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FOURTH AMENDMENT TO LINE OF CREDIT AGREEMENT
This Fourth Amendment to Line of Credit Agreement (the "Amendment") is
effective as of September 15, 1998 by and between SANWA BANK CALIFORNIA (the
"Bank") and ZENITH NATIONAL INSURANCE CORP. (the "Borrower") with respect to the
following:
This Amendment shall be deemed to be a part of and subject to that certain
Line of Credit Agreement dated as of December 15, 1994, as heretofore amended,
and any and all addenda and riders heretofore made (collectively the
"Agreement"). Unless otherwise defined herein, all terms used in this Amendment
shall have the same meanings as in the Agreement. To the extent that any of the
terms or provisions of this Amendment conflict with those contained in the
Agreement, the terms and provisions contained herein shall control.
WHEREAS, the Borrower and the Bank mutually desire to extend and/or modify
the Agreement.
NOW THEREFORE, for value received and hereby acknowledged, the Borrower and
the Bank agree as follows:
1. CERTAIN DEFINED TERMS. Unless elsewhere defined in this Fourth
Amendment, the following terms shall have the following meaning
"CAPITAL SECURITIES" shall mean the 8.55% Capital Securities
issued by the Trust on July 30, 1998.
"CONFIDENTIAL OFFERING CIRCULAR" shall mean the Confidential
Offering Circular dated July 27, 1998 for the Capital Securities to be
issued by the Trust.
"CONTINGENT OBLIGATIONS" shall mean any agreement, undertaking or
arrangement (other than insurance and reinsurance obligations and surety
bonds, in each case entered into in the ordinary course of business) by
which any Person guarantees, endorses or otherwise becomes or is
contingently liable for (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise
to invest in, a debtor, or otherwise to assure a creditor against loss but
excluding the Borrower's agreement to subordinate debt owed to it by
Perma-Bilt, a Nevada corporation, to amounts owed to others) the debt,
obligation or other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other
Person. The amount of any Person's obligation under any Contingent
Obligation shall (subject to any limitation set forth therein) be deemed to
be the outstanding principal amount of the debt, obligation of other
liability guaranteed thereby. The obligations of the Borrower through the
Guarantee, the Declaration, the Subordinated Deferrable Interest
Debentures, and the Indenture (which taken together is a full and
unconditional guaranty by Borrower of the Trust's obligations under the
Capital Securities) shall not constitute Contingent Obligations for the
purposes of this Agreement except for the provisions of section 5.02.
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"DECLARATION" shall mean as specified in the Confidential
Offering Circular.
"DEBT" shall mean the outstanding principal for which Borrower
is either directly liable or indirectly liable as a Contingent Obligation
for (a) all indebtedness for borrowed money (b) all obligations evidenced
by notes, bonds, debentures or similar instruments, including obligations
so evidenced incurred in connection with the acquisition of property,
assets or business but excluding the Subordinated Deferrable Interest
Debentures and the Capital Securities (c) all obligations with respect to
capital leases.
"DISTRIBUTIONS" shall mean as specified in the Confidential
Offering Circular.
"FIXED INTEREST CHARGES" shall mean interest paid, or without
duplication, accrued but unpaid on (i) the Line of Credit, (ii) all
indebtedness for borrowed money, and (iii) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets,
or businesses, which shall be determined at the end of each fiscal quarter
for the four consecutive fiscal quarters then ended." For the purposes of
this definition Distributions and interest on the Subordinated Deferrable
Interest Debentures will be excluded.
"GUARANTEE" shall mean as specified in the Confidential Offering
Circular.
"INDENTURE" shall mean as specified in the Confidential Offering
Circular.
"SUBORDINATED DEFERRABLE INTEREST DEBENTURES" shall mean the
$77,320,000 8.55% Subordinated Deferrable Interest Debentures due August 1,
2028 issued by the Borrower.
"TOTAL CAPITALIZATION" shall be defined as (a) Debt plus (b)
Total Shareholder's Equity of the Borrower plus (c) the aggregate
liquidation amount of the Capital Securities.
"TRUST" shall mean Zenith National Insurance Capital Trust I, a
statutory business trust formed under the laws of the State of Delaware.
The Borrower will own all the common securities of the Trust.
6. EVENTS OF DEFAULT. Section 5.02 of the Agreement is deleted in its
entirety and the following is inserted in lieu thereof:
"5.02.
a) Performance under this Agreement. The Borrower shall fail in any
material respect to perform or observe any material term, covenant or
agreement contained in this Agreement or any material document,
instrument or agreement evidencing or relating to any material
indebtedness of the Borrower to the Bank and any such failure
(exclusive of the payment of money to the Bank under this Agreement or
any other document, instrument or agreement, which failure shall
constitute an immediate Event of Default if not paid within five (5)
business days after notice from the Bank that the same is past due)
shall continue for more than 30 days after written notice from the
Bank to the Borrower of the existence and character of such Event of
Default or should the default require more than (30) days but less
than ninety (90) days to correct, the Borrower does not commence
material corrective action within thirty (30) days and actively
pursues such corrective action.
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b) Performance With Other Third Parties. The Borrower shall:
(1) fail to make any payment in respect of (a) all indebtedness
of Borrower for borrowed money (b) all obligations of Borrower
evidenced by notes, bonds, debentures, Subordinated Deferrable
Interest Debentures, Capital Securities or similar instruments,
including obligations so evidenced incurred in connection with
the acquisition of property, assets or businesses (c) all
non-contingent reimbursement or payment obligations of Borrower
with respect to Surety Instruments and (d) all obligations of
Borrower with respect to capital leases or any Contingent
Obligations of Borrower related to (a), (b), (c), and (d), having
an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors
under any combined or syndicated credit agreement) of more than
$10,000,000 when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) and such failure
continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure;
or
(2) fail to perform or observe any other condition or covenant,
or any other event shall occur or condition exist, under any
agreement or instrument relating to any such indebtedness or
Contingent Obligation and such failure continues after the
applicable grace or notice period, if any, specified in the
relevant document on the date of such failure if the effect of
such failure, event or condition is to cause such indebtedness to
be declared to be due and payable prior to its stated maturity,
or such Contingent Obligation to become payable or cash
collateral in respect thereof to be demanded.
7. CONFIRMATION OF OTHER TERMS AND CONDITIONS OF THE AGREEMENT. Except as
specifically provided in this Amendment, all other terms, conditions and
covenants of the Agreement unaffected by this Amendment shall remain unchanged
and shall continue in full force and effect and the Borrower hereby covenants
and agrees to perform and observe all terms, covenants and agreements provided
for in the Agreement, as hereby amended.
IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto as of
the date first hereinabove written.
BANK: BORROWER:
SANWA BANK CALIFORNIA ZENITH NATIONAL INSURANCE CORP.
By: /s/ Xxxx X. Price By: /s/ Xxxxxxx X. Xxx
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Xxxx X. Price, Vice President Xxxxxxx X. Xxx, President & Chairman
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