedent to the curing of any such default (to
        the
        extent that any such cure is otherwise expressly permitted under the terms
        of
        this Note).

                 
Limitation of Interest.  Notwithstanding
        any provision herein to the
        contrary, it is the intent of the Lender and the Borrower that neither the
        Lender nor any subsequent Holder shall be entitled to receive, collect, reserve
        or apply, as interest, any amount in excess of the maximum lawful rate of
        interest permitted to be charged by applicable law or regulations, as amended
        or
        enacted from time to time.  In the event the Note calls for any interest
        payment that exceeds the maximum lawful rate of interest then applicable,
        such
        interest shall not be received, collected, charged, or reserved until such
        time
        as the interest, together with all other interest then payable, falls within
        the
        then applicable maximum lawful rate of interest.  In the event Lender, or
        any subsequent Holder, receives any such interest in excess of the then maximum
        lawful rate of interest, such amount which would be excessive interest shall
        be
        deemed a partial prepayment of principal and treated hereunder as such, or,
        if
        the principal indebtedness evidenced hereby is paid in full, any remaining
        excess funds shall immediately be paid to Borrower.

                 
Cumulative Rights.  No delay on
        the part of the Holder of this Note
        in the exercise of any power or right under this Note, or any other instrument
        executed pursuant hereto shall operate as a waiver thereof, nor shall a single
        or partial exercise of any power or right preclude other or further exercise
        thereof or in the exercise of any other power or right.  Enforcement by the
        Holder of this Note of any security for the payment hereof shall not constitute
        any election by it or remedies so as to preclude the exercise of any other
        remedy available to it. 

                 
Waiver.  Presentment
        for payment, demand, protest and notice of
        demand, protest and nonpayment are hereby waived by Borrower and all other
        parties hereto.  No failure to accelerate the indebtedness evidenced hereby
        by reason of default hereunder, acceptance of a past-due installment or other
        indulgences granted from time to time, shall be construed as a novation of
        this
        Note or as a waiver of such right of acceleration or of the right of Holder
        thereafter to insist upon strict compliance with the terms of this Note or
        to
        prevent the exercise of such right of acceleration or any other right granted
        hereunder or by applicable laws.  Unless otherwise specifically agreed by
        Holder in writing, the liability of Borrower and all other persons now or
        hereafter liable for payment of the indebtedness evidenced hereby, or any
        portion thereof, shall not be affected by (1) any renewal hereof or other
        extension of the time for payment of the indebtedness evidenced hereby or
        any
        amount due in respect thereof, (2) the release of all or any part of any
        collateral now or hereafter securing the payment of the indebtedness evidenced
        hereby or any portion thereof, or (3) the release of or resort to any person
        now
        or hereafter liable for payment of the indebtedness evidenced hereby or any
        portion thereof.  This Note may not be changed orally, but only by an
        agreement in writing signed by the party against whom enforcement of any
        waiver,
        change, modification or discharge is sought.  To the extent permitted by
        applicable law, Borrower hereby waives and renounces for itself, its heirs,
        successors and assigns, all rights to the benefits of any appraisement,
        exception and homestead now provided, or that may hereafter be provided by
        the
        Constitution and laws of the United States of America and of any state thereof
        in and to all of its property, real and personal, against the enforcement
        and
        collection of the obligations evidenced by this Note.

                 
Attorney’s Fees and Costs.  In the event
        one or more Events of
        Default shall occur, and in the event that thereafter this Note is placed
        in the
        hands of an attorney for collection, or in the event this Note is collected
        in
        whole or in part through legal proceedings of any nature, then, and in any
        such
        case, there shall be added to the unpaid principal balance hereof all costs
        of
        collection, including, but not limited to, reasonable attorneys’ fees and all
        expenses incurred in connection with the exercise of any rights under the
        Note
        incurred by the Holder hereof on account of such collection, whether or not
        suit
        is filed.

                 
Revolving Line of
        Credit.  This Note evidences a revolving line of
        credit.  Advances under this Note, as well as directions for payment from
        Borrower’s accounts, may be requested orally or in writing by Borrower or by an
        authorized person.  Until the Maturity Date, Borrower may reborrow funds
        available under the Loan.  Borrower agrees to be liable for all sums
        either: (a) advanced in accordance with the instructions of an authorized
        person
        or (b) credited to any of Borrower’s accounts with Lender in accordance with the
        Loan Agreement.

                 
Governing Law.  This Note has
        been negotiated, executed and
        delivered in the State of Tennessee and shall be construed in accordance
        with
        the laws of the State of Tennessee, except to the extent that Federal law
        may be
        applicable to the determination of the Default Rate.  

                 
Headings.  The headings
        of the Sections of this Note are inserted
        for convenience only and shall not be deemed to constitute a part hereof.

                 
Successors and Assigns.  As used herein,
        the terms “Borrower”
and “Holder” shall be deemed to include their respective successors,
        legal representatives and assigns, whether by voluntary action of the parties
        or
        by operation of law.  In the event that more than one person, firm or
        entity is a Borrower hereunder, then all references to “Borrower” shall be
        deemed to refer equally to each of said persons, firms and/or entities, all
        of
        whom shall be jointly and severally liable for all of the obligations of
        Borrower hereunder.

                 
IN WITNESS WHEREOF,
        the undersigned has caused this Note to be executed as of
        the date first set forth above.

      BORROWER:

       

      UTG, INC.

       

      By:_/s/ Theodore C. Miller______

       

      Title:_Sr. Vice
        President________

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