PAGE
March 3, 1997
Selective Insurance Company of America
Selective Insurance Group, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
RE: Loan Facility
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Ladies and Gentlemen:
Street Bank and Trust Company (the "Bank") is pleased to make
available to Selective Insurance Company of America, a corporation
organized under the laws of New Jersey (the "Company") and Selective
Insurance Group, Inc., a corporation organized under the laws of New Jersey
(the "the Parent")(collectively, the Company and the Parent are hereinafter
referred to as the "Borrower") an aggregate $25,000,000 revolving line of
credit (the "Revolving Line of Credit") on the following terms and
conditions:
1. Term. The Revolving Line of Credit shall commence on the date
hereof and expire on June 30, 1997 (the "Revolving Maturity Date"), unless
extended by mutual agreement.
2. Notice and Manner of Borrowings. Subject to the terms and
conditions hereof, and upon request by either ▇▇▇▇▇▇▇▇, the Bank agrees to
make revolving loans to such Borrower provided for herein (each, a
"Revolving Loan") not to exceed $25,000,000 in aggregate of all outstanding
Revolving Loans to both Borrowers at any time and provided further that no
more than $20,000,000 of Revolving Loans shall be outstanding to the Parent
at any time.
3. Evidence of Indebtedness. All Revolving Loans will be evidenced
by a promissory note in the form attached hereto as Exhibit A (the "Note").
Each Borrower hereby authorizes the Bank to record each Revolving Loan and
the corresponding information on the schedule forming part of the Note, and,
absent manifest error, this record shall be conclusive and binding.
4. Interest Rate. Principal on each outstanding Revolving Loan
shall bear interest as selected by the applicable Borrower at either a
floating rate equal to the Bank's Prime Rate (Revolving Loans bearing
interest at such rate, "Prime Rate Loans"), or the Adjusted Libor Rate plus
28 basis points per annum (Revolving Loans bearing interest at such rate,
"Libor Rate Loans") or a money market rate quoted by the Bank for the amount
1
and duration of the requested loan plus 40 basis points per annum (each such
rate, a "Money Market Rate")(Revolving Loans bearing interest at such money
market rate, "Money Market Loans"). The Bank has no commitment hereunder to
quote a Money Market Rate for any particular loan duration or amount or for
each requested Revolving Loan. Libor Rate Loans may be made for interest
periods of 1, 2, 3 or 6 months and Money Market Loans may be made for
interest periods of 1 to 30 days, in each case the foregoing interest periods
shall be acceptable to the Bank and adjusted for month-end, weekend and
holiday periods. In no event shall any interest period extend beyond the
Revolving Maturity Date. Interest on each Revolving Loan shall be
calculated on the basis of a 360-day year for the actual number of days
elapsed. Interest on Prime Rate Loans shall be payable monthly in arrears
on the first business day of each month commencing on the first business day
of the month on which such Revolving Loan is made and on the same day when
principal is payable, whether upon acceleration following an Event of
Default as defined herein or on the Revolving Maturity Date. Interest on
Libor Rate Loans and Money Market Loans shall be payable in arrears at the
end of each interest period relating thereto, and for Libor Rate Loans
having interest periods exceeding 3 months, at the end of each 3 month
period and at the end of such interest period. All accrued and unpaid
interest on all Revolving Loans shall be due and payable on the same day
when principal is payable, whether upon acceleration following an Event of
Default as defined herein or on the Revolving Maturity Date. Prime Rate
Loans may be prepaid without penalty. Libor Rate Loans and Money Market
Loans may not be prepaid, and the Borrower shall pay all of the Bank's
losses, costs and expenses, excluding lost profits, arising in connection
with any prepayment of any Libor Rate Loan or Money Market Loan made prior
to the end of any interest period relating thereto, whether as a result of
acceleration or otherwise, which amount shall be calculated by the Bank
based on the amount, if any, by which the rate of interest which would have
been payable to the Bank on the prepaid amount had such prepayment not
occurred exceeds the rate of interest which would accrue to the Bank if such
prepaid amount was invested in a United States Treasury instrument selected
by the Bank of similar amount and maturity as the Loan amount which was
prepaid. Revolving Loans which are repaid may be reborrowed subject to the
terms hereof.
5. Special Provisions Relating to Libor Rate Loans. All Adjusted
Libor Rates and Money Market Rates shall be adjusted to reflect deposit
requirements, reserves, capital, taxes and other charges assessed against
the Bank in connection with the Bank's offering such a pricing option and
the Borrower agrees to pay to the Bank upon demand any increase in cost or
reduction in the rate of return realized by the Bank as a result of
imposition of
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any of the foregoing which is not reflected in adjustments to
the Adjusted Libor Rate or Money Market Rate. As of the date hereof, the
Bank is not aware of any adjustments for the foregoing items which would be
required to be made to the Adjusted Libor Rates quoted by the Bank
hereunder, and the Bank will endeavor to give prior notice to the Borrowers
before making any adjustment as permitted by this paragraph, provided
however, that failure in good faith by the Bank to give such notice shall
not affect the Bank's rights to make any adjustment or the obligation of the
Borrowers to make any payments to reflect such adjustment as provided
herein. In the event that (a) the Bank is unable to offer an Adjusted Libor
Rate, (b) it is unlawful or impractical for the Bank to offer such a rate,
or (c) the Adjusted Libor Rate does not reflect the cost to the Bank of
offering such rate, then in any such event the Bank shall have no further
obligation to quote Adjusted Libor Rates until such event ceases to be in
effect, and in the event that the making or continuing of any Libor Rate
Loan by the Bank is unlawful, the Borrower shall repay the amount of any
outstanding Libor Rate Loans and may reborrow such Libor Rate Loans as Prime
Rate Loans or, if applicable, Money Market Loans. The Borrower shall give
to the Bank no less than 3 days' prior notice of its request for the Bank to
make, or continue any maturing, Libor Rate Loan and will provide to the Bank
adequate prior notice of its request for the Bank to make, or continue any
maturing, Money Market Loan, and in the event that the Bank does not receive
adequate prior notice as to any maturing Libor Rate Loan or Money Market
Loan, the Bank may roll over or continue any such Revolving Loan as a Prime
Rate Loan or a loan of similar type and interest period as the maturing
Revolving Loan at the then prevailing Adjusted Libor Rate or Money Market
Rate, as the case may be.
6. Commitment Fee. For the period from the date hereof through the
Revolving Maturity Date, the Borrower will pay to the Bank a commitment fee
equal to 12 basis points per annum on the amount of the Revolving Line of
Credit which shall be payable quarterly in arrears on March 31, 1997 and
June 30, 1997 and on any date on which the commitment hereunder is
terminated by the Borrower.
7. Payments. Each Borrower shall pay interest and principal on the
amount of the Revolving Loans which it borrows hereunder as provided herein
and on the Revolving Maturity Date all unpaid Revolving Loans, together with
accrued and unpaid interest, shall be paid in full by such Borrower. All
payments of principal and interest shall be made in immediately available
United States dollars at the main office of the Bank without setoff or
deduction. The Borrowers and the Bank acknowledge and agree that the
obligations of the Borrowers hereunder are not
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PAGE
joint and several, and each Borrower is responsible solely for payment and
performance of those obligations required to be performed by such Borrower
hereunder or in connection with ▇▇▇▇▇ made to such Borrower hereunder.
8. Covenants. Until all Obligations have been paid in full, each
of the Borrowers covenants and agrees:
a) That the Parent shall maintain a ratio of Indebtedness to
Capital of not more than .3 to 1 at all times;
b) Not to, and to ensure that its Subsidiaries will not,
create, incur, assume or suffer to exist any mortgage, pledge,
security interest, lien or other charge or encumbrance upon any
of its assets or properties, other than (i) those described on
Exhibit B, (ii) those in favor of the Bank, and (iii) those for
which the Bank has given its prior written approval, or execute
any document providing for such interest in the future or
prohibiting the granting of any such interest in favor of the
Bank;
c) Not to, and ensure that its Subsidiaries will not, create,
incur assume or guarantee other than (i) Indebtedness to the
Bank, (ii) Indebtedness existing as of the date of this
letter agreement and disclosed on Exhibit B and (iii)
Indebtedness for which the Bank has given its prior written
consent;
d) To, and to ensure that each of its Subsidiaries will, (i)
duly observe and comply with all applicable laws, including
without limitation, those pertaining to environmental
matters and the release or threat of release of hazardous
substances, and pension and retirement plans, and pay all
taxes and governmental charges prior to the time they become
delinquent other than those taxes and charges which are
being contested in good faith by appropriate proceedings as
long as adequate book reserves required to be maintained in
accordance with generally accepted accounting principles or
statutory accounting principles have been established and
maintained, provided, however, that no reserves shall be
required to be maintained by the Borrowers in connection with
any amount payable in connection with the Retaliatory Tax, as
hereinafter defined, and so long as the title of the
Borrowers or the Subsidiary, as the case may be, to, and its
rights to use, the affected property is not materially
adversely affected thereby,
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PAGE
(ii) maintain in full force and effect all licenses and permits
necessary in any material respect for the proper conduct of its
business, (iii) keep its properties and assets in good repair
and insured in such amounts as is customary in the industry and
as the Bank may require, (iv) remain engaged substantially in
the business in which it is currently engaged and not engage in
any merger or consolidation, except that any Subsidiary may
merge or consolidate with any Subsidiary or with either Borrower
so long as such Borrower is the surviving entity, or sell
substantially all of its assets, or acquire substantially all
of the assets of any other party unless at the time of such
acquisition and after giving effect thereto no Event of
Default will have occurred hereunder, and if such acquisition
relates to a business unrelated to the business in which the
Borrower or such Subsidiary is then involved, the Borrower or
such Subsidiary shall have obtained the prior written consent
of the Bank, (v) ensure that the Company maintains a rating
of no less favorable than A- or its equivalent from the
▇.▇.▇▇▇▇ Company rating agency and promptly notify the Bank
of any change in any rating given by A.M. Best Company and
(vi) comply with all terms and provisions of all documents
evidencing or securing any Obligations or any Indebtedness
other than to the Bank, including under any credit facility
with Summit Bank, and immediately notify the Bank of any
default or event of default with respect to such Obligations
or Indebtedness;
e) To permit the Bank to visit and inspect the properties
of the Borrower and make copies or abstracts from the
Borrower's books and records;
f) To pay all fees, costs and expenses incurred or paid by
the Bank in connection with the enforcement of the
Borrower's obligations to pay any amounts payable under
this letter agreement and Note or any other documents
executed in connection therewith;
g) Until the Maturity Date, to submit to the Bank:
(i) within 45 days of the end of each fiscal quarter of
the Borrowers, consolidated financial statements of the
Parent prepared by management, including balance sheet
and income statement, together with financial statements
of each subsidiary of the Parent as required by
applicable law together with a certificate of compliance
executed by an authorized officer of the Borrower in a
form acceptable to the Bank showing a calculation of
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PAGE
the financial covenants described herein, (ii) within 90 days
of the end of each fiscal year of the Borrowers, annual
consolidated financial statements of the Parent audited by
a certified public accountant acceptable to the Bank,
which, unless otherwise notified by the Bank shall
include any of the so called "big 6" certified public
accountant firms, and (iii) such other financial
statements and information as to either Borrower as the
Bank may reasonably request from time to time; and
h) To execute and deliver such additional instruments and
take such further action as the Bank may reasonably
request to effect the purpose of this letter agreement
and the Revolving Loans.
The Bank acknowledges that the Borrowers are currently contesting
payment of certain so called "Retaliatory Tax" impositions by the
Commonwealth of Pennsylvania in the amounts and for the years described on
Exhibit C attached hereto (such amounts, the "Retaliatory Tax". In
connection therewith, the Borrowers represent to the Bank that (i) the
Borrowers reasonably believe that they will prevail in this contest, (ii) in
the event that such contest is determined in a manner adverse to the Bank,
such event will not have a material impact on the ability of the Borrowers
to pay and perform their obligations hereunder or their financial condition
and (iii)) in the event that the Commonwealth of Pennsylvania commences any
action to foreclose on any lien on any property of either of the Borrowers
arising in its favor with respect to any Retaliatory Tax amount, the
Borrowers will either pay such amount or pay all Revolving Loans and other
amounts payable to the Bank hereunder, if so requested by the Bank.
9. Representations and Warranties. Each Borrower represents and
warrants that:
a) It is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power and authority
to own its property and conduct its business as is now
conducted, is duly qualified and in good standing as a
foreign corporation and is duly authorized to do business in
each jurisdiction where the nature of its properties or business
requires such qualification;
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PAGE
b) The execution, delivery and performance of this letter
agreement, the Note and any related documents (i) are, and will
be, within its corporate power and authority, (ii) have been
authorized by all necessary corporate proceedings, (iii) do not,
and will not, require any consents or approvals other than those
which have already been received, (iv) will not contravene any
provision of the charter documents or by-laws of the Borrower or
any law, rule or regulation applicable to the Borrower, and (v)
will not constitute a default under any other agreement, order
or undertaking binding on the Borrower;
c) This letter agreement, the Note and related documents constitute
the legal, valid, binding and enforceable obligations of the
Borrower, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
the enforcement of creditors' rights generally and by general
equitable principles;
d) All financial statements previously furnished to the Bank by it
were prepared in accordance with generally accepted accounting
principles and statutory accounting principles and present
fairly and completely the financial position of the Borrower.
Since the date of such statements, there has been no material,
adverse change in the assets, liabilities, financial condition
or business of the Borrower other than in the ordinary course of
business; and
e) Other than with respect to insurance subrogation claims and loss
claims which would not materially and adversely affect the
ability of either Borrower to pay or perform its obligations to
the Bank hereunder and under any related document, there is no
litigation, arbitration, proceeding or investigation pending, or
to the best of such ▇▇▇▇▇▇▇▇'s knowledge threatened, against
either Borrower except those previously disclosed by such
Borrower to the Bank in writing.
The making of each Revolving Loan hereunder shall be deemed to be a
reaffirmation by the Borrower as to the representations and warranties
contained in this paragraph and confirmation that no Event of Default has
occurred hereunder.
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PAGE
10. Events of Default. It will be an Event of Default hereunder
and under the Note if any of the following events occurs:
a) either ▇▇▇▇▇▇▇▇ fails to pay when due any amount of principal,
interest or fees payable hereunder or under the Note; or
b) either Borrower fails to perform any term, covenant or agreement
contained in this letter agreement, the Note or any other
agreement or document executed in connection with this letter
agreement; or
c) there shall occur any material adverse change in the assets,
liabilities, financial condition, business or prospects of
either Borrower as determined by the Bank acting in good faith;
or
d) any representation or warranty of either Borrower made in this
letter agreement, the Note or any other document executed in
connection with this letter agreement shall prove to have been
false in any material respect upon the date when made or deemed
to have been made; or
e) either Borrower fails to pay or perform (i) any Obligation or
(ii) any obligation to any other party with respect to any
Indebtedness, including, in any event the occurrence of a
default or event of default under any credit facility of either
Borrower with Summit Bank or its successors or assigns
continuing beyond any applicable grace period; or
f) either Borrower (i) applies for or consents to the appointment
of, or the taking of possession by, a receiver, custodian,
trustee, liquidator or similar official of itself or of all or a
substantial part of its property, (ii) is generally not paying
its debts as such debts become due, (iii) makes a general
assignment for the benefit of its creditors, (iv) commences any
case or proceeding under any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or
adjustment of debts, or any other law providing for the relief
of debtors, (v) fails to contest in a timely or appropriate
manner, or acquiesces in writing to, any petition filed against
it in an involuntary case under the Federal Bankruptcy Code or
other law, or (vi) takes any action under the laws of its
jurisdiction of
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incorporation or organization similar to any of the foregoing;
or
g) a proceeding or case shall be commenced, without the application
or consent of either Borrower in any court of competent
jurisdiction, seeking (i) the liquidation, reorganization,
dissolution, winding-up, or composition or readjustment of its
debts, (ii) the appointment of a trustee, receiver, custodian,
liquidator or the like of it or of all or any substantial part
of its assets, or (iii) similar relief in respect of it,
under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of
debts or any other law providing for the relief of debtors, and
such proceeding or case shall continue undismissed, or unstayed
and in effect, for a period of 30 days; or an order for relief
shall be entered in an involuntary case under the Federal
Bankruptcy Code, against the Borrower or action under the laws
of the jurisdiction of incorporation or organization of the
Borrower or similar to any of the foregoing shall be taken with
respect to the Borrower and shall continue unstayed and in
effect for any period of 30 days; or
h) a final judgment or final order for the payment of money is
entered against either Borrower by any court, or an execution
or similar process is issued or levied against property of the
Borrower, that in the aggregate exceeds $2,000,000, not
including any judgment or order arising in connection with the
Retaliatory Tax, as defined herein, in value and which is not
fully covered by insurance, other than any applicable
deductible, and such judgment, order, warrant or process shall
continue undischarged or unstayed for 30 days; or
i) The Parent ceases to own 100% of the issued and outstanding
shares of the Company in the aggregate at any time.
11. Remedies. Upon the occurrence of an Event of Default described
in subsections 10(f) and (g), immediately and automatically, and upon the
occurrence of any other Event of Default, at any time thereafter while such
Event of Default is continuing, at the Bank's option and upon the Bank's
declaration:
(a) The Revolving Line of Credit shall terminate;
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PAGE
(b) the unpaid principal amount of the Revolving Loans together
with accrued interest shall become immediately due and payable
without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived, together with
any prepayment penalties as provided herein, if applicable; and
(c) the Bank may exercise any and all rights it has under this
Agreement and the Note and any other document executed in
connection herewith, and proceed to protect and enforce the
Bank's rights against either or both Borrowers by any action at
law, in equity or other appropriate proceeding including
appointment of a receiver for the properties or assets of
either Borrower.
12. Notices. All notices hereunder shall be in writing and shall
be deemed to have been given when delivered by hand, when properly deposited
in the mails postage prepaid, when sent by facsimile or when delivered to
overnight courier. Notice to either Borrower shall be deemed to constitute
notice to the Borrower. Notices to the Bank shall be given to State Street
Bank and Trust Company, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, No. Quincy, Massachusetts 02171
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President, and notice to the Borrower shall
be deemed to have been given if given at the address stated at the beginning
of this letter agreement, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President
and Chief Financial Officer.
13. Miscellaneous. No waivers shall be effective unless in writing.
All amendments hereto must be in writing signed by all parties hereto. Any
amounts owing from the Bank to either Borrower may be set off against
obligations due and owing of such Borrower to the Bank. This letter and the
Note shall be governed by the laws of The Commonwealth of Massachusetts.
Neither Borrower may assign or transfer or participate any of its rights
hereunder or under the Note without the prior written consent of the Bank.
The Bank may participate or assign its rights hereunder, including as
collateral to any Federal Reserve Bank, without the prior consent of either
Borrower.
14. Definitions. Except as otherwise defined herein, all financial
terms shall be defined in accordance with generally accepted accounting
principles. The following defined terms as used herein shall have the
following meanings:
"Adjusted Libor Rate" shall mean the rate per annum quoted by the Bank
as its applicable rate of interest offered to the Bank by first class
banks for United
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PAGE
States dollar deposits in the London interbank market in which
the Bank participates on the day of determination for the amount and
the interest period requested by the Borrower. The Bank expects that
the "Adjusted Libor Rate" as used herein shall be substantially similar
to the Libor Rate as quoted by The Wall Street Journal from time to
time for the applicable period, although the Bank makes no
representation that such rates will at all times be substantially
similar interest rates.
"Capital" shall mean an amount equal to consolidated shareholders'
equity of the Parent and its Subsidiaries as shown on the most recent
financial statements delivered to the Bank hereunder, plus Indebtedness
of the Parent and its Subsidiaries at the time of determination.
"Indebtedness" shall mean all obligations for borrowed money and
other extensions of credit to the Borrower, secured or unsecured,
absolute or contingent, whether or not evidenced by a note, bond or
other instrument, all guarantees, all obligations reflecting the
deferred purchase price of property or other accounts payable, and all
obligations of the Borrower secured by a mortgage, lien, pledge or
other security interest, together with any interest, charges and fees
payable on any of the foregoing.
"Obligations" means any and all obligations of either Borrower to the
Bank of every kind and description, direct or indirect, absolute or
contingent, primary or secondary, due or to become due, now existing
or hereafter arising, regardless of how they arise or by what agreement
or instrument, if any, and including obligations to perform acts and
refrain from taking action as well as obligations to pay money.
"Prime Rate" shall mean the rate of interest per annum announced from
time to time by the Bank in Boston, Massachusetts as its Prime Rate.
"Subsidiary" shall mean any corporation, association, or similar
organization of which 50% or more of the ordinary voting power for the
election of a majority of the board of directors or other governing body of
such entity is held or controlled by either Borrower or Subsidiary of such
Borrower; or any other such organization the management of which is directly
or indirectly controlled by either Borrower or a Subsidiary of such Borrower
through the exercise of voting power or otherwise; or any joint
11
page
venture, whether incorporated or not, in which the Borrower has a 50%
ownership interest.
If the foregoing satisfactorily sets forth the terms and conditions of
this credit facility, please execute and return the enclosed copy of this
letter agreement, the Note and such other documents and agreements as the
Bank may request each of which when received will be considered to be an
agreement executed under seal to be governed by the laws of The Commonwealth
of Massachusetts effective when received by the Bank.
Sincerely,
STATE STREET BANK AND
TRUST COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Title: Vice President
Acknowledged and accepted:
SELECTIVE INSURANCE COMPANY OF AMERICA
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------
Title:Senior Vice President
Chief Investment Officer
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Title: Senior Vice President
Chief Financial Officer
SELECTIVE INSURANCE GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Title: Senior Vice President
Chief Investment Officer
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Title: Senior Vice President
Chief Financial Officer
Date: March 3, 1997
12
PAGE
SELECTIVE INSURANCE COMPANY OF AMERICA
SELECTIVE INSURANCE GROUP, INC.
PROMISSORY NOTE
$25,000,000 March 3, 1997
Boston, Massachusetts
For value received, the undersigned hereby each promises to pay to
State Street Bank and Trust Company (the "Bank"), or order, at the head
office of the Bank at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on
the Revolving Maturity Date, as defined in the Letter Agreement described
below, the principal amount of Twenty Five Million Dollars ($25,000,000), or
such lesser amount of outstanding Revolving Loans, as described in the
Agreement as defined below, as such Borrower shall have borrowed and not
repaid under such Agreement, in immediately available funds, together with
interest on the unpaid principal amount of such Revolving Loans at the times
and at the rates described in the Agreement. The undersigned and the Bank
acknowledge and agree that the obligations of the undersigned hereunder are
not joint and several, and each obligor hereunder is responsible solely for
payment and performance of those obligations required to be performed by
such party hereunder or in connection with ▇▇▇▇▇ made to such party
hereunder.
All loans hereunder and all payments on account of principal and
interest hereof shall be recorded by the Bank. The entries on the records
of the Bank (including any appearing on this Note) shall be prima facie
evidence of amounts outstanding hereunder.
Overdue payments of principal (whether at stated maturity by
acceleration or otherwise), and, to the extent permitted by law, overdue
interest, shall bear interest, compounded monthly and payable on demand in
immediately available funds, at a rate per annum equal to four percent (4%)
above the Bank's Prime Rate in effect from time to time as defined in the
Letter Agreement.
This Note is issued pursuant to, and entitled to the benefits of,
and is subject to, the provisions of a certain Letter Agreement dated as of
March 3, 1997 by and between the undersigned and the Bank (herein, as
the same may from time to time be amended or extended, referred to as the
"Agreement"), but neither this reference to the Agreement nor any provision
thereof shall affect or impair the absolute and unconditional obligation of
the undersigned maker of this Note to pay the principal of and interest on
this Note as herein provided. All terms not
1
PAGE
otherwise defined herein shall be used as defined in the Agreement.
In case an Event of Default (as defined in the Agreement) shall occur,
the aggregate unpaid principal plus accrued interest on this Note shall
become or may be declared to be due and payable in the manner and with the
effect provided in the Agreement.
The undersigned may at its option prepay all or any part of the
principal of this Note before maturity upon the terms provided in the
Agreement and may reborrow such principal subject to the Agreement.
Any deposits or other sums at any time credited by or due from the Bank
to either of the undersigned or any endorser or guarantor hereof and any
securities or other property of either of the undersigned or any endorser or
guarantor at any time in the possession of the Bank may be set off and
applied by the Bank against any obligations of such party to the Bank.
The undersigned maker and every endorser and guarantor hereof hereby
waives presentment, demand, notice, protest and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement hereof and consents that this Note may be extended from time to
time and that no such extension or other indulgence, and no substitution,
release or surrender of collateral and no discharge or release of any other
party primarily or secondarily liable hereon, shall discharge or otherwise
affect the liability of the undersigned, endorser or guarantor. No delay or
omission on the part of the Bank in exercising any right hereunder shall
operate as a waiver of such right or of any other right hereunder, and a
waiver of any such right on any one occasion shall not be construed as a bar
to or waiver of any such right on any future occasion.
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PAGE
This instrument shall have the effect of an instrument executed under
seal and shall be governed by and construed in accordance with the laws of
The Commonwealth of Massachusetts (without giving effect to any conflicts of
laws provisions contained therein).
WITNESS: SELECTIVE INSURANCE
COMPANY OF AMERICA
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Title:Senior Vice President
Chief Investment Officer
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Senior Vice President
Chief Financial Officer
SELECTIVE INSURANCE GROUP, INC.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title:Senior Vice President
Chief Investment Officer
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Senior Vice President
Chief Financial Officer
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PAGE
SCHEDULE I TO NOTE DATED MARCH 3, 1997
FROM SELECTIVE INSURANCE COMPANY OF AMERICA
AND SELECTIVE INSURANCE GROUP, INC. TO THE BANK
Date Amount of Amount of Outstanding Notation
Made Loan Principal Principal By
Paid Balance
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3/11/97 $15,500,000 15,500,000 ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇.
3/31/97 9,500,000 25,000,000 ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇.
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EXHIBIT B
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Liens and Encumbrances and Indebtedness
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Indebtedness Indebtedness Debt Out-
Incurred by Owed to standing Facility
------------ ------------ --------- --------
Selective Insurance Publicly Traded $ 6,887,000 $6,887,000 (as of
Group, Inc. Security 1/31/97) 8-3/4%
Convertible
Subordinated
Debentures
Selective Insurance For detail by $42,857,000 $50,000,000 7.84%
Group, Inc. holder refer to Senior Notes Due
original note November 15, 2002
Selective Insurance For detail by $54,000,000 $54,000,000 8.77%
Group, Inc. holder refer to Senior Notes Due
original note August 1, 2005
Selective Insurance Summit Bank $ 9,200,000 $10,000,000 Line
Group, Inc. and/or of Credit
Selective Insurance
Company of America
PAGE
EXHIBIT C
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Retaliatory Tax Detail
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The Pennsylvania Department of Revenue has notified Selective Way Insurance
Company ("Selective Way") and Selective Insurance Company of America
("Selective"), Subsidiaries, of the following Retaliatory Tax impositions on
Selective Way and America, as applicable, for the following years, which tax
impositions are currently being contested:
Year Company Amount
---- ------- ------
1991 Selective $ 868,230
Selective Way 10,687
1990 Selective 1,508,362
1989 Selective 507,562
1988 Selective 386,496
1987 Selective 343,981
1986 Selective 223,452
1984 Selective 6,229
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$3,854,999
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