Exhibit 10.1
$200,000,000.00 REVOLVING CREDIT FACILITY
CREDIT AGREEMENT
by and among
THE BORROWER PARTY HERETO
and
THE LENDERS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent,
and
JPMORGAN CHASE BANK, N.A., as Co-Syndication Agent,
and
BANK OF AMERICA, N.A., as Co-Syndication Agent,
and
PNC CAPITAL MARKETS LLC, as Sole Lead Arranger and Sole Bookrunner
Dated as of September 30, 2009

 

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TABLE OF CONTENTS

              Page
 
       
1. CERTAIN DEFINITIONS
    1  
 
       
1.1 Certain Definitions
    1  
1.2 Construction
    19  
1.3 Accounting Principles
    19  
 
       
2. REVOLVING CREDIT AND SWING LOAN FACILITIES
    20  
 
       
2.1 Revolving Credit and Swing Loan Commitments
    20  
2.1.1 Revolving Credit Loans
    20  
2.1.2 Swing Loans
    20  
2.2 Nature of Lenders Obligations with Respect to Revolving Credit Loans
    20  
2.3 Commitment Fees
    21  
2.4 Revolving Credit Loan Requests; Swing Loan Requests
    21  
2.4.1 Revolving Credit Loan Requests
    21  
2.4.2 Swing Loan Requests
    21  
2.5 Increase in Revolving Credit Commitments
    22  
2.6 Making Revolving Credit Loans and Swing Loans; Presumptions by the
Administrative Agent; Repayment of Revolving Credit Loans; Borrowings to Repay
Swing Loans
    23  
2.6.1 Making Revolving Credit Loans
    23  
2.6.2 Making Swing Loans
    24  
2.6.3 Presumptions by the Administrative Agent
    24  
2.6.4 Repayment of Revolving Credit Loans
    24  
2.6.5 Borrowings to Repay Swing Loans
    24  
2.7 Notes
    25  
2.8 Use of Proceeds
    25  
2.9 Letter of Credit Subfacility
    25  
2.9.1 Issuance of Letters of Credit
    25  
2.9.2 Letter of Credit Fees
    26  
2.9.3 Disbursements, Reimbursement
    26  
2.9.4 Repayment of Participation Advances
    28  
2.9.5 Documentation
    28  
2.9.6 Determinations to Honor Drawing Requests
    28  
2.9.7 Nature of Participation and Reimbursement Obligations
    28  
2.9.8 Indemnity
    30  
2.9.9 Liability for Acts and Omissions
    30  
2.9.10 Issuing Lender Reporting Requirements
    32  
2.10 Reduction of Revolving Credit Commitment
    32  
2.11 Mark to Market Collateral Certification
    32  

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              Page
 
       
3. INTEREST RATES
    32  
 
       
3.1 Interest Rate Options
    32  
3.1.1 Revolving Credit Interest Rate Options; Swing Line Interest Rate
    33  
3.1.2 Rate Quotations
    33  
3.2 Interest Periods
    33  
3.2.1 Amount of Borrowing Tranche
    33  
3.2.2 Renewals
    33  
3.3 Interest After Default
    33  
3.3.1 Letter of Credit Fees, Interest Rate
    33  
3.3.2 Other Obligations
    34  
3.3.3 Acknowledgment
    34  
3.4 LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available
    34  
3.4.1 Unascertainable
    34  
3.4.2 Illegality; Increased Costs; Deposits Not Available
    34  
3.4.3 Administrative Agent’s and Lender’s Rights
    34  
3.5 Selection of Interest Rate Options
    35  
 
       
4. PAYMENTS
    35  
 
       
4.1 Payments
    35  
4.2 Pro Rata Treatment of Lenders
    36  
4.3 Sharing of Payments by Lenders
    36  
4 4 Presumptions by Administrative Agent
    37  
4.5 Interest Payment Dates
    37  
4.6 Voluntary Prepayments
    38  
4.6.1 Right to Prepay
    38  
4.6.2 Replacement of a Lender
    39  
4.7 Increased Costs
    39  
4.7.1 Increased Costs Generally
    40  
4.7.2 Capital Requirements
    40  
4.7.3 Certificates for Reimbursement; Repayment of Outstanding Loans; Borrowing
of New Loans
    41  
4.7.4 Delay in Requests
    41  
4.8 Taxes
    41  
4.8.1 Payments Free of Taxes
    41  
4.8.2 Payment of Other Taxes by the Borrower
    41  
4.8.3 Indemnification by the Borrower
    42  
4.8.4 Evidence of Payments
    42  
4.8.5 Status of Lenders
    42  
4.8.6 Treatment of Certain Refunds
    43  
4.9 Indemnity
    43  
4.10 Settlement Date Procedures
    44  
 
       
5. REPRESENTATIONS AND WARRANTIES
    44  
 
       
5.1 Representations and Warranties
    44  

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              Page
 
       
5.1.1 Organization and Qualification; Power and Authority; Compliance With Laws;
Title to Properties; Event of Default
    45  
5.1.2 Subsidiaries and Owners; Investment Companies
    45  
5.1.3 Validity and Binding Effect
    45  
5.1.4 No Conflict; Material Agreements; Consents
    45  
5.1.5 Litigation
    46  
5.1.6 Financial Statements
    46  
5.1.7 Margin Stock
    47  
5.1.8 Full Disclosure
    47  
5.1.9 Taxes
    47  
5.1.10 Patents, Trademarks, Copyrights, Licenses, Etc.
    48  
5.1.11 Liens in the Collateral
    48  
5.1.12 Insurance
    48  
5 1 13 ERISA Compliance
    48  
5.1.14 Environmental Matters
    49  
5.1.15 Solvency
    49  
5.1.16 Insurance Licenses
    49  
5.2 Updates to Schedules
    49  
 
       
6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
    49  
 
       
6 1 First Loans and Letters of Credit
    49  
6.1.1 Deliveries
    49  
6.1.2 Payment of Fees
    51  
6.2 Each Loan or Letter of Credit
    51  
 
       
7. COVENANTS
    51  
 
       
7.1 Affirmative Covenants
    51  
7.1.1 Preservation of Existence, Etc.
    51  
7.1.2 Payment of Liabilities, Including Taxes, Etc.
    52  
7.1.3 Maintenance of Insurance
    52  
7.1.4 Maintenance of Properties and Leases
    52  
7.1.5 Visitation Rights
    52  
7.1.6 Keeping of Records and Books of Account
    52  
7.1.7 Compliance with Laws; Use of Proceeds
    52  
7.1.8 Further Assurances
    53  
7.1.9 Anti-Terrorism Laws
    53  
7.1.10 Collateral Value
    53  
7.1.11 Post-Closing Filings
    53  
7.1.12 Eligible Collateral Requirements
    53  
7.1.13 Collateral Value and Delinquency Proceedings
    54  
7.2 Negative Covenants
    54  
7.2.1 Indebtedness
    54  
7.2.2 Liens
    54  
7.2.3 Guarantees
    55  
7.2.4 Investments
    55  
7.2.5 Dividends and Related Distributions
    56  

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              Page
 
       
7.2.6 Liquidations, Mergers, Consolidations, Acquisitions
    56  
7.2.7 Dispositions of Assets or Subsidiaries
    56  
7.2.8 Affiliate Transactions
    57  
7.2.9 Continuation of or Change in Business
    57  
7.2.10 Fiscal Year
    57  
7.2.11 Issuance of Stock or Other Ownership Interests
    57  
7.2.12 Changes in Organizational Documents
    57  
7.2.13 Negative Pledges
    57  
7.2.14 Minimum Statutory Surplus
    58  
7.2.15 Total Adjusted Capital to Authorized Control Level Risk Based Capital
    58  
7.2.16 Management Fee
    58  
7.2.17 Successor Attorney-in-Fact
    58  
7.3 Reporting Requirements
    58  
7.3.1 Quarterly Financial Statements
    58  
7.3.2 Annual Financial Statements
    58  
7.3.3 Certificate of the Borrower
    59  
7.3.4 Department of Insurance Certificate of Compliance
    59  
7.3.5 Valuation Statements
    59  
7.3.6 Certificates; Other Information
    59  
7.3.7 Notices
    60  
7.3.7.1 Default
    60  
7.3.7.2 Litigation
    60  
7.3.7.3 Organizational Documents
    60  
7.3.7.4 Erroneous Financial Information
    60  
7.3.7.5 ERISA Event
    60  
7.3.7.6 Other Reports
    60  
 
       
8. DEFAULT
    60  
 
       
8.1 Events of Default
    60  
8.1.1 Payments Under Loan Documents
    60  
8.1.2 Breach of Warranty
    61  
8.1.3 Breach of Negative Covenants or Visitation Rights
    61  
8.1.4 Breach of Other Covenants
    61  
8.1.5 Defaults in Other Agreements or Indebtedness
    61  
8.1.6 Final Judgments or Orders
    61  
8.1.7 Loan Document Unenforceable
    61  
8.1.8 Proceedings Against Assets
    61  
8.1.9 Events Relating to Plans and Benefit Arrangements
    62  
8.1.10 Change of Control
    62  
8.1.11 Relief Proceedings
    62  
8.1.12 Revocation of Certificate of Compliance
    62  
8.2 Consequences of Event of Default
    62  
8.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings
    62  
8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings
    63  

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              Page
 
       
8.2.3 Set-off
    63  
8.2.4 Suits, Actions, Proceedings
    63  
8.2.5 Application of Proceeds
    64  
 
       
9. THE ADMINISTRATIVE AGENT
    64  
 
       
9.1 Appointment and Authority
    64  
9.2 Rights as a Lender
    64  
9.3 Exculpatory Provisions
    65  
9.4 Reliance by Administrative Agent
    66  
9.5 Delegation of Duties
    66  
9.6 Resignation of Administrative Agent
    66  
9.7 Non-Reliance on Administrative Agent and Other Lenders
    67  
9.8 No Other Duties, etc.
    67  
9.9 Administrative Agent’s Fee
    67  
9.10 Authorization to Release Collateral
    67  
9.11 No Reliance on Administrative Agents Customer Identification Program
    68  
 
       
10. MISCELLANEOUS
    68  
 
       
10.1 Modifications, Amendments or Waivers
    68  
10.1.1 Increase of Commitment
    68  
10.1.2 Extension of Payment; Reduction of Principal Interest or Fees;
Modification of Terms of Payment
    68  
10.1.3 Release of Collateral or Borrower
    68  
10.1.4 Miscellaneous
    68  
10.2 No Implied Waivers; Cumulative Remedies
    69  
10.3 Expenses; Indemnity; Damage Waiver
    69  
10.3.1 Costs and Expenses
    69  
10.3.2 Indemnification by the Borrower
    70  
10.3.3 Reimbursement by Lenders
    70  
10.3.4 Waiver of Consequential Damages, Etc.
    70  
10.3.5 Payments
    71  
10.4 Holidays
    71  
10.5 Notices; Effectiveness; Electronic Communication
    71  
10.5.1 Notices Generally
    71  
10.5.2 Electronic Communications
    71  
10.5.3 Change of Address, Etc.
    72  
10.6 Severability
    72  
10.7 Duration; Survival
    72  
10.8 Successors and Assigns
    72  
10.8.1 Successors and Assigns Generally
    72  
10.8.2 Assignments by Lenders
    73  
10.8.3 Register
    74  
10.8.4 Participations
    74  
10.8.5 Limitations upon Participant Rights Successors and Assigns Generally
    75  

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              Page
 
       
10.8.6 Certain Pledges; Successors and Assigns Generally
    75  
10.9 Confidentiality
    75  
10.9.1 General
    75  
10.9.2 Sharing Information With Affiliates of the Lenders
    76  
10.10 Counterparts; Integration; Effectiveness
    76  
10.10.1 Counterparts; Integration; Effectiveness
    76  
10.11 CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF
PROCESS; WAIVER OF JURY TRIAL
    76  
10.11.1 Governing Law
    76  
10.11.2 SUBMISSION TO JURISDICTION
    77  
10.11.3 WAIVER OF VENUE
    77  
10.11.4 SERVICE OF PROCESS
    77  
10.11.5 WAIVER OF JURY TRIAL
    77  
10.12 USA Patriot Act Notice
    78  

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LIST OF SCHEDULES AND EXHIBITS
SCHEDULES

         
SCHEDULE 1.1 (A)
  -   PRICING GRID
SCHEDULE 1.1 (B)
  -   COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
SCHEDULE 5.1.1
  -   QUALIFICATIONS TO DO BUSINESS
SCHEDULE 5.1.2
  -   SUBSIDIARIES
SCHEDULE 5.1.14
  -   ENVIRONMENTAL DISCLOSURES
SCHEDULE 7.2.1
  -   PERMITTED INDEBTEDNESS
SCHEDULE 7.2.4
  -   PERMITTED INVESTMENTS

EXHIBITS

         
EXHIBIT 1.1 (A)
  -   ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1 (C)
  -   CONTROL AGREEMENT
EXHIBIT 1.1 (E)
  -   EXISTING LETTERS OF CREDIT
EXHIBIT 1.1 (N)(l)
  -   REVOLVING CREDIT NOTE
EXHIBIT 1.1 (N)(2)
  -   SWING NOTE
EXHIBIT 1.1 (P)
  -   PLEDGE AGREEMENT
EXHIBIT 2.4.1
  -   REVOLVING CREDIT LOAN REQUEST
EXHIBIT 2.4.2
  -   SWING LOAN REQUEST
EXHIBIT 7.3.3
  -   QUARTERLY COMPLIANCE CERTIFICATE

 

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CREDIT AGREEMENT
     THIS CREDIT AGREEMENT (as hereafter amended, restated, modified or
supplemented from time to time, this “Agreement”) is dated as of September 30,
2009 and is made by and among the BORROWER (as hereinafter defined), the LENDERS
(as hereinafter defined), BANK OF AMERICA, N.A., in its capacity as
co-syndication agent for the Lenders under this Agreement, JPMORGAN CHASE BANK,
N.A., in its capacity as co-syndication agent for the Lenders under this
Agreement (each a “Co-Syndication Agent” and hereinafter collectively referred
to in such capacity as the “Co-Syndication Agents”), and PNC BANK, NATIONAL
ASSOCIATION, in its capacity as administrative agent for the Lenders under this
Agreement (hereinafter referred to in such capacity as the “Administrative
Agent”).
     The Borrower has requested the Lenders to provide a revolving credit
facility to the Borrower in an aggregate principal amount not to exceed Two
Hundred Million and 00/100 Dollars ($200,000,000.00). In consideration of their
mutual covenants and agreements hereinafter set forth and intending to be
legally bound hereby, the parties hereto covenant and agree as follows:
1. CERTAIN DEFINITIONS
     1.1 Certain Definitions. In addition to words and terms defined elsewhere
in this Agreement, the following words and terms shall have the following
meanings, respectively, unless the context hereof clearly requires otherwise:
     Account Bank shall mean any “bank” within the meaning of
Section 9-102(a)(8) of the UCC at which any deposit account constituting a
Collateral Account is held, which (a) shall be located in the United States of
America, (b) shall have a Moody’s rating at all times equal to or greater than
“A3” and a Standard & Poor’s rating at all times equal to or greater than “A-”,
and (c) shall be otherwise acceptable to the Administrative Agent in its
discretion.
     Administrative Agent shall have the meaning specified in the Preamble
hereof and shall include its successors and assigns.
     Administrative Agent’s Fee shall have the meaning specified in Section 9.9
[Administrative Agent’s Fee].
     Administrative Agent’s Letter shall have the meaning specified in
Section 9.9 [Administrative Agent’s Fee].
     Affiliate as to any Person any other Person (i) which directly or
indirectly controls, is controlled by, or is under common control with such
Person, (ii) which beneficially owns or holds ten percent (10%) or more of any
class of the voting or other equity interests of such Person, or (iii) ten
percent (10%) or more of any class of voting interests or other equity interests
of which is beneficially owned or held, directly or indirectly, by such Person.
     Agreement shall have the meaning specified in the Preamble hereof and shall
include all schedules and exhibits hereto.
     Alternate Source shall have the meaning specified in the definition of
LIBOR Rate.

 

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     Annual Statement shall mean with respect to any Person, the annual
financial statement of such Person as required to be filed with the Applicable
Insurance Regulatory Authority, together with all exhibits or schedules filed
therewith, prepared in conformity with SAP.
     Anti-Terrorism Laws shall mean any Laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA Patriot Act, the Laws
comprising or implementing the Bank Secrecy Act, and the Laws administered by
the United States Treasury Department’s Office of Foreign Asset Control (as any
of the foregoing Laws may from time to time be amended, renewed, extended, or
replaced).
     Applicable Insurance Regulatory Authority shall mean the Commonwealth of
Pennsylvania Department of Insurance or similar Official Body located in (i) the
jurisdiction in which such Person is domiciled or (ii) such other jurisdiction
which, due to such Person’s activities, has regulatory authority over such
Person, and any federal Official Body regulating the insurance industry.
     Applicable Letter of Credit Fee Rate shall mean the percentage rate per
annum based on the Borrower’s Financial Strength Rating then in effect according
to the pricing grid on Schedule 1.1(A) below the heading “Letter of Credit Fee”.
     Applicable Margin shall mean, as applicable:
     (A) the percentage spread to be added to the Base Rate applicable to
Revolving Credit Loans under the Base Rate Option based on the Borrower’s
Financial Strength Rating then in effect according to the pricing grid on
Schedule 1.1(A) below the heading “Revolving Credit Base Rate Spread”, or
     (B) the percentage spread to be added to the LIBOR Rate applicable to
Revolving Credit Loans under the LIBOR Rate Option based on the Borrower’s
Financial Strength Rating then in effect according to the pricing grid on
Schedule 1.1(A) below the heading “Revolving Credit LIBOR Rate Spread”.
     Approved Fund shall mean any fund that is engaged in making, purchasing,
holding or investing in bank loans and similar extensions of credit in the
ordinary course of business and that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
     Assignment and Assumption Agreement shall mean an assignment and assumption
agreement entered into by a Lender and an assignee permitted under Section 10.8
[Successors and Assigns], in substantially the form of Exhibit 1.1(A).
     Attorney-in-Fact shall mean Erie Indemnity Company, a Pennsylvania
corporation, in its capacity as the attorney-in-fact for the Borrower or such
successor attorney-in-fact for the Borrower approved by the Administrative Agent
in accordance with Section 7.1.14 [Successor Attorney-in-Fact].
     Authorized Control Level Risk Based Capital shall mean, as to the Borrower,
the “authorized control level risk based capital” calculated in accordance with
SAP pursuant to the

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requirements of the Insurance Department of the Commonwealth of Pennsylvania, as
amended, restated, modified or supplemented from time to time.
     Authorized Officer shall mean, with respect to the Borrower, the Chief
Executive Officer, President, Chief Financial Officer, Treasurer or Assistant
Treasurer of the Attorney-in-Fact or such other individuals, designated by
written notice to the Administrative Agent from the Borrower, authorized to
execute notices, reports and other documents on behalf of the Borrower required
hereunder. The Borrower may amend such list of individuals from time to time by
giving written notice of such amendment to the Administrative Agent.
     Base Rate shall mean the greatest of (i) the Prime Rate, (ii) the Federal
Funds Open Rate, plus one-half of one percent (0.5%) per annum, and (iii) the
Daily LIBOR Rate, plus one percent (1.0%) per annum. Any change in the Base Rate
(or any component thereof) shall take effect at the opening of business on the
day such change occurs.
     Base Rate Option shall mean the option of the Borrower to have Loans bear
interest at the rate and under the terms set forth in Section 3.1.1 (i)
[Revolving Credit Base Rate Option].
     Borrower shall mean Erie Insurance Exchange, a reciprocal or
inter-insurance exchange domiciled in the Commonwealth of Pennsylvania, acting
by and through the Attorney-in-Fact.
     Borrower Statutory Net Income shall mean, for any period, for the Borrower,
the positive net statutory income of the Borrower for that period, calculated in
accordance with SAP.
     Borrower Statutory Surplus shall mean, on any date, the amount (determined
in accordance with SAP) of the Borrower’s surplus as of the last day of any
fiscal quarter ending on or most recently ended prior to such date.
     Borrowing Date shall mean, with respect to any Loan, the date for the
making thereof or the renewal or conversion thereof at or to the same or a
different Interest Rate Option, which shall be a Business Day.
     Borrowing Tranche shall mean specified portions of Loans outstanding as
follows: (i) any Loans to which a LIBOR Rate Option applies which become subject
to the same Interest Rate Option under the same Loan Request by the Borrower and
which have the same Interest Period shall constitute one (1) Borrowing Tranche,
and (ii) all Loans to which a Base Rate Option applies shall constitute one
(1) Borrowing Tranche.
     Business Day shall mean any day other than a Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required to be closed for
business in Pittsburgh, Pennsylvania and if the applicable Business Day relates
to any Loan to which the LIBOR Rate Option applies, such day must also be a day
on which dealings are carried on in the London interbank market.
     Cash means Dollars held in a Collateral Account.

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     Cash Equivalents means at any time:
     (a) time deposits and certificates of deposit, maturing not more than two
(2) years after the date of determination, which are issued by the applicable
Securities Intermediary; and
     (b) Short-term asset management accounts offered by the Securities
Intermediary which are reasonably acceptable to the Administrative Agent or
investments in money market funds.
     Change in Law shall mean the occurrence, after the date of this Agreement,
of any of the following: (a) the adoption or taking effect of any Law, (b) any
change in any Law or in the administration, interpretation or application
thereof by any Official Body or (c) the making or issuance of any request,
guideline or directive (whether or not having the force of Law) by any Official
Body.
     CIP Regulations shall have the meaning specified in Section 9.10 [No
Reliance on Administrative Agent’s Customer Identification Program].
     Closing Date shall mean the Business Day on which the first Loan shall be
made, which shall be September 30, 2009.
     Code shall mean the Internal Revenue Code of 1986, as the same may be
amended or supplemented from time to time, and any successor statute of similar
import, and the rules and regulations thereunder, as from time to time in
effect.
     Collateral shall mean the collateral under the Pledge Agreement.
     Collateral Account means (a) account no. EIRF 1221052 at The Bank of New
York Mellon Trust Company, N.A., as to which the Borrower, The Bank of New York
Mellon Trust Company, N.A., and the Administrative Agent have entered into a
Control Agreement, and (b) any other account at The Bank of New York Mellon
Trust Company, N.A., or another Securities Intermediary or Account Bank as to
which such Securities Intermediary or Account Bank, as the case may be, the
Borrower and the Administrative Agent have entered into a Control Agreement.
     Collateral Shortfall shall have the meaning specified in Section 7.1.10
[Collateral Value].
     Collateral Value means, on any date, an amount equal to the sum of the Fair
Market Value of all Eligible Collateral; provided, however, that the portion of
Eligible Collateral of any issuer (other than an issuer of Government Debt)
which exceeds five percent (5%) of the Fair Market Value of all Eligible
Collateral shall be excluded from such calculation.
     Commercial Letter of Credit shall mean any letter of credit which is a
commercial letter of credit issued in respect of the purchase of goods or
services by the Borrower in the ordinary course of its business.
     Commissioner shall mean the Insurance Commissioner of the Commonwealth of
Pennsylvania.

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     Commitment shall mean, as to any Lender, its Revolving Credit Commitment
and, in the case of PNC Bank, its Swing Loan Commitment, and Commitments shall
mean the Revolving Credit Commitments and Swing Loan Commitment of all of the
Lenders.
     Commitment Fee shall have the meaning specified in Section 2.3 [Commitment
Fees].
     Compliance Certificate shall have the meaning specified in Section 7.3.3
[Certificate of the Borrower].
     Control Agreement shall mean the Notification and Control Agreement by and
among the Borrower, the applicable Securities Intermediary or Account Bank, as
the case may be, and the Administrative Agent with respect to any Collateral
Account substantially in the form of Exhibit 1.1(C).
     Corporate Securities means publicly traded debt securities (other than
preferred stock) denominated in Dollars issued by a corporation, limited
liability company, limited partnership or similar entity organized in the United
States.
     Co-Syndication Agent shall have the meaning specified in the preamble of
this Agreement.
     Co-Syndication Agents shall have the meaning specified in the preamble of
this Agreement.
     Daily LIBOR Rate shall mean, for any day, the rate per annum determined by
the Administrative Agent by dividing (x) the Published Rate by (y) a number
equal to 1.00 minus the percentage prescribed by the Federal Reserve for
determining the maximum reserve requirements with respect to any eurocurrency
funding by banks on such day.
     Defaulting Lender means any Lender that (a) has failed to fund any portion
of the Loans, participations with respect to Letters of Credit, or
participations in Swing Loans required to be funded by it hereunder within one
(1) Business Day of the date required to be funded by it hereunder unless such
failure has been cured and all interest accruing as a result of such failure has
been fully paid in accordance with the terms hereof, (b) has otherwise failed to
pay over to the Administrative Agent or any other Lender any other amount
required to be paid by it hereunder within one (1) Business Day of the date when
due, unless the subject of a good faith dispute or unless such failure has been
cured and all interest accruing as a result of such failure has been fully paid
in accordance with the terms hereof, or (c) has since the date of this Agreement
been deemed insolvent by an Official Body or become the subject of a bankruptcy,
receivership, conservatorship or insolvency proceeding.
     Delinquency Proceeding shall have the meaning specified in Section 221.3 of
the Suspension of Business-Involuntary Dissolutions Article in the Insurance
Act, 40 P.S. § 221.3.
     Delinquent Lender shall have the meaning specified in Section 4.3 [Sharing
of Payments by Lenders].

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     Dispositions shall have the meaning specified in Section 7.2.7
[Dispositions of Assets or Subsidiaries].
     Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful money of
the United States of America.
     Drawing Date shall have the meaning specified in Section 2.9.3
[Disbursements, Reimbursement].
     Eligible Collateral means Cash, Cash Equivalents, Corporate Securities,
Federal Agency Debt, Government Debt and Municipal Securities which (a) are
denominated in Dollars, (b) meet the requirements set forth in the Pledge
Agreement, if any, (c) are capable of being marked to market on a daily basis
and capable of being cleared by the Depository Trust Company (other than United
States Federal Governmental Securities which will clear through the Federal
Reserve System) and (d) are held in a Collateral Account.
     Environmental Laws shall mean all applicable federal, state, local, tribal,
territorial and foreign Laws (including common law), constitutions, statutes,
treaties, regulations, rules, ordinances and codes and any consent decrees,
settlement agreements, judgments, orders, directives, policies or programs
issued by or entered into with an Official Body pertaining or relating to:
(i) pollution or pollution control; (ii) protection of human health from
exposure to regulated substances; (iii) protection of the environment and/or
natural resources; employee safety in the workplace; (iv) the presence, use,
management, generation, manufacture, processing, extraction, treatment,
recycling, refining, reclamation, labeling, packaging, sale, transport, storage,
collection, distribution, disposal or release or threat of release of regulated
substances; (v) the presence of contamination; (vi) the protection of endangered
or threatened species; and (vii) the protection of environmentally sensitive
areas.
     Equity Interests shall have the meaning specified in Section 5.1.2
[Subsidiaries and Owners; Investment Companies].
     Erie Property & Casualty Insurance Group shall mean Erie Insurance Company,
Erie Insurance Property and Casualty Company, Erie Insurance Company of New
York, the Borrower and Flagship City Insurance Company.
     ERISA shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as from
time to time in effect.
     ERISA Affiliate shall mean, at any time, any trade or business (whether or
not incorporated) under common control with the Borrower and are treated as a
single employer under Section 414 of the Code.
     ERISA Event means (a) a reportable event (under Section 4043 of ERISA and
regulations thereunder) with respect to a Pension Plan; (b) a withdrawal by the
Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of
ERISA during a plan year in which it was a substantial employer (as defined in
Section 4001 (a)(2) of ERISA) or a cessation of operations that is treated as
such a withdrawal under Section 4062(e) of ERISA; (c) a

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complete or partial withdrawal by the Borrower or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any
liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate.
     ERISA Group shall mean, at any time, the Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control and all other entities which, together with
the Borrower, are treated as a single employer under Section 414 of the Internal
Revenue Code.
     Event of Default shall mean any of the events described in Section 8.1
[Events of Default] and referred to therein as an “Event of Default.”
     Excluded Taxes shall mean, with respect to the Administrative Agent, any
Lender, the Issuing Lender or any other recipient of any payment to be made by
or on account of any obligation of the Borrower hereunder, (a) taxes imposed on
or measured by its overall net income (however denominated), and franchise taxes
imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the Laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender, any withholding tax that is imposed on amounts payable to
such Foreign Lender at the time such Foreign Lender becomes a party hereto (or
designates a new lending office) or is attributable to such Foreign Lender’s
failure or inability (other than as a result of a Change in Law) to comply with
Section 4.8.5 [Status of Lenders], except to the extent that such Foreign Lender
(or its assignor, if any) was entitled, at the time of designation of a new
lending office (or assignment), to receive additional amounts from the Borrower
with respect to such withholding tax pursuant to Section 4.8.1 [Payments Free of
Taxes].
     Executive Order No. 13224 shall mean the Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001, as the same has been, or
shall hereafter be, renewed, extended, amended or replaced.
     Existing Credit Agreement shall mean that certain Amended, Restated and
Consolidated Loan Agreement dated January 30, 2008, by and between the Borrower
and PNC Bank.
     Existing Letters of Credit shall mean all letters of credit set forth on
Schedule 1.1(E) which were issued by PNC Bank under the Existing Credit
Agreement prior to the date hereof upon the application of the Borrower and are
outstanding on the Closing Date.
     Expiration Date shall mean, with respect to the Revolving Credit
Commitments, September 30, 2012.

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     Fair Market Value shall mean (a) with respect to any Government Debt,
Federal Agency Debt, or other publicly-traded security (other than those set
forth in clause (b)) the closing price for such security on Bloomberg, Inc., and
with respect to Municipal Securities, Standard & Poor’s/J.J. Kenny or, if
Bloomberg, Inc. or Standard & Poor’s/J.J. Kenny with respect to Municipal
Securities is not available, another quotation service or services reasonably
acceptable to the Administrative Agent, (b) with respect to Cash and Cash
Equivalents, the amounts thereof, and (c) with respect to any Eligible
Collateral (other than those set forth in clauses (a), and (b)), the price for
such Eligible Collateral on the date of calculation obtained from a generally
recognized source approved by the Administrative Agent or the most recent bid
quotation from such approved source (or, if no generally recognized source
exists as to such Eligible Collateral, any other source specified by the
Borrower to which the Administrative Agent does not object).
     Federal Agency means any of the following agencies of the federal
government of the United States: (a) Government National Mortgage Association;
(b) the Export-Import Bank of the United States; (c) the Farmers Home
Administration, an agency of the United States Department of Agriculture;
(d) the United States General Services Administration; (e) the United States
Maritime Administration; (f) the United States Small Business Administration;
(g) the Commodity Credit Corporation; (h) the Rural Electrification
Administration; (i) the Rural Telephone Bank; (j) Washington Metropolitan Area
Transit Authority; (k) the Federal National Mortgage Association; and (l) such
other federal agencies as are reasonably acceptable to the Administrative Agent.
     Federal Agency Debt means evidence of Freely Transferable Indebtedness that
constitutes obligations of a Federal Agency.
     Federal Funds Effective Rate for any day shall mean the rate per annum
(based on a year of 360 days and actual days elapsed and rounded upward to the
nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any
successor) on such day as being the weighted average of the rates on overnight
federal funds transactions arranged by federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the “Federal Funds
Effective Rate” as of the date of this Agreement; provided, if such Federal
Reserve Bank (or its successor) does not announce such rate on any day, the
“Federal Funds Effective Rate” for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.
     Federal Funds Open Rate for any day shall mean the rate per annum (based on
a year of 360 days and actual days elapsed) which is the daily federal funds
open rate as quoted by ICAP North America, Inc. (or any successor) as set forth
on the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on
such other substitute Bloomberg Screen that displays such rate), or as set forth
on such other recognized electronic source used for the purpose of displaying
such rate as selected by the Administrative Agent (a “Federal Funds Open Rate
Alternate Source”) (or if such rate for such day does not appear on the
Bloomberg Screen BTMM (or any substitute screen) or on any Federal Funds Open
Rate Alternate Source, or if there shall at any time, for any reason, no longer
exist a Bloomberg Screen BTMM (or any substitute screen) or any Federal Funds
Open Rate Alternate Source, a comparable replacement rate determined by the
Administrative Agent at such time (which determination shall be

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conclusive absent manifest error); provided, however, that if such day is not a
Business Day, the Federal Funds Open Rate for such day shall be the “open” rate
on the immediately preceding Business Day. If and when the Federal Funds Open
Rate changes, the rate of interest with respect to any Loan to which the Federal
Funds Open Rate applies will change automatically without notice to the
Borrower, effective on the date of any such change.
     Federal Funds Open Rate Alternate Source shall have the meaning specified
in the definition of Federal Funds Open Rate.
     Financial Strength Rating shall mean, as of the date of determination, the
Erie Insurance Exchange Financial Strength Rating by A.M. Best Company, Inc. or
its successors.
     Foreign Lender shall mean any Lender that is organized under the Laws of a
jurisdiction other than that in which the Borrower is resident for tax purposes.
For purposes of this definition, the United States of America, each State
thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.
     Freely Transferable means securities which are freely transferable and
traded in established and recognized markets and as to which there are readily
available price quotations.
     GAAP shall mean generally accepted accounting principles as are in effect
from time to time, subject to the provisions of Section 1.3 [Accounting
Principles], and applied on a consistent basis both as to classification of
items and amounts.
     Government Debt means Freely Transferable Indebtedness issued by the U.S.
Treasury Department or backed by the full faith and credit of the United States.
     Guarantee means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as

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determined by the guaranteeing Person in good faith. The term “Guarantee” as a
verb has a corresponding meaning.
     Increasing Lender shall have the meaning assigned to that term in
Section 2.5 [Increase in Revolving Credit Commitments].
     Indebtedness shall mean, as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of: (i) borrowed money,
(ii) amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii) reimbursement obligations (contingent or
otherwise) under any letter of credit, currency swap agreement, interest rate
swap, cap, collar or floor agreement or other interest rate management device,
(iv) any other transaction (including forward sale or purchase agreements,
capitalized leases and conditional sales agreements) having the commercial
effect of a borrowing of money entered into by such Person to finance its
operations or capital requirements (but not including trade payables and accrued
expenses incurred in the ordinary course of business which are not represented
by a promissory note or other evidence of indebtedness and which are not more
than forty-five (45) days past due), or (v) any Guarantee of Indebtedness for
borrowed money.
     Indemnified Taxes shall mean Taxes other than Excluded Taxes.
     Indemnitee shall have the meaning specified in Section 10.3.2
[Indemnification by the Borrower].
     Information shall mean all information received from the Borrower or any of
its Subsidiaries relating to the Borrower or any of its Subsidiaries or any of
their respective businesses, other than any such information that is available
to the Administrative Agent, any Lender or the Issuing Lender on a
non-confidential basis prior to disclosure by the Borrower or any of its
Subsidiaries, provided that, in the case of information received from the
Borrower or any of its Subsidiaries after the date of this Agreement, such
information is clearly identified at the time of delivery as confidential.
     Insolvency Proceeding shall mean, with respect to any Person, (a) a case,
action or proceeding with respect to such Person (i) before any court or any
other Official Body under any bankruptcy, insolvency, reorganization or other
similar Law now or hereafter in effect, or (ii) for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or similar official) of the Borrower or otherwise relating to the liquidation,
dissolution, winding-up or relief of such Person, or (b) any general assignment
for the benefit of creditors, composition, marshaling of assets for creditors,
or other, similar arrangement in respect of such Person’s creditors generally or
any substantial portion of its creditors; undertaken under any Law.
     Insurance License means any license, certificate of authority, permit or
other authorization which is required to be obtained from any Official Body in
connection with the operation, ownership or transaction of insurance or
reinsurance business.
     Interest Period shall mean the period of time selected by the Borrower in
connection with (and to apply to) any election permitted hereunder by the
Borrower to have Revolving Credit

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Loans bear interest under the LIBOR Rate Option. Subject to the last sentence of
this definition, such period shall be one (1), two (2), three (3) or six
(6) Months. Such Interest Period shall commence on the effective date of such
Interest Rate Option, which shall be (i) the Borrowing Date if the Borrower is
requesting new Loans, or (ii) the date of renewal of or conversion to the LIBOR
Rate Option if the Borrower is renewing or converting to the LIBOR Rate Option
applicable to outstanding Loans. Notwithstanding the second sentence hereof:
(A) any Interest Period which would otherwise end on a date which is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, and (B) the Borrower shall
not select, convert to or renew an Interest Period for any portion of the Loans
that would end after the Expiration Date.
     Interest Rate Hedge shall mean an interest rate exchange, collar, cap,
swap, adjustable strike cap, adjustable strike corridor or similar agreements
entered into by the Borrower or its Subsidiaries in order to provide protection
to, or minimize the impact upon, the Borrower and/or its Subsidiaries of
increasing floating rates of interest applicable to Indebtedness.
     Interest Rate Option shall mean any LIBOR Rate Option or Base Rate Option.
     Interim Statement shall mean, with respect to any Person, any interim
statutory financial statement or financial report (whether quarterly,
semiannually or otherwise) of such Person as required to be filed with the
Applicable Insurance Regulatory Authority, together with all exhibits or
schedules filed therewith, prepared in conformity with SAP.
     Investments shall mean, as to any Person, any direct or indirect
acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of capital stock or other securities of another Person or
(b) a loan, advance or capital contribution to, Guarantee or assumption of debt
of, or purchase or other acquisition of any other debt or equity participation
or interest in, another Person, including any partnership or joint venture
interest in such other Person and any arrangement pursuant to which the investor
Guarantees Indebtedness of such other Person.
     IRS shall mean the Internal Revenue Service.
     ISP98 shall have the meaning specified in Section 10.11.1 [Governing Law].
     Issuing Lender means PNC Bank, in its individual capacity as issuer of
Letters of Credit hereunder.
     Joint Venture shall mean a corporation, partnership, limited liability
company or other entities in which any Person other than the Borrower and its
Subsidiaries holds, directly or indirectly, an equity interest.
     Law shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree, bond, judgment, authorization or approval, lien or
award by or settlement agreement with any Official Body.

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     Lender Provided Interest Rate Hedge shall mean an Interest Rate Hedge which
is provided by any Lender or its Affiliate and with respect to which the
Administrative Agent confirms: (i) is documented in a standard International
Swap Dealer Association Agreement, (ii) provides for the method of calculating
the reimbursable amount of the provider’s credit exposure in a reasonable and
customary manner, and (iii) is entered into for hedging (rather than
speculative) purposes.
     Lenders shall mean the financial institutions named on Schedule 1.1 (B) and
their respective successors and assigns as permitted hereunder, each of which is
referred to herein as a Lender. For the purpose of any Loan Document which
provides for the granting of a security interest or other Lien to the Lenders or
to the Administrative Agent (for its benefit and for the benefit of the Lenders)
as security for the Obligations, “Lenders” shall include any Affiliate of a
Lender to which such Obligation is owed.
     Letter of Credit shall have the meaning specified in Section 2.9.1
[Issuance of Letters of Credit].
     Letter of Credit Borrowing shall have the meaning specified in
Section 2.9.3.3 [Disbursements, Reimbursement].
     Letter of Credit Fee shall have the meaning specified in Section 2.9.2
[Letter of Credit Fees].
     Letter of Credit Obligation means, as of any date of determination, the
aggregate amount available to be drawn under all outstanding Letters of Credit
(if any Letter of Credit shall increase in amount automatically in the future,
such aggregate amount available to be drawn shall currently give effect to any
such future increase) plus the aggregate Reimbursement Obligations and Letter of
Credit Borrowings.
     Letter of Credit Sublimit shall have the meaning specified in Section 2.9
[Letter of Credit Subfacility].
     LIBOR Rate shall mean, with respect to the Loans comprising any Borrowing
Tranche to which the LIBOR Rate Option applies for any Interest Period, the
interest rate per annum determined by the Administrative Agent by dividing (the
resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1%
per annum) (i) the rate which appears on the Bloomberg Page BBAM1 (or on such
other substitute Bloomberg page that displays rates at which U.S. Dollar
deposits are offered by leading banks in the London interbank deposit market),
or the rate which is quoted by another source selected by the Administrative
Agent which has been approved by the British Bankers’ Association as an
authorized information vendor for the purpose of displaying rates at which U.S.
Dollar deposits are offered by leading banks in the London interbank deposit
market (an “Alternate Source”), at approximately 11:00 a.m., London time, two
(2) Business Days prior to the commencement of such Interest Period as the
London interbank offered rate for U.S. Dollars for an amount comparable to such
Borrowing Tranche and having a borrowing date and a maturity comparable to such
Interest Period (or if there shall at any time, for any reason, no longer exist
a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a
comparable replacement rate determined by the Administrative Agent at

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such time (which determination shall be conclusive absent manifest error)), by
(ii) a number equal to 1.00 minus the LIBOR Rate Reserve Percentage. LIBOR may
also be expressed by the following formula:

           
London interbank offered rate quoted by Bloomberg or
 
LIBOR Rate =
 
appropriate successor as shown on Bloomberg Page BBAM1
   
 
   
 
     
1.00 - LIBOR Rate Reserve Percentage
 

     The LIBOR Rate shall be adjusted with respect to any Loan to which the
LIBOR Rate Option applies that is outstanding on the effective date of any
change in the LIBOR Rate Reserve Percentage as of such effective date. The
Administrative Agent shall give prompt notice to the Borrower of the LIBOR Rate
as determined or adjusted in accordance herewith, which determination shall be
conclusive absent manifest error.
     LIBOR Rate Option shall mean the option of the Borrower to have Loans bear
interest at the rate and under the terms set forth in Section 3.1.1 (ii)
[Revolving Credit LIBOR Rate Option].
     LIBOR Rate Reserve Percentage shall mean as of any day the maximum
percentage in effect on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the reserve
requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
“Eurocurrency Liabilities”).
     Lien shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the filing).
     Loan Documents shall mean this Agreement, the Administrative Agent’s
Letter, the Notes, the Pledge Agreement, the Control Agreement, and any other
instruments, certificates or documents delivered in connection herewith or
therewith, as the same may be amended, restated, modified or supplemented from
time to time in accordance herewith or therewith, and Loan Document shall mean
any of the Loan Documents.
     Loan Request shall mean either a Revolving Credit Loan Request or a Swing
Loan Request, as the case may be.
     Loans shall mean collectively and Loan shall mean separately, all Revolving
Credit Loans and Swing Loans or any Revolving Credit Loan or Swing Loan.
     Material Adverse Change shall mean any set of circumstances or events which
(a) has or could reasonably be expected to have any material adverse effect
whatsoever upon the validity or enforceability of this Agreement or any other
Loan Document, (b) is material and adverse to the business, properties, assets,
financial condition, results of operations or prospects of the Borrower,
(c) impairs materially the ability of the Borrower to duly and punctually pay or

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perform its Indebtedness, or (d) impairs materially the ability of the
Administrative Agent or any of the Lenders, to the extent permitted, to enforce
their legal remedies pursuant to this Agreement or any other Loan Document.
     Month, with respect to an Interest Period under the LIBOR Rate Option,
shall mean the interval between the days in consecutive calendar months
numerically corresponding to the first (1st) day of such Interest Period. If any
LIBOR Rate Interest Period begins on a day of a calendar month for which there
is no numerically corresponding day in the month in which such Interest Period
is to end, the final month of such Interest Period shall be deemed to end on the
last Business Day of such final month.
     Moody’s shall mean Moody’s Investors Service, Inc.
     Multiemployer Plan shall mean any employee benefit plan which is a
“multiemployer plan” within the meaning of Section 400l(a)(3) of ERISA and to
which the Borrower or any member of the ERISA Group is then making or accruing
an obligation to make contributions or, within the preceding five (5) Plan
years, has made or had an obligation to make such contributions.
     Municipal Securities means publicly traded debt securities issued by any
state or municipality or subdivision or instrumentality thereunder located in
the United States.
     NAIC mans the National Association of Insurance Commissioners and any
successor thereto.
     New Lender shall have the meaning specified in Section 2.5 [Increase in
Revolving Credit Commitments].
     Non-Consenting Lender shall have the meaning specified in Section 10.1.4
[Miscellaneous].
     Non-Delinquent Lender shall mean any Lender which is not a Delinquent
Lender.
     Notes shall mean, collectively, the Notes in the form of Exhibit l.l(N)(1)
evidencing the Revolving Credit Loans and in the form of Exhibit 1.1(N)(2)
evidencing the Swing Loan, each as amended, restated, modified or supplemented
from time to time.
     Obligation shall mean any obligation or liability of the Borrower,
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due, under or in
connection with (i) this Agreement, the Notes, the Letters of Credit, the
Administrative Agent’s Letter or any other Loan Document whether to the
Administrative Agent, any of the Lenders or their Affiliates or other persons
provided for under such Loan Documents and (ii) any Lender Provided Interest
Rate Hedge.
     Official Body shall mean the government of the United States of America or
any other nation, or of any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to

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government (including any supra-national bodies such as the European Union or
the European Central Bank).
     Other Taxes shall mean all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.
     Participant has the meaning specified in Section 10.8.4 [Participations].
     Participation Advance shall have the meaning specified in Section 2.9.3
[Disbursements, Reimbursement].
     Payment Date shall mean the first (1st) day of each calendar quarter after
the date hereof and on the Expiration Date or upon acceleration of the Notes.
     Payment In Full shall mean payment in full in cash of the Loans and other
Obligations hereunder, termination of the Commitments and expiration or
termination of all Letters of Credit.
     PBGC shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor.
     Pension Plan means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
times during the immediately preceding five plan years.
     Permitted Liens shall have the meaning specified in Section 7.2.2 [Liens].
     Person shall mean any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
organization, joint venture, government or political subdivision or agency
thereof, or any other entity.
     Plan shall mean at any time an employee pension benefit plan (including a
Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title
IV of ERISA or is subject to the minimum funding standards under Section 412 of
the Code and either (i) is maintained by any member of the ERISA Group for
employees of any member of the ERISA Group or (ii) has at any time within the
preceding five (5) years been maintained by any entity which was at such time a
member of the ERISA Group for employees of any entity which was at such time a
member of the ERISA Group.
     Pledge Agreement shall mean the Pledge Agreement in substantially the form
of Exhibit 1.1 (P) executed and delivered by the Borrower to the Administrative
Agent for the benefit of the Lenders.
     PNC Bank shall mean PNC Bank, National Association, its successors and
assigns.

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     Post-Closing Filings shall have the meaning assigned to such term in
Section 7.1.11 [Post-Closing Filings].
     Potential Default shall mean any event or condition which with notice or
passage of time, or both, would constitute an Event of Default.
     Prime Rate shall mean the interest rate per annum announced from time to
time by the Administrative Agent at its Principal Office as its then prime rate,
which rate may not be the lowest or most favorable rate then being charged
commercial borrowers or others by the Administrative Agent. Any change in the
Prime Rate shall take effect at the opening of business on the day such change
is announced.
     Principal Office shall mean the main banking office of the Administrative
Agent in Pittsburgh, Pennsylvania.
     Prior Security Interest shall mean a valid and enforceable perfected
first-priority security interest under the UCC in the Collateral which is
subject only to statutory Liens for taxes not yet due and payable.
     Published Rate shall mean the rate of interest published each Business Day
in The Wall Street Journal “Money Rates” listing under the caption “London
Interbank Offered Rates” for a one (1) month period (or, if no such rate is
published therein for any reason, then the Published Rate shall be the
eurodollar rate for a one (1) month period as published in another publication
selected by the Administrative Agent).
     Ratable Share shall mean the proportion that a Lender’s Commitment
(excluding the Swing Loan Commitment) bears to the Commitments (excluding the
Swing Loan Commitment) of all of the Lenders. If the Commitments have terminated
or expired, the Ratable Shares shall be determined based upon the Commitments
(excluding the Swing Loan Commitment) most recently in effect, giving effect to
any assignments.
     Reimbursement Obligation shall have the meaning specified in Section 2.9.3
[Disbursements, Reimbursement].
     Related Parties shall mean, with respect to any Person, such Person’s
Affiliates and the partners, directors, officers, employees, agents and advisors
of such Person and of such Person’s Affiliates.
     Relief Proceeding shall mean any Delinquency Proceeding or any proceeding
seeking a decree or order for relief in respect of the Borrower or any
Subsidiary of the Borrower in a voluntary or involuntary case under any
applicable bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, or for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or similar official) of the
Borrower or any Subsidiary of the Borrower for any substantial part of its
property, or for the winding-up or liquidation of its affairs, or an assignment
for the benefit of its creditors.
     Required Lenders shall mean Lenders (other than any Defaulting Lender)
having more than fifty percent (50%) of the aggregate amount of the Revolving
Credit Commitments of the

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Lenders (excluding any Defaulting Lender) or, after the termination of the
Revolving Credit Commitments, the outstanding Revolving Credit Loans and Ratable
Share of Letter of Credit Obligations of the Lenders (excluding any Defaulting
Lender).
     Required Share shall have the meaning specified in Section 4.10 [Settlement
Date Procedures].
     Revolving Credit Commitment shall mean, as to any Lender at any time, the
amount initially set forth opposite its name on Schedule 1.1(B) in the column
labeled “Amount of Commitment for Revolving Credit Loans”, as such Commitment is
thereafter increased pursuant to Section 2.5 [Increase in Revolving Credit
Commitments] or decreased pursuant to Section 2.10 [Reduction of Revolving
Credit Commitments], as applicable, and Revolving Credit Commitments shall mean
the aggregate Revolving Credit Commitments of all of the Lenders.
     Revolving Credit Loans shall mean collectively, and Revolving Credit Loan
shall mean separately, all Revolving Credit Loans or any Revolving Credit Loan
made by the Lender or one (1) of the Lenders to the Borrower pursuant to
Section 2.1.1 [Revolving Credit Loans] or Section 2.9.3 [Disbursements,
Reimbursement].
     Revolving Credit Loan Request shall have the meaning specified in
Section 2.4.1 [Revolving Credit Loan Requests].
     Revolving Facility Usage shall mean at any time the sum of the outstanding
Revolving Credit Loans and the Letter of Credit Obligations (for purposes of
this computation, PNC Bank’s Swing Loans shall be deemed to be borrowed amounts
under its Revolving Credit Commitment).
     SAP means, as to any Person, the accounting practices prescribed or
permitted by NAIC, if then applicable to such Person, or the Applicable
Insurance Regulatory Authority of the jurisdiction of domicile of such Person
for the preparation of Annual Statements, Interim Statements and other financial
reports by insurance companies of the same type as such Person.
     Securities Intermediary shall mean any “securities intermediary” within the
meaning of Section 8.102(a)(14) of the UCC at which any securities account
constituting a Collateral Account is held, which shall be (a) located in the
United States of America and (b) acceptable to the Administrative Agent in its
reasonable discretion.
     Settlement Dates shall mean any Business Day on which the Administrative
Agent elects to effect settlement pursuant to Section 4.10 [Settlement Date
Procedures].
     Solvent shall mean, with respect to any Person on a particular date, that
on such date (i) the fair value of the property of such Person is greater than
the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (ii) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (iii) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (iv) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature, and (v) such
Person is not engaged in

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business or a transaction, and is not about to engage in business or a
transaction, for which such Person’s property would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be computed
at the amount which, in light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
     Standard & Poor’s shall mean Standard & Poor’s Ratings Services, a division
of The McGraw-Hill Companies, Inc.
     Standby Letter of Credit shall mean a Letter of Credit issued to support
obligations of the Borrower, contingent or otherwise, which finance the working
capital and business needs of the Borrower incurred in the ordinary course of
business.
     Statements shall have the meaning specified in Section 5.1.6 [Financial
Statements].
     Subscriber’s Agreement shall mean an agreement executed by each
policyholder in a reciprocal/inter-insurance exchange pursuant to which, among
other things, the policyholder appoints an attorney-in-fact to act on its behalf
in connection with the policyholder’s insurance business at the
reciprocal/inter-insurance exchange.
     Subsidiary of any Person at any time shall mean any corporation, trust,
partnership, any limited liability company or other business entity (i) of which
fifty percent (50%) or more of the outstanding voting securities or other
interests normally entitled to vote for the election of one or more directors or
trustees (regardless of any contingency which does or may suspend or dilute the
voting rights) is at such time owned directly or indirectly by such Person or
one or more of such Person’s Subsidiaries, or (ii) which is controlled or
capable of being controlled by such Person or one or more of such Person’s
Subsidiaries.
     Subsidiary Equity Interests shall have the meaning specified in
Section 5.1.2 [Subsidiaries and Owners; Investment Companies].
     Swing Loan Commitment shall have the meaning specified in Section 2.1.2
[Swing Loan Commitment].
     Swing Loan Request shall have the meaning specified in Section 2.4.2 [Swing
Loan Requests].
     Swing Loans shall mean PNC Bank’s commitment to make Swing Loans to the
Borrower pursuant to Section 2.1.2 [Swing Loan Commitment] hereof in an
aggregate principal amount up to Twenty-Five Million and 00/100 Dollars
($25,000,000.00).
     Taxes shall mean all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Official Body, including any interest, additions to tax or penalties applicable
thereto.
     Total Adjusted Capital shall mean, as to the Borrower, the “total adjusted
capital” calculated in accordance with SAP pursuant to the requirements of the
Insurance Department of

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the Commonwealth of Pennsylvania, as amended, restated, modified or supplemented
from time to time.
     UCC shall mean the Uniform Commercial Code as in effect in each applicable
jurisdiction.
     UCP shall have the meaning specified in Section 10.11.1 [Governing Law].
     USA Patriot Act shall mean the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.
     Valuation Statement shall have the meaning specified in Section 7.3.5
[Valuation Statements].
     1.2 Construction. Unless the context of this Agreement otherwise clearly
requires, the following rules of construction shall apply to this Agreement and
each of the other Loan Documents: (i) references to the plural include the
singular, the plural, the part and the whole and the words “include”, “includes”
and “including” shall be deemed to be followed by the phrase“without
limitation”; (ii) the words “hereof, “herein”, “hereunder”, “hereto” and similar
terms in this Agreement or any other Loan Document refer to this Agreement or
such other Loan Document as a whole; (iii) article, section, subsection, clause,
schedule and exhibit references are to this Agreement or other Loan Document, as
the case may be, unless otherwise specified; (iv) reference to any Person
includes such Person’s successors and assigns; (v) reference to any agreement,
including this Agreement and any other Loan Document together with the schedules
and exhibits hereto or thereto, document or instrument means such agreement,
document or instrument as amended, modified, replaced, substituted for,
superseded or restated; (vi) relative to the determination of any period of
time, “from” means “from and including”, “to” means “to but excluding”, and
“through” means “through and including”; (vii) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights, (viii) section headings herein and in each other
Loan Document are included for convenience and shall not affect the
interpretation of this Agreement or such Loan Document,and (ix) unless otherwise
specified, all references herein to times of day shall be references to Eastern
Time.
     1.3 Accounting Principles. Except as otherwise provided in this Agreement,
all computations and determinations as to accounting or financial matters and
all financial statements to be delivered pursuant to this Agreement shall be
made and prepared in accordance with GAAP or SAP, as applicable (including
principles of consolidation where appropriate), and all accounting or financial
terms shall have the meanings ascribed to such terms by GAAP or SAP, as
applicable; provided, however, that all accounting terms used in Section 7.2
[Negative Covenants] (and all defined terms used in the definition of any
accounting term used in Section 7.2 [Negative Covenants] shall have the meaning
given to such terms (and defined terms) under GAAP or SAP, as applicable, as in
effect on the date hereof applied on a basis consistent with those used in
preparing Statements referred to in Section 5.1.6(i) [Financial Statements]. In
the event of any change after the date hereof in GAAP or SAP, as applicable,

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and if such change would result in the inability to determine compliance with
the financial covenants set forth in Section 7.2 [Negative Covenants], then the
parties hereto agree to endeavor, in good faith, to agree upon an amendment to
this Agreement that would adjust such financial covenants in a manner that would
preserve the original intent thereof, but would allow compliance therewith to be
determined in accordance with the Borrower’s financial statements at that time,
provided that, until so amended such financial covenants shall continue to be
computed in accordance with GAAP or SAP, as applicable, prior to such change
therein.
          2. REVOLVING CREDIT AND SWING LOAN FACILITIES
     2.1 Revolving Credit and Swing Loan Commitments.
          2.1.1 Revolving Credit Loans. Subject to the terms and conditions
hereof and relying upon the representations and warranties herein set forth,
each Lender severally agrees to make Revolving Credit Loans to the Borrower at
any time or from time to time on or after the date hereof to, but not including,
the Expiration Date; provided that after giving effect to such Loan (i) the
aggregate amount of Loans from such Lender shall not exceed such Lender’s
Revolving Credit Commitment minus such Lender’s Ratable Share of the Letter of
Credit Obligations and (ii) the Revolving Facility Usage shall not exceed the
Revolving Credit Commitments. Within such limits of time and amount and subject
to the other provisions of this Agreement, the Borrower may borrow, repay and
reborrow pursuant to this Section 2.1.1 [Revolving Credit Loans].
          2.1.2 Swing Loans. Subject to the terms and conditions hereof and
relying upon the representations and warranties herein set forth, and in order
to facilitate loans and repayments between Settlement Dates, PNC Bank may, at
its option, cancelable at any time for any reason whatsoever, make swing loans
(the “Swing Loans”) to the Borrower at any time or from time to time after the
date hereof to, but not including, the Expiration Date, in an aggregate
principal amount up to, but not in excess of Twenty-Five Million and 00/100
Dollars ($25,000,000.00)(the “Swing Loan Commitment”), provided that the
aggregate principal amount of PNC Bank’s Swing Loans and the Revolving Credit
Loans of all Lenders and the Letter of Credit Obligations at any one time
outstanding shall not exceed the Revolving Credit Commitments of all the
Lenders. Within such limits of time and amount and subject to the other
provisions of this Agreement, the Borrower may borrow, repay and reborrow
pursuant to this Section 2.1.2 [Swing Loans].
     2.2 Nature of Lenders Obligations with Respect to Revolving Credit Loans.
Each Lender shall be obligated to participate in each request for Revolving
Credit Loans pursuant to Section 2.4.1 [Revolving Credit Loan Requests] in
accordance with its Ratable Share. The aggregate of each Lender’s Revolving
Credit Loans outstanding hereunder to the Borrower at anytime shall never exceed
its Revolving Credit Commitment minus its Ratable Share of the Letter of Credit
Obligations. The obligations of each Lender hereunder are several. The failure
of any Lender to perform its obligations hereunder shall not affect the
Obligations of the Borrower to any other party nor shall any other party be
liable for the failure of such Lender to perform its obligations hereunder. The
Lenders shall have no obligation to make Revolving Credit Loans hereunder on or
after the Expiration Date.

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     2.3 Commitment Fees. Accruing from the date hereof until the Expiration
Date, the Borrower agrees to pay to the Administrative Agent for the account of
each Lender, as consideration for such Lender’s Revolving Credit Commitment
hereunder, a nonrefundable commitment fee (the “Commitment Fee”) equal to
one-quarter of one percent (0.25%) per annum (computed on the basis of a year of
three hundred sixty (360) days and actual days elapsed) times the average daily
difference between the amount of (i) such Lender’s Revolving Credit Commitment
as the same may be constituted from time to time and (ii) the Revolving Facility
Usage; provided, however, that any Commitment Fee accrued with respect to the
Revolving Credit Commitment of a Defaulting Lender during the period prior to
the time such Lender became a Defaulting Lender and unpaid at such time shall
not be payable by the Borrower so long as such Lender shall be a Defaulting
Lender except to the extent that such Commitment Fee shall otherwise have been
due and payable by the Borrower prior to such time; and provided further that no
Commitment Fee shall accrue with respect to the Revolving Credit Commitment of a
Defaulting Lender so long as such Lender shall be a Defaulting Lender. Subject
to the proviso in the directly preceding sentence, all Commitment Fees shall be
payable in arrears on each Payment Date.
     2.4 Revolving Credit Loan Requests; Swing Loan Requests.
          2.4.1 Revolving Credit Loan Requests. Except as otherwise provided
herein, the Borrower may from time to time prior to the Expiration Date request
the Lenders to make Revolving Credit Loans, or renew or convert the Interest
Rate Option applicable to existing Revolving Credit Loans pursuant to
Section 3.2 [Interest Periods], by delivering to the Administrative Agent, not
later than 10:00 a.m., (i) three (3) Business Days prior to the proposed
Borrowing Date with respect to the making of Revolving Credit Loans to which the
LIBOR Rate Option applies or the conversion to or the renewal of the LIBOR Rate
Option for any Loans; and(ii) on the proposed Borrowing Date with respect to the
making of a Revolving Credit Loan to which the Base Rate Option applies or the
last day of the preceding Interest Period with respect to the conversion to the
Base Rate Option for any Loan, of a duly completed request therefor
substantially in the form of Exhibit 2.4.1 or a request by telephone immediately
confirmed in writing by letter, facsimile or telex in such form (each, a
“Revolving Credit Loan Request”), it being understood that the Administrative
Agent may rely on the authority of any individual making such a telephonic
request without the necessity of receipt of such written confirmation. Each
Revolving Credit Loan Request shall be irrevocable and shall specify the
aggregate amount of the proposed Loans comprising each Borrowing Tranche, and,
if applicable, the Interest Period, which amounts shall be in integral multiples
of Five Hundred Thousand and 00/100 Dollars ($500,000.00) and not less than Two
Million and 00/100 Dollars ($2,000,000.00) for each Borrowing Tranche under the
LIBOR Rate Option and not less than the lesser of Two Million and 00/100 Dollars
($2,000,000.00) or the maximum amount available for Borrowing Tranches under the
Base Rate Option.
          2.4.2 Swing Loan Requests. Except as otherwise provided herein, the
Borrower may from time to time prior to the Expiration Date request PNC Bank to
make Swing Loans by delivery to PNC Bank not later than 1:00 p.m. on the
proposed Borrowing Date of a duly completed request therefor substantially in
the form of Exhibit 2.4.2 hereto or a request by telephone immediately confirmed
in writing by letter, facsimile or telex, in such form (each, a“Swing Loan
Request”), it being understood that the Administrative Agent may rely on the

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authority of any individual making such a telephonic request without the
necessity of receipt of such written confirmation. Each Swing Loan Request shall
be irrevocable and shall specify (i) the proposed Borrowing Date and (ii) the
principal amount of such Swing Loan, which shall be in integral multiples of One
Hundred Thousand and 00/100 Dollars ($100,000.00) and not less than One Hundred
Thousand and 00/100 Dollars ($100,000.00).
     2.5 Increase in Revolving Credit Commitments.
               (i) Increasing Lenders and New Lenders. The Borrower may, one
time prior to the second anniversary of the Closing Date, request that (1) the
current Lenders increase their Revolving Credit Commitments (any current Lender
which elects to increase its Revolving Credit Commitment shall be referred to as
an “Increasing Lender”) or (2) one or more new lenders (each a “New Lender”)
join this Agreement and provide a Revolving Credit Commitment hereunder, subject
to the following terms and conditions:
                    a. No Obligation to Increase. No current Lender shall be
obligated to increase its Revolving Credit Commitment and any increase in the
Revolving Credit Commitment by any current Lender shall be in the sole
discretion of such current Lender.
                    b. Defaults. There shall exist no Events of Default or
Potential Default on the effective date of such increase after giving effect to
such increase.
                    c. Aggregate Revolving Credit Commitments. After giving
effect to such increase, the total Revolving Credit Commitments shall not exceed
Two Hundred Fifty Million and 00/100 Dollars ($250,000,000.00).
                    d. Minimum Revolving Credit Commitments. After giving effect
to such increase, the amount of the Revolving Credit Commitments provided by
each of the New Lenders and each of the Increasing Lenders shall be at least
Twenty-Five Million and 00/100 Dollars ($25,000,000.00).
                    e. Resolutions; Opinion. The Borrower shall deliver to the
Administrative Agent on or before the effective date of such increase the
following documents in a form acceptable to the Administrative Agent:
(1) certifications of an Authorized Officer with attached resolutions of the
Attorney-in-Fact certifying that the increase in the Revolving Credit Commitment
has been approved by the Borrower, and (2) an opinion of counsel addressed to
the Administrative Agent and the Lenders addressing the authorization of the
Borrower and the Attorney-in-Fact and execution of the Loan Documents by the
Attorney-in-Fact, and enforceability of the Loan Documents against, the
Borrower.
                    f. Notes. The Borrower shall execute and deliver (1) to each
Increasing Lender a replacement revolving credit Note reflecting the new amount
of such Increasing Lender’s Revolving Credit Commitment after giving effect to
the increase (and the prior Note issued to such Increasing Lender shall be
deemed to be terminated) and (2) to each New Lender a revolving credit Note
reflecting the amount of such New Lender’s Revolving Credit Commitment.

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                    g. Approval of New Lenders. Any New Lender shall be subject
to the approval of the Administrative Agent, which approval shall not be
unreasonably withheld.
                    h. Increasing Lenders. Each Increasing Lender shall confirm
its agreement to increase its Revolving Credit Commitment pursuant to an
acknowledgement in a form reasonably acceptable to the Administrative Agent,
signed by it and the Borrower and delivered to the Administrative Agent at least
five (5) days before the effective date of such increase.
                    i. New Lenders—Joinder. Each New Lender shall execute a
lender joinder in form and substance reasonably satisfactory to the
Administrative Agent pursuant to which such New Lender shall join and become a
party to this Agreement and the other Loan Documents with a Revolving Credit
Commitment in the amount set forth in such lender joinder.
               (ii) Treatment of Outstanding Loans and Letters of Credit.
                    (a) Repayment of Outstanding Loans; Borrowing of New Loans.
On the effective date of any increase in Revolving Credit Commitments as
provided in the preceding clause (i), the Borrower shall repay all Loans then
outstanding, subject to the Borrower’s indemnity obligations under Section 4.9
[Indemnity]; provided that it may borrow new Loans with a Borrowing Date on such
date. Each of the Lenders shall participate in any new Loans made on or after
such date in accordance with their respective Ratable Shares after giving effect
to the increase in Revolving Credit Commitments contemplated by this Section 2.5
[Increase in Revolving Credit Commitments].
                    (b) Outstanding Letters of Credit. Repayment of Outstanding
Loans; Borrowing of New Loans. On the effective date of such increase, each
Increasing Lender and each New Lender (i) will be deemed to have purchased a
participation in each then outstanding Letter of Credit equal to its Ratable
Share of such Letter of Credit and the participation of each other Lender in
such Letter of Credit shall be adjusted accordingly and (ii) will acquire, (and
will pay to the Administrative Agent, for the account of each Lender, in
immediately available funds, an amount equal to) its Ratable Share of all
outstanding Participation Advances.
     2.6 Making Revolving Credit Loans and Swing Loans; Presumptions by the
Administrative Agent; Repayment of Revolving Credit Loans; Borrowings to Repay
Swing Loans.
          2.6.1 Making Revolving Credit Loans. The Administrative Agent shall,
promptly after receipt by it of a Revolving Credit Loan Request pursuant to
Section 2.4.1 [Revolving Credit Loan Requests], notify the Lenders of its
receipt of such Loan Request specifying the information provided by the Borrower
and the apportionment among the Lenders of the requested Revolving Credit Loans
as determined by the Administrative Agent in accordance with Section 2.2 [Nature
of Lenders Obligations with Respect to Revolving Credit Loans]. Each Lender
shall remit the principal amount of each Revolving Credit Loan to the

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Administrative Agent such that the Administrative Agent is able to, and the
Administrative Agent shall, to the extent the Lenders have made funds available
to it for such purpose and subject to Section 6.2 [Each Loan or Letter of
Credit], fund such Revolving Credit Loans to the Borrower in U.S. Dollars and
immediately available funds at the Principal Office prior to 2:00 p.m., on the
applicable Borrowing Date; provided that if any Lender fails to remit such funds
to the Administrative Agent in a timely manner, the Administrative Agent may
elect in its sole discretion to fund with its own funds the Revolving Credit
Loans of such Lender on such Borrowing Date, and such Lender shall be subject to
the repayment obligation in Section 2.6.3 [Presumptions by the Administrative
Agent].
          2.6.2 Making Swing Loans. So long as PNC Bank elects to make Swing
Loans, PNC Bank shall, after receipt by it of a Swing Loan Request pursuant to
Section 2.4.2 [Swing Loan Requests], fund such Swing Loan to the Borrower in
U.S. Dollars and immediately available funds at the Principal Office prior to
2:00 p.m. on the Borrowing Date.
          2.6.3 Presumptions by the Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Loan that such Lender will not make available to the
Administrative Agent such Lender’s share of such Loan, the Administrative Agent
may assume that such Lender has made such share available on such date in
accordance with Section 2.6.1 [Making Revolving Credit Loans] and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Loan available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of a payment to be made by such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation and(ii) in the case of a
payment to be made by the Borrower, the interest rate applicable to Loans under
the Base Rate Option. If such Lender pays its share of the applicable Loan to
the Administrative Agent, then the amount so paid shall constitute such Lender’s
Loan. Any payment by the Borrower shall be without prejudice to any claim the
Borrower may have against a Lender that shall have failed to make such payment
to the Administrative Agent.
          2.6.4 Repayment of Revolving Credit Loans. The Borrower shall repay
the Revolving Credit Loans together with all outstanding interest thereon on the
Expiration Date.
          2.6.5 Borrowings to Repay Swing Loans. PNC Bank may, at its option,
exercisable at any time for any reason whatsoever, demand repayment of the Swing
Loans, and each Lender shall make a Revolving Credit Loan in an amount equal to
such Lender’s Ratable Share of the aggregate principal amount of the outstanding
Swing Loans, plus, if PNC Bank so requests, accrued interest thereon, provided
that no Lender shall be obligated in any event to make Revolving Credit Loans in
excess of its Revolving Credit Commitment less its Ratable Share of the Letter
of Credit Obligations. Revolving Credit Loans made pursuant to the preceding
sentence shall bear interest at the Base Rate Option and shall be deemed to have
been properly requested in accordance with Section 2.4.1 [Revolving Credit Loan
Requests] without regard to any of the requirements of that provision. PNC Bank
shall provide notice to the

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Lenders (which may be telephonic, written, or facsimile notice) that such
Revolving Credit Loans are to be made under this Section 2.6.5 [Borrowings to
Repay Swing Loans] and of the apportionment among the Lenders, and the Lenders
shall be unconditionally obligated to fund such Revolving Credit Loans (whether
or not the conditions specified in Section 2.4.1 [Revolving Credit Loan
Requests] are then satisfied) by the time PNC Bank so requests, which shall not
be earlier than 2:00 p.m. on the next Business Day after the date the Lenders
receive such notice from PNC Bank.
     2.7 Notes. The Obligation of the Borrower to repay the aggregate unpaid
principal amount of the Revolving Credit Loans made to it by each Lender,
together with interest thereon, shall be evidenced by a revolving credit Note,
dated the Closing Date payable to the order of such Lender in a face amount
equal to the Revolving Credit Commitment. The Obligation of the Borrower to
repay the aggregate unpaid principal amount of the Swing Loans made to it by PNC
Bank, together with interest thereon, shall be evidenced by a swing Note, dated
the Closing Date payable to the order of PNC Bank in a face amount equal to the
Swing Loan Commitment.
     2.8 Use of Proceeds. The proceeds of the Loans shall be used (a) to provide
working capital to the Borrower, (b) for general corporate purposes of the
Borrower, and (c) to refinance the existing Indebtedness owed by the Borrower to
PNC Bank. The Borrower shall not use the
Letters of Credit or the proceeds of the Loans for any purposes that contravene
any Law or any provision hereof.
     2.9 Letter of Credit Subfacility.
          2.9.1 Issuance of Letters of Credit. Borrower may at any time prior to
the Expiration Date request the issuance of letters of credit (each, a “Letter
of Credit”) on behalf of itself, or the amendment or extension of an existing
Letter of Credit, by delivering to the Issuing Lender (with a copy to the
Administrative Agent) a completed application and agreement for letters of
credit, or request for such amendment or extension, as applicable, in such form
as the Issuing Lender may specify from time to time by no later than 10:00 a.m.
at least five (5) Business Days, or such shorter period as may be agreed to by
the Issuing Lender, in advance of the proposed date of issuance. Each Letter of
Credit shall be a Standby Letter of Credit (and may not be a Commercial Letter
of Credit). Promptly after receipt of any Letter of Credit application, the
Issuing Lender shall confirm with the Administrative Agent (by telephone or in
writing) that the Administrative Agent has received a copy of such Letter of
Credit application and if not, such Issuing Lender will provide Administrative
Agent with a copy thereof. Unless the Issuing Lender has received notice from
any Lender, the Administrative Agent or the Borrower, at least one (1) day prior
to the requested date of issuance, amendment or extension of the applicable
Letter of Credit, that one or more applicable conditions in Section 6
[Conditions of Lending and Issuance of Letters of Credit] is not satisfied,
then, subject to the terms and conditions hereof and in reliance on the
agreements of the other Lenders set forth in this Section 2.9 [Letter of Credit
Subfacility], the Issuing Lender or any of the Issuing Lender’s Affiliates will
issue a Letter of Credit or agree to such amendment or extension, provided that
each Letter of Credit shall (A) have a maximum maturity of twelve (12) months
from the date of issuance, and (B) in no event expire later than the Expiration
Date and provided further that in no event shall (i) the Letter of Credit
Obligations exceed, at any one time, Twenty-Five Million and 00/100 Dollars
($25,000,000.00) (the “Letter of Credit Sublimit”) or (ii) the Revolving
Facility

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Usage exceed, at any one time, the Revolving Credit Commitments. Each request by
the Borrower for the issuance, amendment or extension of a Letter of Credit
shall be deemed to be a representation by the Borrower that it shall be in
compliance with the preceding sentence and with Section 6 [Conditions of Lending
and Issuance of Letters of Credit] after giving effect to the requested
issuance, amendment or extension of such Letter of Credit. Promptly after its
delivery of any Letter of Credit or any amendment to a Letter of Credit to the
beneficiary thereof, the Issuing Lender will also deliver to the Borrower and
Administrative Agent a true and complete copy of such Letter of Credit or
amendment. Notwithstanding any other provision hereof, no Issuing Lender shall
be required to issue any Letter of Credit, if any Lender is at such time a
Defaulting Lender hereunder, unless such Issuing Lender has entered into
satisfactory arrangements with the Borrower or such Defaulting Lender to
eliminate the Issuing Lender’s risk with respect to such Defaulting Lender (it
being understood that the Issuing Lender would consider the Borrower providing
cash collateral to the Administrative Agent, for the benefit of the Issuing
Lender, to secure the Defaulting Lender’s Ratable Share of the Letter of Credit
to be a satisfactory arrangement. Each of the Existing Letters of Credit shall
be deemed to have been issued hereunder on the Closing Date by PNC Bank as the
Issuing Lender. Each of the Existing Letters of Credit shall be deemed to be a
Letter of Credit for all purposes of this Agreement.
          2.9.2 Letter of Credit Fees. The Borrower shall pay (i) to the
Administrative Agent for the ratable account of the Lenders a fee (the “Letter
of Credit Fee”) equal to the Applicable Letter of Credit Fee Rate, and (ii) to
the Issuing Lender for its own account a fronting fee equal to one hundred
twenty-five thousandths of one percent (0.125%) per annum (in each case computed
on the basis of a year of 360 days and actual days elapsed), which fees shall be
computed on the daily average Letter of Credit Obligations and shall be payable
quarterly in arrears on each Payment Date following issuance of each Letter of
Credit. The Borrower shall also pay to the Issuing Lender for the Issuing
Lender’s sole account the Issuing Lenders then in effect customary fees and
administrative expenses payable with respect to the Letters of Credit as the
Issuing Lender may generally charge or incur from time to time in connection
with the issuance, maintenance, amendment (if any), assignment or transfer (if
any), negotiation, and administration of Letters of Credit.
          2.9.3 Disbursements, Reimbursement. Immediately upon the issuance of
each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably
and unconditionally agrees to, purchase from the Issuing Lender a participation
in such Letter of Credit and each drawing thereunder in an amount equal to such
Lender’s Ratable Share of the maximum amount available to be drawn under such
Letter of Credit and the amount of such drawing, respectively.
               2.9.3.1 In the event of any request for a drawing under a Letter
of Credit by the beneficiary or transferee thereof, the Issuing Lender will
promptly notify the Borrower and the Administrative Agent thereof. Provided that
it shall have received such notice, the Borrower shall reimburse (such
obligation to reimburse the Issuing Lender shall sometimes be referred to as a
“Reimbursement Obligation”) the Issuing Lender prior to 12:00 noon, Pittsburgh
time on each date that an amount is paid by the Issuing Lender under any Letter
of Credit (each such date, a “Drawing Date”) by paying to the Administrative
Agent for the account of the Issuing Lender an amount equal to the amount so
paid by the Issuing Lender. In the event the Borrower fails to reimburse the
Issuing Lender (through the Administrative Agent) for the full amount of any
drawing under any Letter of Credit by 12:00 noon, Pittsburgh time, on the

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Drawing Date, the Administrative Agent will promptly notify each Lender thereof,
and the Borrower shall be deemed to have requested that Revolving Credit Loans
be made by the Lenders under the Base Rate Option to be disbursed on the Drawing
Date under such Letter of Credit, subject to the amount of the unutilized
portion of the Revolving Credit Commitment and subject to the conditions set
forth in Section 6.2 [Each Loan or Letter of Credit] other than any notice
requirements. Any notice given by the Administrative Agent or Issuing Lender
pursuant to this Section 2.9.3.1 [Disbursements; Reimbursement] may be oral if
immediately confirmed in writing; provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.
               2.9.3.2 Each Lender shall upon any notice pursuant to this
Section 2.9.3 [Disbursements; Reimbursement] make available to the
Administrative Agent for the account of the Issuing Lender an amount in
immediately available funds equal to its Ratable Share of the amount of the
drawing, whereupon the participating Lenders shall (subject to this Section
2.9.3 [Disbursements; Reimbursement]) each be deemed to have made a Revolving
Credit Loan under the Base Rate Option to the Borrower in that amount. If any
Lender so notified fails to make available to the Administrative Agent for the
account of the Issuing Lender the amount of such Lender’s Ratable Share of such
amount by no later than 2:00 p.m., Pittsburgh time on the Drawing Date, then
interest shall accrue on such Lender’s obligation to make such payment, from the
Drawing Date to the date on which such Lender makes such payment (i) at a rate
per annum equal to the Federal Funds Effective Rate during the first three
(3) days following the Drawing Date and (ii) at a rate per annum equal to the
rate applicable to Loans under the Revolving Credit Base Rate Option on and
after the fourth day following the Drawing Date. The Administrative Agent and
the Issuing Lender will promptly give notice (as described in this Section 2.9.3
[Disbursements; Reimbursement] above) of the occurrence of the Drawing Date, but
failure of the Administrative Agent or the Issuing Lender to give any such
notice on the Drawing Date or in sufficient time to enable any Lender to effect
such payment on such date shall not relieve such Lender from its obligation
under this Section 2.9.3 [Disbursements; Reimbursement].
               2.9.3.3 With respect to any unreimbursed drawing that is not
converted into Revolving Credit Loans under the Base Rate Option to the Borrower
in whole or in part as contemplated by this Section 2.9.3 [Disbursements;
Reimbursement], because of the Borrower’s failure to satisfy the conditions set
forth in Section 6.2 [Each Loan or Letter of Credit] other than any notice
requirements, or for any other reason, the Borrower shall be deemed to have
incurred from the Issuing Lender a borrowing (each, a “Letter of Credit
Borrowing”) in the amount of such drawing. Such Letter of Credit Borrowing shall
be due and payable on demand (together with interest) and shall bear interest at
the rate per annum applicable to the Revolving Credit Loans under the Base Rate
Option. Each Lender’s payment to the Administrative Agent for the
account of the Issuing Lender pursuant to this Section 2.9.3 [Disbursements,
Reimbursement] shall be deemed to be a payment in respect of its participation
in such Letter of Credit Borrowing (each, a “Participation Advance”) from such
Lender in satisfaction of its participation obligation under this Section 2.9.3
[Disbursements; Reimbursement].

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          2.9.4 Repayment of Participation Advances.
               2.9.4.1 Upon (and only upon) receipt by the Administrative Agent
for the account of the Issuing Lender of immediately available funds from the
Borrower (i) in reimbursement of any payment made by the Issuing Lender under
any Letter of Credit with respect to which any Lender has made a Participation
Advance to the Administrative Agent, or (ii) in payment of interest on such a
payment made by the Issuing Lender under such a Letter of Credit, the
Administrative Agent on behalf of the Issuing Lender will pay to each Lender, in
the same funds as those received by the Administrative Agent, the amount of such
Lender’s Ratable Share of such funds, except the Administrative Agent shall
retain for the account of the Issuing Lender the amount of the Ratable Share of
such funds of any Lender that did not make a Participation Advance in respect of
such payment by the Issuing Lender.
               2.9.4.2 If the Administrative Agent is required at any time to
return to the Borrower, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of any payment made by the
Borrower to the Administrative Agent for the account of the Issuing Lender
pursuant to this Section 2.9.4 [Repayment of Participation Advances] in
reimbursement of a payment made under the Letter of Credit or interest or fee
thereon, each Lender shall, on demand of the Administrative Agent, forthwith
return to the Administrative Agent for the account of the Issuing Lender the
amount of its Ratable Share of any amounts so returned by the Administrative
Agent plus interest thereon from the date such demand is made to the date such
amounts are returned by such Lender to the Administrative Agent, at a rate per
annum equal to the Federal Funds Effective Rate in effect from time to time.
          2.9.5 Documentation. The Borrower agrees to be bound by the terms of
the Issuing Lender’s application and agreement for letters of credit and the
Issuing Lender’s written regulations and customary practices relating to letters
of credit. In the event of a conflict between such application or agreement and
this Agreement, this Agreement shall govern. It is understood and agreed that,
except in the case of gross negligence or willful misconduct, the Issuing Lender
shall not be liable for any error, negligence and/or mistakes, whether of
omission or commission, in following the Borrower’s instructions or those
contained in the Letters of Credit or any modifications, amendments or
supplements thereto.
          2.9.6 Determinations to Honor Drawing Requests. In determining whether
to honor any request for drawing under any Letter of Credit by the beneficiary
thereof, the Issuing Lender shall be responsible only to determine that the
documents and certificates required to be delivered under such Letter of Credit
have been delivered and that they comply on their face with the requirements of
such Letter of Credit.
          2.9.7 Nature of Participation and Reimbursement Obligations. Each
Lender’s obligation in accordance with this Agreement to make the Revolving
Credit Loans or Participation Advances, as contemplated by Section 2.9.3
[Disbursements, Reimbursement], as a result of a drawing under a Letter of
Credit, and the Obligations of the Borrower to reimburse the Issuing Lender upon
a draw under a Letter of Credit, shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Section 2.9 [Letter of Credit Subfacility] under all circumstances,
including the following circumstances:

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               (i) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the Issuing Lender or any of its Affiliates,
the Borrower or any other Person for any reason whatsoever, or which the
Borrower may have against the Issuing Lender or any of its Affiliates, any
Lender or any other Person for any reason whatsoever;
               (ii) the failure of the Borrower or any other Person to comply,
in connection with a Letter of Credit Borrowing, with the conditions set forth
in Section 2.1 [Revolving Credit Loans], Section 2.4.1 [Revolving Credit Loan
Requests], Section 2.6.1 [Making Revolving Credit Loans] or Section 6.2 [Each
Loan or Letter of Credit] or as otherwise set forth in this Agreement for the
making of a Revolving Credit Loan, it being acknowledged that such conditions
are not required for the making of a Letter of Credit Borrowing and the
obligation of the Lenders to make Participation Advances under Section 2.9.3
[Disbursements, Reimbursement];
               (iii) any lack of validity or enforceability of any Letter of
Credit;
               (iv) any claim of breach of warranty that might be made by the
Borrower or any Lender against any beneficiary of a Letter of Credit, or the
existence of any claim, set-off, recoupment, counterclaim, crossclaim, defense
or other right which the Borrower or any Lender may have at any time against a
beneficiary, successor beneficiary any transferee or assignee of any Letter of
Credit or the proceeds thereof (or any Persons for whom any such transferee may
be acting), the Issuing Lender or its Affiliates or any Lender or any other
Person, whether in connection with this Agreement, the transactions contemplated
herein or any unrelated transaction (including any underlying transaction
between the Borrower or any Subsidiaries of the Borrower and the beneficiary for
which any Letter of Credit was procured);
               (v) the lack of power or authority of any signer of (or any
defect in or forgery of any signature or endorsement on) or the form of or lack
of validity, sufficiency, accuracy, enforceability or genuineness of any draft,
demand, instrument, certificate or other document presented under or in
connection with any Letter of Credit, or any fraud or alleged fraud in
connection with any Letter of Credit, or the transport of any property or
provision of services relating to a Letter of Credit, in each case even if the
Issuing Lender or any of its Affiliates has been notified thereof;
               (vi) payment by the Issuing Lender or any of its Affiliates under
any Letter of Credit against presentation of a demand, draft or certificate or
other document which does not comply with the terms of such Letter of Credit;
               (vii) the solvency of, or any acts or omissions by, any
beneficiary of any Letter of Credit, or any other Person having a role in any
transaction or obligation relating to a Letter of Credit, or the existence,
nature, quality, quantity, condition, value or other characteristic of any
property or services relating to a Letter of Credit;
               (viii) any failure by the Issuing Lender or any of its Affiliates
to issue any Letter of Credit in the form requested by the Borrower, unless the
Issuing Lender has received written notice from the Borrower of such failure
within three (3) Business Days after the Issuing Lender or any of its Affiliates
shall have furnished the Borrower and the

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Administrative Agent a copy of such Letter of Credit and such error is material
and no drawing has been made thereon prior to receipt of such notice;
               (ix) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of the Borrower or any
Subsidiaries of the Borrower;
               (x) any breach of this Agreement or any other Loan Document by
any party thereto;
               (xi) the occurrence or continuance of an Insolvency Proceeding
with respect to the Borrower;
               (xii) the fact that an Event of Default or a Potential Default
shall have occurred and be continuing;
               (xiii) the fact that the Expiration Date shall have passed or
this Agreement or the Commitments hereunder shall have been terminated; and
               (xiv) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing.
          2.9.8 Indemnity. The Borrower hereby agrees to protect, indemnify, pay
and save harmless the Issuing Lender and any of its Affiliates that has issued a
Letter of Credit from and against any and all claims, demands, liabilities,
damages, taxes, penalties, interest, judgments, losses, costs, charges and
expenses (including reasonable fees, expenses and disbursements of counsel and
allocated costs of internal counsel) which the Issuing Lender or any of its
Affiliates may incur or be subject to as a consequence, direct or indirect, of
the issuance of any Letter of Credit, other than as a result of (A) the gross
negligence or willful misconduct of the Issuing Lender as determined by a final
non-appealable judgment of a court of competent jurisdiction or (B) the wrongful
dishonor by the Issuing Lender or any of Issuing Lender’s Affiliates of a proper
demand for payment made under any Letter of Credit, except if such dishonor
resulted from any act or omission, whether rightful or wrongful, of any present
or future de jure or de facto government or governmental authority.
          2.9.9 Liability for Acts and Omissions. As between the Borrower and
the Issuing Lender, or the Issuing Lender’s Affiliates, the Borrower assumes all
risks of the acts and omissions of, or misuse of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, the Issuing Lender shall not be responsible for any
of the following, including any losses or damages to the Borrower or other
Person or property relating therefrom: (i) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for an issuance of any such Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged (even if the Issuing Lender or
its Affiliates shall have been notified thereof); (ii) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the beneficiary of
any such Letter of Credit, or any other party

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to which such Letter of Credit may be transferred, to comply fully with any
conditions required in order to draw upon such Letter of Credit or any other
claim of the Borrower against any beneficiary of such Letter of Credit, or any
such transferee, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any such transferee; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of the Issuing Lender or its Affiliates, as
applicable, including any act or omission of any governmental authority, and
none of the above shall affect or impair, or prevent the vesting of, any of the
Issuing Lender’s or its Affiliates’ rights or powers hereunder. Nothing in the
preceding sentence shall relieve the Issuing Lender from liability for the
Issuing Lender’s gross negligence or willful misconduct in connection with
actions or omissions described in such clauses (i) through (viii) of such
sentence. In no event shall the Issuing Lender or its Affiliates be liable to
the Borrower for any indirect, consequential, incidental, punitive, exemplary or
special damages or expenses (including without limitation attorneys fees), or
for any damages resulting from any change in the value of any property relating
to a Letter of Credit.
               Without limiting the generality of the foregoing, the Issuing
Lender and each of its Affiliates (i) may rely on any oral or other
communication believed in good faith by the Issuing Lender or such Affiliate to
have been authorized or given by or on behalf of the applicant for a Letter of
Credit, (ii) may honor any presentation if the documents presented appear on
their face substantially to comply with the terms and conditions of the relevant
Letter of Credit; (iii) may honor a previously dishonored presentation under a
Letter of Credit, whether such dishonor was pursuant to a court order, to settle
or compromise any claim of wrongful dishonor, or otherwise, and shall be
entitled to reimbursement to the same extent as if such presentation had
initially been honored, together with any interest paid by the Issuing Lender or
its Affiliates; (iv) may honor any drawing that is payable upon presentation of
a statement advising negotiation or payment, upon receipt of such statement
(even if such statement indicates that a draft or other document is being
delivered separately), and shall not be liable for any failure of any such draft
or other document to arrive, or to conform in any way with the relevant Letter
of Credit; (v) may pay any paying or negotiating bank claiming that it
rightfully honored under the Laws or practices of the place where such bank is
located; and (vi) may settle or adjust any claim or demand made on the Issuing
Lender or its Affiliates in any way related to any order issued at the
applicant’s request to an air carrier, a letter of guarantee or of indemnity
issued to a carrier or any similar document (each, an “Order”) and honor any
drawing in connection with any Letter of Credit that is the subject of such
Order, notwithstanding that any drafts or other documents presented in
connection with such Letter of Credit fail to conform in any way with such
Letter of Credit.
               In furtherance and extension and not in limitation of the
specific provisions set forth above, any action taken or omitted by the Issuing
Lender or its Affiliates under or in connection with the Letters of Credit
issued by it or any documents and certificates delivered thereunder, if taken or
omitted in good faith, shall not put the Issuing Lender or its Affiliates under
any resulting liability to the Borrower or any Lender.

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          2.9.10 Issuing Lender Reporting Requirements. Each Issuing Lender
shall, on the first (1st) Business Day of each month, provide to the
Administrative Agent and Borrower a schedule of the Letters of Credit issued by
it, in form and substance satisfactory to Administrative Agent, showing the date
of issuance of each Letter of Credit, the account party, the original face
amount (if any), and the expiration date of any Letter of Credit outstanding at
any time during the preceding month, and any other information relating to such
Letter of Credit that the Administrative Agent may request.
     2.10 Reduction of Revolving Credit Commitment. The Borrower shall have the
right at any time after the Closing Date upon five (5) days’ prior written
notice to the Administrative Agent to permanently reduce (ratably among the
Lenders in proportion to their Ratable Shares) the Revolving Credit Commitments,
in a minimum amount of Five Million and 00/100 Dollars ($5,000,000.00), and
whole multiples of One Million and 00/100 Dollars ($1,000,000.00), or to
terminate completely the Revolving Credit Commitments, without penalty or
premium except as hereinafter set forth; provided that any such reduction or
termination shall be accompanied by prepayment of the Notes, together with
outstanding Commitment Fees, and the full amount of interest accrued on the
principal sum to be prepaid (and all amounts referred to in Section 4.9
[Indemnity] hereof) to the extent necessary to cause the aggregate Revolving
Facility Usage after giving effect to such prepayments to be equal to or less
than the Revolving Credit Commitments as so reduced or terminated. Any notice to
reduce the Revolving Credit Commitments under this Section 2.10 [Reduction of
Revolving Credit Commitment] shall be irrevocable.
     2.11 Mark to Market Collateral Certification. Prior to any Revolving Credit
Loan Request, Swing Loan Request or request for a Letter of Credit that would
cause the Revolving Facility Usage to be greater than One Hundred Twenty-Five
Million and 00/100 Dollars ($125,000,000.00), the Borrower must deliver to the
Administrative Agent a certification that the Borrower has marked to market the
Collateral as of the date of such request and a Valuation Statement calculated
as of the most recent Business Day prior to the date of such request.
3. INTEREST RATES
     3.1 Interest Rate Options. The Borrower shall pay interest in respect of
the outstanding unpaid principal amount of the Loans as selected by it from the
Base Rate Option or LIBOR Rate Option set forth below applicable to the Loans,
it being understood that, subject to the provisions of this Agreement, the
Borrower may select different Interest Rate Options and different Interest
Periods to apply simultaneously to the Loans comprising different Borrowing
Tranches and may convert to or renew one or more Interest Rate Options with
respect to all or any portion of the Loans comprising any Borrowing Tranche;
provided that there shall not be at any one time outstanding more than six
(6) Borrowing Tranches in the aggregate among all of the Loans; and provided
further that if an Event of Default exists and is continuing, the Borrower may
not request, convert to, or renew the LIBOR Rate Option for any Loans and the
Required Lenders may demand that all existing Borrowing Tranches bearing
interest under the LIBOR Rate Option shall be converted at the end of the
applicable Interest Period. If at any time the designated rate applicable to any
Loan made by any Lender exceeds such Lender’s highest lawful rate, the rate of
interest on such Lender’s Loan shall be limited to such Lender’s highest lawful
rate.

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          3.1.1 Revolving Credit Interest Rate Options; Swing Line Interest
Rate. The Borrower shall have the right to select from the following Interest
Rate Options applicable to the Revolving Credit Loans (subject to the provisions
above regarding Swing Loans):
               (i) Revolving Credit Base Rate Option: A fluctuating rate per
annum (computed on the basis of a year of 360 days and actual days elapsed)
equal to the Base Rate plus the Applicable Margin, such interest rate to change
automatically from time to time effective as of the effective date of each
change in the Base Rate; or
               (ii) Revolving Credit LIBOR Rate Option: A rate per annum
(computed on the basis of a year of 360 days and actual days elapsed) equal to
the LIBOR Rate plus the Applicable Margin.

Subject to Section 3.3 [Interest After Default], only the Base Rate Option shall
apply to the Swing Loans.
          3.1.2 Rate Quotations. The Borrower may call the Administrative Agent
on or before the date on which a Loan Request is to be delivered to receive an
indication of the rates then in effect, but it is acknowledged that such
projection shall not be binding on the Administrative Agent or the Lenders nor
affect the rate of interest which thereafter is actually in effect when the
election is made.
     3.2 Interest Periods. At any time when the Borrower shall select, convert
to or renew a LIBOR Rate Option, the Borrower shall notify the Administrative
Agent thereof at least three (3) Business Days prior to the effective date of
such LIBOR Rate Option by delivering a Loan Request. The notice shall specify an
Interest Period during which such Interest Rate Option shall apply.
Notwithstanding the preceding sentence, the following provisions shall apply to
any selection of, renewal of, or conversion to a LIBOR Rate Option:
          3.2.1 Amount of Borrowing Tranche. Each Borrowing Tranche of Loans
under the LIBOR Rate Option shall be in integral multiples of Five Hundred
Thousand and 00/100 Dollars ($500,000.00) and not less than Two Million and
00/100 Dollars ($2,000,000.00); and
          3.2.2 Renewals. In the case of the renewal of a LIBOR Rate Option at
the end of an Interest Period, the first day of the new Interest Period shall be
the last day of the preceding Interest Period, without duplication in payment of
interest for such day.
     3.3 Interest After Default. To the extent permitted by Law, upon the
occurrence of an Event of Default and until such time such Event of Default
shall have been cured or waived, and at the discretion of the Administrative
Agent or upon written demand by the Required Lenders to the Administrative
Agent:
          3.3.1 Letter of Credit Fees, Interest Rate. The Letter of Credit Fees
and the rate of interest for each Loan otherwise applicable pursuant to
Section 2.9.2 [Letter of Credit Fees] or Section 3.1 [Interest Rate Options],
respectively, shall be increased by two percent (2.0%) per annum;

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          3.3.2 Other Obligations. Each other Obligation hereunder if not paid
when due shall bear interest at a rate per annum equal to the sum of the rate of
interest applicable under the Revolving Credit Base Rate Option plus an
additional two percent (2%) per annum from the time such Obligation becomes due
and payable and until it is paid in full; and
          3.3.3 Acknowledgment. The Borrower acknowledges that the increase in
rates referred to in this Section 3.3 [Interest After Default] reflects, among
other things, the fact that such Loans or other amounts have become a
substantially greater risk given their default status and that the Lenders are
entitled to additional compensation for such risk; and all such interest shall
be payable by Borrower upon demand by Administrative Agent.
     3.4 LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available.
          3.4.1 Unascertainable. If on any date on which a LIBOR Rate would
otherwise be determined, the Administrative Agent shall have determined that:
               (i) adequate and reasonable means do not exist for ascertaining
such LIBOR Rate, or
               (ii) a contingency has occurred which materially and adversely
affects the London interbank eurodollar market relating to the LIBOR Rate,
the Administrative Agent shall have the rights specified in Section 3.4.3
[Administrative Agent’s and Lender’s Rights].
          3.4.2 Illegality; Increased Costs; Deposits Not Available. If at any
time any Lender shall have determined that:
               (i) the making, maintenance or funding of any Loan to which a
LIBOR Rate Option applies has been made impracticable or unlawful by compliance
by such Lender in good faith with any Law or any interpretation or application
thereof by any Official Body or with any request or directive of any such
Official Body (whether or not having the force of Law), or
               (ii) such LIBOR Rate Option will not adequately and fairly
reflect the cost to such Lender of the establishment or maintenance of any such
Loan, or
               (iii) after making all reasonable efforts, deposits of the
relevant amount in Dollars for the relevant Interest Period for a Loan, or to
banks generally, to which a LIBOR Rate Option applies, respectively, are not
available to such Lender with respect to such Loan, or to banks generally, in
the interbank eurodollar market,
then the Administrative Agent shall have the rights specified in Section 3.4.3
[Administrative Agents and Lenders Rights].
          3.4.3 Administrative Agent’s and Lender’s Rights. In the case of any
event specified in Section 3.4.1 [Unascertainable] above, the Administrative
Agent shall promptly so notify the Lenders and the Borrower thereof, and in the
case of an event specified in

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Section 3.4.2 [Illegality; Increased Costs; Deposits Not Available] above, such
Lender shall promptly so notify the Administrative Agent and endorse a
certificate to such notice as to the specific circumstances of such notice, and
the Administrative Agent shall promptly send copies of such notice and
certificate to the other Lenders and the Borrower. Upon such date as shall be
specified in such notice (which shall not be earlier than the date such notice
is given), the obligation of (A) the Lenders, in the case of such notice given
by the Administrative Agent, or (B) such Lender, in the case of such notice
given by such Lender, to allow the Borrower to select, convert to or renew a
LIBOR Rate Option shall be suspended until the Administrative Agent shall have
later notified the Borrower, or such Lender shall have later notified the
Administrative Agent, of the Administrative Agent’s or such Lender’s, as the
case may be, determination that the circumstances giving rise to such previous
determination no longer exist, which notice shall be given promptly following
the termination of the circumstance which gave rise to such determination. If at
any time the Administrative Agent makes a determination under Section 3.4.1
[Unascertainable] and the Borrower has previously notified the Administrative
Agent of its selection of, conversion to or renewal of a LIBOR Rate Option and
such Interest Rate Option has not yet gone into effect, such notification shall
be deemed to provide for selection of, conversion to or renewal of the Base Rate
Option otherwise available with respect to such Loans. If any Lender notifies
the Administrative Agent of a determination under Section 3.4.2 [Illegality;
Increased Costs; Deposits Not Available], the Borrower shall, subject to the
Borrower’s indemnification Obligations under Section 4.9 [Indemnity], as to any
Loan of the Lender to which a LIBOR Rate Option applies, on the date specified
in such notice either convert such Loan to the Base Rate Option otherwise
available with respect to such Loan or prepay such Loan in accordance with
Section 4.6 [Voluntary Prepayments]. Absent due notice from the Borrower of
conversion or prepayment, such Loan shall automatically be converted to the Base
Rate Option otherwise available with respect to such Loan upon such specified
date.
     3.5 Selection of Interest Rate Options. If the Borrower fails to select a
new Interest Period to apply to any Borrowing Tranche of Loans under the LIBOR
Rate Option at the expiration of an existing Interest Period applicable to such
Borrowing Tranche in accordance with the provisions of Section 3.2 [Interest
Periods], the Borrower shall be deemed to have converted such Borrowing Tranche
to the Revolving Credit Base Rate Option, commencing upon the last day of the
existing Interest Period.
4. PAYMENTS
     4.1 Payments. All payments and prepayments to be made in respect of
principal, interest, Commitment Fees, Letter of Credit Fees, Administrative
Agent’s Fee or other fees or amounts due from the Borrower hereunder shall be
payable prior to 12:00 noon on the date when due without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived by the
Borrower, and without set-off, counterclaim or other deduction of any nature.
Such payments shall be made to the Administrative Agent at the Principal Office
for the account of PNC Bank with respect to the Swing Loans and for the ratable
accounts of the Lenders with respect to the Loans in U.S. Dollars and in
immediately available funds, and the Administrative Agent shall promptly
distribute such amounts to the Lenders in immediately available funds; provided
that in the event payments are received by 12:00 noon by the Administrative
Agent with respect to the Loans and such payments are not distributed to the
Lenders on the same day received by the Administrative Agent, the Administrative
Agent shall

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pay the Lenders the Federal Funds Effective Rate with respect to the amount of
such payments for each day held by the Administrative Agent and not distributed
to the Lenders. The Administrative Agent’s and each Lender’s statement of
account, ledger or other relevant record shall, in the absence of manifest
error, be conclusive as the statement of the amount of principal of and interest
on the Loans and other amounts owing under this Agreement and shall be deemed an
“account stated.”
     4.2 Pro Rata Treatment of Lenders. Each borrowing shall be allocated to
each Lender according to its Ratable Share, and each selection of, conversion to
or renewal of any Interest Rate Option and each payment or prepayment by the
Borrower with respect to principal, interest, Commitment Fees, Letter of Credit
Fees, or other fees (except for the Administrative Agent’s Fee and the Issuing
Lender’s fronting fee) or amounts due from the Borrower hereunder to the Lenders
with respect to the Loans, shall (except as otherwise may be provided with
respect to a Defaulting Lender or a Delinquent Lender and except as provided in
Section 3.4.3 [Administrative Agent’s and Lender’s Rights] in the case of an
event specified in Section 3.4 [LIBOR Rate Unascertainable; Etc.], Section 4.6.2
[Replacement of a Lender] or Section 4.7 [Increased Costs]) be made in
proportion to the applicable Loans outstanding from each Lender and, if no such
Loans are then outstanding, in proportion to the Ratable Share of each Lender.
Notwithstanding any of the foregoing, each borrowing or payment or pre-payment
by the Borrower of principal, interest, fees or other amounts from the Borrower
with respect to Swing Loans shall be made by or to PNC Bank according to
Article 2 [Revolving Credit and Swing Loan Facilities].
     4.3 Sharing of Payments by Lenders. If any Lender shall, by exercising any
right of setoff, counterclaim or banker’s lien, by receipt of voluntary payment,
by realization upon security, or by any other non-pro rata source, obtain
payment in respect of any principal of or interest on any of its Loans or other
obligations hereunder resulting in such Lender receiving payment of a proportion
of the aggregate amount of its Loans and accrued interest thereon or other such
obligations greater than its Ratable Share thereof as provided herein, then the
Lender receiving such greater proportion shall (a) notify the Administrative
Agent of such fact, and (b) purchase (for cash at face value) participations in
the Loans and such other obligations of the other Lenders, or make such other
adjustments as shall be equitable, so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Loans and other amounts
owing them, provided that:
               (i) if any such participations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such
recovery, together with interest or other amounts, if any, required by Law
(including court order) to be paid by the Lender or the holder making such
purchase; and
               (ii) the provisions of this Section 4.3 [Sharing of Payments by
Lenders] shall not be construed to apply to (x) any payment made by the Borrower
pursuant to and in accordance with the express terms of the Loan Documents or
(y) any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Loans or Participation Advances to any
assignee or participant, other than to the Borrower or any

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Subsidiary of the Borrower (as to which the provisions of this Section 4.3
[Sharing of Payments by Lenders] shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of setoff and counterclaim with respect to such participation as
fully as if such Lender were a direct creditor of the Borrower in the amount of
such participation.
Notwithstanding anything to the contrary contained in this Agreement or any of
the other Loan Documents, any Lender that fails at any time to comply with the
provisions of this Section 4.3 [Sharing of Payments by Lenders] with respect to
purchasing participations from the other Lenders whereby such Lender’s share of
any payment received, whether by setoff or otherwise, is in excess of its
Ratable Share of such payments due and payable to all of the Lenders, when and
to the full extent required by the provisions of this Agreement, shall be deemed
delinquent (a “Delinquent Lender”) and shall be deemed to be a Delinquent Lender
until such time as each such delinquency and all of its obligations hereunder
are satisfied. A Delinquent Lender shall be deemed to have assigned any and all
payments due to it from the Borrower, whether on account of or relating to
outstanding Loans, Letters of Credit, interest, fees or otherwise, to the
remaining Non-Delinquent Lenders for application to, and reduction of, their
respective Ratable Shares of all outstanding Loans and other unpaid Obligations
of the Borrower. The Delinquent Lender hereby authorizes the Administrative
Agent to distribute such payments to the Non-Delinquent Lenders in proportion to
their respective Ratable Share of all outstanding Loans and other unpaid
Obligations of the Borrower. A Delinquent Lender shall be deemed to have
satisfied in full a delinquency when and if, as a result of application of the
assigned payments to all outstanding Loans and other unpaid Obligations of the
Borrower to the Non-Delinquent Lenders, the Lenders’ respective Ratable Share of
all outstanding Loans and unpaid Obligations have returned to those in effect
immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
     4.4 Presumptions by Administrative Agent. Unless the Administrative Agent
shall have received notice from the Borrower prior to the date on which any
payment is due to the Administrative Agent for the account of the Lenders or the
Issuing Lender hereunder that the Borrower will not make such payment, the
Administrative Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Lender, as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the Lenders or the Issuing Lender, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender or the Issuing Lender, with interest thereon, for each day from
and including the date such amount is distributed to it to but excluding the
date of payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
     4.5 Interest Payment Dates. Interest on Loans to which the Base Rate Option
applies shall be due and payable in arrears on each Payment Date. Interest on
Loans to which the LIBOR Rate Option applies shall be due and payable on the
last day of each Interest Period for

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those Loans and, if such Interest Period is longer than three (3) Months, also
on the 90th day of such Interest Period. Interest on the principal amount of
each Loan or other monetary Obligation shall be due and payable on demand after
such principal amount or other monetary Obligation becomes due and payable
(whether on the stated Expiration Date, upon acceleration or otherwise).
     4.6 Voluntary Prepayments.
          4.6.1 Right to Prepay. The Borrower shall have the right at its option
from time to time to prepay the Loans in whole or part without premium or
penalty (except as provided in Section 4.6.2 [Replacement of a Lender] below, or
in Section 4.7 [Increased Costs]):
               (i) at any time with respect to any Loan to which the Base Rate
Option applies,
               (ii) on the last day of the applicable Interest Period with
respect to Loans to which a LIBOR Rate Option applies or any other day subject
to compliance with the provisions of Section 4.9 [Indemnity], or
               (iii) on the date specified in a notice by any Lender pursuant to
Section 3.4 [LIBOR Rate Unascertainable, Etc.] with respect to any Loan to which
a LIBOR Rate Option applies.
               Whenever the Borrower desires to prepay any part of the Loans, it
shall provide a prepayment notice to the Administrative Agent by (a) 1:00 p.m.
at least one (1) Business Day prior to the date of prepayment of the Revolving
Credit Loans and (b) 11:00 a.m. on the date of prepayment of Swing Loans,
setting forth the following information:
                    (x) the date, which shall be a Business Day, on which the
proposed prepayment is to be made;
                    (y) a statement indicating the application of the prepayment
between the Revolving Credit Loans and Swing Loans; and
                    (z) the total principal amount of such prepayment, which
shall not be less than the lesser of (i) the Facility Usage or (ii) One Hundred
Thousand and 00/100 Dollars ($100,000.00) for any Swing Loan or Two Million and
00/100 Dollars ($2,000,000.00) for any Revolving Credit Loan.
               All prepayment notices shall be irrevocable. The principal amount
of the Loans for which a prepayment notice is given, together with interest on
such principal amount except with respect to Loans to which the Base Rate Option
applies, shall be due and payable on the date specified in such prepayment
notice as the date on which the proposed prepayment is to be made. Except as
provided in Section 3.4.3 [Administrative Agent’s and Lender’s Rights], if the
Borrower prepays a Loan but fails to specify the applicable Borrowing Tranche
which the Borrower is prepaying, the prepayment shall be applied (i) first to
Swing Loans then to Revolving Credit Loans; and (ii) after giving effect to the
allocations in clause (i) above and in the preceding sentence, first to Loans to
which the Base Rate Option applies, then to Loans to

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which the LIBOR Rate Option applies. Any prepayment hereunder shall be subject
to the Borrower’s Obligation to indemnify the Lenders under Section 4.9
[Indemnity].
          4.6.2 Replacement of a Lender. In the event any Lender (i) gives
notice under Section 3.4 [LIBOR Rate Unascertainable; Etc.], (ii) requests
compensation under Section 4.7 [Increased Costs], or requires the Borrower to
pay any additional amount to any Lender or any Official Body for the account of
any Lender pursuant to Section 4.8 [Taxes], (iii) is a Defaulting Lender, (iv)
becomes subject to the control of an Official Body (other than normal and
customary supervision), or (v) is a Non-Consenting Lender referred to in
Section 10.1 [Modifications, Amendments or Waivers], then in any such event the
Borrower may, at its sole expense, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 10.8 [Successors and Assigns]), all of its
interests, rights and obligations under this Agreement and the related Loan
Documents to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment), provided that:
               (i) the Borrower shall have paid to the Administrative Agent the
assignment fee specified in Section 10.8 [Successors and Assigns];
               (ii) such Lender shall have received payment of an amount equal
to the outstanding principal of its Loans and Participation Advances, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder and
under the other Loan Documents (including any amounts under Section 4.9
[Indemnity]) from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts);
               (iii) in the case of any such assignment resulting from a claim
for compensation under Section 4.7.1 [Increased Costs Generally] or payments
required to be made pursuant to Section 4.8 [Taxes], such assignment will result
in a reduction in such compensation or payments thereafter; and
               (iv) such assignment does not conflict with applicable Law.
A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
     4.7 Increased Costs.
          4.7.1 Increased Costs Generally. If any Change in Law shall:
               (i) impose, modify or deem applicable any reserve, special
deposit, compulsory loan, insurance charge or similar requirement against assets
of, deposits with or for the account of, or credit extended or participated in
by, any Lender (except any reserve requirement reflected in the LIBOR Rate) or
the Issuing Lender;

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               (ii) subject any Lender or the Issuing Lender to any tax of any
kind whatsoever with respect to this Agreement, any Letter of Credit, any
participation in a Letter of Credit or any Loan under the LIBOR Rate Option made
by it, or change the basis of taxation of payments to such Lender or the Issuing
Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered
by Section 4.8 [Taxes] and the imposition of, or any change in the rate of, any
Excluded Tax payable by such Lender or the Issuing Lender); or
               (iii) impose on any Lender, the Issuing Lender or the London
interbank market any other condition, cost or expense affecting this Agreement
or Loan under the LIBOR Rate Option made by such Lender or any Letter of Credit
or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Loan under the LIBOR Rate Option (or of
maintaining its obligation to make any such Loan), or to increase the cost to
such Lender or the Issuing Lender of participating in, issuing or maintaining
any Letter of Credit (or of maintaining its obligation to participate in or to
issue any Letter of Credit), or to reduce the amount of any sum received or
receivable by such Lender or the Issuing Lender hereunder (whether of principal,
interest or any other amount) then, upon request of such Lender or the Issuing
Lender, the Borrower will pay to such Lender or the Issuing Lender, as the case
may be, such additional amount or amounts as will compensate such Lender or the
Issuing Lender, as the case may be, for such additional costs incurred or
reduction suffered.
The obligations of the Borrower pursuant to this Section 4.7.1 [Increased Costs
Generally] are subject to the following: no Lender shall enforce the provisions
solely against the Borrower or against a few of such Lender’s customers without
in each case generally enforcing these (or similar provisions in other
contracts) with respect to similarly situated borrowers (provided that, anything
herein to the contrary notwithstanding, no Lender shall be required to disclose
to the Borrower the identity of, or the nature of such Lender’s relationship
with, any other of such Lender’s customers).
          4.7.2 Capital Requirements. If any Lender or the Issuing Lender
determines that any Change in Law affecting such Lender or the Issuing Lender or
any lending office of such Lender or such Lender’s or the Issuing Lender’s
holding company, if any, regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender’s or the Issuing Lender’s
capital or on the capital of such Lender’s or the Issuing Lender’s holding
company, if any, as a consequence of this Agreement, the Commitments of such
Lender or the Loans made by, or participations in Letters of Credit held by,
such Lender, or the Letters of Credit issued by the Issuing Lender, to a level
below that which such Lender or the Issuing Lender or such Lender’s or the
Issuing Lender’s holding company could have achieved but for such Change in Law
(taking into consideration such Lender’s or the Issuing Lender’s policies and
the policies of such Lender’s or the Issuing Lender’s holding company with
respect to capital adequacy), then from time to time the Borrower will pay to
such Lender or the Issuing Lender, as the case may be, such additional amount or
amounts as will compensate such Lender or the Issuing Lender or such Lender’s or
the Issuing Lender’s holding company for any such reduction suffered.
The obligations of the Borrower pursuant to this Section 4.7.2 [Capital
Requirements] are subject to the following: no Lender shall enforce these
provisions solely against the Borrower or against

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a few of such Lender’s customers without in each case generally enforcing these
(or similar provisions in other contracts) with respect to similarly situated
borrowers (provided that, anything herein to the contrary notwithstanding, no
Lender shall be required to disclose to the Borrower the identity of, or the
nature of such Lender’s relationship with, any other of such Lender’s
customers).
          4.7.3 Certificates for Reimbursement; Repayment of Outstanding Loans;
Borrowing of New Loans. A certificate of a Lender or the Issuing Lender setting
forth the amount or amounts necessary to compensate such Lender or the Issuing
Lender or its holding company, as the case may be, as specified in
Sections 4.7.1 [Increased Costs Generally] or 4.7.2 [Capital Requirements]
(including the calculation thereof in reasonable detail) delivered to the
Borrower shall be conclusive absent manifest error. The Borrower shall pay such
Lender or the Issuing Lender, as the case may be, the amount shown as due on any
such certificate within ten (10) Business Days after receipt thereof.
          4.7.4 Delay in Requests. Failure or delay on the part of any Lender or
the Issuing Lender to demand compensation pursuant to this Section 4.7.4 [Delay
in Requests] shall not constitute a waiver of such Lender’s or the Issuing
Lender’s right to demand such compensation, provided that the Borrower shall not
be required to compensate a Lender or the Issuing Lender pursuant to this
Section 4.7.4 [Delay in Requests] for any increased costs incurred or reductions
suffered more than six (6) months prior to the date that such Lender or the
Issuing Lender, as the case may be, notifies the Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender’s or the
Issuing Lender’s intention to claim compensation therefor (except that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the six (6) month period referred to above shall be extended to include the
period of retroactive effect thereof).
     4.8 Taxes.
          4.8.1 Payments Free of Taxes. Any and all payments by or on account of
any obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without reduction or withholding for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required by applicable Law to deduct any Indemnified Taxes (including any Other
Taxes) from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent, Lender or Issuing Lender, as the case may be, receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall timely pay the
full amount deducted to the relevant Official Body in accordance with applicable
Law.
          4.8.2 Payment of Other Taxes by the Borrower. Without limiting the
provisions of Section 4.8.1 [Payments Free of Taxes] above, the Borrower shall
timely pay any Other Taxes to the relevant Official Body in accordance with
applicable Law.

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          4.8.3 Indemnification by the Borrower. The Borrower shall indemnify
the Administrative Agent, each Lender and the Issuing Lender, within ten
(10) days after demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section 4.8 [Taxes]) paid by the
Administrative Agent, such Lender or the Issuing Lender, as the case may be, and
any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Official Body. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or the Issuing Lender (with a copy to the Administrative
Agent), or by the Administrative Agent on its own behalf or on behalf of a
Lender or the Issuing Lender, shall be conclusive absent manifest error.
          4.8.4 Evidence of Payments. As soon as practicable after any payment
of Indemnified Taxes or Other Taxes by the Borrower to a Official Body, the
Borrower shall deliver to the Administrative Agent the original or a certified
copy of a receipt issued by such Official Body evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
          4.8.5 Status of Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the Law of the jurisdiction
in which the Borrower is resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any other
Loan Document shall deliver to the Borrower (with a duplicate original to the
Administrative Agent), at the time or times prescribed by applicable Law or
reasonably requested by the Borrower or the Administrative Agent, such properly
completed and executed documentation prescribed by applicable Law as will permit
such payments to be made without withholding or at a reduced rate of
withholding. Notwithstanding the submission of a such documentation claiming a
reduced rate of or exemption from U.S. withholding tax, the Administrative Agent
shall be entitled to withhold United States federal income taxes at the full
thirty percent (30%) withholding rate if in its reasonable judgment it is
required to do so under the due diligence requirements imposed upon a
withholding agent under § 1.1441-7(b) of the United States Income Tax
Regulations. Further, the Administrative Agent is indemnified under § 1.1461-1
(e) of the United States Income Tax Regulations against any claims and demands
of any Lender or assignee or participant of a Lender for the amount of any tax
it deducts and withholds in accordance with regulations under § 1441 of the
Internal Revenue Code. In addition, any Lender, if requested by the Borrower or
the Administrative Agent, shall deliver such other original documentation
prescribed by applicable Law or reasonably requested by the Borrower or the
Administrative Agent as will enable the Borrower or the Administrative Agent to
determine whether or not such Lender is subject to backup withholding or
information reporting requirements.
               Without limiting the generality of the foregoing, in the event
that the Borrower is resident for tax purposes in the United States of America,
any Foreign Lender shall deliver to the Borrower and the Administrative Agent
(in such number of originals as shall be requested by the recipient) on or prior
to the date on which such Foreign Lender becomes a Lender under this Agreement
(and from time to time thereafter upon the request of the Borrower or the
Administrative Agent, but only if such Foreign Lender is legally entitled to do
so), whichever of the following is applicable:

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               (i) duly completed originals of IRS Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States of
America is a party,
               (ii) duly completed originals of IRS Form W-8ECI,
               (iii) in the case of a Foreign Lender claiming the benefits of
the exemption for portfolio interest under section 881(c) of the Code, (x) an
original certificate to the effect that such Foreign Lender is not (A) a “bank”
within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent
shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the
Code, or (C) a “controlled foreign corporation” described in section
881(c)(3)(C) of the Code and (y) duly completed originals of IRS Form W-8BEN, or
               (iv) any other original form prescribed by applicable Law as a
basis for claiming exemption from or a reduction in United States Federal
withholding tax duly completed together with such supplementary documentation as
may be prescribed by applicable Law to permit the Borrower to determine the
withholding or deduction required to be made. To the extent that any Lender is
not a Foreign Lender, such Lender shall submit to the Administrative Agent two
(2) originals of a W-9 or any other form prescribed by applicable Law
demonstrating that such Lender is not a Foreign Lender.
          4.8.6 Treatment of Certain Refunds. If the Administrative Agent, a
Lender or the Issuing Lender determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section, it shall pay to the Borrower an
amount equal to such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrower under this Section with respect to
the Taxes or Other Taxes giving rise to such refund); net of all out-of-pocket
expenses of the Administrative Agent, such Lender or the Issuing Lender, as the
case may be, and without interest (other than any interest paid by the relevant
Official Body with respect to such refund), provided that the Borrower, upon the
request of the Administrative Agent, such Lender or the Issuing Lender, agrees
to repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Official Body) to the Administrative
Agent, such Lender or the Issuing Lender in the event the Administrative Agent,
such Lender or the Issuing Lender is required to repay such refund to such
Official Body. This Section shall not be construed to require the Administrative
Agent, any Lender or the Issuing Lender to make available its tax returns (or
any other information relating to its taxes that it deems confidential) to the
Borrower or any other Person.
     4.9 Indemnity. In addition to the compensation or payments required by
Section 4.7 [Increased Costs] or Section 4.8 [Taxes], the Borrower shall
indemnify each Lender against all liabilities, losses or expenses (including
loss of margin, any loss or expense incurred in liquidating or employing
deposits from third parties and any loss or expense incurred in connection with
funds acquired by a Lender to fund or maintain Loans subject to a LIBOR Rate
Option) which such Lender sustains or incurs as a consequence of any
               (i) payment, prepayment, conversion or renewal of any Loan to
which a LIBOR Rate Option applies on a day other than the last day of the
corresponding Interest

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Period (whether or not such payment or prepayment is mandatory, voluntary or
automatic and whether or not such payment or prepayment is then due),
               (ii) attempt by the Borrower to revoke (expressly, by later
inconsistent notices or otherwise) in whole or part any Loan Requests under
Section 2.4 [Revolving Credit Loan Requests; Swing Loan Requests] or Section 3.2
[Interest Periods] or notice relating to prepayments under Section 4.6
[Voluntary Prepayments], or
               (iii) default by the Borrower in the performance or observance of
any covenant or condition contained in this Agreement or any other Loan
Document, including any failure of the Borrower to pay when due (by acceleration
or otherwise) any principal, interest, Commitment Fee or any other amount due
hereunder.
          If any Lender sustains or incurs any such loss or expense, it shall
from time to time notify the Borrower of the amount determined in good faith by
such Lender (which determination may include such assumptions, allocations of
costs and expenses and averaging or attribution methods as such Lender shall
deem reasonable) to be necessary to indemnify such Lender for such loss or
expense. Such notice shall set forth in reasonable detail the basis for such
determination. Such amount shall be due and payable by the Borrower to such
Lender ten (10) Business Days after such notice is given.
     4.10 Settlement Date Procedures. In order to minimize the transfer of funds
between the Lenders and the Administrative Agent, the Borrower may borrow, repay
and reborrow Swing Loans and PNC Bank may make Swing Loans as provided in
Section 2.1.2 [Swing Loans] hereof during the period between Settlement Dates.
Not later than 10:00 a.m. on each Settlement Date, the Administrative Agent
shall notify each Lender of its Ratable Share of the total of the Revolving
Credit Loans (each, a “Required Share”). Prior to 2:00 p.m. on such Settlement
Date, each Lender shall pay to the Administrative Agent the amount equal to the
difference between its Required Share and its Revolving Credit Loans, and the
Administrative Agent shall pay to each Lender its Ratable Share of all payments
made by the Borrower to the Administrative Agent with respect to the Revolving
Credit Loans. The Administrative Agent shall also effect settlement in
accordance with the foregoing sentence on the proposed Borrowing Dates for
Revolving Credit Loans and may at its option effect settlement on any other
Business Day. These settlement procedures are established solely as a matter of
administrative convenience, and nothing contained in this Section 4.10
[Settlement Date Procedures] shall relieve the Lenders of their obligations to
fund Revolving Credit Loans on dates other than a Settlement Date pursuant to
Section 2.1.1 [Revolving Credit Loans]. The Administrative Agent may at any time
at its option for any reason whatsoever require each Lender to pay immediately
to the Administrative Agent such Lender’s Ratable Share of the outstanding
Revolving Credit Loans and each Lender may at any time require the
Administrative Agent to pay immediately to such Lender its Ratable Share of all
payments made by the Borrower to the Administrative Agent with respect to the
Revolving Credit Loans.
5. REPRESENTATIONS AND WARRANTIES
     5.1 Representations and Warranties. The Borrower represents and warrants to
the Administrative Agent and each of the Lenders as follows:

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          5.1.1 Organization and Qualification; Power and Authority; Compliance
With Laws; Title to Properties; Event of Default, (i) The Borrower is a
reciprocal insurance exchange duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, (ii) the
Attorney-in-Fact is a corporation, limited partnership or limited liability
company duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization, (iii) the Borrower has the lawful power to own
or lease its properties and to engage in the business it presently conducts or
proposes to conduct, (iv) the Borrower is duly licensed or qualified and in good
standing as of the Closing Date in each jurisdiction listed on Schedule 5.1.1
and in all other jurisdictions where the property owned or leased by it or the
nature of the business transacted by it or both makes such licensing or
qualification necessary, (v) each of the Borrower and the Attorney-in-Fact has
full power to enter into, execute, deliver and carry out this Agreement and the
other Loan Documents to which it is a party, (vi) the Borrower has full power to
incur the Indebtedness contemplated by the Loan Documents and to perform its
Obligations under the Loan Documents to which it is a party, and all such
actions have been duly authorized by all necessary proceedings on its part or
the part of the Attorney-in- Fact, (vii) the Borrower is in compliance in all
material respects with all applicable Laws (other than Environmental Laws which
are specifically addressed in Section 5.1.14 [Environmental Matters]) in all
jurisdictions in which the Borrower and any Subsidiary of the Borrower is
presently or will be doing business except where the failure to do so would not
constitute a Material Adverse Change, and (viii) the Borrower has good and
marketable title to or valid leasehold interest in all properties, assets and
other rights which it purports to own or lease or which are reflected as owned
or leased on its books and records, free and clear of all Liens and encumbrances
except Permitted Liens. No Event of Default or Potential Default exists or is
continuing.
          5.1.2 Subsidiaries and Owners; Investment Companies. Schedule 5.1.2
states (i) the name of each of the Borrower’s Subsidiaries (if any), its
jurisdiction of organization and the amount, percentage and type of equity
interests in such Subsidiary (the “Subsidiary Equity Interests”), and (ii) any
options, warrants or other rights outstanding to purchase any such equity
interests referred to in clause (i) (collectively, the “Equity Interests”). The
Borrower and each Subsidiary of the Borrower has good and marketable title to
all of the Subsidiary Equity Interests it purports to own, free and clear in
each case of any Lien and all such Subsidiary Equity Interests have been validly
issued, fully paid and nonassessable. Neither the Borrower nor any of its
Subsidiaries is an “investment company” registered or required to be registered
under the Investment Company Act of 1940 or under the “control” of an
“investment company” as such terms are defined in the Investment Company Act of
1940 and shall not become such an “investment company” or under such “control”.
          5.1.3 Validity and Binding Effect. This Agreement and each of the
other Loan Documents (i) has been duly and validly executed and delivered by the
Attorney-in-Fact, and (ii) constitutes, or will constitute, legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with its terms.
          5.1.4 No Conflict; Material Agreements; Consents. Neither the
execution and delivery of this Agreement or the other Loan Documents by the
Borrower or the Attorney-in- Fact, nor the consummation of the transactions
herein or therein contemplated or compliance with the terms and provisions
hereof or thereof by any of them will conflict with, constitute a

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default under or result in any breach of (i) the terms and conditions of the
certificate of incorporation, bylaws, certificate of limited partnership,
partnership agreement, certificate of formation, limited liability company
agreement, certificate of authority to transact insurance, Subscriber’s
Agreements or other organizational documents of the Borrower or the
Attorney-in-Fact or (ii) any Law or any material agreement or instrument or
order, writ, judgment, injunction or decree to which the Borrower or the
Attorney-in-Fact or any of their respective Subsidiaries is a party or by which
the Borrower or the Attorney-in-Fact or any of their respective Subsidiaries is
bound or to which the Borrower or the Attorney-in-Fact is subject, or result in
the creation or enforcement of any Lien, charge or encumbrance whatsoever upon
any property (now or hereafter acquired) of the Borrower or the Attorney-in-Fact
or any of their respective Subsidiaries (other than Liens granted under the Loan
Documents). There is no default under such material agreement of the Borrower
(referred to above) and neither the Borrower nor any of its Subsidiaries is
bound by any contractual obligation, or subject to any restriction in any
organization document, or any requirement of Law which could reasonably be
expected to result in a Material Adverse Change. No consent, approval,
exemption, order or authorization of, or a registration or filing with, any
Applicable Insurance Regulatory Authority or any other Official Body or any
other Person is required by any Law or any agreement in connection with the
execution, delivery and carrying out of this Agreement and the other Loan
Documents.
          5.1.5 Litigation. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of the Borrower, threatened against
the Borrower or any Subsidiary of the Borrower at law or in equity before any
Official Body which individually or in the aggregate could reasonably be
expected to result in any Material Adverse Change. Neither the Borrower nor any
Subsidiaries of the Borrower is in violation of any order, writ, injunction or
any decree of any Official Body which could reasonably be expected to result in
any Material Adverse Change.
          5.1.6 Financial Statements.
               (i) The Borrower has delivered to the Administrative Agent copies
of its Annual Statement for and as of the end of the fiscal year ended
December 31, 2008 (including, without limitation, the provisions made therein
for Investments and the valuation thereof, reserves, policy and contract claims
and statutory liabilities) as filed with the Applicable Insurance Regulatory
Authority. In addition, the Borrower has delivered to the Administrative Agent
copies of its Interim Statements for the fiscal year to date and as of the end
of the fiscal quarter ended June 30, 2009 as filed with the Applicable Insurance
Regulatory Authority (all such Annual Statements and Interim Statements being
collectively referred to as the “Statements”). The Statements were compiled from
the books and records maintained by the Borrower’s management, are correct and
complete as required by SAP and fairly represent the consolidated financial
condition of the Borrower and its Subsidiaries as of the respective dates
thereof and the results of operations for the fiscal periods then ended and have
been prepared in accordance with SAP, consistently applied, subject (in the case
of the Interim Statements) to normal year-end audit adjustments.
               (ii) Neither the Borrower nor any Subsidiary of the Borrower has
any liabilities, contingent or otherwise, or forward or long-term commitments
that are not disclosed in the Statements or in the notes thereto, and except as
disclosed therein there are no unrealized

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or anticipated losses from any commitments of the Borrower or any Subsidiary of
the Borrower which could reasonably be expected to cause a Material Adverse
Change. Since December 31, 2008, no Material Adverse Change has occurred.
               (iii) The Investments of the Borrower reflected in the Statements
comply in all material respects with all applicable requirements of the
Pennsylvania Department of Insurance as well as those of any other Applicable
Insurance Regulatory Authority relating to Investments in respect of which the
Borrower may invest its funds.
               (iv) The provisions made by the Borrower in the Statements for
reserves, policy and contract claims and statutory liabilities are in compliance
in all material respects with the requirements of the Applicable Insurance
Regulatory Authority, and have been computed in accordance with SAP.
               (v) The marketable securities and short term Investments
reflected in the Statements are valued at cost, amortized cost or market value,
as required by applicable Law.
          5.1.7 Margin Stock. Neither the Borrower nor any Subsidiaries of the
Borrower engages or intends to engage principally, or as one of its important
activities, in the business of extending credit for the purpose, immediately,
incidentally or ultimately, of purchasing or carrying margin stock (within the
meaning of Regulation U, T or X as promulgated by the Board of Governors of the
Federal Reserve System). No part of the proceeds of any Loan has been or will be
used, immediately, incidentally or ultimately, to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock or which is inconsistent with the provisions of the regulations
of the Board of Governors of the Federal Reserve System. Neither the Borrower
nor any Subsidiary of the Borrower holds or intends to hold margin stock in such
amounts that more than thirty-five percent (35%) of the reasonable value of the
assets of the Borrower or any Subsidiary of the Borrower are or will be
represented by margin stock.
          5.1.8 Full Disclosure. Neither this Agreement nor any other Loan
Document, nor any certificate, statement, agreement or other documents when
furnished to the Administrative Agent or any Lender in connection herewith or
therewith, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein, in light of the circumstances under which they were made and taken as a
whole, not misleading. There is no fact known to the Borrower which materially
adversely affects the business, property, assets, financial condition, results
of operations or prospects of the Borrower or any Subsidiary of the Borrower
which has not been set forth in this Agreement or in the certificates,
statements, agreements or other documents furnished in writing to the
Administrative Agent and the Lenders prior to or at the date hereof in
connection with the transactions contemplated hereby.
          5.1.9 Taxes. All federal, state premium, material local and other
material tax returns required to have been filed with respect to the Borrower
and each Subsidiary of the Borrower have been filed, and payment or adequate
provision has been made for the payment of all taxes, fees, assessments and
other governmental charges which have or may become due pursuant to said returns
or to assessments received, except to the extent that such taxes, fees,

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assessments and other charges are being contested in good faith by appropriate
proceedings diligently conducted and for which such reserves or other
appropriate provisions, if any, as shall be required by SAP, shall have been
made.
          5.1.10 Patents, Trademarks, Copyrights, Licenses, Etc. The Borrower
and each Subsidiary of the Borrower owns or possesses all the material patents,
trademarks, service marks, trade names, copyrights, licenses, registrations,
franchises, permits and rights necessary to own and operate its properties and
to carry on its business as presently conducted and planned to be conducted by
the Borrower or Subsidiary, without known possible, alleged or actual conflict
with the rights of others which could reasonably be expected to result in a
Material Adverse Change.
          5.1.11 Liens in the Collateral. The Liens in the Collateral granted to
the Administrative Agent for the benefit of the Lenders pursuant to the Pledge
Agreement constitute and will continue to constitute first priority perfected
Liens. All filing fees and other expenses in connection with the perfection of
such Liens have been or will be paid by the Borrower.
          5.1.12 Insurance. The properties of the Borrower and each of its
Subsidiaries are insured pursuant to policies and other bonds which are valid
and in full force and effect and which provide adequate coverage from reputable
and financially sound insurers, including self-insurance to the extent
customary.
          5.1.13 ERISA Compliance.
               (i) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state Laws. Each
Plan that is intended to qualify under Section 401 (a) of the Code has received
a favorable determination letter from the IRS or an application for such a
letter is currently being processed by the IRS with respect thereto and, to the
best knowledge of Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. Borrower and each ERISA Affiliate have made all
required contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
               (ii) No ERISA Event has occurred or is reasonably expected to
occur; (a) no qualified pension plan has any unfunded pension liability (i.e.
excess of benefit liabilities over the current value of that Pension Plan’s
assets, determined in accordance with the assumptions used for funding the
Pension Plan for the applicable plan year); (b) no Borrower nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than premiums due and
not delinquent under Section 4007 of ERISA); (c) no Borrower nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Sections 4201 or 4243 of ERISA with
respect to a Multiemployer Plan; and (d) no Borrower nor any ERISA Affiliate has
engaged in a transaction that could be subject to Sections 4069 or 4212(c) of
ERISA.

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          5.1.14 Environmental Matters. The Borrower is and, to the knowledge of
the Borrower and each of its Subsidiaries is and has been in compliance with
applicable Environmental Laws except as disclosed on Schedule 5.1.14; provided
that such matters so disclosed could not reasonably be expected in the aggregate
to result in a Material Adverse Change.
          5.1.15 Solvency. The Borrower is Solvent. After giving effect to the
transactions contemplated by this Agreement and the other Loan Documents,
including all Indebtedness incurred thereby, the Liens granted by the Borrower
in connection therewith and the payment of all fees related thereto, the
Borrower will be Solvent.
          5.1.16 Insurance Licenses. (a) The Borrower has all Insurance Licenses
necessary to conduct its business, (b) no Insurance License of the Borrower is
the subject of a proceeding for suspension or revocation or any similar
proceedings, (c) there is no sustainable basis for such a suspension or
revocation, and (d) no such suspension or revocation is threatened by any
Applicable Insurance Regulatory Authority.
     5.2 Updates to Schedules. Should any of the information or disclosures on
any of the following Schedules attached hereto be outdated or incorrect in any
material respect as of the date on which Borrower delivers its Compliance
Certificate for each fiscal quarter end pursuant to Section 7.3.3 [Certificate
of the Borrower], Borrower shall deliver an amended and restated form of such
Schedule together with such Compliance Certificate:

      Schedule 5.1.1   — Qualifications to do Business
Schedule 5.1.2   — Subsidiaries
Schedule 5.1.14 — Environmental Matters

provided, however, that Schedule 5.1.14 shall not be deemed to have been
amended, modified or superseded by any such correction or update, nor shall any
breach of warranty or representation resulting from the inaccuracy or
incompleteness of Schedule 5.1.14 be deemed to have been cured thereby, unless
and until the Required Lenders, in their sole and absolute discretion, shall
accept in writing such revisions or updates to Schedule 5.1.14.
     6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
     The obligation of each Lender to make Loans and of the Issuing Lender to
issue Letters of Credit hereunder is subject to the performance by the Borrower
of its Obligations to be performed hereunder at or prior to the making of any
such Loans or issuance of such Letters of Credit and to the satisfaction of the
following further conditions:
     6.1 First Loans and Letters of Credit.
          6.1.1 Deliveries. On the Closing Date, the Administrative Agent shall
have received each of the following in form and substance satisfactory to the
Administrative Agent:
               (i) A certificate of the Borrower signed by an Authorized
Officer, dated the Closing Date stating that the Borrower is in compliance with
its representations, warranties, covenants and conditions hereunder and no Event
of Default or

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Potential Default exists and no Material Adverse Change has occurred since the
date of the last Annual Statement of the Borrower delivered to the
Administrative Agent.
               (ii) A certificate dated the Closing Date and signed by an
Authorized Officer, certifying as to: (a) all action taken by the
Attorney-in-Fact in connection with this Agreement and the other Loan Documents;
(b) the names of the Authorized Officers authorized to sign the Loan Documents
and their true signatures; (c) copies of the organizational documents of the
Borrower and the Attorney-in-Fact as in effect on the Closing Date certified by
the appropriate state official where such documents are filed in a state office
including, in the case of the Borrower, a copy of the Subscriber’s Agreements;
(d) the exact legal name of the Borrower; and (e) the tax identification number
of the Borrower.
               (iii) A good standing certificate for the Attorney-in-Fact dated
not more than sixty (60) days prior to the Closing Date, issued by the Secretary
of State or other appropriate official of the Attorney-in-Fact’s jurisdiction of
formation and a Certificate of Authority to Transact Insurance of the Borrower
from the Commonwealth of Pennsylvania Department of Insurance.
               (iv) This Agreement and each of the other Loan Documents signed
by an Authorized Officer and all appropriate Statements.
               (v) A duly completed Valuation Statement calculated as of the
Closing Date.
               (vi) A written opinion of counsel for the Borrower and the
Attorney-in-Fact, dated the Closing Date.
               (vii) A duly completed Compliance Certificate as of the last day
of the fiscal quarter of the Borrower most recently ended prior to the Closing
Date, signed by an Authorized Officer.
               (viii) Evidence that (a) no litigation, investigation or
proceeding before or by any arbitrator or any Applicable Insurance Regulatory
Authority or other Official Body shall be continuing or threatened against the
Borrower or the Attorney-in-Fact or against the officers or directors of the
Borrower or the Attorney-in-Fact (1) in connection with this Agreement, the
other Loan Documents or any of the transactions contemplated hereby or thereby
and which, in the reasonable opinion of the Administrative Agent, is deemed
material or (2) which could, in the reasonable opinion of the Administrative
Agent, result in a Material Adverse Change; and (b) no injunction, writ,
restraining order or other order of any nature materially adverse to the
Borrower or the Attorney-in-Fact or the conduct of its business shall have been
issued by any Official Body.
               (ix) All material consents required to effectuate the
transactions contemplated hereby.
               (x) Evidence that the Amended, Restated and Consolidated Loan
Agreement dated January 30, 2008 among Borrower and PNC Bank and the other
documents executed in connection therewith (together with all amendments,
restatements,

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modifications and supplements thereto) have been terminated, and all outstanding
obligations thereunder have been paid and all Liens securing such obligations
have been released.
               (xi) (a) UCC Lien Searches with respect to the Borrower (at the
state level only) in the Commonwealth of Pennsylvania and (b) judgment and tax
lien searches with respect to the Borrower (at the state and county level) in
Erie County, Pennsylvania and the Commonwealth of Pennsylvania with acceptable
results.
               (xii) Fully executed copies of the UCC-3 amendments and any other
releases that may be necessary to satisfy any and all existing Liens on the
assets of the Borrower that are not permitted hereunder (including payoff
letters, if applicable).
               (xiii) Evidence that the Borrower has received all Insurance
Licenses and all other authorizations, licenses and permits necessary for the
operation of the Borrower’s business.
               (xiv) Such other documents in connection with such transactions
as the Administrative Agent or said counsel may reasonably request.
          6.1.2 Payment of Fees. The Borrower shall have paid all fees payable
on or before the Closing Date.
     6.2 Each Loan or Letter of Credit. At the time of making any Loans or
issuing any Letters of Credit and after giving effect to the proposed extensions
of credit: the representations, warranties and covenants of the Borrower shall
then be true in all respects (in the case of any representation, warranty or
covenant containing a materiality modification) or in all material respects (in
the case of any representation, warranty or covenant not containing a
materiality modification) and no Event of Default or Potential Default shall
have occurred and be continuing; the making of the Loans or issuance of such
Letter of Credit shall not contravene any Law applicable to the Borrower or any
Subsidiary of the Borrower or any of the Lenders; and the Borrower shall have
delivered to the Administrative Agent a duly executed and completed Loan Request
or to the Issuing Lender an application for a Letter of Credit, as the case may
be.
7. COVENANTS
     The Borrower covenants and agrees that until Payment in Full, the Borrower
shall comply at all times with the following covenants:
     7.1 Affirmative Covenants.
          7.1.1 Preservation of Existence, Etc. The Borrower shall maintain its
legal existence as a reciprocal insurance exchange domiciled in the Commonwealth
of Pennsylvania. The Attorney-in-Fact shall maintain its legal existence as a
corporation, limited partnership or limited liability company, as applicable in
its state or organization. Each of the Borrower and the Attorney-in-Fact shall
maintain its respective Insurance Licenses and its license or qualification and
good standing in the Commonwealth of Pennsylvania, and the Borrower shall
maintain its Insurance Licenses and its license or qualification and good
standing in each other jurisdiction in which its ownership or lease of property
or the nature of its business makes such license or

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qualification necessary and shall cause each of its Subsidiaries to maintain its
legal existence as a corporation, limited partnership or limited liability
company and its license or qualification and good standing in each jurisdiction
in which its ownership or lease of property or the nature of its business makes
such license or qualification necessary, except as otherwise expressly permitted
in Section 7.2.6 [Liquidations, Mergers, Etc.].
          7.1.2 Payment of Liabilities, Including Taxes, Etc. The Borrower
shall, and shall cause each of its Subsidiaries to, duly pay and discharge all
liabilities to which it is subject or which are asserted against it, promptly as
and when the same shall become due and payable, including all taxes, assessments
and governmental charges upon it or any of its properties, assets, income or
profits, prior to the date on which penalties attach thereto, except to the
extent that such liabilities, including taxes, assessments or charges, are being
contested in good faith and by appropriate and lawful proceedings diligently
conducted and for which such reserve or other appropriate provisions, if any, as
shall be required by SAP, shall have been made.
          7.1.3 Maintenance of Insurance. The Borrower shall, and shall cause
each of its Subsidiaries to, insure its properties and assets against loss or
damage by fire and such other insurable hazards as such assets are commonly
insured in such amounts as similar properties and assets are insured by prudent
companies in similar circumstances carrying on similar businesses, and with
reputable and financially sound insurers, including self-insurance to the extent
customary.
          7.1.4 Maintenance of Properties and Leases. The Borrower shall, and
shall cause each of its Subsidiaries to, maintain in good repair, working order
and condition (ordinary wear and tear excepted) in accordance with the general
practice of other businesses of similar character and size, all of those
properties useful or necessary to its business, and from time to time, the
Borrower will make or cause to be made all appropriate repairs, renewals or
replacements thereof.
          7.1.5 Visitation Rights. The Borrower shall, and shall cause each of
its Subsidiaries to, permit any of the officers or authorized employees or
representatives of the Administrative Agent or any of the Lenders to visit and
inspect any of its properties and to examine and make excerpts from its books
and records and discuss its business affairs, finances and accounts with its
officers, all in such detail and at such times and as often as any of the
Lenders may reasonably request, provided that so long as no Event of Default has
occurred and is continuing, each Lender shall provide the Borrower and the
Administrative Agent with reasonable notice prior to any visit or inspection.
          7.1.6 Keeping of Records and Books of Account. The Borrower shall, and
shall cause each Subsidiary of the Borrower to, maintain and keep proper books
of record and account which enable the Borrower and its Subsidiaries to issue
financial statements in accordance with SAP and as otherwise required by
applicable Laws of any Official Body having jurisdiction over the Borrower or
any Subsidiary of the Borrower, and in which full, true and correct entries
shall be made in all material respects of all its dealings and business and
financial affairs.
          7.1.7 Compliance with Laws; Use of Proceeds. The Borrower shall, and
shall cause each of its Subsidiaries to, comply with all applicable Laws,
including all Environmental

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Laws, in all respects; provided that it shall not be deemed to be a violation of
this Section 7.1.7 [Compliance with Laws; Use of Proceeds] if any failure to
comply with any Law would not result in fines, penalties, remediation costs,
other similar liabilities or injunctive relief which in the aggregate would
constitute a Material Adverse Change. The Borrower will use the Letters of
Credit and the proceeds of the Loans only in accordance with Section 2.8 [Use of
Proceeds] and as permitted by applicable Law.
          7.1.8 Further Assurances. The Borrower shall, from time to time, at
its expense, faithfully preserve and protect the Administrative Agent’s Lien on
and Prior Security Interest in the Collateral as a continuing first priority
perfected Lien, subject only to Permitted Liens, and shall do such other acts
and things as the Administrative Agent in its reasonable discretion may deem
necessary or advisable from time to time in order to preserve, perfect and
protect the Liens granted under the Loan Documents and to exercise and enforce
its rights and remedies thereunder, in accordance with the terms thereof, with
respect to the Collateral.
          7.1.9 Anti-Terrorism Laws. The Borrower is not and shall not be (i) a
Person with whom any Lender is restricted from doing business under Executive
Order No. 13224 or any other Anti-Terrorism Law, (ii) engaged in any business
involved in making or receiving any contribution of funds, goods or services to
or for the benefit of such a Person or in any transaction that evades or avoids,
or has the purpose of evading or avoiding, the prohibitions set forth in any
Anti-Terrorism Law, or (iii) otherwise in violation of any Anti-Terrorism Law.
The Borrower shall provide to the Lenders any certifications or information that
a Lender requests to confirm compliance by the Borrower with Anti-Terrorism
Laws.
          7.1.10 Collateral Value. The Borrower shall maintain at all times,
subject to the next sentence, Collateral Value of not less than one hundred
twenty-five percent (125%) of the Revolving Credit Commitments. If at any time
the Collateral Value is less than one hundred twenty-five percent (125%) of the
Revolving Credit Commitments (the amount of such shortage, the “Collateral
Shortfall”), an Event of Default shall occur unless within three (3) Business
Days of the date the Collateral Shortfall occurred no Collateral Shortfall
exists as a result of (i) a change in the Collateral Value due to market
fluctuations, (ii) a deposit of additional securities in the Collateral Account
and/or (iii) a reduction of the Revolving Credit Commitments pursuant to
Section 2.10 [Reduction of Credit Commitments].
          7.1.11 Post-Closing Filings. The Borrower shall make all post-closing
filings that may be required by any Applicable Insurance Regulatory Authority
(“Post-Closing Filings”).
          7.1.12 Eligible Collateral Requirements. The Borrower shall cause the
Eligible Collateral to consist of (i) at least fifty percent (50%) of investment
property or other assets having an applicable rating at all times equal to or
greater than Aaa or AAA, (ii) not more than fifteen percent (15%) of investment
property or other assets having an applicable rating at any time less than Aa2
or AA but greater than or equal to A2 or A, and (iii) the balance of investment
property or other assets having an applicable rating at all times equal to or
greater than Aa2 or AA. For purposes of this Section 7.1.12, the rating of any
specific investment property or other assets will be determined as follows:
(i) such rating shall be based upon the higher of (a) the rating of such
underlying investment property or other asset provided by Moody’s and Standard &
Poor’s or (b) the credit enhanced rating of such investment property or other
asset provided by

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Moody’s and Standard & Poor’s; (ii) if a difference exists in the ratings of
Moody’s and Standard & Poor’s and the difference is only one level, such rating
shall be based upon the higher of Moody’s and Standard & Poor’s (for example if
Moody’s rating is Aa3 and Standard & Poor’s rating is AA, Standard & Poor’s
rating would apply); and (iii) if a difference exists in the ratings of Moody’s
& Standard & Poor’s and the difference is two or more levels then the rating
will be based upon the lower of Moody’s and Standard & Poor’s (for example if
Moody’s rating is A2 and Standard & Poor’s rating is AA-, Moody’s rating would
apply). Notwithstanding anything to the contrary contained herein, at no time
shall more than ten percent (10%) of the underlying investment property or other
assets comprising the Eligible Collateral have an unenhanced Moody’s or Standard
& Poor’s rating less than A3 or A-.
          7.1.13 Collateral Value and Delinquency Proceedings. The Collateral
Value requirements set forth in Section 7.1.10 [Collateral Value] must be
maintained for so long as the Borrower may borrow under this Agreement and until
payment in full of the Notes, interest thereon, and all fees and other
Obligations of the Borrower and expiration of all Letters of Credit under this
Agreement and the other Loan Documents including, but not limited to, during any
Delinquency Proceeding. In the event of a Delinquency Proceeding, the parties
agree that, for purposes of Section 221.43 of the Suspension of
Business-Involuntary Dissolutions Article of the Insurance Act, 40 P.S. §221.1
et seq., the value of the Collateral must be equal to at least one hundred
twenty-five percent (125%) of the Revolving Credit Commitments.
     7.2 Negative Covenants.
          7.2.1 Indebtedness. The Borrower shall not, and shall not permit any
of its Subsidiaries to, at any time create, incur, assume or suffer to exist any
Indebtedness, except:
               (i) Indebtedness under the Loan Documents;
               (ii) Existing Indebtedness as set forth on Schedule 7.2.1
(including any extensions or renewals thereof; provided there is no increase in
the amount thereof or other significant change in the terms thereof unless
otherwise specified on Schedule 7.2.1);
               (iii) Any Lender Provided Interest Rate Hedge; and
               (iv) Any other Indebtedness not exceeding an aggregate principal
amount of Five Hundred Million and 00/100 Dollars ($500,000,000.00).
          7.2.2 Liens. The Borrower shall not, and shall not permit any of its
Subsidiaries to, at any time create, incur, assume or suffer to exist any Lien
on any of its property or assets, tangible or intangible, now owned or hereafter
acquired, or agree or become liable to do so, except the following
(collectively, “Permitted Liens”):
               (i) Liens for taxes, assessments, or similar charges, incurred in
the ordinary course of business and which are not yet due and payable;
               (ii) Pledges or deposits made in the ordinary course of business
to secure payment of worker’s compensation, or to participate in any fund in
connection with

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worker’s compensation, unemployment insurance, old-age pensions or other social
security programs;
               (iii) Liens of mechanics, materialmen, warehousemen, carriers, or
other like Liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable and Liens of landlords securing
obligations to pay lease payments that are not yet due and payable or in
default;
               (iv) Good-faith pledges or deposits made in the ordinary course
of business to secure performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, not in excess of the aggregate
amount due thereunder, or to secure statutory obligations, or surety, appeal,
indemnity, performance or other similar bonds required in the ordinary course of
business;
               (v) Encumbrances consisting of zoning restrictions, easements or
other restrictions on the use of real property, none of which materially impairs
the use of such property or the value thereof, and none of which is violated in
any material respect by existing or proposed structures or land use;
               (vi) Liens, security interests and mortgages in favor of the
Administrative Agent (for its benefit and for the benefit of the Lenders and
their Affiliates) securing the Obligations (including Lender Provided Interest
Rate Hedges);
               (vii) Judgment Liens which do not constitute an Event of Default;
and
               (viii) Liens on assets (other than the Collateral or any
Subsidiary Equity Interests) provided the amount of outstanding Indebtedness and
other obligations secured thereby does not exceed One Hundred Fifty Million and
00/100 Dollars ($150,000,000.00) at any time.
          7.2.3 Guarantees. The Borrower shall not, and shall not permit any of
its Subsidiaries to, at any time, directly or indirectly, become or be liable in
respect of any Guarantee, or assume, guarantee, become surety for, endorse or
otherwise agree, become or remain directly or contingently liable upon or with
respect to any obligation or liability of any other Person in an aggregate
amount in excess of One Hundred Million and 00/100 Dollars ($100,000,000.00),
except for a Guarantee of Indebtedness of the Borrower permitted hereunder.
          7.2.4 Investments. The Borrower shall not make any Investments,
except:
               (a) Investments disclosed on Schedule 7.2.4;
               (b) Investments maintained in the Borrower’s investment portfolio
in the ordinary course of business (including Investments in Subsidiaries and
Joint Ventures, either directly or by way of purchase of another Person’s
interest in such Subsidiary or Joint Venture, which shall be deemed to be in the
ordinary course of business), and in each case in compliance with applicable
Law;
               (c) Trade accounts receivables; and

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               (d) Acquisitions of assets or capital stock of any other Person
to the extent permitted by Section 7.2.6 [Liquidations, Mergers, Consolidations,
Acquisitions].
          7.2.5 Dividends and Related Distributions. The Borrower shall not, and
shall not permit any of its Subsidiaries to, make or pay, or agree to become or
remain liable to make or pay, any dividend or other distribution of any nature
(whether in cash, property, securities or otherwise) on account of or in respect
of its ownership interests or on account of the purchase, redemption, retirement
or acquisition of its ownership interests unless prior to and after giving
effect to such dividend or distribution, no Event of Default or Potential
Default shall have occurred.
          7.2.6 Liquidations, Mergers, Consolidations, Acquisitions. The
Borrower shall not dissolve, liquidate or wind-up its affairs. The Borrower
shall not fail to have at all times an Attorney-in-Fact duly authorized to act
on its behalf in accordance with applicable Law. The Borrower shall not become a
party to any merger or consolidation, and shall not, and shall not permit any of
the Borrower’s Subsidiaries to, acquire by purchase, lease or otherwise all or
substantially all of the assets or capital stock of any other Person unless
(i) at the time of such transaction the Borrower is able to demonstrate pro
forma compliance with Section 7.2.14 [Minimum Statutory Surplus] and
Section 7.2.15 [Total Adjusted Capital to Authorized Control Level Risk Based
Capital], (ii) prior to and after giving effect to such transaction, no Event of
Default or Potential Default shall have occurred and (iii) after giving effect
to such transaction, the Borrower shall be the surviving legal entity if it is a
party to such transaction.
          7.2.7 Dispositions of Assets or Subsidiaries. The Borrower shall not,
and shall not permit any of its Subsidiaries to, sell, convey, assign, lease,
abandon or otherwise transfer or dispose of, voluntarily or involuntarily, any
of its properties or assets, tangible or intangible (including sale, assignment,
discount or other disposition of accounts, contract rights, chattel paper,
equipment or general intangibles with or without recourse or of capital stock,
shares of beneficial interest, partnership interests or limited liability
company interests of a Subsidiary of the Borrower) (each, a “Disposition”),
except:
               (a) Dispositions of obsolete or worn out property or property no
longer useful in the business of the Borrower or any of its Subsidiaries,
whether now owned or hereafter acquired, in the ordinary course of business;
               (b) Dispositions of Collateral to the extent that no such
Disposition results in a Collateral Shortfall at any time;
               (c) Dispositions of Investments held in the Borrower’s investment
portfolio (including Investments in Subsidiaries and Joint Ventures, either held
directly or indirectly by the Borrower, but excluding the Collateral) in the
ordinary course of business;
               (d) Dispositions of equipment or real property to the extent that
(i) such property is exchanged for credit against the purchase price of similar
replacement property or (ii) the proceeds of such Disposition are promptly
applied to the purchase price of such replacement property;
               (e) Dispositions of property for fair market value;

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               (f) Leases, subleases, licenses or sublicenses of property in the
ordinary course of business and which do not materially interfere with the
business of the Borrower and its Subsidiaries;
               (g) Transfers of property subject to casualty events upon receipt
of the insurance payments with respect to such casualty events;
               (h) Sales or discounts without recourse of accounts receivable
arising in the ordinary course of business in connection with the compromise or
collection thereof; and
               (i) Dispositions by any Subsidiary of the Borrower to the
Borrower or another Subsidiary of the Borrower.
          7.2.8 Affiliate Transactions. The Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into or carry out any transaction with
any Affiliates of such Person (including purchasing property or services from or
selling property or services to any Affiliate of the Borrower or other Person)
unless such transaction is not otherwise prohibited by this Agreement, and is
entered into upon fair and reasonable terms and conditions or terms and
conditions which are fully disclosed to the Administrative Agent and the
Lenders, and is in accordance with all applicable Law.
          7.2.9 Continuation of or Change in Business. The Borrower shall not,
and shall not permit any of its Subsidiaries to, engage in any business other
than the insurance business and services related to the insurance business,
substantially as conducted and operated by the Borrower or Subsidiary during the
present fiscal year, and the Borrower or Subsidiary shall not permit any
material change in such business or services related thereto.
          7.2.10 Fiscal Year. The Borrower shall not, and shall not permit any
Subsidiary of the Borrower to, change its fiscal year from the twelve-month
period beginning January 1 and ending December 31.
          7.2.11 Issuance of Stock or Other Ownership Interests. The Borrower
shall not permit any of its Subsidiaries to issue any additional shares of their
capital stock or other ownership interests or any options, warrants or other
rights in respect thereof, provided that the Borrower’s Subsidiaries may issue
shares of capital stock or other ownership interests to the Borrower or any
other Subsidiary or shareholder in any Joint Venture.
          7.2.12 Changes in Organizational Documents. The Borrower shall not,
and shall not permit any of its Subsidiaries to, amend in any respect its
certificate of incorporation (including any provisions or resolutions relating
to capital stock), by-laws, certificate of limited partnership, partnership
agreement, certificate of formation, limited liability company agreement or
other organizational documents without providing at least thirty (30) calendar
days’ prior written notice to the Administrative Agent and the Lenders and, in
the event such change would be adverse to the Lenders as determined by the
Administrative Agent in its sole but reasonable discretion, obtaining the prior
written consent of the Required Lenders.
          7.2.13 Negative Pledges. The Borrower shall not directly or indirectly
enter into or assume or become bound by, or permit any Subsidiary to enter into
or assume or become bound by, any agreement (other than this Agreement and the
other Loan Documents), or any

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provision of any certificate or article of incorporation, bylaws, partnership
agreement, operating agreement or other organizational formation or governing
document prohibiting the creation or assumption of any Lien or encumbrance upon
Eligible Collateral in the Borrower’s investment portfolio, whether now owned or
hereafter created or acquired, which prohibits the Borrower’s ability to comply
with this Agreement or any of the other Loan Documents; provided that the
foregoing shall not apply to (i) restrictions and conditions imposed by any Law
or by any Loan Document, (ii) restrictions or conditions imposed by any
agreement relating to secured Indebtedness or other obligations permitted by
this Agreement but only to the extent such restriction or condition is limited
to the specific assets subject to a Permitted Lien, or (iii) customary
provisions in leases or other agreements restricting assignment thereof.
          7.2.14 Minimum Statutory Surplus. As of September 30, 2009 and the end
of each fiscal quarter thereafter, the Borrower shall not permit the Borrower
Statutory Surplus to be less than an amount equal to the sum of (i) seventy
percent (70%) of $3,915,000,000.00, plus (ii) fifty percent (50%) of Borrower
Statutory Net Income on a cumulative basis for the fiscal quarter ended
September 30, 2009 and for each succeeding fiscal quarter thereafter.
          7.2.15 Total Adjusted Capital to Authorized Control Level Risk Based
Capital. As of September 30, 2009 and the end of each fiscal quarter thereafter,
the Borrower shall not permit the ratio (expressed as a percentage) of Total
Adjusted Capital to Authorized Control Level Risk Based Capital to be less than
four hundred fifty percent (450%).
          7.2.16 Management Fee. The Borrower shall not pay management fees to
the Attorney-in-Fact or any other Person in excess of twenty-five percent (25%)
of the direct written premiums of the Erie Property & Casualty Insurance Group.
          7.2.17 Successor Attorney-in-Fact. The Borrower shall not make any
change in its Attorney-in-Fact unless not less than thirty (30) days prior
written notice of its intention to appoint a successor Attorney-in-Fact is given
to the Administrative Agent, which successor Attorney-in-Fact must be acceptable
to the Administrative Agent in its sole but reasonable discretion.
     7.3 Reporting Requirements. The Borrower will furnish or cause to be
furnished to the Administrative Agent;
          7.3.1 Quarterly Financial Statements. As soon as available and in any
event within forty-five (45) calendar days after the end of each of the first
three fiscal quarters in each fiscal year, Interim Statements of the Borrower,
as filed with the Applicable Insurance Regulatory Authority as of the end of
such fiscal quarter for the fiscal quarter then ended and the fiscal year
through that date, all in reasonable detail and certified (subject to normal
year-end audit adjustments) by an Authorized Officer of the Borrower as having
been prepared in accordance with SAP, consistently applied, and setting forth in
comparative form the respective Interim Statements for the corresponding date
and period in the previous fiscal year.
          7.3.2 Annual Financial Statements. As soon as available and in any
event within ninety (90) days after the end of each fiscal year of the Borrower,
Annual Statements of the Borrower consisting of a consolidated and consolidating
balance sheet as of the end of such

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fiscal year, all in reasonable detail and setting forth in comparative form the
Annual Statements as of the end of and for the preceding fiscal year accompanied
by or including the opinion or statement of the Borrower’s actuary as required
to be filed with such Annual Statements, in form and substance reasonably
acceptable to the Administrative Agent.
          7.3.3 Certificate of the Borrower. Concurrently with the delivery of
the Statements of the Borrower furnished to the Administrative Agent pursuant to
Section 7.3.1 [Quarterly Financial Statements] and Section 7.3.2 [Annual
Financial Statements], a certificate (each, a “Compliance Certificate”) of the
Borrower signed by an Authorized Officer (for purposes of this Section 7.3.3,
such Authorized Officer shall be limited to the Chief Executive Officer,
President or Chief Financial Officer) of the Borrower, in the form of Exhibit
7.3.3.
          7.3.4 Department of Insurance Certificate of Compliance. Concurrently
with the delivery of the Annual Statements of the Borrower furnished to the
Administrative Agent pursuant to Section 7.3.2 [Annual Financial Statements],
the Borrower’s certificate of compliance procured annually from the
Commissioner.
          7.3.5 Valuation Statements. As soon as available and in any event
within twenty (20) days after the end of each month, or more frequently if
requested by the Administrative Agent, in its reasonable discretion, valuation
statements from the custodian of the Collateral, in form and substance
reasonably acceptable to the Administrative Agent (each, a “Valuation
Statement”).
          7.3.6 Certificates; Other Information.
               (a) within fifteen (15) days after receipt by the Borrower, any
final Report on Examination issued by the Applicable Insurance Regulatory
Authority or the NAIC that results in material adjustments to the Statements;
               (b) within fifteen (15) days after receipt by the Borrower, a
copy of any “Statement of Actuarial Opinion” and “Management Discussion and
Analysis” for the Borrower which is required to be provided to the Applicable
Insurance Regulatory Authority as to the adequacy of loss reserves of the
Borrower;
               (c) within fifteen (15) days of receipt, a copy of any financial
examination reports by any Applicable Insurance Regulatory Authority with
respect to the Borrower relating to the insurance business of the Borrower
(when, and if, prepared);
               (d) within five (5) Business Days of such notice, notice of
actual suspension, termination or revocation of any material Insurance License
of the Borrower by any Applicable Insurance Regulatory Authority;
               (e) promptly upon notice thereof, any change in the A.M. Best
Rating financial strength rating of the Borrower;
               (f) promptly, such additional information regarding the business,
financial or corporate affairs of the Borrower or any Subsidiary, or compliance
with the terms of

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the Loan Documents, as the Administrative Agent or any Lender may from time to
time reasonably request; and
               (g) promptly after filing, a copy of the Post-Closing Filings, if
any.
          7.3.7 Notices.
               7.3.7.1 Default. Promptly after any officer of the Borrower has
learned of the occurrence of an Event of Default or Potential Default, a
certificate signed by an Authorized Officer setting forth the details of such
Event of Default or Potential Default and the action which the Borrower proposes
to take with respect thereto.
               7.3.7.2 Litigation. Promptly after the commencement thereof,
notice of all actions, suits, proceedings or investigations before or by any
Official Body or any other Person against the Borrower or any Subsidiary of the
Borrower which relate to the Collateral, involve a claim or series of claims in
excess of Fifty Million and 00/100 Dollars ($50,000,000.00) or which if
adversely determined would constitute a Material Adverse Change.
               7.3.7.3 Organizational Documents. Within the time limits set
forth in Section 7.2.12 [Changes in Organizational Documents], any amendment to
the organizational documents of the Borrower.
               7.3.7.4 Erroneous Financial Information. Immediately in the event
that the Borrower or its accountants conclude or advise that any previously
issued financial statement, audit report or interim review should no longer be
relied upon or that disclosure should be made or action should be taken to
prevent future reliance, notice thereof.
               7.3.7.5 ERISA Event. Immediately upon the occurrence of any ERISA
Event, notice thereof.
               7.3.7.6 Other Reports. Promptly upon request, such other reports
and information as the Administrative Agent or any of the Lenders may from time
to time reasonably request.
8. DEFAULT
     8.1 Events of Default. An Event of Default shall mean the occurrence or
existence of any one or more of the following events or conditions (whatever the
reason therefor and whether voluntary, involuntary or effected by operation of
Law):
          8.1.1 Payments Under Loan Documents.
               (i) The Borrower shall fail to pay any principal of any Loan
(including scheduled installments, mandatory prepayments or the payment due at
maturity), Reimbursement Obligation or any interest on any Loan, Reimbursement
Obligation or any other amount owing hereunder or under the other Loan Documents
on the date on which such principal, interest or other amount becomes due in
accordance with the terms hereof;

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               (ii) The Borrower shall fail to pay any other Obligation within
five (5) days of the date on which such other Obligation becomes due in
accordance with the terms hereof;
          8.1.2 Breach of Warranty. Any representation or warranty made at any
time by the Borrower herein or by the Borrower in any other Loan Document, or in
any certificate, other instrument or statement furnished pursuant to the
provisions hereof or thereof, shall prove to have been false or misleading in
any material respect as of the time it was made or furnished;
          8.1.3 Breach of Negative Covenants or Visitation Rights. The Borrower
shall default in the observance or performance of any covenant contained in
Section 7.1.1 [Preservation of Existence, Etc.], Section 7.1.5 [Visitation
Rights], Section 7.1.7 [Compliance with Laws; Use of Proceeds], Section 7.1.10
[Collateral Value] or Section 7.2 [Negative Covenants];
          8.1.4 Breach of Other Covenants. The Borrower shall default in the
observance or performance of any other covenant, condition or provision hereof
or of any other Loan Document and such default shall continue unremedied for a
period of twenty (20) Business Days;
          8.1.5 Defaults in Other Agreements or Indebtedness. A default or event
of default shall occur at any time under the terms of any other agreement
involving borrowed money or the extension of credit or any other Indebtedness
under which the Borrower or any Subsidiary of the Borrower may be obligated as a
borrower or guarantor in excess of Fifty Million and 00/100 Dollars
($50,000,000.00) in the aggregate, and such breach, default or event of default
consists of the failure to pay (beyond any period of grace permitted with
respect thereto, whether waived or not) any Indebtedness when due (whether at
stated maturity, by acceleration or otherwise) or if such breach or default
permits or causes the acceleration of any Indebtedness (whether or not such
right shall have been waived) or the termination of any commitment to lend;
          8.1.6 Final Judgments or Orders. Any final judgments or orders for the
payment of money in excess of Fifty Million and 00/100 Dollars ($50,000,000.00)
in the aggregate shall be entered against the Borrower by a court having
jurisdiction in the premises, which judgment is not discharged, vacated, bonded
or stayed pending appeal within a period of thirty (30) days from the date of
entry;
          8.1.7 Loan Document Unenforceable. Any of the Loan Documents shall
cease to be legal, valid and binding agreements enforceable against the party
executing the same or such party’s successors and assigns (as permitted under
the Loan Documents) in accordance with the respective terms thereof or shall in
any way be terminated (except in accordance with its terms) or become or be
declared ineffective or inoperative or shall in any way be challenged or
contested or cease to give or provide the respective Liens, security interests,
rights, titles, interests, remedies, powers or privileges intended to be created
thereby;
          8.1.8 Proceedings Against Assets. Any assets (other than the
Collateral) valued in excess of Ten Million and 00/100 Dollars ($10,000,000.00)
or the Collateral of the Borrower

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or any of its Subsidiaries are attached, seized, levied upon or subjected to a
writ or distress warrant; or such come within the possession of the Commissioner
(except as set forth in Section 8.2.2 [Bankruptcy, Insolvency or Reorganization
Proceedings]) or any other receiver, trustee, custodian or assignee for the
benefit of creditors and the same is not cured within thirty (30) days
thereafter;
          8.1.9 Events Relating to Plans and Benefit Arrangements. An ERISA
Event occurs with respect to a Pension Plan or Multiemployer Plan which has
resulted or could reasonably be expected to result in liability of the Borrower
under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in
an aggregate amount in excess of Ten Million and 00/100 Dollars
($10,000,000.00), or (ii) the Borrower or any ERISA Affiliate fails to pay when
due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of Ten Million and
00/100 Dollars ($10,000,000.00);
          8.1.10 Change of Control. Within a period of twelve (12) consecutive
calendar months, individuals who were directors of the Attorney-in-Fact on the
first day of such period, or directors approved by them, shall cease to
constitute a majority of the board of directors of the Attorney-in-Fact;
          8.1.11 Relief Proceedings.
               (i) A Relief Proceeding shall have been instituted against the
Borrower or any Subsidiary of the Borrower and such Relief Proceeding shall
remain undismissed or unstayed and in effect for a period of thirty
(30) consecutive days or such court shall enter a decree or order granting any
of the relief sought in such Relief Proceeding, (ii) the Borrower or any
Subsidiary of the Borrower institutes, or takes any action in furtherance of, a
Relief Proceeding, or (iii) the Borrower or any Subsidiary of the Borrower
ceases to be solvent or admits in writing its inability to pay its debts as they
mature or ceases operation of its present business; and
          8.1.12 Revocation of Certificate of Compliance. The Borrower’s
certificate of compliance shall have been revoked by the Commissioner.
     8.2 Consequences of Event of Default.
          8.2.1 Events of Default Other Than Bankruptcy, Insolvency or
Reorganization Proceedings. If an Event of Default specified under
Sections 8.1.1 [Payments Under Loan Documents] through 8.1.10 [Change of
Control] and 8.1.12 [Revocation of Certificate of Compliance] shall occur and be
continuing, the Lenders and the Administrative Agent shall be under no further
obligation to make Loans and the Issuing Lender shall be under no obligation to
issue Letters of Credit and the Administrative Agent may, and upon the request
of the Required Lenders, shall (i) by written notice to the Borrower, declare
the unpaid principal amount of the Notes then outstanding and all interest
accrued thereon, any unpaid fees and all other Indebtedness of the Borrower to
the Lenders hereunder and thereunder to be forthwith due and payable, and the
same shall thereupon become and be immediately due and payable to the
Administrative Agent for the benefit of each Lender without presentment, demand,
protest or any

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other notice of any kind, all of which are hereby expressly waived, and
(ii) require the Borrower to, and the Borrower shall thereupon, deposit in a
non-interest-bearing account with the Administrative Agent, as cash collateral
for its Obligations under the Loan Documents, an amount equal to the maximum
amount currently or at any time thereafter available to be drawn on all
outstanding Letters of Credit, and the Borrower hereby pledges to the
Administrative Agent and the Lenders, and grants to the Administrative Agent and
the Lenders a security interest in, all such cash as security for such
Obligations; and
          8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings. If an
Event of Default specified under Section 8.1.12 [Relief Proceedings] shall
occur, the Lenders shall be under no further obligations to make Loans hereunder
and the Issuing Lender shall be under no obligation to issue Letters of Credit
and the unpaid principal amount of the Loans then outstanding and all interest
accrued thereon, any unpaid fees and all other Indebtedness of the Borrower to
the Lenders hereunder and thereunder shall be immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived; and
          8.2.3 Set-off. If an Event of Default shall have occurred and be
continuing, each Lender, the Issuing Lender, and each of their respective
Affiliates and any participant of such Lender or Affiliate which has agreed in
writing to be bound by the provisions of Section 4.3 [Sharing of Payments by
Lenders] is hereby authorized at any time and from time to time, to the fullest
extent permitted by applicable Law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final, in whatever currency)
at any time held and other obligations (in whatever currency) at any time owing
by such Lender, the Issuing Lender or any such Affiliate or participant to or
for the credit or the account of the Borrower against any and all of the
Obligations of the Borrower now or hereafter existing under this Agreement or
any other Loan Document to such Lender, the Issuing Lender, Affiliate or
participant, irrespective of whether or not such Lender, Issuing Lender,
Affiliate or participant shall have made any demand under this Agreement or any
other Loan Document and although such Obligations of the Borrower or the
Borrower may be contingent or unmatured or are owed to a branch or office of
such Lender or the Issuing Lender different from the branch or office holding
such deposit or obligated on such Indebtedness. The rights of each Lender, the
Issuing Lender and their respective Affiliates and participants under this
Section 8.2.3 [Set-Off] are in addition to other rights and remedies (including
other rights of setoff) that such Lender, the Issuing Lender or their respective
Affiliates and participants may have. Each Lender and the Issuing Lender agrees
to notify the Borrower and the Administrative Agent promptly after any such
setoff and application; provided that the failure to give such notice shall not
affect the validity of such setoff and application; and
          8.2.4 Suits, Actions, Proceedings. If an Event of Default shall occur
and be continuing, and whether or not the Administrative Agent shall have
accelerated the maturity of the Loans pursuant to any of the foregoing
provisions of this Section 8.2 [Consequences of an Event of Default], the
Administrative Agent or any Lender, if owed any amount with respect to the
Loans, may proceed to protect and enforce its rights by suit in equity, action
at law and/or other appropriate proceeding, whether for the specific performance
of any covenant or agreement contained in this Agreement or the other Loan
Documents, including as permitted by applicable Law the obtaining of the ex
parte appointment of a receiver, and, if such amount shall have

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become due, by declaration or otherwise, proceed to enforce the payment thereof
or any other legal or equitable right of the Administrative Agent or such
Lender; and
          8.2.5 Application of Proceeds. From and after the date on which the
Administrative Agent has taken any action pursuant to this Section 8.2
[Consequences of an Event of Default] and until all Obligations of the Borrower
have been paid in full, any and all proceeds received by the Administrative
Agent from any sale or other disposition of the Collateral, or any part thereof,
or the exercise of any other remedy by the Administrative Agent, shall be
applied as follows:
               (i) first, to reimburse the Administrative Agent and the Lenders
for out-of-pocket costs, expenses and disbursements, including reasonable
attorneys and paralegals fees and legal expenses, incurred by the Administrative
Agent or the Lenders in connection with realizing on the Collateral or
collection of any Obligations of the Borrower under any of the Loan Documents,
including advances made by the Lenders or any one of them or the Administrative
Agent for the reasonable maintenance, preservation, protection or enforcement
of, or realization upon, the Collateral, including advances for taxes,
insurance, repairs and the like and reasonable expenses incurred to sell or
otherwise realize on, or prepare for sale or other realization on, any of the
Collateral;
               (ii) second, to the repayment of all Obligations then due and
unpaid of the Borrower to the Lenders or their Affiliates incurred under this
Agreement or any of the other Loan Documents, whether of principal, interest,
fees, expenses or otherwise and to cash collateralize the Letter of Credit
Obligations, in such manner as the Administrative Agent may determine in its
discretion;
               (iii) third, to repayment of all Obligations then due and unpaid
of the Borrower to the Lender or their Affiliates incurred under any agreements
evidencing any Lender Provided Interest Rate Hedge, whether of fees, expenses or
otherwise; and
               (iv) the balance, if any, as required by Law.
9. THE ADMINISTRATIVE AGENT
     9.1 Appointment and Authority. Each of the Lenders and the Issuing Lender
hereby irrevocably appoints PNC Bank to act on its behalf as the Administrative
Agent hereunder and under the other Loan Documents and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Section 9 [The Administrative Agent] are solely
for the benefit of the Administrative Agent, the Lenders and the Issuing Lender,
and the Borrower shall not have rights as a third party beneficiary of any of
such provisions.
     9.2 Rights as a Lender. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity.

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Such Person and its Affiliates may accept deposits from, lend money to, act as
the financial advisor or in any other advisory capacity for and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if such Person were not the Administrative Agent hereunder and
without any duty to account therefor to the Lenders.
     9.3 Exculpatory Provisions. The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein and in the other
Loan Documents. Without limiting the generality of the foregoing, the
Administrative Agent:
               (a) shall not be subject to any fiduciary or other implied
duties, regardless of whether a Potential Default or Event of Default has
occurred and is continuing;
               (b) shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents that the
Administrative Agent is required to exercise as directed in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be
expressly provided for herein or in the other Loan Documents); provided that the
Administrative Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Loan Document or applicable Law; and
               (c) shall not, except as expressly set forth herein and in the
other Loan Documents, have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of its
Affiliates that is communicated to or obtained by the Person serving as the
Administrative Agent or any of its Affiliates in any capacity.
          The Administrative Agent shall not be liable for any action taken or
not taken by it (i) with the consent or at the request of the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary, or as
the Administrative Agent shall believe in good faith shall be necessary, under
the circumstances as provided in Sections 10.1 [Modifications, Amendments or
Waivers] and 8.2 [Consequences of Event of Default]) or (ii) in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Potential Default or Event of Default
unless and until notice describing such Potential Default or Event of Default is
given to the Administrative Agent by the Borrower, a Lender or the Issuing
Lender.
          The Administrative Agent shall not be responsible for or have any duty
to ascertain or inquire into (i) any statement, warranty or representation made
in or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Potential Default or Event of
Default, (iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or
document or (v) the satisfaction of any condition set forth in Article 6
[Conditions of Lending and Issuance of Letters of Credit] or elsewhere herein,
other than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

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     9.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting
or other distribution) believed by it to be genuine and to have been signed,
sent or otherwise authenticated by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to have been made by the proper Person, and shall not incur any liability
for relying thereon. In determining compliance with any condition hereunder to
the making of a Loan, or the issuance of a Letter of Credit, that by its terms
must be fulfilled to the satisfaction of a Lender or the Issuing Lender, the
Administrative Agent may presume that such condition is satisfactory to such
Lender or the Issuing Lender unless the Administrative Agent shall have received
notice to the contrary from such Lender or the Issuing Lender prior to the
making of such Loan or the issuance of such Letter of Credit. The Administrative
Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.
     9.5 Delegation of Duties. The Administrative Agent may perform any and all
of its duties and exercise its rights and powers hereunder or under any other
Loan Document by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this
Section 9 shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
     9.6 Resignation of Administrative Agent. The Administrative Agent may at
any time give notice of its resignation to the Lenders, the Issuing Lender and
the Borrower. Upon receipt of any such notice of resignation, the Required
Lenders shall have the right, with approval from the Borrower (so long as no
Event of Default has occurred and is continuing), to appoint a successor, such
approval not to be unreasonably withheld or delayed. If no such successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may on
behalf of the Lenders and the Issuing Lender, appoint a successor Administrative
Agent meeting the qualifications set forth above; provided that if the
Administrative Agent shall notify the Borrower and the Lenders that no
qualifying Person has accepted such appointment, then such resignation shall
nonetheless become effective in accordance with such notice and (i) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
collateral security held by the Administrative Agent on behalf of the Lenders or
the Issuing Lender under any of the Loan Documents, the retiring Administrative
Agent shall continue to hold such collateral security until such time as a
successor Administrative Agent is appointed) and (ii) all payments,
communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender and the Issuing
Lender directly, until such time as the Required Lenders appoint a successor
Administrative Agent as provided for above in this Section 9.6 [Resignation of
Administrative Agent]. Upon

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the acceptance of a successor’s appointment as Administrative Agent hereunder,
such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring (or retired) Administrative Agent,
and the retiring Administrative Agent shall be discharged from all of its duties
and obligations hereunder or under the other Loan Documents (if not already
discharged therefrom as provided above in this Section 9 [The Administrative
Agent]). The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the retiring Administrative
Agent’s resignation hereunder and under the other Loan Documents, the provisions
of this Section 9 [The Administrative Agent] and Section 10.3 [Expenses;
Indemnity; Damage Waiver] shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while the retiring Administrative Agent was acting as Administrative Agent.
          If PNC Bank resigns as Administrative Agent under this Section 9.6
[Resignation of Administrative Agent], PNC Bank shall also resign as an Issuing
Lender. Upon the appointment of a successor Administrative Agent hereunder, such
successor shall (i) succeed to all of the rights, powers, privileges and duties
of PNC Bank as the retiring Issuing Lender and Administrative Agent and PNC Bank
shall be discharged from all of its respective duties and obligations as Issuing
Lender and Administrative Agent under the Loan Documents, and (ii) issue letters
of credit in substitution for the Letters of Credit issued by PNC Bank, if any,
outstanding at the time of such succession or make other arrangement
satisfactory to PNC Bank to effectively assume the obligations of PNC Bank with
respect to such Letters of Credit.
     9.7 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and
the Issuing Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender or any of their Related
Parties and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender and the Issuing Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.
     9.8 No Other Duties, etc. Anything herein to the contrary notwithstanding,
none of the co-syndication agents or lead arranger listed on the cover page
hereof shall have any powers, duties or responsibilities under this Agreement or
any of the other Loan Documents, except in its capacity, as applicable, as the
Administrative Agent, a Lender or the Issuing Lender hereunder.
     9.9 Administrative Agent’s Fee. The Borrower shall pay to the
Administrative Agent a nonrefundable fee (the “Administrative Agent’s Fee”)
under the terms of a letter (the “Administrative Agent’s Letter”) between the
Borrower and Administrative Agent, as amended from time to time.
     9.10 Authorization to Release Collateral. The Lenders and Issuing Lenders
authorize the Administrative Agent to release any Collateral consisting of
assets or equity interests sold or

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otherwise disposed of in a sale or other disposition or transfer permitted under
Section 7.2.7 [Disposition of Assets or Subsidiaries].
     9.11 No Reliance on Administrative Agents Customer Identification Program.
Each Lender acknowledges and agrees that neither such Lender, nor any of its
Affiliates, participants or assignees, may rely on the Administrative Agent to
carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer
identification program, or other obligations required or imposed under or
pursuant to the USA Patriot Act or the regulations thereunder, including the
regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the
“CIP Regulations”), or any other Anti-Terrorism Law, including any programs
involving any of the following items relating to or in connection with the
Borrower, its Affiliates or its agents, the Loan Documents or the transactions
hereunder or contemplated hereby: (i) any identity verification procedures,
(ii) any recordkeeping, (iii) comparisons with government lists, (iv) customer
notices or (v) other procedures required under the CIP Regulations or such other
Laws.
10. MISCELLANEOUS
     10.1 Modifications, Amendments or Waivers. With the written consent of the
Required Lenders, the Administrative Agent, acting on behalf of all the Lenders,
and the Borrower, on behalf of the Borrower, may from time to time enter into
written agreements amending or changing any provision of this Agreement or any
other Loan Document or the rights of the Lenders or the Borrower hereunder or
thereunder, or may grant written waivers or consents hereunder or thereunder.
Any such agreement, waiver or consent made with such written consent shall be
effective to bind all the Lenders and the Borrower; provided, that no such
agreement, waiver or consent may be made which will:
          10.1.1 Increase of Commitment. Increase the amount of the Revolving
Credit Commitment of any Lender hereunder without the consent of such Lender;
          10.1.2 Extension of Payment; Reduction of Principal Interest or Fees;
Modification of Terms of Payment. Whether or not any Loans are outstanding,
extend the Expiration Date or the time for payment of principal or interest of
any Loan (excluding the due date of any mandatory prepayment of a Loan), the
Commitment Fee or any other fee payable to any Lender, or reduce the principal
amount of or the rate of interest borne by any Loan or reduce the Commitment Fee
or any other fee payable to any Lender, without the consent of each Lender
directly affected thereby;
          10.1.3 Release of Collateral or Borrower. Release (i) any Collateral
that would result in a Collateral Shortfall, (ii) the Borrower from its
Obligations under this Agreement without the consent of all of the Lenders
(other than Defaulting Lenders) or (iii) any Person who may Guarantee the
Obligations without the consent of all of the Lenders (other than the Defaulting
Lenders); or
          10.1.4 Miscellaneous. Amend Section 4.2 [Pro Rata Treatment of
Lenders], Section 7.1.10 [Collateral Value], Section 8.2.5 [Application of
Proceeds], Section 9.3 [Exculpatory Provisions, Etc.], Section 4.3 [Sharing of
Payments by Lenders] or this

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Section 10.1 [Modifications, Amendments or Waivers], alter the definition of
Eligible Collateral, alter any provision regarding the pro rata treatment of the
Lenders or requiring all Lenders to authorize the taking of any action or reduce
any percentage specified in the definition of Required Lenders, or consent to a
subordinate Lien with respect to the Collateral, in each case without the
consent of all of the Lenders (other than Defaulting Lenders);
provided that no agreement, waiver or consent which would modify the interests,
rights or obligations of the Administrative Agent or the Issuing Lender without
the written consent of such Administrative Agent or Issuing Lender, as
applicable, and provided, further that, if in connection with any proposed
waiver, amendment or modification referred to in Sections 10.1.1 [Increase of
Commitment] through 10.1.4 [Miscellaneous] above, the consent of the Required
Lenders is obtained but the consent of one (1) or more of such other Lenders
(other than Defaulting Lenders) whose consent is required is not obtained (each,
a “Non-Consenting Lender”), then the Borrower shall have the right to replace
any such Non-Consenting Lender with one (1) or more replacement Lenders pursuant
to Section 4.6.2 [Replacement of a Lender].
     10.2 No Implied Waivers; Cumulative Remedies. No course of dealing and no
delay or failure of the Administrative Agent or any Lender in exercising any
right, power, remedy or privilege under this Agreement or any other Loan
Document shall affect any other or future exercise thereof or operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
further exercise thereof or of any other right, power, remedy or privilege. The
rights and remedies of the Administrative Agent and the Lenders under this
Agreement and any other Loan Documents are cumulative and not exclusive of any
rights or remedies which they would otherwise have.
     10.3 Expenses; Indemnity; Damage Waiver.
          10.3.1 Costs and Expenses. The Borrower shall pay (i) all reasonable
and documented out-of-pocket expenses incurred by the Administrative Agent or
PNC Capital Markets LLC (including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent and PNC Capital Markets
LLC), and shall pay all reasonable and documented fees and time charges and
disbursements for attorneys who may be employees of the Administrative Agent, in
connection with the syndication of the credit facilities provided for herein,
the preparation, negotiation, execution, delivery and administration of this
Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable and
documented out-of-pocket expenses incurred by the Issuing Lender in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder, and (iii) all reasonable and documented
out-of-pocket expenses incurred by the Administrative Agent, any Lender or the
Issuing Lender (including the fees, charges and disbursements of any counsel for
the Administrative Agent, any Lender or the Issuing Lender), and shall pay all
reasonable and documented fees and time charges for attorneys who may be
employees of the Administrative Agent, any Lender or the Issuing Lender, in
connection with the enforcement or protection of its rights (A) in connection
with this Agreement and the other Loan Documents, including its rights under
this Section, or (B) in connection with the Loans made or Letters of Credit
issued hereunder, including all such

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reasonable and documented out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.
          10.3.2 Indemnification by the Borrower. The Borrower shall indemnify
the Administrative Agent (and any sub-agent thereof), each Lender and the
Issuing Lender, and each Related Party of any of the foregoing Persons (each
such Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses (including the fees, charges and disbursements of any counsel for any
Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees
and time charges and disbursements for attorneys who may be employees of any
Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any
third party or by the Borrower arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the
proceeds therefrom (including any refusal by the Issuing Lender to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter
of Credit), (iii) breach of representations, warranties or covenants of the
Borrower under the Loan Documents, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
including any such items or losses relating to or arising under Environmental
Laws or pertaining to environmental matters, whether based on contract, tort or
any other theory, whether brought by a third party or by the Borrower, and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses (x) are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or
(y) result from a claim brought by the Borrower against an Indemnitee for breach
in bad faith of such Indemnitees obligations hereunder or under any other Loan
Document, if the Borrower has obtained a final and nonappealable judgment in its
favor on such claim as determined by a court of competent jurisdiction.
          10.3.3 Reimbursement by Lenders. To the extent that the Borrower for
any reason fails to indefeasibly pay any amount required under Section 10.3.1
[Costs and Expenses] or Section 10.3.2 [Indemnification by the Borrower] to be
paid by it to the Administrative Agent (or any sub-agent thereof), the Issuing
Lender or any Related Party of any of the foregoing, each Lender severally
agrees to pay to the Administrative Agent (or any such sub-agent), the Issuing
Lender or such Related Party, as the case may be, such Lender’s Ratable Share
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount, provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Administrative Agent (or any
such sub-agent) or the Issuing Lender in its capacity as such, or against any
Related Party of any of the foregoing acting for the Administrative Agent (or
any such sub-agent) or Issuing Lender in connection with such capacity.
          10.3.4 Waiver of Consequential Damages, Etc. To the fullest extent
permitted by applicable Law, the Borrower shall not assert, and hereby waives,
any claim against any

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Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or Letter of Credit or the use of the proceeds
thereof. No Indemnitee referred to in Section 10.3.2 [Indemnification by the
Borrower] shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby.
          10.3.5 Payments. All amounts due under this Section shall be payable
not later than ten (10) days after demand therefor.
     10.4 Holidays. Whenever payment of a Loan to be made or taken hereunder
shall be due on a day which is not a Business Day such payment shall be due on
the next Business Day (except as provided in Section 3.2 [Interest Periods]) and
such extension of time shall be included in computing interest and fees, except
that the Loans shall be due on the Business Day preceding the Expiration Date if
the Expiration Date is not a Business Day. Whenever any payment or action to be
made or taken hereunder (other than payment of the Loans) shall be stated to be
due on a day which is not a Business Day, such payment or action shall be made
or taken on the next following Business Day, and such extension of time shall
not be included in computing interest or fees, if any, in connection with such
payment or action.
     10.5 Notices; Effectiveness; Electronic Communication.
          10.5.1 Notices Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in Section 10.5.2 [Electronic Communications]), all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopier (i) if to a Lender, to it at its address set forth in its
administrative questionnaire, or (ii) if to any other Person, to it at its
address set forth on Schedule 1.1 (B).
               Notices sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given when received;
notices sent by telecopier shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day
for the recipient). Notices delivered through electronic communications to the
extent provided in Section 10.5.2 [Electronic Communications], shall be
effective as provided in such Section 10.5 [Notices; Effectiveness; Electronic
Communication].
          10.5.2 Electronic Communications. Notices and other communications to
the Lenders and the Issuing Lender hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent; provided that the
foregoing shall not apply to notices to any Lender or the Issuing Lender if such
Lender or the Issuing Lender, as applicable, has notified the Administrative
Agent that it is incapable of receiving notices under such Article by electronic

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communication. The Administrative Agent or the Borrower may, in its discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that approval of
such procedures may be limited to particular notices or communications. Unless
the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement); provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.
          10.5.3 Change of Address, Etc. Any party hereto may change its address
or telecopier number for notices and other communications hereunder by notice to
the other parties hereto.
     10.6 Severability. The provisions of this Agreement are intended to be
severable. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
     10.7 Duration; Survival. All representations and warranties of the Borrower
contained herein or made in connection herewith shall survive the execution and
delivery of this Agreement, the completion of the transactions hereunder and
Payment In Full. All covenants and agreements of the Borrower contained herein
relating to the payment of principal, interest, premiums, additional
compensation or expenses and indemnification, including those set forth in the
Notes, Section 4 [Payments] and Section 10.3 [Expenses; Indemnity; Damage
Waiver], shall survive Payment in Full. All other covenants and agreements of
the Borrower shall continue in full force and effect from and after the date
hereof and until Payment in Full.
     10.8 Successors and Assigns.
          10.8.1 Successors and Assigns Generally. The provisions of this
Agreement shall be binding upon, and inure to the benefit of, the parties hereto
and their respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of the Administrative Agent and each
Lender and no Lender may assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an assignee in accordance with the
provisions of Section 10.8.2 [Assignments by Lenders], (ii) by way of
participation in accordance with the provisions of Section 10.8.4
[Participations], or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of Section 10.8.6 [Certain Pledges; Successors and
Assigns Generally] (and any other attempted assignment or transfer by any party
hereto shall be null and void). Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby,

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Participants to the extent provided in Section 10.8.4 [Participations] and, to
the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
          10.8.2 Assignments by Lenders. Any Lender may at any time assign to
one or more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans at the
time owing to it); provided that any such assignment shall be subject to the
following conditions:
               (i) Minimum Amounts.
                    (A) in the case of an assignment of the entire remaining
amount of the assigning Lender’s Commitment and the Loans at the time owing to
it or in the case of an assignment to a Lender, an Affiliate of a Lender or an
Approved Fund, no minimum amount need be assigned; and
                    (B) in any case not described in clause (i)(A) of this
Section 10.8.2 [Assignments by Lenders], the aggregate amount of the Commitment
(which for this purpose includes Loans outstanding thereunder) or, if the
applicable Commitment is not then in effect, the principal outstanding balance
of the Loans of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Assumption Agreement with respect to such
assignment is delivered to the Administrative Agent or, if “Trade Date” is
specified in the Assignment and Assumption Agreement, as of the Trade Date)
shall not be less than Five Million and 00/100 Dollars ($5,000,000.00), in the
case of any assignment in respect of the Revolving Credit Commitment of the
assigning Lender, unless each of the Administrative Agent and, so long as no
Event of Default has occurred and is continuing, the Borrower otherwise
consents.
               (ii) Proportionate Amounts. Each partial assignment shall be made
as an assignment of a proportionate part of all the assigning Lender’s rights
and obligations under this Agreement with respect to the Loan or the Commitment
assigned.
               (iii) Required Consents. No consent shall be required for any
assignment except for the consent of the Administrative Agent (which shall not
be unreasonably withheld or delayed) and:
                    (A) the consent of the Borrower (such consent not to be
unreasonably withheld or delayed) shall be required unless (x) an Event of
Default has occurred and is continuing at the time of such assignment or
(y) such assignment is to a Lender, an Affiliate of a Lender or an Approved
Fund;
                    (B) the consent of the Issuing Lender (such consent not to
be unreasonably withheld or delayed) shall be required for any assignment that
increases the obligation of the assignee to participate in exposure under one or
more Letters of Credit (whether or not then outstanding).
               (iv) Assignment and Assumption Agreement. The parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and

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Assumption Agreement, together with a processing and recordation fee of Three
Thousand Five Hundred and 00/100 Dollars ($3,500.00), and the assignee, if it is
not a Lender, shall deliver to the Administrative Agent an administrative
questionnaire provided by the Administrative Agent.
               (v) No Assignment to the Borrower. No such assignment shall be
made to the Borrower or any of the Borrower’s Affiliates or Subsidiaries.
               (vi) No Assignment to Natural Persons. No such assignment shall
be made to a natural person.
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to Section 10.8.3 [Register], from and after the effective date specified in
each Assignment and Assumption Agreement, the assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption Agreement, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption Agreement, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption Agreement covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto) but shall continue to be entitled to the benefits of Section 3.4
[LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available], Section 4.7 [Increased Costs], and Section 10.3 [Expenses,
Indemnity; Damage Waiver] with respect to facts and circumstances occurring
prior to the effective date of such assignment. Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 10.8.2 [Assignments by Lenders] shall be treated for purposes of
this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 10.8.4 [Participations].
          10.8.3 Register. The Administrative Agent, acting solely for this
purpose as an agent of the Borrower, shall maintain a record of the names and
addresses of the Lenders, and the Commitments of, and principal amounts of the
Loans owing to, each Lender pursuant to the terms hereof from time to time. Such
register shall be conclusive, and the Borrower, the Administrative Agent and the
Lenders may treat each Person whose name is in such register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. Such register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.
          10.8.4 Participations. Any Lender may at any time, without the consent
of, or notice to, the Borrower or the Administrative Agent, sell participations
to any Person (other than a natural person or the Borrower or any of the
Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a
portion of such Lenders rights and/or obligations under this Agreement
(including all or a portion of its Commitment and/or the Loans owing to it);
provided that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrower, the
Administrative Agent, the Lenders and the Issuing Lender shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

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               Any agreement or instrument pursuant to which a Lender sells such
a participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver with respect to Section 10.1.1
[Increase of Commitment, Etc.], Section 10.1.2 [Extension of Payment, Etc.], or
Section 10.1.3 [Release of Collateral or Borrower]). Subject to Section 10.8.5
[Limitations upon Participant Rights Successors and Assigns Generally], the
Borrower agrees that each Participant shall be entitled to the benefits of
Section 3.4 [LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits
Not Available] and Section 4.7 [Increased Costs] to the same extent as if it
were a Lender and had acquired its interest by assignment pursuant to
Section 10.8.2 [Assignments by Lenders]. To the extent permitted by Law, each
Participant also shall be entitled to the benefits of Section 8.2.3 [Setoff] as
though it were a Lender; provided such Participant agrees to be subject to
Section 4.3 [Sharing of Payments by Lenders] as though it were a Lender.
          10.8.5 Limitations upon Participant Rights Successors and Assigns
Generally. A Participant shall not be entitled to receive any greater payment
under Section 4.7 [Increased Costs], Section 4.8 [Taxes] or Section 10.3
[Expenses; Indemnity; Damage Waiver] than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower’s prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 4.8 [Taxes]
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with
Section 4.8.5 [Status of Lenders] as though it were a Lender.
          10.8.6 Certain Pledges; Successors and Assigns Generally. Any Lender
may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including
any pledge or assignment to secure obligations to a Federal Reserve Bank;
provided that no such pledge or assignment shall release such Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
     10.9 Confidentiality.
          10.9.1 General. Each of the Administrative Agent, the Lenders and the
Issuing Lender agrees to maintain the confidentiality of the Information, except
that Information may be disclosed (i) to its Affiliates and to its and its
Affiliates’ respective partners, directors, officers, employees, agents,
advisors and other representatives (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (ii) to the
extent requested by any regulatory authority purporting to have jurisdiction
over it (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (iii) to the extent required by
applicable Laws or regulations or by any subpoena or similar legal process,
(iv) to any other party hereto, (v) in connection with the exercise of any
remedies hereunder or under any other Loan Document or any action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (vi) subject to an agreement containing
provisions substantially the same as those of this Section 10.9.1 [General],

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to (A) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (B) any
actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Borrower and its obligations, (vii) with the consent
of the Borrower or (viii) to the extent such Information (A) becomes publicly
available other than as a result of a breach of this Section 10.9.1 [General] or
(B) becomes available to the Administrative Agent, any Lender, the Issuing
Lender or any of their respective Affiliates on a nonconfidential basis from a
source other than the Borrower. Any Person required to maintain the
confidentiality of Information as provided in this Section 10.9.1 [General]
shall be considered to have complied with its obligation to do so if such Person
has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
          10.9.2 Sharing Information With Affiliates of the Lenders. The
Borrower acknowledges that from time to time financial advisory, investment
banking and other services may be offered or provided to the Borrower or one or
more of its Affiliates (in connection with this Agreement or otherwise) by any
Lender or by one or more Subsidiaries or Affiliates of such Lender and the
Borrower hereby authorizes each Lender to share any information delivered to
such Lender by the Borrower and its Subsidiaries pursuant to this Agreement to
any such Subsidiary or Affiliate subject to the provisions of Section 10.9.1
[General].
     10.10 Counterparts; Integration; Effectiveness.
          10.10.1 Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents, and any separate letter agreements with respect to fees payable
to the Administrative Agent, constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof including any prior confidentiality agreements and commitments. Except as
provided in Section 6 [Conditions of Lending and Issuance of Letters of Credit],
this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof that, when taken together, bear the signatures of each of
the other parties hereto. Delivery of an executed counterpart of a signature
page of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
     10.11 CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE
OF PROCESS; WAIVER OF JURY TRIAL.
          10.11.1 Governing Law. This Agreement shall be deemed to be a contract
under the Laws of the Commonwealth of Pennsylvania without regard to its
conflict of laws principles. Each Standby Letter of Credit issued under this
Agreement shall be subject either to the rules of the Uniform Customs and
Practice for Documentary Credits, as most recently published by the
International Chamber of Commerce (the “ICC”) at the time of issuance (“UCP”) or
the rules of the International Standby Practices (ICC Publication Number 590)
(“ISP98”), as determined by the Issuing Lender, to the extent not inconsistent
therewith, the Laws of the Commonwealth of Pennsylvania without regard to is
conflict of laws principles.

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          10.11.2 SUBMISSION TO JURISDICTION. THE BORROWER IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF PENNSYLVANIA SITTING IN
ALLEGHENY COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF PENNSYLVANIA, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
PENNSYLVANIA STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY
RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE ISSUING LENDER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF
ANY JURISDICTION.
          10.11.3 WAIVER OF VENUE. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY
COURT REFERRED TO IN THIS SECTION 10.11 [CHOICE OF LAW, ETC.]. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES NOT ASSERT ANY SUCH DEFENSE.
          10.11.4 SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.5 [NOTICES;
EFFECTIVENESS; ELECTRONIC COMMUNICATION]. NOTHING IN THIS AGREEMENT WILL AFFECT
THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.
          10.11.5 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO

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REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
     10.12 USA Patriot Act Notice. Each Lender that is subject to the USA
Patriot Act and the Administrative Agent (for itself and not on behalf of any
Lender) hereby notifies Borrower that pursuant to the requirements of the USA
Patriot Act, it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of
Borrower and other information that will allow such Lender or Administrative
Agent, as applicable, to identify the Borrower in accordance with the USA
Patriot Act.
[INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written as a document under seal.

                BORROWER:
    WITNESS:    Erie Insurance Exchange
    /s/ Brian W. Bolash     By:   Erie Indemnity Company,           a
Pennsylvania corporation, its Attomey-in-Fact                By:   /s/ Douglas
F. Zeigler    (SEAL)       Name:   Douglas F. Zeigler          Title:   Senior
Vice President Treasurer and Chief Investment Officer   

 

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                ADMINISTRATIVE AGENT AND LENDERS:
    WITNESS:    PNC BANK, NATIONAL ASSOCIATION,
as a Lender and as Administrative Agent
        By:   /s/ James F. Stevenson          Name:   James F. Stevenson       
  Title:   Senior Vice President   

 

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            WITNESS:    JPMORGAN CHASE BANK, N.A,
as a Lender
        By:   /s/ Eugene M. Kennedy          Name:   Eugene M. Kennedy         
Title:   Vice President   

 

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            WELLS FARGO BANK, NATIONAL ASSOCIATION,
as a Lender
      By:   /s/ David Bendel         Name:   David Bendel        Title:   Vice
President     

 

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            BANK OF AMERICA, N.A., as a Lender
      By:   /s/ James H. Harper         Name:   James H. Harper        Title:  
Vice President     

 

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            U.S. BANK NATIONAL ASSOCIATION,
as a Lender
      By:   /s/ Ginger So         Name:   Ginger So        Title:   Vice
President     

 

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            THE BANK OF NEW YORK MELLON, as a Leader
      By:   /s/ Heather Lindstrom         Name:   Heather Lindstrom       
Title:   Managing Director     

 

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SCHEDULE l.l(A)
PRICING GRID —
VARIABLE PRICING AND FEES BASED ON
BORROWER FINANCIAL STRENGTH RATING
(pricing expressed in basis points)

                                  Revolving Credit     Financial Strength  
Letter of   Revolving Credit   LIBOR Rate Level   Rating   Credit Fee   Base
Rate Spread   Spread I   A+ or above   150     50   150 II   A   175     75  
175 III   Lower than A   200   100   200

     For purposes of determining the Applicable Margin and the Applicable Letter
of Credit Fee Rate:
     (a) As of the Closing Date, the Applicable Margin and the Applicable Letter
of Credit
Fee Rate shall be calculated based upon Level I pricing as set forth above.
     (b) The Applicable Margin and the Applicable Letter of Credit Fee Rate
shall be based on the Borrower’s Financial Strength Rating, which will be
recomputed as of December 31, 2009, and the end of each fiscal quarter ending
thereafter based on the Borrower’s Financial Strength as of such quarter end.
Any increase or decrease in the Applicable Margin or the Applicable Letter of
Credit Fee Rate computed as of a quarter end shall be effective on the first day
of the immediately succeeding fiscal quarter.
SCHEDULE 1.1(A)-1

 

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SCHEDULE l.l(B)
COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
(Page 1 of 4)
Part 1-Commitments of Lenders and Addresses for Notices to Lenders

                              Amount of                   Commitment            
      for Revolving               Lender   Credit Loans     Commitment    
Ratable Share    
Name:
                       
PNC Bank, National Association
                       
Address:
                       
PNC Bank, National Association
                       
901 State Street
                       
4th Floor, Corporate Banking
                       
Erie, PA 16501
                       
Attention:
                       
James F. Stevenson, Senior Vice
                       
President
                       
Telephone:
                       
814-871-9383
                       
Telecopy:
                       
814-871-9432
  $ 55,000,000.00     $ 55,000,000.00       27.50 %
 
                       
Name:
                       
JP Morgan Chase Bank, N.A.
                       
Address:
                       
JP Morgan Chase Bank, N.A.
                       
270 Park Avenue - 41st Fl.
                       
New York, NY 10017
                       
Attention:
                       
Gene M. Kennedy III
                       
Telephone:
                       
212-270-1903
                       
Telecopy:
                       
646-534-2239
  $ 35,000,000.00     $ 35,000,000.00       17.50 %

SCHEDULE l.l(B)-1

 

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                              Amount of                   Commitment            
      for Revolving               Lender   Credit Loans     Commitment    
Ratable Share  
Name:
                       
Wells Fargo Bank, National Association
                       
Address:
                       
Wells Fargo Bank, National
                       
Association
                       
230 W. Monroe Street
                       
Chicago, IL 60606
                       
Attention:
                       
Thomas Doddridge
                       
Telephone:
                       
312-781-0722
                       
Telecopy:
                       
312-845-8606
  $ 25,000,000.00     $ 25,000,000.00       12.50 %
 
                       
Name:
                       
Bank of America, N.A.
                       
Address:
                       
901 Main Street - 64th Floor
                       
Dallas, TX 75202
                       
Attention:
                       
James H. Harper
                       
Telephone:
                       
214-209-9048
                       
Telecopy:
                       
214-209-3742
  $ 35,000,000.00     $ 35,000,000.00       17.50 %
 
                       
Name:
                       
U.S. Bank National Association
                       
Address:
                       
461 Fifth Avenue
                       
New York, NY 10017
                       
Attention:
                       
David Albanesi
                       
Telephone:
                       
646-935-4585
                       
Telecopy:
                       
646 935 4533
  $ 25,000,000.00     $ 25,000,000.00       12.50 %

[01044074]
SCHEDULE l.l(B) - 2

 

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                              Amount of                   Commitment            
      for Revolving               Lender   Credit Loans     Commitment    
Ratable Share  
Name:
                       
Bank of New York Mellon
                       
Address:
                       
Bank of New York Mellon
                       
One Wall Street
                       
New York, NY 10286
                       
Attention:
                       
Brian K. Brown
                       
Telephone:
                       
315-765-4503
                       
Telecopy:
                       
315-765-4783
  $ 25,000,000.00     $ 25,000,000.00       12.50 %
 
                       
TOTAL
  $ 200,000,000.00     $ 200,000,000.00       100.00 %
 
                 

SCHEDULE 1.1(B) - 3

 

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

 

SCHEDULE l.l(B)
COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
(Page 4 of 4)
Part 2 - Addresses for Notices to the Administrative Agent and the Borrower:
ADMINISTRATIVE AGENT:

 
Name:
PNC Bank, National Association
Address:
Firstside Center
500 First Avenue, 4th Floor
Pittsburgh, Pennsylvania 15219
Attention:
Rini Davis, Assistant Vice President
Telephone:
412-762-7638
Telecopy:
412-705-2006
 
BORROWER:
 
Name:
Erie Insurance Exchange
Address:
100 Erie Insurance Place
Erie, Pennsylvania 16530
Attention:
Brian W. Bolash
Telephone:
814-870-4747
Telecopy:
814-870-2010

[01044074]
SCHEDULE 1.1(B) - 4