Exhibit 10.1

 

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Published CUSIP Number:                 

CREDIT AGREEMENT

Dated as of March 29, 2006

among

AMERICAN FINANCIAL GROUP, INC.,

as a Borrower,

AAG HOLDING COMPANY, INC.,

as a Borrower

BANK OF AMERICA, N.A.,

as Administrative Agent,

KEYBANK NATIONAL ASSOCIATION

and

NATIONAL CITY BANK,

As Co-Syndication Agents

and

US BANK, N.A.

As Documentation Agent

and

The Other Lenders Party Hereto

BANC OF AMERICA SECURITIES LLC, as

Sole Lead Arranger and Sole Book Manager

 

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TABLE OF CONTENTS

 

Section

        Page

ARTICLE I  DEFINITIONS AND ACCOUNTING TERMS

   1

        1.01

  

Defined Terms

   1

1.02

  

Other Interpretive Provisions

   21

1.03

  

Accounting Terms

   22

1.04

  

Rounding

   23

1.05

  

Times of Day

   23

1.06

  

Letter of Credit Amounts

   23

ARTICLE II  THE COMMITMENTS AND CREDIT EXTENSIONS

   23

2.01

  

Revolving Loans

   23

2.02

  

Revolving Borrowings, Conversions and Continuations of Revolving Loans

   23

2.03

  

Letters of Credit

   25

2.04

  

Prepayments

   33

2.05

  

Termination or Reduction of Commitments

   34

2.06

  

Repayment

   34

2.07

  

Interest

   34

2.08

  

Fees

   35

2.09

  

Computation of Interest and Fees

   36

2.10

  

Evidence of Debt

   36

2.11

  

Payments Generally; Administrative Agent’s Clawback

   36

2.12

  

Sharing of Payments by Lenders

   38

2.13

  

Increase in Commitments.

   39

ARTICLE III  TAXES, YIELD PROTECTION AND ILLEGALITY

   40

3.01

  

Taxes

   40

3.02

  

Illegality

   42

3.03

  

Inability to Determine Rates

   43

3.04

  

Increased Costs; Reserves on Eurodollar Rate Loans

   43

3.05

  

Compensation for Losses

   44

3.06

  

Mitigation Obligations; Replacement of Lenders

   45

3.07

  

Survival

   46

ARTICLE IV  CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

   46

4.01

  

Conditions of Initial Credit Extension

   46

4.02

  

Conditions to all Credit Extensions

   48

ARTICLE V  REPRESENTATIONS AND WARRANTIES

   48

5.01

  

Existence, Qualification and Power

   48

5.02

  

Authorization; No Contravention

   48

5.03

  

Governmental Authorization; Other Consents

   49

5.04

  

Binding Effect

   49

5.05

  

Financial Statements; No Material Adverse Effect.

   49

 

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        5.06

  

Litigation

   50

5.07

  

No Default

   50

5.08

  

Ownership of Property; Liens

   50

5.09

  

Environmental Compliance

   50

5.10

  

Insurance

   50

5.11

  

Taxes

   50

5.12

  

ERISA Compliance

   51

5.13

  

Subsidiaries; Equity Interests

   51

5.14

  

Margin Regulations; Investment Company Act; Public Utility Holding Company Act

   52

5.15

  

Disclosure

   52

5.16

  

Compliance with Laws

   52

5.17

  

Taxpayer Identification Number

   52

5.18

  

Intellectual Property; Licenses, Etc

   52

ARTICLE VI  AFFIRMATIVE COVENANTS

   53

6.01

  

Financial Statements

   53

6.02

  

Certificates; Other Information

   54

6.03

  

Notices

   56

6.04

  

Payment of Obligations

   57

6.05

  

Preservation of Existence, Etc

   57

6.06

  

Maintenance of Properties

   57

6.07

  

Maintenance of Insurance

   57

6.08

  

Compliance with Laws

   57

6.09

  

Books and Records

   58

6.10

  

Inspection Rights

   58

6.11

  

Use of Proceeds

   58

6.12

  

Maintenance of Insurance Licenses

   58

ARTICLE VII  NEGATIVE COVENANTS

   58

7.01

  

Liens

   58

7.02

  

Investments

   59

7.03

  

Indebtedness

   59

7.04

  

Fundamental Changes

   59

7.05

  

Restricted Payments; Stock Redemptions

   60

7.06

  

Change in Nature of Business

   61

7.07

  

Transactions with Affiliates

   61

7.08

  

Burdensome Agreements

   61

7.09

  

Use of Proceeds

   61

7.10

  

Financial Covenants

   61

7.11

  

Additional Debt Subordination

   62

7.12

  

Tax Sharing Agreements

   62

7.13

  

Equity Issuances by Subsidiaries

   63

7.14

  

AFG Bonds and AAG Bonds

   63

ARTICLE VIII  EVENTS OF DEFAULT AND REMEDIES

   63

8.01

  

Events of Default

   63

 

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        8.02

  

Remedies Upon Event of Default

      65

8.03

  

Application of Funds

      66

ARTICLE IX  ADMINISTRATIVE AGENT

      66

9.01

  

Appointment and Authority

      66

9.02

  

Rights as a Lender

      67

9.03

  

Exculpatory Provisions

      67

9.04

  

Reliance by Administrative Agent

      68

9.05

  

Delegation of Duties

      68

9.06

  

Resignation of Administrative Agent

      68

9.07

  

Non-Reliance on Administrative Agent and Other Lenders

      69

9.08

  

No Other Duties, Etc

      69

9.09

  

Administrative Agent May File Proofs of Claim

      69

ARTICLE X  MISCELLANEOUS

      70

10.01

  

Amendments, Etc

      70

10.02

  

Notices; Effectiveness; Electronic Communication.

      71

10.03

  

No Waiver; Cumulative Remedies

      73

10.04

  

Expenses; Indemnity; Damage Waiver

      73

10.05

  

Payments Set Aside

      75

10.06

  

Successors and Assigns

      76

10.07

  

Treatment of Certain Information; Confidentiality

      79

10.08

  

Right of Setoff

      80

10.09

  

Interest Rate Limitation

      81

10.10

  

Counterparts; Integration; Effectiveness

      81

10.11

  

Survival of Representations and Warranties

      81

10.12

  

Severability

      81

10.13

  

Replacement of Lenders

      81

10.14

  

Governing Law; Jurisdiction; Etc

      82

10.15

  

Waiver of Jury Trial

      83

10.16

  

No Advisory or Fiduciary Responsibility

      83

10.17

  

USA PATRIOT Act Notice

      84

10.18

  

Entire Agreement

      84

SIGNATURES

     

 

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SCHEDULES

        1.01

  

CDO Variable Interest Entities

        1.02

  

Existing Letters of Credit

        2.01

  

Commitments and Applicable Percentages

        5.13

  

Subsidiaries; Other Equity Investments

        10.02

  

Administrative Agent’s Office; Certain Addresses for Notices

        10.06

  

Processing and Recordation Fees

EXHIBITS

  

Form of

        A

  

Revolving Loan Notice

        B

  

Note

        C

  

Compliance Certificate

        D

  

Assignment and Assumption

        E

  

Subordination Agreement

        F

  

AFG Guaranty

        G

  

Joinder Agreement

 

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CREDIT AGREEMENT

This CREDIT AGREEMENT (“Agreement”) is entered into as of March 29, 2006 among
AMERICAN FINANCIAL GROUP, INC., an Ohio corporation (“AFG”), AAG HOLDING
COMPANY, INC., an Ohio corporation (“AAG”) (each of AFG and AAG are sometimes
hereinafter referred to individually as a “Borrower” and collectively as the
“Borrowers”), each lender from time to time party hereto (collectively, the
“Lenders” and individually, a “Lender”), KEYBANK NATIONAL ASSOCIATION and
NATIONAL CITY BANK, as Co-Syndication Agents, US BANK, N.A., as Documentation
Agent and BANK OF AMERICA, N.A., as Administrative Agent.

The Borrowers have requested that the Lenders provide a revolving credit
facility, and the Lenders are willing to do so on the terms and conditions set
forth herein.

In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

1.01    Defined Terms.  As used in this Agreement, the following terms shall
have the meanings set forth below:

“AAG” has the meaning specified in the introductory paragraph hereto.

“AAG Bonds” means the 6 7/8% Senior Notes, issued by AAG with a maturity date of
June 1, 2008.

“AAG Capital Trust Securities” means capital stock issued by AAG Trust or any
other trust or similar entity, the proceeds of which are invested by such Person
in an equivalent amount of Subordinated Debentures.

“AAG Trust” means collectively American Annuity Group Capital Trust II, a
statutory trust formed under the laws of the State of Delaware and Great
American Financial Statutory Trust IV, a Connecticut statutory trust.

“Administrative Agent” means Bank of America in its capacity as administrative
agent under any of the Loan Documents, or any successor administrative agent.

“Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or
account as the Administrative Agent may from time to time notify to the
Borrowers and the Lenders.

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly Controlling, Controlled by or under direct or indirect common Control
with such Person and

 

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shall include (i) any officer or director or general partner of such Person and
(ii) any Person or Affiliate of such Person that, directly or indirectly,
beneficially owns either (a) at least 30% of the outstanding voting equity
securities or (b) at least 30% of all Equity Interests.

“AFG” has the meaning specified in the introductory paragraph hereto.

“AFG Bonds” means the 7 1/8% Senior Debentures issued by AFG with a maturity
date of December 15, 2007.

“AFG Capital Trust Securities” means capital stock issued by American Financial
Capital Trust I or any other trust or similar entity, the proceeds of which are
invested by such Person in an equivalent amount of Subordinated Debentures.

“AFG Consolidated Net Worth” means, on any date, the sum of (a) amount reported
by AFG, determined in accordance with GAAP on a consolidated basis, as “Total
Shareholders’ Equity” on its Form 10-K or Form 10-Q, but excluding (i) all
amounts in respect of unrealized gains or losses recorded pursuant to FAS 115
and (ii) any mandatorily redeemable capital stock (or redeemable shares of other
beneficial interest) plus (b) to the extent not included in clause (a) above,
Capital Trust Securities permitted by Section 7.13, in each case as determined
in accordance with GAAP.

“AFG Consolidated Total Financing Debt” means, on any date, on a consolidated
basis determined in accordance with GAAP for AFG and its Subsidiaries (a) the
sum of (i) indebtedness for borrowed money, or indebtedness evidenced by notes,
debentures, Capitalized Leases, guarantees (excluding guarantees of indebtedness
already included as Indebtedness) or similar instruments, (ii) indebtedness for
the deferred purchase price of assets (other than the normal trade accounts
payable), and (iii) indebtedness in respect of mandatory redemption or dividend
rights related to an Equity Interest, but (b) excluding Indebtedness in respect
of (i) the AFG Capital Trust Securities permitted by Section 7.13 (including the
Subordinated Debentures), (ii) any collateralized debt obligation fund managed
by AFG which is listed on Schedule 1.01 and which Indebtedness in this clause
(b) is carried as “Long Term Debt - Variable Interest Entities” on AFG’s balance
sheet from time to time in accordance with GAAP, and (iii) Non-Recourse Real
Estate Indebtedness of AFG and its Subsidiaries.

“AFG Guaranty” means the Guaranty made by AFG, substantially in the form of
Exhibit F.

“AFG Total Capitalization” means, on any date, the sum of (a) AFG Consolidated
Total Financing Debt, plus (b) AFG Consolidated Net Worth, plus (c) all amounts
appearing on a consolidated balance sheet of AFG and its Subsidiaries in the
line item “Minority Interest”, all determined in accordance with GAAP.

“Agent Parties” has the meaning specified in Section 10.02(c).

“Aggregate Commitments” means the Commitments of all the Lenders.

“Agreement” means this Credit Agreement.

 

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“Applicable Percentage” means with respect to any Lender at any time, the
percentage (carried out to the ninth decimal place) of the Aggregate Commitments
represented by such Lender’s Commitment at such time. If the commitment of each
Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 8.02 or if the Aggregate
Commitments have expired, then the Applicable Percentage of each Lender shall be
determined based on the Applicable Percentage of such Lender most recently in
effect, giving effect to any subsequent assignments. The initial Applicable
Percentage of each Lender is set forth opposite the name of such Lender on
Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender
becomes a party hereto, as applicable.

“Applicable Rate” means, from time to time, the following percentages per annum,
based upon the Debt Rating as set forth below:

 

Applicable Rate Pricing  
Level     

Debt Ratings    

S&P/Moody’s    

   Commitment            
Fee               Eurodollar            
Rate Loan               Base Rate        
Loan           Letter of        
Credit Fee         1    A-/A3 or better        0.100%   0.500%   0.000%   0.500%
2    BBB+/Baa1        0.125%   0.600%   0.000%   0.600% 3    BBB/Baa2       
0.150%   0.750%   0.000%   0.750% 4    BBB-/Baa3        0.175%   0.875%   0.000%
  0.875% 5    lower than BBB-/Baa3        0.250%   1.250%   0.000%   1.250%

“Debt Rating” means, as of any date of determination, the rating as determined
by either S&P or Moody’s (collectively, the “Debt Ratings”) of AFG’s
non-credit-enhanced, senior unsecured long-term debt; provided that (a) if the
respective Debt Ratings issued by the foregoing rating agencies differ by one
level, then the Pricing Level for the higher of such Debt Ratings shall apply
(with the Debt Rating for Pricing Level 1 being the highest and the Debt Rating
for Pricing Level 5 being the lowest); (b) if there is a split in Debt Ratings
of more than one level, then the Pricing Level that is one level higher than the
Pricing Level of the lower Debt Rating shall apply; (c) if AFG has only one Debt
Rating, the Pricing Level of such Debt Rating shall apply; and (d) if AFG does
not have a Debt Rating, Pricing Level 5 shall apply.

Initially, the Applicable Rate shall be determined based upon the Debt Rating
specified in the certificate delivered pursuant to Section 4.01(a)(vii).
Thereafter, each change in the Applicable Rate resulting from a publicly
announced change in the Debt Rating shall be effective, in the case of an
upgrade, during the period commencing on the date of delivery by AFG to the
Administrative Agent of notice thereof pursuant to Section 6.03(e) and ending on
the date immediately preceding the effective date of the next such change and,
in the case of a downgrade, during the period commencing on the date of the
public announcement thereof and ending on the date immediately preceding the
effective date of the next such change.

“Approved Bank” has the meaning specified in the definition of “Cash and
Equivalents”.

 

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“Approved Fund” means any Fund 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.

“APU Holding” means APU Holding Company, an Ohio corporation.

“Arranger” means Banc of America Securities LLC, in its capacity as sole lead
arranger and sole book manager.

“Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 10.06(b)), and accepted by the Administrative Agent, in substantially
the form of Exhibit D or any other form approved by the Administrative Agent.

“Attributable Indebtedness” means, on any date, (a) in respect of any
Capitalized Lease of any Person, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease payments under the relevant lease that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP if such lease were accounted for as a Capitalized Lease.

“Audited Financial Statements” means the audited consolidated balance sheet of
AFG and its Subsidiaries for the fiscal year ended December 31, 2005 and the
related consolidated statements of income or operations, shareholders’ equity
and cash flows for such fiscal year of AFG and its Subsidiaries, including the
notes thereto.

“Auto-Extension Letter of Credit” has the meaning specified in
Section 2.03(b)(iii).

“Availability Period” means the period from and including the Closing Date to
the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.05, and (c) the date of termination
of the commitment of each Lender to make Loans pursuant to Section 8.02.

“Bank of America” means Bank of America, N.A. and its successors.

“Bankruptcy Code” means Title 11 of the United States Code.

“Base Rate” means for any day a fluctuating rate per annum equal to the higher
of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
as its “prime rate.” The “prime rate” is a rate set by Bank of America based
upon various factors including Bank of America’s costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change.

 

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“Base Rate Loan” means a Revolving Loan that bears interest based on the Base
Rate.

“Borrower” and “Borrowers” have the meaning specified in the introductory
paragraph hereto.

“Borrowers’ Materials” has the meaning specified in Section 6.02.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the State of New York or the state where the Administrative Agent’s
Office is located and, if such day relates to any Eurodollar Rate Loan, means
any such day on which dealings in Dollar deposits are conducted by and between
banks in the London interbank eurodollar market.

“Capital Trust Securities” means either AAG Capital Trust Securities or AFG
Capital Trust Securities, as applicable.

“Capitalized Lease” means any lease which is required to be capitalized on the
balance sheet of the lessee in accordance with GAAP and Statement No. 13 of the
Financial Accounting Standards Board.

“Capitalized Lease Obligations” means the amount of the liability reflecting the
aggregate discounted amount of future payments under all Capitalized Leases
calculated in accordance with GAAP and Statement No. 13 of the Financial
Accounting Standards Board.

“Cash and Equivalents” means unrestricted and unencumbered (a) cash,
(b) securities based or directly and fully guaranteed or insured by the United
States of America or any agency or instrumentality thereof (provided that the
full faith and credit of the United States of America is pledged in support
thereof) having maturities of not more than 180 days from the date of
acquisition, (c) Dollar denominated time and demand deposits and certificates of
deposit of (i) any Lender, (ii) any domestic commercial bank having capital and
surplus in excess of $500,000,000 or (iii) any bank whose short-term commercial
paper rating from S&P is at least A-2 or the equivalent thereof or from Moody’s
is at least P-2 or the equivalent thereof (any such bank being an “Approved
Bank”), in each case with maturities of not more than 180 days from the date of
acquisition, (d) commercial paper and variable or fixed rate notes issued by any
Approved Bank (or by the parent company thereof) or any variable rate notes
issued by, or guaranteed by, any domestic corporation rated A-2 (or the
equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or
better by Moody’s and maturing within 180 days of the date of acquisition,
(e) repurchase agreements with a bank or trust company (including any of the
Lenders) or recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by the United
States of America in which AFG or any of its Subsidiaries shall have a perfected
first priority security interest (subject to no other Liens) and having, on the
date of purchase thereof, a fair market value of at least 100% of the repurchase
obligations, (f) Investments, classified in accordance with GAAP as current
assets, in money market investments programs registered under the Investment
Company Act of 1940, as amended, which are administered by reputable financial
institutions having capital of at least $500,000,000.

“Cash Collateralize” has the meaning specified in Section 2.03(g).

 

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“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.

“Change of Control” means an event or series of events by which (a) Lindner
Family Members shall collectively cease to own beneficially (i) at least 15% of
the outstanding voting common stock of AFG and (ii) a sufficient number of
shares of such voting common stock of AFG so that Lindner Family Members in the
aggregate own more shares of such voting common stock than any other Person or
group of Persons, (b) fewer than 10% of the members of the board of directors of
AFG shall be Lindner Family Members or representatives thereof, (c) AFG shall
cease to own directly, or indirectly through a direct non-regulated subsidiary
holding company (which does not (i) have any material Indebtedness,
(ii) transact any material business and (iii) own any material assets other than
Equity Interests of GAIC and other Insurance Subsidiaries) in which AFG owns
100% of the Equity Interests, 100% of the voting common stock of GAIC,
(d) GAFRI, AAG, or any of their respective Subsidiaries (or any combination
thereof) shall cease to own, directly or indirectly through a direct
non-regulated holding company (which does not (i) have any material
Indebtedness, (ii) transact any material business, and (iii) own any material
assets other than Equity Interests of GALIC and other Insurance Subsidiaries) in
which GAFRI, AAG or one of their respective Subsidiaries (or any combination
thereof) owns 100% of the Equity Interests, 100% of the voting common stock of
GALIC, or (e) any Change of Control (howsoever defined) shall occur with respect
to any other Indebtedness of AFG or any of its Subsidiaries.

“Closing Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 10.01.

“Code” means the Internal Revenue Code of 1986.

“Commitment” means, as to each Lender, its obligation to (a) make Revolving
Loans to the Borrowers pursuant to Section 2.01 and (b) purchase participations
in L/C Obligations, in an aggregate principal amount at any one time outstanding
not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01
or in the Assignment and Assumption pursuant to which such Lender becomes a
party hereto, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C.

“Consolidated Net Income” means, for any period, the net income (or loss) of AFG
and its Subsidiaries, determined in accordance with GAAP on a consolidated
basis, and as reported by AFG on its Form 10-K or Form 10-Q.

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

 

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“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

“Credit Extension” means each of the following: (a) a Revolving Borrowing and
(b) an L/C Credit Extension.

“Debt Rating” has the meaning specified in the definition of “Applicable Rate.”

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

“Default Rate” means (a) when used with respect to Obligations other than Letter
of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per annum;
provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate
shall be an interest rate equal to the interest rate (including any Applicable
Rate) otherwise applicable to such Loan plus 2% per annum, and (b) when used
with respect to the Letter of Credit Fees, a rate equal to the Applicable Rate
plus 2% per annum.

“Defaulting Lender” means any Lender that (a) has failed to fund any portion of
the Revolving Loans or participations in L/C Obligations required to be funded
by it hereunder within one Business Day of the date required to be funded by it
hereunder unless such failure has been cured, (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 Business Day of the date when due, unless
the subject of a good faith dispute or unless such failure has been cured, or
(c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding.

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

“Dollar” and “$” mean lawful money of the United States.

“Eligible Assignee” means any Person that meets the requirements to be an
assignee under Section 10.06(b)(iii), (v) and (vi), subject to such consents, if
any, as may be required under Section 10.06(b)(iii).

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants,

 

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franchises, licenses, agreements or governmental restrictions relating to
pollution and the protection of the environment or the release of any materials
into the environment, including those related to hazardous substances or wastes,
air emissions and discharges to waste or public systems.

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of AFG or any of its Subsidiaries directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with either Borrower within the meaning of Section 414(b)
or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by either Borrower or any ERISA Affiliate thereof 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 complete or partial withdrawal by AFG or any ERISA Affiliate
thereof 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 Section 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 AFG or any
ERISA Affiliate thereof.

“Eurodollar Rate” means, for any Interest Period with respect to a Eurodollar
Rate Loan, the rate per annum equal to the British Bankers Association LIBOR
Rate (“BBA LIBOR”), as

 

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published by Reuters (or other commercially available source providing
quotations of BBA LIBOR as designated by the Administrative Agent from time to
time) at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, for Dollar deposits (for delivery on the
first day of such Interest Period) with a term equivalent to such Interest
Period. If such rate is not available at such time for any reason, then the
“Eurodollar Rate” for such Interest Period shall be the rate per annum
determined by the Administrative Agent to be the rate at which deposits in
Dollars for delivery on the first day of such Interest Period in same day funds
in the approximate amount of the Eurodollar Rate Loan being made, continued or
converted by Bank of America and with a term equivalent to such Interest Period
would be offered by Bank of America’s London Branch to major banks in the London
interbank eurodollar market at their request at approximately 11:00 a.m. (London
time) two Business Days prior to the commencement of such Interest Period.

“Eurodollar Rate Loan” means a Revolving Loan that bears interest at a rate
based on the Eurodollar Rate.

“Event of Default” has the meaning specified in Section 8.01.

“Exchange Act” means the Securities Exchange Act of 1934.

“Excluded Taxes” means, with respect to the Administrative Agent, the L/C
Issuer, any Lender or any other recipient of any payment to be made by or on
account of any obligation of either Borrower hereunder or under any other Loan
Document, (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 or any
similar tax imposed by any other jurisdiction in which either Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by AFG under Section 10.13), 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 3.01(e), 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 either
Borrower with respect to such withholding tax pursuant to Section 3.01(a).

“Existing AFG Credit Agreement” means that certain Credit Agreement dated as of
November 19, 2004 among AFG, Bank of America, as administrative agent, and a
syndicate of lenders, as amended, modified or supplemented from time to time.

“Existing GAFRI Credit Agreement” means that certain Credit Agreement dated as
of August 31, 2004 among GAFRI, AAG and Bank of America, as administrative
agent, and a syndicate of lenders, as amended, modified or supplemented from
time to time.

“Existing Letters of Credit” means those Letters of Credit set forth on Schedule
1.02.

 

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“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of
America on such day on such transactions as determined by the Administrative
Agent.

“Fee Letter” means the letter agreement, dated February 10, 2006, among AFG,
AAG, the Administrative Agent and the Arranger.

“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which either Borrower is resident for tax
purposes. For purposes of this definition, the United States, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.

“FRB” means the Board of Governors of the Federal Reserve System of the United
States.

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

“GAFRI” means Great American Financial Resources, Inc., a Delaware corporation.

“GAFRI Consolidated Financing Debt” means on a consolidated basis for GAFRI and
its Subsidiaries the sum of (a)(i) indebtedness for borrowed money, or
indebtedness evidenced by notes, debentures (excluding any subordinated
debentures issued by AAG to AAG Trust and other similar entities), Capitalized
Leases, guarantees (excluding guarantees of indebtedness already included as
GAFRI Consolidated Financing Debt) or similar instruments, (ii) indebtedness for
the deferred purchase price of assets (other than the normal trade accounts
payable), and (iii) indebtedness in respect of mandatory redemption or dividend
rights related to an Equity Interest, minus the sum of (b)(i) all Cash and
Equivalents in excess of $5,000,000 held by GAFRI and AAG, on a holding company
only basis, and other non-insurance Subsidiaries so long as the movement of cash
to GAFRI and AAG is not restricted, (ii) any collateralized debt obligation fund
managed by GAFRI which is listed on Schedule 1.01 and which Indebtedness in this
clause (b)(ii) is carried as “Long Term Debt – Variable Interest Entities” on
GAFRI’s

 

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balance sheet from time to time in accordance with GAAP, and (iii) Non-Recourse
Real Estate Indebtedness of GAFRI and its Subsidiaries. For purposes of this
definition, “Cash and Equivalents” shall mean unencumbered cash and short-term
investments, fixed income securities, and equity securities (excluding GAFRI
and/or its Subsidiaries securities) at market value.

“GAFRI Consolidated Net Worth” means, on any date, the amount reported by GAFRI,
determined in accordance with GAAP on a consolidated basis, as “Total
Shareholders’ Equity” on its Form 10-K or Form 10-Q. Notwithstanding the
foregoing, the calculation of GAFRI Consolidated Net Worth shall (a) include the
preferred securities of AAG Trust and other similar entities (to the extent the
proceeds of such preferred securities were, or will be, used to purchase
subordinated debentures issued by GAFRI or one of its Subsidiaries) and
(b) exclude (i) all amounts in respect of unrealized gains or losses recorded
pursuant to FAS 115, and (ii) preferred stock which is required to be included
as GAFRI Consolidated Financing Debt.

“GAFRI Total Capitalization” means, as of any date the sum of (a) GAFRI
Consolidated Financing Debt, plus (b) GAFRI Consolidated Net Worth.

“GAIC” means Great American Insurance Company, an Ohio insurance company.

“GALIC” means Great American Life Insurance Company, an Ohio insurance company.

“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, any
Insurance Authorities, 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 government (including any supra-national bodies such as the
European Union or the European Central Bank).

“Guarantee” means, as to any Person, any (a) 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

 

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not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by the guaranteeing Person in good faith. The term
“Guarantee” as a verb has a corresponding meaning.

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

“Honor Date” has the meaning specified in Section 2.03(c)(i).

“Increase Effective Date” has the meaning specified in Section 2.13.

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

(a)    all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

(b)    all direct or contingent obligations of such Person arising under letters
of credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments other than under insurance
policies issued by an Insurance Subsidiary;

(c)    net obligations of such Person under any Swap Contract;

(d)    all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business);

(e)    indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;

(f)    Capitalized Leases and Synthetic Lease Obligations;

(g)    all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Equity Interest in such Person or
any other Person, valued, in the case of a redeemable preferred interest, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; and

(h)    all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited

 

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liability company) in which such Person is a general partner or a joint
venturer, unless such Indebtedness is expressly made non-recourse to such
Person. The amount of any net obligation under any Swap Contract on any date
shall be deemed to be the Swap Termination Value thereof as of such date. The
amount of any Capitalized Lease or Synthetic Lease Obligation as of any date
shall be deemed to be the amount of Attributable Indebtedness in respect thereof
as of such date.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Indemnitees” has the meaning specified in Section 10.04(b).

“Insurance Authorities” means collectively, in relation to any particular
jurisdiction, the insurance regulatory authorities, commissions, agencies,
departments, boards or other authorities of or in that jurisdiction.

“Insurance Subsidiary” means each Significant Subsidiary of AFG engaged
primarily in the insurance business and licensed as an insurance company in one
or more states or Puerto Rico.

“Interest and Dividend Charges” means, for any period, with respect to AFG, the
sum (without duplication) of (a) the aggregate amount of interest, including
commitment fees, charges in the nature of interest under Capitalized Leases and
net amounts due under Swap Contracts, accrued directly by AFG (whether such
interest is reflected as an item of expense or capitalized but excluding
interest on intercompany debt) in accordance with GAAP, plus (b) actual cash
dividends (including liquidating distributions and dividends paid on AFG Capital
Trust Securities) paid by AFG (other than regular cash dividends paid on AFG’s
common stock in amounts consistent with past practice and other than dividends
paid to any holding company that is a Subsidiary of AFG) with respect to Equity
Interests.

“Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan,
the last day of each Interest Period applicable to such Loan and the Maturity
Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan
exceeds three months, the respective dates that fall every three months after
the beginning of such Interest Period shall also be Interest Payment Dates; and
(b) as to any Base Rate Loan, the last Business Day of each March, June,
September and December and the Maturity Date.

“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing
on the date such Eurodollar Rate Loan is disbursed or converted to or continued
as a Eurodollar Rate Loan and ending on the date one, two, three or six months
(or other periods if available to all Lenders) thereafter, as selected by the
applicable Borrower in its Revolving Loan Notice; provided that:

(i)    any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day;

 

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(ii)        any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and

(iii)        no Interest Period shall extend beyond the Maturity Date.

“Internal Control Event” means a material weakness in, or fraud that involves
management or other employees who have a significant role in, AFG’s internal
controls over financial reporting, in each case as described in the Securities
Laws.

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) any loan, advance or
extension of credit (including Guarantees), (b) any capital contribution or
purchase of Equity Interests, and (c) any acquisition of property other than
upon full payment in cash at fair market value; provided, however that the term
“Investment” shall not include (i) investments and reinvestments in portfolio
securities in the ordinary course of business, (ii) sales or other transfers of
portfolio assets among AFG and its Subsidiaries in the ordinary course of
business, (iii) trade and customer accounts receivable for property leased,
goods furnished or services rendered in the ordinary course of business and
payable on a current basis in accordance with customary trade terms,
(iv) deposits, advances or prepayments to suppliers for property leased or
licensed, goods furnished and services rendered in the ordinary course of
business, (v) advances to employees for relocation and travel expenses, drawing
accounts and similar expenditures, (vi) stock or other securities acquired in
connection with the satisfaction or enforcement of Indebtedness or claims due to
any Person or as security for any such Indebtedness or claims or (vii) demand
deposits in banks or similar financial institutions. For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in value of such
Investment.

“IP Rights” has the meaning specified in Section 5.18.

“IRS” means the United States Internal Revenue Service.

“ISP” means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice (or such later version thereof as may be in effect at the time of
issuance).

“Issuer Documents” means with respect to any Letter of Credit, the Letter of
Credit Application, and any other document, agreement and instrument entered
into by the L/C Issuer and either Borrower (or any Subsidiary) or in favor of
the L/C Issuer and relating to such Letter of Credit.

“Joinder Agreement” means the Joinder Agreement, substantially in the form of
Exhibit G, executed by any Subsidiary of AFG (other than AAG) for whose account
a Letter of Credit is issued.

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial

 

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precedents or authorities, including the interpretation or administration
thereof by any Governmental Authority charged with the enforcement,
interpretation or administration thereof, and all applicable administrative
orders, directed duties, requests, licenses, authorizations and permits of, and
agreements with, any Governmental Authority, in each case whether or not having
the force of law.

“L/C Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Applicable Percentage.

“L/C Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Revolving Borrowing.

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.

“L/C Issuer” means Bank of America in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder.

“L/C Obligations” means, as at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit plus the aggregate
of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of
computing the amount available to be drawn under any Letter of Credit, the
amount of such Letter of Credit shall be determined in accordance with
Section 1.06. For all purposes of this Agreement, if on any date of
determination a Letter of Credit has expired by its terms but any amount may
still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP,
such Letter of Credit shall be deemed to be “outstanding” in the amount so
remaining available to be drawn.

“Lender” has the meaning specified in the introductory paragraph hereto.

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrowers and the
Administrative Agent.

“Letter of Credit” means any standby letter of credit issued hereunder, and
shall include Existing Letters of Credit.

“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the L/C Issuer.

“Letter of Credit Expiration Date” means the day that is seven days prior to the
Maturity Date then in effect (or, if such day is not a Business Day, the next
preceding Business Day).

“Letter of Credit Fee” has the meaning specified in Section 2.03(i).

“Letter of Credit Obligor” means AFG, AAG and any Subsidiary who may execute a
Joinder Agreement.

 

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“Letter of Credit Sublimit” means an amount equal to $25,000,000. The Letter of
Credit Sublimit is part of, and not in addition to, the Aggregate Commitments.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement in the nature of
a security interest of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any easement, right of way or other
encumbrance on title to real property, and any financing lease having
substantially the same economic effect as any of the foregoing).

“Lindner Family Members” means Carl H. Lindner, his wife and all lineal
descendents and their wives, as well as trusts established by or for the benefit
of such persons.

“Loan” means an extension of credit by a Lender to either Borrower under Article
II in the form of a Revolving Loan.

“Loan Documents” means this Agreement, each Note, each Issuer Document, the Fee
Letter, the Subordination Agreement, each Joinder Agreement and the AFG
Guaranty.

“Loan Parties” means AFG, AAG and each other Letter of Credit Obligor.

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent), condition (financial or otherwise) or prospects of AFG,
individually, or AFG and its Subsidiaries, taken as a whole; (b) a material
impairment of the ability of any Loan Party to perform its obligations under any
Loan Document to which it is a party; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against any Loan Party of
any Loan Document to which it is a party.

“Maturity Date” means the earliest of (a) March 29, 2011 (provided, however, if
such date is not a Business Day, the date which is the next preceding Business
Day), (b) the date of termination of the Aggregate Commitments pursuant to
Section 2.05 and (c) the date of termination of the commitment of each Lender to
make Loans pursuant to Section 8.02.

“Maximum Rate” has the meaning specified in Section 10.09.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which either Borrower or any ERISA Affiliate
thereof makes or is obligated to make contributions, or during the preceding
five plan years, has made or been obligated to make contributions.

“NAIC” means the National Association of Insurance Commissioners.

“National Interstate” means National Interstate Corporation, an Ohio
corporation.

“Non-Extension Notice Date” has the meaning specified in Section 2.03(b)(iii).

 

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“Non-Recourse Real Estate Indebtedness” means, with respect to any Person, any
Indebtedness of such Person for which the owner of such Indebtedness has no
recourse, directly or indirectly, to such Person for the principal of, premium,
if any, and interest on such Indebtedness, and for which such Person is not
directly or indirectly obligated or otherwise liable for the principal of,
premium, if any, and interest on such Indebtedness, except with respect to real
property of such Person pursuant to mortgages, deeds of trust or other security
interests to which such Indebtedness relates, provided that recourse obligations
or liabilities solely for fraud, environmental matters and other customary
“non-recourse carve-outs” in respect of any Indebtedness will not prevent
Indebtedness from being classified as Non-Recourse Real Estate Indebtedness.

“Note” means a promissory note made by each Borrower in favor of a Lender
evidencing Loans made by such Lender, substantially in the form of Exhibit B.

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan, whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest and fees that accrue after
the commencement by or against any Loan Party or any Affiliate thereof of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding.

“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

“Other Taxes” means 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.

“Outstanding Amount” means (a) with respect to Revolving Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of Revolving Loans, as the case may be,
occurring on such date, and (b) with respect to any L/C Obligations on any date,
the amount of such L/C Obligation on such date after giving effect to any L/C
Credit Extension occurring on such date and any other changes in the aggregate
amount of the L/C Obligations as of such date, including as a result of any
reimbursements by any Loan Party of Unreimbursed Amounts.

“Participant” has the meaning specified in Section 10.06(d).

 

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“PBGC” means the Pension Benefit Guaranty Corporation.

“PCAOB” means the Public Company Accounting Oversight Board.

“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 either Borrower
or any ERISA Affiliate thereof or to which either Borrower or any ERISA
Affiliate thereof 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 time during the immediately preceding five plan years.

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

“Plan” means any “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA) established by either Borrower or, with respect to any
such plan that is subject to Section 412 of the Code or Title IV of ERISA, any
ERISA Affiliate.

“Platform” has the meaning specified in Section 6.02.

“Public Lender” has the meaning specified in Section 6.02.

“Qualified Institutional Buyer” means any domestic or foreign bank, insurance
company (other than any of AFG’s Affiliates or Subsidiaries that are insurance
companies) savings and loan association, or registered investment company which
in the aggregate owns and invests on a discretionary basis at least $100,000,000
in securities and which has a net worth of at least $100,000,000; provided,
however, so long as no Event of Default has occurred and is continuing, AFG
shall approve any assignment to a Qualified Institutional Buyer to the extent
required under Section 10.06(b).

“Register” has the meaning specified in Section 10.06(c).

“Registered Public Accounting Firm” has the meaning specified in the Securities
Laws and shall be independent of AFG as provided by the Securities Laws.

“Related Parties” means, 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.

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

“Request for Credit Extension” means (a) with respect to a Revolving Borrowing,
conversion or continuation of Revolving Loans, a Revolving Loan Notice, and
(b) with respect to an L/C Extension, a Letter of Credit Application.

“Required Lenders” means, as of any date of determination, Lenders having at
least 51% of the Aggregate Commitments or, if the commitment of each Lender to
make Loans and the

 

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obligation of the L/C Issuer to make L/C Credit Extensions have been terminated
pursuant to Section 8.02, Lenders holding in the aggregate at least 51% of the
Total Outstandings(with the aggregate amount of each Lender’s risk participation
and funded participation in L/C Obligations being deemed “held” by such Lender
for purposes of this definition); provided that the Commitment of, and the
portion of the Total Outstandings held or deemed held by, any Defaulting Lender
shall be excluded for purposes of making a determination of Required Lenders.

“Responsible Officer” means a chief executive officer, president, executive

vice president, senior vice president, chief financial officer, general counsel,
treasurer or assistant treasurer of a Loan Party. Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.

“Restricted Payment” means (a) the declaration or payment of any dividend on any
Equity Interest of AFG or any Subsidiary, other than dividends payable solely in
shares of common stock, (b) the purchase or other retirement of any class of
Equity Interest of AFG or any Subsidiary, (c) any other distribution on or in
respect of any class of Equity Interest of AFG or any Subsidiary, and (d) any
payment of principal or interest or premium on, or any purchase or other
retirement of, any Indebtedness required to be subordinated to the Obligations
under this Agreement and the other Loan Documents, including (i) the
Subordinated Debentures, and (ii) intercompany debt obligations of either
Borrower owing to any of its Subsidiaries or Affiliates.

“Revolving Borrowing” means a borrowing consisting of simultaneous Revolving
Loans of the same Type and, in the case of Eurodollar Rate Loans, having the
same Interest Period made by each of the Lenders pursuant to Section 2.01.

“Revolving Loan” has the meaning specified in Section 2.01.

“Revolving Loan Notice” means a notice of (a) a Revolving Borrowing, (b) a
conversion of Revolving Loans from one Type to the other, or (c) a continuation
of Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in writing,
shall be substantially in the form of Exhibit A.

“RICA” means Republic Indemnity Company of America, a California insurance
company.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto.

“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

 

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“Securities Laws” means the Securities Act of 1933, the Securities Exchange Act
of 1934, Sarbanes-Oxley and the applicable accounting and auditing principles,
rules, standards and practices promulgated, approved or incorporated by the SEC
or the PCAOB.

“Significant Subsidiary” means any Subsidiary of AFG which has five percent
(5%) or more of the total assets of AFG and its Subsidiaries (determined as of
the last day of the most recent fiscal quarter), and shall in any event include
(a) GAIC, (b) GALIC, (c) RICA, (d) GAFRI, (e) Great American Holding, Inc.,
(f) APU Holding, (g) AAG and (h) the successors and assigns of any of the
foregoing permitted under this Agreement.

“Statutory Accounting Methods” means the statutory reporting practices
prescribed by the applicable Insurance Authorities with respect to the Insurance
Subsidiaries.

“Subordinated Debentures” means any subordinated debentures (which debentures
shall be subordinated to the Obligations on terms satisfactory to the
Administrative Agent) issued by AFG or any of its Subsidiaries on or prior to
the Closing Date (or, in the case only of AFG or GAFRI, after the Closing Date
as contemplated by Section 7.13(c)(ii)) to AAG Trust, American Financial Capital
Trust I or any other trust or similar entity controlled by AFG or any of its
Subsidiaries.

“Subordination Agreement” means the Subordination Agreement substantially in the
form of Exhibit E pursuant to which each of the Borrowers’ Subsidiaries and
Affiliates to which either Borrower has any Indebtedness shall unconditionally
subordinate any Indebtedness owed to it by such Borrower to the prior payment in
full of the Obligations.

“Subsidiary” means any person of which AFG (or other specified Person) shall at
the time, directly or indirectly through one or more of its Subsidiaries,
(i) own more than 50% of the outstanding Equity Interests entitled to vote
generally, (ii) hold more than 50% of the Equity Interests or (iii) be a general
partner or joint venture. Unless otherwise specified, all references to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of
AFG.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

 

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“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

“Synthetic Lease Obligation” means the monetary obligation of a Person under
(a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.

“Total Outstandings” means the aggregate Outstanding Amount of all Loans and L/C
Obligations.

“Type” means, with respect to a Revolving Loan, its character as a Base Rate
Loan or a Eurodollar Rate Loan.

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

“United States” and “U.S.” mean the United States of America.

“Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).

1.02    Other Interpretive Provisions.  With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:

(a)    The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” The word “will” shall be construed to have the same
meaning and effect as the word “shall.” Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to include
such

 

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Person’s successors and assigns, (iii) the words “herein,” “hereof” and
“hereunder,” and words of similar import when used in any Loan Document, shall
be construed to refer to such Loan Document in its entirety and not to any
particular provision thereof, (iv) all references in a Loan Document to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, the Loan Document in
which such references appear, (v) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time, and (vi) 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.

(b)    In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”

(c)    Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

(d)    For purposes of Section 8.01(b), a breach of a financial covenant
contained in Section 7.10 shall be deemed to have occurred as of any date of
determination thereof by the Administrative Agent or as of the last day of any
specified measuring period, regardless of when the financial statements
reflecting such breach are delivered to the Administrative Agent and the
Lenders.

1.03    Accounting Terms.  (a)    Generally.  All accounting terms not
specifically or completely defined herein shall be construed in conformity with,
and all financial data (including financial ratios and other financial
calculations) required to be submitted pursuant to this Agreement shall be
prepared in conformity with, GAAP or Statutory Accounting Methods, as the case
may be, applied on a consistent basis, as in effect from time to time, applied
in a manner consistent with that used in preparing the Audited Financial
Statements, except as otherwise specifically prescribed herein.

(b)    Changes in GAAP or Statutory Accounting Methods. If at any time any
change in GAAP or Statutory Accounting Methods, as the case may be, would affect
the computation of any financial ratio or requirement set forth in any Loan
Document, and either AFG or the Required Lenders shall so request, the
Administrative Agent, the Lenders and AFG shall negotiate in good faith to amend
such ratio or requirement to preserve the original intent thereof in light of
such change in GAAP or Statutory Accounting Methods, as the case may be,
(subject to the approval of the Required Lenders); provided that, until so
amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP or Statutory Accounting Methods, as the case may be, prior
to such change therein and (ii) AFG shall provide to the Administrative Agent
and the Lenders financial statements and other documents required under this
Agreement or as reasonably requested hereunder setting forth a reconciliation
between calculations of such ratio or requirement made before and after giving
effect to such change in GAAP or Statutory Accounting Methods, as the case may
be.

 

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1.04    Rounding.  Any financial ratios required to be maintained by AFG
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).

1.05    Times of Day.  Unless otherwise specified, all references herein to
times of day shall be references to Eastern time (daylight or standard, as
applicable).

1.06    Letter of Credit Amounts.  Unless otherwise specified herein, the amount
of a Letter of Credit at any time shall be deemed to be the stated amount of
such Letter of Credit in effect at such time; provided, however, that with
respect to any Letter of Credit that, by its terms or the terms of any Issuer
Document related thereto, provides for one or more automatic increases in the
stated amount thereof, the amount of such Letter of Credit shall be deemed to be
the maximum stated amount of such Letter of Credit after giving effect to all
such increases, whether or not such maximum stated amount is in effect at such
time.

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

2.01    Revolving Loans.  Subject to the terms and conditions set forth herein,
each Lender severally agrees to make loans (each such loan, a “Revolving Loan”)
to each of the Borrowers from time to time, on any Business Day during the
Availability Period, in an aggregate amount not to exceed at any time
outstanding the amount of such Lender’s Commitment; provided, however, that
after giving effect to any Revolving Borrowing, (i) the Total Outstandings shall
not exceed the Aggregate Commitments, (ii) the aggregate Outstanding Amount of
the Revolving Loans of any Lender, plus such Lender’s Applicable Percentage of
the Outstanding Amount of all L/C Obligations shall not exceed such Lender’s
Commitment, and (iii) the aggregate Outstanding Amount of all Revolving Loans
made to AAG and L/C Obligations for which GAFRI or one of its Subsidiaries is
the Letter of Credit Obligor shall not exceed $200,000,000. Within the limits of
each Lender’s Commitment, and subject to the other terms and conditions hereof,
the Borrowers may borrow under this Section 2.01, prepay under Section 2.04, and
reborrow under this Section 2.01. Revolving Loans may be Base Rate Loans or
Eurodollar Rate Loans, as further provided herein.

2.02    Revolving Borrowings, Conversions and Continuations of Revolving Loans.

(a)    Each Revolving Borrowing, each conversion of Revolving Loans from one
Type to the other, and each continuation of Eurodollar Rate Loans shall be made
upon the applicable Borrower’s irrevocable notice to the Administrative Agent,
which may be given by telephone. Each such notice must be received by the
Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to
the requested date of any Revolving Borrowing of, conversion to or continuation
of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base
Rate Loans, and (ii) on the requested date of any Revolving Borrowing of Base
Rate Loans.

 

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Each telephonic notice by the applicable Borrower pursuant to this
Section 2.02(a) must be confirmed promptly by delivery to the Administrative
Agent of a written Revolving Loan Notice, appropriately completed and signed by
a Responsible Officer of the applicable Borrower; provided, however, any
Revolving Loan Notices delivered by AAG shall be signed by two Responsible
Officers of AAG, at least one of whom shall be the chief executive officer, the
chief operating officer or the general counsel of AAG. Each Revolving Borrowing
of, conversion to or continuation of Eurodollar Rate Loans shall be in a
principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof. Each Revolving Borrowing of or conversion to Base Rate Loans shall be
in a principal amount of $500,000 or a whole multiple of $100,000 in excess
thereof. Each Revolving Loan Notice (whether telephonic or written) shall
specify (i) whether such Borrower is requesting a Revolving Borrowing, a
conversion of Revolving Loans from one Type to the other, or a continuation of
Eurodollar Rate Loans, (ii) the requested date of the Revolving Borrowing,
conversion or continuation, as the case may be (which shall be a Business Day),
(iii) the principal amount of Revolving Loans to be borrowed, converted or
continued, (iv) the Type of Revolving Loans to be borrowed or to which existing
Revolving Loans are to be converted, and (v) if applicable, the duration of the
Interest Period with respect thereto. If a Borrower fails to specify a Type of
Revolving Loan in a Revolving Loan Notice or if a Borrower fails to give a
timely notice requesting a conversion or continuation, then the applicable
Revolving Loans shall be made as, or converted to, Base Rate Loans. Any such
automatic conversion to Base Rate Loans shall be effective as of the last day of
the Interest Period then in effect with respect to the applicable Eurodollar
Rate Loans. If a Borrower requests a Revolving Borrowing of, conversion to, or
continuation of Eurodollar Rate Loans in any such Revolving Loan Notice, but
fails to specify an Interest Period, it will be deemed to have specified an
Interest Period of one month.

(b)    Following receipt of a Revolving Loan Notice, the Administrative Agent
shall promptly notify each Lender of the amount of its Applicable Percentage of
the Revolving Loans, and if no timely notice of a conversion or continuation is
provided by the applicable Borrower, the Administrative Agent shall notify each
Lender of the details of any automatic conversion to Base Rate Loans described
in the preceding subsection. In the case of a Revolving Borrowing, each Lender
shall make the amount of its Revolving Loan available to the Administrative
Agent in immediately available funds at the Administrative Agent’s Office not
later than 1:00 p.m. on the Business Day specified in the Revolving Loan Notice.
Upon satisfaction of the applicable conditions set forth in Section 4.02 (and,
if such Revolving Borrowing is the initial Credit Extension, Section 4.01), the
Administrative Agent shall make all funds so received available to the
applicable Borrower in like funds as received by the Administrative Agent either
by (i) crediting the account of the applicable Borrower on the books of Bank of
America with the amount of such funds or (ii) wire transfer of such funds, in
each case in accordance with instructions provided to (and reasonably acceptable
to) the Administrative Agent by the applicable Borrower; provided, however, that
if, on the date the Revolving Loan Notice with respect to such Revolving
Borrowing is given by a Borrower there are L/C Borrowings outstanding, then the
proceeds of such Revolving Borrowing, first, shall be applied to the payment in
full of any such L/C Borrowings, and second, shall be made available to the
applicable Borrower as provided above.

(c)    Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued or converted only on the last day of an Interest Period for such
Eurodollar Rate Loan. During the existence of a Default, no Loans may be
requested as, converted to or continued as Eurodollar Rate Loans without the
consent of the Required Lenders.

 

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(d)    The Administrative Agent shall promptly notify the applicable Borrower
and the Lenders of the interest rate applicable to any Interest Period for
Eurodollar Rate Loans upon determination of such interest rate. At any time that
Base Rate Loans are outstanding, the Administrative Agent shall notify the
applicable Borrower and the Lenders of any change in Bank of America’s prime
rate used in determining the Base Rate promptly following the public
announcement of such change.

(e)    After giving effect to all Revolving Borrowings, all conversions of
Revolving Loans from one Type to the other, and all continuations of Revolving
Loans as the same Type, there shall not be more than ten Interest Periods in
effect with respect to Revolving Loans.

2.03    Letters of Credit.

(a)    The Letter of Credit Commitment.

(i)    Subject to the terms and conditions set forth herein, (A) the L/C Issuer
agrees, in reliance upon the agreements of the Lenders set forth in this
Section 2.03, (1) from time to time on any Business Day during the period from
the Closing Date until the Letter of Credit Expiration Date, to issue Letters of
Credit for the account of the Letter of Credit Obligors, and to amend or extend
Letters of Credit previously issued by it, in accordance with subsection
(b) below, and (2) to honor drawings under the Letters of Credit; and (B) the
Lenders severally agree to participate in Letters of Credit issued for the
account of the Letter of Credit Obligors and any drawings thereunder; provided
that after giving effect to any L/C Credit Extension with respect to any Letter
of Credit, (x) the Total Outstandings shall not exceed the Aggregate
Commitments, (y) the aggregate Outstanding Amount of the Revolving Loans of any
Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of
all L/C Obligations, shall not exceed such Lender’s Commitment, and (z) the
Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit
Sublimit. Each request by a Letter of Credit Obligor for the issuance or
amendment of a Letter of Credit shall be deemed to be a representation by such
Letter of Credit Obligor that the L/C Credit Extension so requested complies
with the conditions set forth in the proviso to the preceding sentence. Within
the foregoing limits, and subject to the terms and conditions hereof, each
Letter of Credit Obligor’s ability to obtain Letters of Credit shall be fully
revolving, and accordingly the Letter of Credit Obligors may, during the
foregoing period, obtain Letters of Credit to replace Letters of Credit that
have expired or that have been drawn upon and reimbursed. All Existing Letters
of Credit shall be deemed to have been issued pursuant hereto, and from and
after the Closing Date shall be subject to and governed by the terms and
conditions hereof.

(ii)    The L/C Issuer shall not issue any Letters of Credit if:

 

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(A)    subject to Section 2.03(b)(iii), the expiry date of such requested Letter
of Credit would occur more than twelve months after the date of issuance or last
extension, unless the Required Lenders have approved such expiry date;

(B)    the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless all the Lenders have approved such
expiry date; or

(C)    such Letter of Credit is to be denominated in a currency other than
Dollars.

(iii)    The L/C Issuer shall not be under any obligation to issue any Letter of
Credit if:

(A)    any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the L/C Issuer from issuing
such Letter of Credit, or any Law applicable to the L/C Issuer or any request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the L/C Issuer shall prohibit, or request that
the L/C Issuer refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon the L/C Issuer with respect
to such Letter of Credit any restriction, reserve or capital requirement (for
which the L/C Issuer is not otherwise compensated hereunder) not in effect on
the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss,
cost or expense which was not applicable on the Closing Date and which the L/C
Issuer in good faith deems material to it;

(B)    the issuance of such Letter of Credit would violate one or more policies
of the L/C Issuer applicable to letters of credit generally;

(C)    except as otherwise agreed by the Administrative Agent and the L/C
Issuer, such Letter of Credit is in an initial stated amount less than $500,000;

(D)    such Letter of Credit contains any provisions for automatic reinstatement
of the stated amount after any drawing thereunder; or

(E)    a default of any Lender’s obligations to fund under Section 2.03(c)
exists or any Lender is at such time a Defaulting Lender hereunder, unless the
L/C Issuer has entered into satisfactory arrangements with AFG or, as the case
may be, an applicable Letter of Credit Obligor or such Lender to eliminate the
L/C Issuer’s risk with respect to such Lender.

(iv)    The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer
would not be permitted at such time to issue such Letter of Credit in its
amended form under the terms hereof.

(v)    The L/C Issuer shall be under no obligation to amend any Letter of Credit
if (A) the L/C Issuer would have no obligation at such time to issue such Letter
of Credit in its amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

 

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(vi)    The L/C Issuer shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith, and the
L/C Issuer shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Article IX with respect to any acts taken or omissions
suffered by the L/C Issuer in connection with Letters of Credit issued by it or
proposed to be issued by it and Issuer Documents pertaining to such Letters of
Credit as fully as if the term “Administrative Agent” as used in Article IX
included the L/C Issuer with respect to such acts or omissions, and (B) as
additionally provided herein with respect to the L/C Issuer.

(b)    Procedures for Issuance and Amendment of Letters of Credit;
Auto-Extension Letters of Credit.

(i)    Each Letter of Credit shall be issued or amended, as the case may be,
upon the request of a Letter of Credit Obligor delivered to the L/C Issuer (with
a copy to the Administrative Agent) in the form of a Letter of Credit
Application, appropriately completed and signed by a Responsible Officer of such
Letter of Credit Obligor. Such Letter of Credit Application must be received by
the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least
two Business Days (or such later date and time as the Administrative Agent and
the L/C Issuer may agree in a particular instance in their sole discretion)
prior to the proposed issuance date or date of amendment, as the case may be. In
the case of a request for an initial issuance of a Letter of Credit, such Letter
of Credit Application shall specify in form and detail satisfactory to the L/C
Issuer: (A) the proposed issuance date of the requested Letter of Credit (which
shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof;
(D) the name and address of the beneficiary thereof; (E) the documents to be
presented by such beneficiary in case of any drawing thereunder; (F) the full
text of any certificate to be presented by such beneficiary in case of any
drawing thereunder; and (G) such other matters as the L/C Issuer may require. In
the case of a request for an amendment of any outstanding Letter of Credit, such
Letter of Credit Application shall specify in form and detail satisfactory to
the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of
amendment thereof (which shall be a Business Day); (C) the nature of the
proposed amendment; and (D) such other matters as the L/C Issuer may require.
Additionally, the Letter of Credit Obligor shall furnish to the L/C Issuer and
the Administrative Agent such other documents and information pertaining to such
requested Letter of Credit issuance or amendment, including any Issuer
Documents, as the L/C Issuer or the Administrative Agent may require.

(ii)    Promptly after receipt of any Letter of Credit Application, the L/C
Issuer will confirm with the Administrative Agent (by telephone or in writing)
that the Administrative Agent has received a copy of such Letter of Credit
Application from a Letter of Credit Obligor and, if not, the L/C Issuer will
provide the Administrative Agent with a copy thereof. Unless the L/C Issuer has
received written notice from any Lender, the Administrative Agent or any Loan
Party, at least one Business Day prior to the requested date of issuance or
amendment of the applicable Letter of Credit, that one or

 

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more applicable conditions contained in Article IV shall not then be satisfied,
then, subject to the terms and conditions hereof, the L/C Issuer shall, on the
requested date, issue a Letter of Credit for the account of the applicable
Letter of Credit Obligor or enter into the applicable amendment, as the case may
be, in each case in accordance with the L/C Issuer’s usual and customary
business practices. 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 L/C Issuer a risk participation in such Letter of Credit in an
amount equal to the product of such Lender’s Applicable Percentage times the
amount of such Letter of Credit

(iii)    If a Letter of Credit Obligor so requests in any applicable Letter of
Credit Application, the L/C Issuer may, in its sole and absolute discretion,
agree to issue a Letter of Credit that has automatic extension provisions (each,
an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension
Letter of Credit must permit the L/C Issuer to prevent any such extension at
least once in each twelve-month period (commencing with the date of issuance of
such Letter of Credit) by giving prior notice to the beneficiary thereof not
later than a day (the “Non-Extension Notice Date”) in each such twelve-month
period to be agreed upon at the time such Letter of Credit is issued. Unless
otherwise directed by the L/C Issuer, a Letter of Credit Obligor shall not be
required to make a specific request to the L/C Issuer for any such extension.
Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be
deemed to have authorized (but may not require) the L/C Issuer to permit the
extension of such Letter of Credit at any time to an expiry date not later than
the Letter of Credit Expiration Date; provided, however, that the L/C Issuer
shall not permit any such extension if (A) the L/C Issuer has determined that it
would not be permitted, or would have no obligation, at such time to issue such
Letter of Credit in its revised form (as extended) under the terms hereof (by
reason of the provisions of clause (ii) or (iii) of Section 2.03(a) or
otherwise), or (B) it has received notice (which may be by telephone or in
writing) on or before the day that is five Business Days before the
Non-Extension Notice Date (1) from the Administrative Agent that the Required
Lenders have elected not to permit such extension or (2) from the Administrative
Agent, any Lender or a Letter of Credit Obligor that one or more of the
applicable conditions specified in Section 4.02 is not then satisfied, and in
each such case directing the L/C Issuer not to permit such extension.

(iv)    Promptly after its delivery of any Letter of Credit or any amendment to
a Letter of Credit to an advising bank with respect thereto or to the
beneficiary thereof, the L/C Issuer will also deliver to the applicable Letter
of Credit Obligor and the Administrative Agent a true and complete copy of such
Letter of Credit or amendment.

(c)    Drawings and Reimbursements; Funding of Participations.

(i)    Upon receipt from the beneficiary of any Letter of Credit of any notice
of a drawing under such Letter of Credit, the L/C Issuer shall notify the Letter
of Credit Obligor who requested the issuance of such Letter of Credit and the
Administrative Agent thereof. Not later than 11:00 a.m. on the date of any
payment by the L/C Issuer under a Letter of Credit (each such date, an “Honor
Date”), such Letter of Credit Obligor shall reimburse the L/C Issuer through the
Administrative Agent in an amount equal to

 

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the amount of such drawing. If such Letter of Credit Obligor fails to so
reimburse the L/C Issuer by such time, the Administrative Agent shall promptly
notify each Lender of the Honor Date, the amount of the unreimbursed drawing
(the “Unreimbursed Amount”), and the amount of such Lender’s Applicable
Percentage thereof. In such event, AFG shall be deemed to have requested a
Revolving Borrowing of Base Rate Loans to be disbursed on the Honor Date in an
amount equal to the Unreimbursed Amount, without regard to the minimum and
multiples specified in Section 2.02 for the principal amount of Base Rate Loans,
but subject to the amount of the unutilized portion of the Aggregate Commitments
and the conditions set forth in Section 4.02 (other than the delivery of a
Revolving Loan Notice). Any notice given by the L/C Issuer or the Administrative
Agent pursuant to this Section 2.03(c)(i) may be given by telephone 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.

(ii)    Each Lender shall upon any notice pursuant to Section 2.03(c)(i) make
funds available to the Administrative Agent for the account of the L/C Issuer at
the Administrative Agent’s Office in an amount equal to its Applicable
Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business
Day specified in such notice by the Administrative Agent, whereupon, subject to
the provisions of Section 2.03(c)(iii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Loan to AFG in such amount.
The Administrative Agent shall remit the funds so received to the L/C Issuer.

(iii)    With respect to any Unreimbursed Amount that is not fully refinanced by
a Revolving Borrowing of Base Rate Loans because the conditions set forth in
Section 4.02 cannot be satisfied or for any other reason, the Letter of Credit
Obligor for whose account that such Letter of Credit was issued shall be deemed
to have incurred from the L/C Issuer an L/C Borrowing in the amount of the
Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due
and payable on demand (together with interest) and shall bear interest at the
Default Rate. In such event, each Lender’s payment to the Administrative Agent
for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Lender in satisfaction of its participation
obligation under this Section 2.03.

(iv)    Until each Lender funds its Revolving Loan or L/C Advance pursuant to
this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any
Letter of Credit, interest in respect of such Lender’s Applicable Percentage of
such amount shall be solely for the account of the L/C Issuer.

(v)    Each Lender’s obligation to make Revolving Loans or L/C Advances to
reimburse the L/C Issuer for amounts drawn under Letters of Credit, as
contemplated by this Section 2.03(c), shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right which such Lender may have
against the L/C Issuer, any Letter of Credit Obligor or any other Person for any
reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any
other occurrence, event or condition, whether or not similar to any of the

 

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foregoing; provided, however, that each Lender’s obligation to make Revolving
Loans pursuant to this Section 2.03(c) is subject to the conditions set forth in
Section 4.02 (other than delivery by a Borrower of a Revolving Loan Notice). No
such making of an L/C Advance shall relieve or otherwise impair the obligation
of any Letter of Credit Obligor to reimburse the L/C Issuer for the amount of
any payment made by the L/C Issuer under any Letter of Credit, together with
interest as provided herein.

(vi)    If any Lender fails to make available to the Administrative Agent for
the account of the L/C Issuer any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.03(c) by the time
specified in Section 2.03(c)(ii), the L/C Issuer shall be entitled to recover
from such Lender (acting through the Administrative Agent), on demand, such
amount with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available to the L/C
Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a
rate determined by the L/C Issuer in accordance with banking industry rules on
interbank compensation, plus any administrative, processing or similar fees
customarily charged by the L/C Issuer in connection with the foregoing. If such
Lender pays such amount (with interest and fees as aforesaid), the amount so
paid shall constitute such Lender’s Revolving Loan included in the relevant
Revolving Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as
the case may be. A certificate of the L/C Issuer submitted to any Lender
(through the Administrative Agent) with respect to any amounts owing under this
clause (vi) shall be conclusive absent manifest error.

(d)    Repayment of Participations.

(i)    At any time after the L/C Issuer has made a payment under any Letter of
Credit and has received from any Lender such Lender’s L/C Advance in respect of
such payment in accordance with Section 2.03(c), if the Administrative Agent
receives for the account of the L/C Issuer any payment in respect of the related
Unreimbursed Amount or interest thereon (whether directly from a Letter of
Credit Obligor or otherwise, including proceeds of Cash Collateral applied
thereto by the Administrative Agent), the Administrative Agent will distribute
to such Lender its Applicable Percentage thereof in the same funds as those
received by the Administrative Agent.

(ii)    If any payment received by the Administrative Agent for the account of
the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under
any of the circumstances described in Section 10.05 (including pursuant to any
settlement entered into by the L/C Issuer in its discretion), each Lender shall
pay to the Administrative Agent for the account of the L/C Issuer its Applicable
Percentage thereof on demand of the Administrative Agent, plus interest thereon
from the date of such demand to the date such amount is returned by such Lender,
at a rate per annum equal to the Federal Funds Rate from time to time in effect.
The obligations of the Lenders under this clause shall survive the payment in
full of the Obligations and the termination of this Agreement.

(e)    Obligations Absolute.  The obligation of each Letter of Credit Obligor to
reimburse the L/C Issuer for each drawing under each Letter of Credit and to
repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

 

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(i)    any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other Loan Document;

(ii)    the existence of any claim, counterclaim, setoff, defense or other right
that any Letter of Credit Obligor may have at any time against any beneficiary
or any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the L/C Issuer or any other
Person, whether in connection with this Agreement, the transactions contemplated
hereby or by such Letter of Credit or any agreement or instrument relating
thereto, or any unrelated transaction;

(iii)    any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;

(iv)    any payment by the L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by the L/C Issuer under such
Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law; or

(v)    any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, any Letter of Credit
Obligor.

Each Letter of Credit Obligor shall promptly examine a copy of each Letter of
Credit issued for its account and each amendment thereto that is delivered to it
and, in the event of any claim of noncompliance with such Letter of Credit
Obligor’s instructions or other irregularity, such Letter of Credit Obligor will
immediately notify the L/C Issuer. Each Letter of Credit Obligor shall be
conclusively deemed to have waived any such claim against the L/C Issuer and its
correspondents unless such notice is given as aforesaid.

(f)    Role of L/C Issuer.  Each Lender and each Letter of Credit Obligor agree
that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not
have any responsibility to obtain any document (other than any sight draft,
certificates and documents expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. None of the
L/C Issuer, the Administrative Agent, any of their respective Related Parties
nor any correspondent, participant or assignee of the L/C Issuer shall be liable
to any Lender for (i) any action taken or omitted in connection herewith at the
request or with the approval of the Lenders or the Required Lenders, as
applicable; (ii) any action taken or omitted in the absence of gross

 

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negligence or willful misconduct; or (iii) the due execution, effectiveness,
validity or enforceability of any document or instrument related to any Letter
of Credit or Issuer Document. Each Letter of Credit Obligor hereby assumes all
risks of the acts or omissions of any beneficiary or transferee with respect to
its use of any Letter of Credit; provided, however, that this assumption is not
intended to, and shall not, preclude any Letter of Credit Obligor pursuing such
rights and remedies as it may have against the beneficiary or transferee at law
or under any other agreement. None of the L/C Issuer, the Administrative Agent,
any of their respective Related Parties nor any correspondent, participant or
assignee of the L/C Issuer shall be liable or responsible for any of the matters
described in clauses (i) through (v) of Section 2.03(e); provided, however, that
anything in such clauses to the contrary notwithstanding, a Letter of Credit
Obligor may have a claim against the L/C Issuer, and the L/C Issuer may be
liable to such Letter of Credit Obligor, to the extent, but only to the extent,
of any direct, as opposed to consequential or exemplary, damages suffered by
such Letter of Credit Obligor which such Letter of Credit Obligor proves were
caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C
Issuer’s willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the foregoing, the L/C Issuer may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary,
and the L/C Issuer shall not be responsible for the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or assign a
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.

(g)    Cash Collateral.  Upon the request of the Administrative Agent, (i) if
the L/C Issuer has honored any full or partial drawing request under any Letter
of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of
the Letter of Credit Expiration Date, any L/C Obligation for any reason remains
outstanding, AFG shall, in each case, immediately Cash Collateralize the then
Outstanding Amount of all L/C Obligations. Sections 2.04 and 8.02(c) set forth
certain additional requirements to deliver Cash Collateral hereunder. For
purposes of this Section 2.03, Section 2.04 and Section 8.02(c), “Cash
Collateralize” means to pledge and deposit with or deliver to the Administrative
Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the
L/C Obligations, cash or deposit account balances pursuant to documentation in
form and substance satisfactory to the Administrative Agent and the L/C Issuer
(which documents are hereby consented to by the Lenders). Derivatives of such
term have corresponding meanings. AFG hereby grants to the Administrative Agent,
for the benefit of the L/C Issuer and the Lenders, a security interest in all
such cash, deposit accounts and all balances therein and all proceeds of the
foregoing. Cash Collateral shall be maintained in blocked, non-interest bearing
deposit accounts at Bank of America.

(h)    Applicability of ISP.  Unless otherwise expressly agreed by the L/C
Issuer and a Letter of Credit Obligor when a Letter of Credit is issued
(including any such agreement applicable to an Existing Credit Agreement), the
rules of the ISP shall apply to each standby Letter of Credit.

(i)    Letter of Credit Fees.  Each Letter of Credit Obligor shall pay to the
Administrative Agent for the account of each Lender in accordance with its
Applicable

 

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Percentage a Letter of Credit fee (the “Letter of Credit Fee”) for each Letter
of Credit issued for such Letter of Credit Obligor’s account equal to the
Applicable Rate times the daily amount available to be drawn under such Letter
of Credit. For purposes of computing the daily amount available to be drawn
under any Letter of Credit, the amount of such Letter of Credit shall be
determined in accordance with Section 1.06. Letter of Credit Fees shall be
(i) due and payable on the first Business Day after the end of each March, June,
September and December, commencing with the first such date to occur after the
issuance of such Letter of Credit, on the Letter of Credit Expiration Date and
thereafter on demand and (ii) computed on a quarterly basis in arrears. If there
is any change in the Applicable Rate during any quarter, the daily amount
available to be drawn under each Letter of Credit shall be computed and
multiplied by the Applicable Rate separately for each period during such quarter
that such Applicable Rate was in effect. Notwithstanding anything to the
contrary contained herein, upon the request of the Required Lenders, while any
Event of Default exists, all Letter of Credit Fees shall accrue at the Default
Rate.

(j)    Fronting Fee and Documentary and Processing Charges Payable to L/C
Issuer.  Each Letter of Credit Obligor shall pay directly to the L/C Issuer for
its own account a fronting fee with respect to each Letter of Credit issued for
such Letter of Credit Obligor’s account, at the rate per annum specified in the
Fee Letter, computed on the daily amount available to be drawn under such Letter
of Credit on a quarterly basis in arrears. Such fronting fee shall be due and
payable on the tenth Business Day after the end of each March, June, September
and December in respect of the most recently-ended quarterly period (or portion
thereof, in the case of the first payment), commencing with the first such date
to occur after the issuance of such Letter of Credit, on the Letter of Credit
Expiration Date and thereafter on demand. For purposes of computing the daily
amount available to be drawn under any Letter of Credit, the amount of such
Letter of Credit shall be determined in accordance with Section 1.06. In
addition, AFG shall pay directly to the L/C Issuer for its own account the
customary issuance, presentation, amendment and other processing fees, and other
standard costs and charges, of the L/C Issuer relating to letters of credit as
from time to time in effect. Such customary fees and standard costs and charges
are due and payable on demand and are nonrefundable.

(k)    Conflict with Issuer Documents.  In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall
control.

(l)    Letters of Credit Issued for Letter of Credit Obligors that are
Subsidiaries.  Notwithstanding that a Letter of Credit issued or outstanding
hereunder is in support of any obligations of, or is for the account of, a
Letter of Credit Obligor that is a Subsidiary, AFG shall be jointly and
severally obligated to reimburse the L/C Issuer hereunder for any and all
drawings under such Letter of Credit. AFG hereby acknowledges that the issuance
of Letters of Credit for the account of Letter of Credit Obligors that are
Subsidiaries inures to the benefit of AFG, and that AFG’s business derives
substantial benefits from the businesses of such Subsidiaries.

2.04    Prepayments.

(a)    Either Borrower may, upon notice to the Administrative Agent, at any time
or from time to time voluntarily prepay Revolving Loans made to it in whole or
in part without premium or penalty; provided that (i) such notice must be
received by the Administrative Agent

 

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not later than 11:00 a.m. (A) three Business Days prior to any date of
prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of Base
Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal
amount of a whole multiple of $1,000,000; and (iii) any prepayment of Base Rate
Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000
in excess thereof or, in each case, if less, the entire principal amount thereof
then outstanding. Each such notice shall specify the date and amount of such
prepayment and the Type(s) of Revolving Loans to be prepaid and, if Eurodollar
Rate Loans are to be prepaid, the Interest Period(s) of such Loans. The
Administrative Agent will promptly notify each Lender of its receipt of each
such notice, and of the amount of such Lender’s Applicable Percentage of such
prepayment. If such notice is given by a Borrower, such Borrower shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan
shall be accompanied by all accrued interest on the amount prepaid, together
with any additional amounts required pursuant to Section 3.05. Each such
prepayment shall be applied to the Revolving Loans of the Lenders in accordance
with their respective Applicable Percentages.

(b)    If for any reason the Total Outstandings at any time exceed the Aggregate
Commitments then in effect, the Borrowers shall immediately prepay Loans and/or
Cash Collateralize the L/C Obligations in an aggregate amount equal to such
excess; provided, however, that AFG shall not be required to Cash Collateralize
the L/C Obligations pursuant to this Section 2.04(b) unless after prepayment in
the full amount of the Revolving Loans the Total Outstandings exceed the
Aggregate Commitments then in effect.

2.05    Termination or Reduction of Commitments.  AFG may, upon notice to the
Administrative Agent, terminate the Aggregate Commitments, or from time to time
permanently reduce the Aggregate Commitments; provided that (i) any such notice
shall be received by the Administrative Agent not later than 11:00 a.m. five
Business Days prior to the date of termination or reduction, (ii) any such
partial reduction shall be in an aggregate amount of $10,000,000 or any whole
multiple of $1,000,000 in excess thereof, and (iii) AFG shall not terminate or
reduce the Aggregate Commitments if, after giving effect thereto and to any
concurrent prepayments hereunder, the Total Outstandings would exceed the
Aggregate Commitments. The Administrative Agent will promptly notify the Lenders
of any such notice of termination or reduction of the Aggregate Commitments. Any
reduction of the Aggregate Commitments shall be applied to the Commitment of
each Lender according to its Applicable Percentage. All fees accrued until the
effective date of any termination of the Aggregate Commitments shall be paid on
the effective date of such termination.

2.06    Repayment.  Each Borrower shall repay to the Lenders on the Maturity
Date the aggregate principal amount of Revolving Loans made to it and AFG shall
repay to the Lenders on the Maturity Date all other Obligations outstanding on
such date.

2.07    Interest.

(a)    Subject to the provisions of subsection (b) below, (i) each Eurodollar
Rate Loan shall bear interest on the outstanding principal amount thereof for
each Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate and

 

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(ii) each Base Rate Loan shall bear interest on the outstanding principal amount
thereof from the applicable borrowing date at a rate per annum equal to the Base
Rate plus the Applicable Rate.

(b)    (i)    If any amount of principal of any Loan is not paid when due
(without regard to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.

(ii)    If any amount (other than principal of any Loan) payable by any Loan
Party under any Loan Document is not paid when due (without regard to any
applicable grace periods), whether at stated maturity, by acceleration or
otherwise, then upon the request of the Required Lenders, such amount shall
thereafter bear interest at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iii)    Upon the request of the Required Lenders, while any Event of Default
exists, AFG shall pay interest on the principal amount of all outstanding
Obligations hereunder at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iv)    Accrued and unpaid interest on past due amounts (including interest on
past due interest) shall be due and payable upon demand.

(c)    Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.

2.08 Fees.

(a)    Commitment Fee.  AFG shall pay to the Administrative Agent for the
account of each Lender in accordance with its Applicable Percentage, a
commitment fee equal to the Applicable Rate times the actual daily amount by
which the Aggregate Commitments exceed the sum of (i) the Outstanding Amount of
Revolving Loans and (ii) the Outstanding Amount of the L/C Obligations. The
commitment fee shall accrue at all times during the Availability Period,
including at any time during which one or more of the conditions in Article IV
is not met, and shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December, commencing with the
first such date to occur after the Closing Date, and on the last day of the
Availability Period. The commitment fee shall be calculated quarterly in
arrears, and if there is any change in the Applicable Rate during any quarter,
the actual daily amount shall be computed and multiplied by the Applicable Rate
separately for each period during such quarter that such Applicable Rate was in
effect.

 

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(b)     Other Fees.

(i)    The Borrowers shall pay to the Arranger and the Administrative Agent for
their own respective accounts fees in the amounts and at the times specified in
the Fee Letter. Such fees shall be fully earned when paid and shall not be
refundable for any reason whatsoever.

(ii)    The Borrowers shall pay to the Lenders such fees as shall have been
separately agreed upon in writing in the amounts and at the times so specified.
Such fees shall be fully earned when paid and shall not be refundable for any
reason whatsoever.

2.09    Computation of Interest and Fees.  All computations of interest for Base
Rate Loans when the Base Rate is determined by Bank of America’s “prime rate”
and all computations of fees shall be made on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed. Subject to Section 10.09, all
other computations of interest shall be made on the basis of a 360-day year and
actual days elapsed (which results in more interest being paid than if computed
on the basis of a 365-day year). Interest shall accrue on each Loan for the day
on which the Loan is made, and shall not accrue on a Loan, or any portion
thereof, for the day on which the Loan or such portion is paid, provided that
any Loan that is repaid on the same day on which it is made shall, subject to
Section 2.11(a), bear interest for one day. Each determination by the
Administrative Agent of an interest rate or fee hereunder shall be conclusive
and binding for all purposes, absent manifest error.

2.10    Evidence of Debt.  The Credit Extensions made by each Lender shall be
evidenced by one or more accounts or records maintained by such Lender and by
the Administrative Agent in the ordinary course of business. The accounts or
records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Credit Extensions made by
the Lenders to the Borrowers and the interest and payments thereon. Any failure
to so record or any error in doing so shall not, however, limit or otherwise
affect the obligation of the Borrowers hereunder to pay any amount owing with
respect to the Obligations. In the event of any conflict between the accounts
and records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error. Upon the
request of any Lender made through the Administrative Agent, the Borrowers shall
execute and deliver to such Lender (through the Administrative Agent) a Note,
which shall evidence such Lender’s Loans in addition to such accounts or
records. Each Lender may attach schedules to its Note and endorse thereon the
date, Type (if applicable), amount and maturity of its Loans and payments with
respect thereto.

2.11    Payments Generally; Administrative Agent’s Clawback.

(a)    General.  All payments to be made by the Borrowers shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein, all payments by the Borrowers
hereunder shall be made to the Administrative Agent, for the account of the
respective Lenders to which such payment is owed, at the Administrative Agent’s
Office in Dollars and in immediately available funds not later than 2:00 p.m. on
the date specified herein. The Administrative Agent will promptly distribute to

 

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each Lender its Applicable Percentage (or other applicable share as provided
herein) of such payment in like funds as received by wire transfer to such
Lender’s Lending Office. All payments received by the Administrative Agent after
2:00 p.m. shall be deemed received on the next succeeding Business Day and any
applicable interest or fee shall continue to accrue. If any payment to be made
by the Borrowers shall come due on a day other than a Business Day, payment
shall be made on the next following Business Day, and such extension of time
shall be reflected in computing interest or fees, as the case may be.

(b)    (i)    Funding by Lenders; Presumption by Administrative Agent.  Unless
the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Revolving Borrowing of a Eurodollar Rate Loan (or, in the
case of any Revolving Borrowing of a Base Rate Loan, prior to 12:00 noon on the
date of such Revolving Borrowing) that such Lender will not make available to
the Administrative Agent such Lender’s share of such Revolving Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with Section 2.02 (or, in the case of a Revolving
Borrowing on a Base Rate Loan, that such Lender has made such share available in
accordance with and at the time required by Section 2.02) and may, in reliance
upon such assumption, make available to the applicable Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Revolving Borrowing available to the Administrative Agent, then the
applicable Lender and the applicable Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount in
immediately available funds with interest thereon, for each day from and
including the date such amount is made available to the applicable Borrower to
but excluding the date of payment to the Administrative Agent, at (A) in the
case of a payment to be made by such Lender, the greater of the Federal Funds
Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation, plus any administrative,
processing or similar fees customarily charged by the Administrative Agent in
connection with the foregoing and (B) in the case of a payment to be made by a
Borrower, the interest rate applicable to Base Rate Loans. If a Borrower and
such Lender shall pay such interest to the Administrative Agent for the same or
an overlapping period, the Administrative Agent shall promptly remit to such
Borrower the amount of such interest paid by such Borrower for such period. If
such Lender pays its share of the applicable Revolving Borrowing to the
Administrative Agent, then the amount so paid shall constitute such Lender’s
Revolving Loan included in such Revolving Borrowing. Any payment by a Borrower
shall be without prejudice to any claim such Borrower may have against a Lender
that shall have failed to make such payment to the Administrative Agent.

(ii)    Payments by a Borrower; Presumptions by Administrative Agent.  Unless
the Administrative Agent shall have received notice from a Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or the L/C Issuer hereunder that such Borrower will not make such
payment, the Administrative Agent may assume that such Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the
amount due. In such event, if such Borrower has not in fact made such payment,
then each of the Lenders or the L/C Issuer,

 

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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 L/C Issuer,
in immediately available funds 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 Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.

A notice of the Administrative Agent to any Lender or a Borrower with respect to
any amount owing under this subsection (b) shall be conclusive, absent manifest
error.

(c)    Failure to Satisfy Conditions Precedent.  If any Lender makes available
to the Administrative Agent funds for any Loan to be made by such Lender as
provided in the foregoing provisions of this Article II, and such funds are not
made available to a Borrower by the Administrative Agent because the conditions
to the applicable Credit Extension set forth in Article IV are not satisfied or
waived in accordance with the terms hereof, the Administrative Agent shall
promptly return such funds (in like funds as received from such Lender) to such
Lender, without interest.

(d)    Obligations of Lenders Several.  The obligations of the Lenders hereunder
to make Revolving Loans and to make payments pursuant to Section 10.04(c) are
several and not joint. The failure of any Lender to make any Revolving Loan or
to make any payment under Section 10.04(c) on any date required hereunder shall
not relieve any other Lender of its corresponding obligation to do so on such
date, and no Lender shall be responsible for the failure of any other Lender to
so make its Revolving Loan or to make its payment under Section 10.04(c).

(e)    Funding Source.  Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Loan in any particular place or manner or to constitute
a representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.

2.12    Sharing of Payments by Lenders.  If any Lender shall, by exercising any
right of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of the Revolving Loans made by it or the
participation in L/C Obligations held by it resulting in such Lender’s receiving
payment of a portion of the aggregate amount of such Revolving Loans or
participations and accrued interest thereon greater than its pro rata 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 Revolving Loans and subparticipations
in L/C 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 Revolving Loans and other amounts owing
them, provided that:

(i)    if any such participations or subparticipations are purchased and all or
any portion of the payment giving rise thereto is recovered, such participations
or subparticipations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest; and

 

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(ii)    the provisions of this Section shall not be construed to apply to
(x) any payment made by a Borrower pursuant to and in accordance with the
express terms of this Agreement or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Revolving Loans or subparticipations in L/C Obligations to any assignee or
participant, other than to AFG or any Subsidiary thereof (as to which the
provisions of this Section shall apply).

Each 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 such
Borrower rights of setoff and counterclaim with respect to such participation as
fully as if such Lender were a direct creditor of such Borrower in the amount of
such participation.

2.13    Increase in Commitments.

(a)    Request for Increase.  Provided there exists no Default, upon notice to
the Administrative Agent (which shall promptly notify the Lenders), AFG may from
time to time, request one or more increases in the Aggregate Commitments in an
aggregate amount (for all such requests) not exceeding $100,000,000; provided
that (i) any such request for an increase shall be in a minimum amount of
$10,000,000, and (ii) the Aggregate Commitments shall not at any time exceed the
lesser of (x) $600,000,000 or (y) the amount to which the maximum Aggregate
Commitments shall have been permanently reduced pursuant to Section 2.05 or
otherwise under this Agreement. At the time of sending such notice, AFG (in
consultation with the Administrative Agent) shall specify the time period within
which each Lender is requested to respond (which shall in no event be less than
ten Business Days from the date of delivery of such notice to the Lenders).

(b)    Lender Elections to Increase.  Each Lender shall notify the
Administrative Agent within such time period whether or not it agrees to
increase its Commitment and, if so, whether by an amount equal to, greater than,
or less than its Applicable Percentage of such requested increase. Any Lender
not responding within such time period shall be deemed to have declined to
increase its Commitment.

(c)    Notification by Administrative Agent; Additional Lenders.  The
Administrative Agent shall notify AFG and each Lender of the Lenders’ responses
to each request made hereunder. To achieve the full amount of a requested
increase and subject to the approval of the Administrative Agent and the L/C
Issuer (which approvals shall not be unreasonably withheld), AFG may also invite
additional Eligible Assignees to become Lenders pursuant to a joinder agreement
in form and substance satisfactory to the Administrative Agent and its counsel.

(d)    Effective Date and Allocations.  If the Aggregate Commitments are
increased in accordance with this Section, the Administrative Agent and AFG
shall determine the effective date (the “Increase Effective Date”) and the final
allocation of such increase. The Administrative Agent shall promptly notify AFG
and the Lenders of the final allocation of such increase and the Increase
Effective Date.

 

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(e)    Conditions to Effectiveness of Increase.  As a condition precedent to
such increase, each Borrower shall deliver to the Administrative Agent a
certificate of such Borrower dated as of the Increase Effective Date (in
sufficient copies for each Lender) signed by a Responsible Officer of such
Borrower (i) certifying and attaching the resolutions adopted by such Borrower
approving or consenting to such increase, and (ii) certifying that, before and
after giving effect to such increase, (A) the representations and warranties
contained in Article V and the other Loan Documents are true and correct on and
as of the Increase Effective Date, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they are true and correct as of such earlier date, and except that for
purposes of this Section 2.13, the representations and warranties contained in
subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most
recent statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01, and (B) no Default exists. The Borrowers shall prepay any
Revolving Loans outstanding on the Increase Effective Date (and pay any
additional amounts required pursuant to Section 3.05) to the extent necessary to
keep the outstanding Revolving Loans ratable with any revised Applicable
Percentages arising from any nonratable increase in the Commitments under this
Section.

(f)    Conflicting Provisions.  This Section shall supersede any provisions in
Section 2.12 or 10.01 to the contrary.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01    Taxes.

(a)    Payments Free of Taxes.  Any and all payments by or on account of any
obligation of the Borrowers hereunder or under any other Loan Document shall be
made free and clear of and without reduction or withholding for any Indemnified
Taxes (including any Other Taxes), provided that if either 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 L/C Issuer, as the case may be, receives an amount equal to the
sum it would have received had no such deductions been made, (ii) such Borrower
shall make such deductions and (iii) such Borrower shall timely pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.

(b)    Payment of Other Taxes.  Without limiting the provisions of subsection
(a) above, AFG (and AAG, to the extent related to any Revolving Loan made to it)
shall timely pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.

(c)    Indemnification.  AFG (and AAG, to the extent related to any Revolving
Loan made to it) shall indemnify the Administrative Agent and each Lender,
within 10 days after demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes (including

 

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Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) paid by the Administrative Agent or such
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
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to AFG by a Lender or the L/C Issuer (with a copy to the
Administrative Agent), or by the Administrative Agent on its own behalf or on
behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest error.

(d)    Evidence of Payments.  As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by AFG (or to the extent applicable, AAG) to a
Governmental Authority, AFG (or to the extent applicable, AAG) shall deliver to
the Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.

(e)    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
either 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 such Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law or reasonably
requested by such 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. In
addition, any Lender, if requested by either Borrower or the Administrative
Agent, shall deliver such other documentation prescribed by applicable law or
reasonably requested by such Borrower or the Administrative Agent as will enable
such 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 either
Borrower is resident for tax purposes in the United States, any Foreign Lender
shall deliver to such Borrower and the Administrative Agent (in such number of
copies 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 a Borrower or the Administrative Agent, but only
if such Foreign Lender is legally entitled to do so), whichever of the following
is applicable:

(i)    duly completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States is a
party,

(ii)    duly completed copies of Internal Revenue Service 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) a certificate to
the effect that such Foreign Lender is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of the

 

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Code, (B) a “10 percent shareholder” of either 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 copies of
Internal Revenue Service Form W-8BEN, or

(iv)    any other 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 a Borrower to determine the withholding or deduction
required to be made.

(f)    Treatment of Certain Refunds.  If the Administrative Agent, any Lender or
the L/C Issuer 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 either
Borrower or with respect to which either Borrower has paid additional amounts
pursuant to this Section, it shall pay to such Borrower an amount equal to such
refund (but only to the extent of indemnity payments made, or additional amounts
paid, by such 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 L/C Issuer, as the case may be, and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund), provided that such Borrower, upon the
request of the Administrative Agent, such Lender or the L/C Issuer, agrees to
repay the amount paid over to such Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority, unless such
penalties, interest or other charges have resulted from the gross negligence or
willful misconduct of the Administrative Agent or such Lender) to the
Administrative Agent, such Lender or the L/C Issuer in the event the
Administrative Agent, such Lender or the L/C Issuer is required to repay such
refund to such Governmental Authority. This subsection shall not be construed to
require the Administrative Agent, any Lender or the L/C Issuer to make available
its tax returns (or any other information relating to its taxes that it deems
confidential) to either Borrower or any other Person.

3.02    Illegality.  If any Lender determines that any Law has made it unlawful,
or that any Governmental Authority has asserted that it is unlawful, for any
Lender or its applicable Lending Office to make, maintain or fund Eurodollar
Rate Loans, or to determine or charge interest rates based upon the Eurodollar
Rate, or any Governmental Authority has imposed material restrictions on the
authority of such Lender to purchase or sell, or to take deposits of, Dollars in
the London interbank market, then, on notice thereof by such Lender to the
Borrowers through the Administrative Agent, any obligation of such Lender to
make or continue Eurodollar Rate Loans or to convert Base Rate Loans to
Eurodollar Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Borrowers that the circumstances giving rise to
such determination no longer exist. Upon receipt of such notice, the applicable
Borrower shall, upon demand from such Lender (with a copy to the Administrative
Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such
Lender owed by such Borrower to Base Rate Loans, either on the last day of the
Interest Period therefor, if such Lender may lawfully continue to maintain such
Eurodollar Rate Loans to such day, or immediately, if such Lender may not
lawfully continue to maintain such Eurodollar Rate Loans. Upon any such
prepayment or conversion, such Borrower shall also pay accrued interest on the
amount so prepaid or converted.

 

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3.03    Inability to Determine Rates.  If the Required Lenders determine that
for any reason in connection with any request for a Eurodollar Rate Loan or a
conversion to or continuation thereof that (a) Dollar deposits are not being
offered to banks in the London interbank eurodollar market for the applicable
amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and
reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan, or
(c) the Eurodollar Rate for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to
such Lenders of funding such Loan, the Administrative Agent will promptly so
notify the Borrowers and each Lender. Thereafter, the obligation of the Lenders
to make or maintain Eurodollar Rate Loans shall be suspended until the
Administrative Agent (upon the instruction of the Required Lenders) revokes such
notice. Upon receipt of such notice, the applicable Borrower may revoke any
pending request for a Revolving Borrowing of, conversion to or continuation of
Eurodollar Rate Loans or, failing that, will be deemed to have converted such
request into a request for a Revolving Borrowing of Base Rate Loans in the
amount specified therein.

3.04    Increased Costs; Reserves on Eurodollar Rate Loans.

(a)    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 contemplated by Section 3.04(e));

(ii)    subject any Lender or the L/C Issuer 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 Eurodollar Loan made by it, or change the basis of
taxation of payments to such Lender or the L/C Issuer in respect thereof (except
for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition
of, or any change in the rate of, any Excluded Tax payable by such Lender or the
L/C Issuer ); or

(iii)    impose on any Lender or the L/C Issuer or the London interbank market
any other condition, cost or expense affecting this Agreement or Eurodollar
Loans 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 Eurodollar Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to such Lender or the
L/C Issuer 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 L/C Issuer hereunder (whether of principal, interest or any other
amount) then, upon request of such Lender or the L/C issuer, as the case may be,
AFG will pay to such Lender or the L/C Issuer, as the case may be, such
additional amount or amounts as will compensate such Lender or the L/C Issuer,
as the case may be, for such additional costs incurred or reduction suffered.

 

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(b)    Capital Requirements.   If any Lender or the L/C Issuer determines that
any Change in Law affecting such Lender or the L/C Issuer or any Lending Office
of such Lender or such Lender’s or the L/C Issuer’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 L/C Issuer’s capital or on the capital of such
Lender’s or the L/C Issuer’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 Letter of
Credit issued by the L/C Issuer, to a level below that which such Lender or the
L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s or
the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s
holding company with respect to capital adequacy), then from time to time AFG
will pay to such Lender or the L/C Issuer, as the case may be, such additional
amount or amounts as will compensate such Lender or the L/C Issuer or such
Lender’s or the L/C Issuer’s holding company for any such reduction suffered.

(c)    Certificates for Reimbursement.   A certificate of a Lender or the L/C
Issuer setting forth the amount or amounts necessary to compensate such Lender
or the L/C Issuer or its holding company, as the case may be, as specified in
subsection (a) or (b) of this Section and delivered to AFG shall be conclusive
absent manifest error. AFG shall pay such Lender or the L/C Issuer, as the case
may be, the amount shown as due on any such certificate within 10 days after
receipt thereof.

(d)    Delay in Requests.   Failure or delay on the part of any Lender or the
L/C Issuer to demand compensation pursuant to the foregoing provisions of this
Section shall not constitute a waiver of such Lender’s or the L/C Issuer’s right
to demand such compensation, provided that neither Borrower shall not be
required to compensate a Lender or the L/C Issuer pursuant to the foregoing
provisions of this Section for any increased costs incurred or reductions
suffered more than nine months prior to the date that such Lender or the L/C
Issuer, as the case may be, notifies a Borrower of the Change in Law giving rise
to such increased costs or reductions and of such Lender’s or the L/C Issuer’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
nine-month period referred to above shall be extended to include the period of
retroactive effect thereof).

(e)    Reserves on Eurodollar Rate Loans.   AFG (and AAG, to the extent related
to any Eurodollar Rate Loan made to it) shall pay to each Lender, as long as
such Lender shall be required to maintain reserves with respect to liabilities
or assets consisting of or including Eurocurrency funds or deposits (currently
known as “Eurocurrency liabilities”), additional interest on the unpaid
principal amount of each Eurodollar Rate Loan equal to the actual costs of such
reserves allocated to such Loan by such Lender (as determined by such Lender in
good faith, which determination shall be conclusive), which shall be due and
payable on each date on which interest is payable on such Loan, provided the
applicable Borrower shall have received at least 10 days’ prior notice (with a
copy to the Administrative Agent) of such additional interest from such Lender.
If a Lender fails to give notice 10 days prior to the relevant Interest Payment
Date, such additional interest shall be due and payable 10 days from receipt of
such notice.

3.05    Compensation for Losses.   Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, AFG (and AAG, to the extent related to
any Eurodollar Rate Loan made to it) shall promptly compensate such Lender for
and hold such Lender harmless from any loss, cost or expense incurred by it as a
result of:

 

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(a)    any continuation, conversion, payment or prepayment of any Loan other
than a Base Rate Loan on a day other than the last day of the Interest Period
for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise);

(b)    any failure by a Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any Loan other
than a Base Rate Loan on the date or in the amount notified by such Borrower; or

(c)    any assignment of a Eurodollar Rate Loan on a day other than the last day
of the Interest Period therefor as a result of a request by AFG pursuant to
Section 10.13;

including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
The applicable Borrower shall also pay any customary administrative fees charged
by such Lender in connection with the foregoing. For purposes of calculating
amounts payable by a Borrower to the Lenders under this Section 3.05 with
respect to loss of anticipated profits, such Borrower shall be obligated to pay
an amount equal to the daily interest for the unexpired portion of such Interest
Period on the portion of the Loan so repaid, or as to which a Eurodollar Rate
Loan was so terminated, at a per annum rate equal to the excess, if any, of
(i) the Eurodollar Rate calculated on the basis of the rate applicable to such
Loan minus (ii) the rate of interest obtainable by the Administrative Agent upon
the purchase of debt securities customarily issued by the Treasury of the United
States of America which have a maturity date approximating the last Banking Day
of such Interest Period, together with reimbursement for any other fees,
expenses or charges incurred by such Lender arising from the liquidation or
reemployment of funds obtained by it to maintain such Loan or from fees payable
to terminate the deposits.

3.06    Mitigation Obligations; Replacement of Lenders.

(a)    Designation of a Different Lending Office.  If any Lender requests
compensation under Section 3.04, or a Borrower is required to pay any additional
amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 3.01, or if any Lender gives a notice pursuant to
Section 3.02, then such Lender shall use reasonable efforts to designate a
different Lending Office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04,
as the case may be, in the future, or eliminate the need for the notice pursuant
to Section 3.02, as applicable, and (ii) in each case, would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. AFG (and AAG, to the extent related to any
Eurodollar Rate Loan made to it) hereby agrees to pay all reasonable costs and
expenses incurred by any Lender in connection with any such designation or
assignment.

 

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(b)    Replacement of Lenders.  If any Lender requests compensation under
Section 3.04, or if a Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, AFG may replace such Lender in accordance with Section 10.13.

3.07    Survival.  All of the Borrowers’ obligations under this Article III
shall survive termination of the Aggregate Commitments and repayment of all
other Obligations hereunder.

ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01    Conditions of Initial Credit Extension.  The obligation of each Lender
to make its initial Credit Extension hereunder is subject to satisfaction of the
following conditions precedent having been met:

(a)    The Administrative Agent’s receipt of the following, each of which shall
be originals or telecopies (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of each Loan Party,
each dated the Closing Date (or, in the case of certificates of governmental
officials, a recent date before the Closing Date) and each in form and substance
satisfactory to the Administrative Agent and each of the Lenders:

(i)    executed counterparts of this Agreement, sufficient in number for
distribution to the Administrative Agent, each Lender and each Borrower;

(ii)    a Note executed by each Borrower in favor of each Lender requesting a
Note;

(iii)    the AFG Guaranty, duly executed by AFG;

(iv)    such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of each Borrower
as the Administrative Agent may require evidencing the identity, authority and
capacity of each Responsible Officer thereof authorized to act as a Responsible
Officer in connection with this Agreement and the other Loan Documents to which
such Borrower is a party;

(v)    such documents and certifications as the Administrative Agent may
reasonably require to evidence that each Loan Party is duly organized or formed,
and that each Loan Party is validly existing, in good standing and qualified to
engage in business in each jurisdiction where its ownership, lease or operation
of properties or the conduct of its business requires such qualification, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect;

(vi)    a favorable opinion of Keating, Muething & Klekamp, counsel to the Loan
Parties, addressed to the Administrative Agent and each Lender, as to the
matters concerning AFG and its Subsidiaries and the Loan Documents as the
Required Lenders may reasonably request;

 

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(vii)    a certificate of a Responsible Officer of each Borrower either
(A) attaching copies of all consents, licenses and approvals required in
connection with the execution, delivery and performance by such Borrower and the
validity against such Borrower of the Loan Documents to which it is a party, and
such consents, licenses and approvals shall be in full force and effect, or
(B) stating that no such consents, licenses or approvals are so required;

(viii)    a certificate signed by a Responsible Officer of AFG certifying
(A) that the conditions specified in Sections 4.02(a) and (b) have been
satisfied, and (B) that there has been no event or circumstance since the date
of the Audited Financial Statements that has had or could be reasonably expected
to have, either individually or in the aggregate, a Material Adverse Effect; and
(C) the current Debt Ratings;

(ix)    a duly completed Compliance Certificate for the period ending
December 31, 2005, signed by a Responsible Officer of AFG;

(x)    evidence that the Existing AFG Credit Agreement and the Existing GAFRI
Credit Agreement have been or concurrently with the Closing Date are being
terminated and all outstanding fees and interest related thereto have been paid
in full;

(xi)    executed Subordination Agreement by each Borrower’s Subsidiaries and
Affiliates to which each Borrower has any Indebtedness; and

(xii)    such other assurances, certificates, documents, consents or opinions as
the Administrative Agent or the Required Lenders reasonably may require.

(b)    Any fees related to this Agreement required to be paid on or before the
Closing Date shall have been paid.

(c)    Unless waived by the Administrative Agent, the Borrowers shall have paid
all fees, charges and disbursements of counsel to the Administrative Agent
(directly to such counsel if requested by the Administrative Agent) to the
extent invoiced prior to or on the Closing Date, plus such additional amounts of
such fees, charges and disbursements as shall constitute its reasonable estimate
of such fees, charges and disbursements incurred or to be incurred by it through
the closing proceedings (provided that such estimate shall not thereafter
preclude a final settling of accounts between the Borrowers and the
Administrative Agent).

(d)    The Closing Date shall have occurred on or before April 15, 2006.

Without limiting the generality of the provisions of Section 9.04, for purposes
of determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, (i) this Agreement and the
Schedules and Exhibits attached hereto and each other document to which it is a
party or which it has reviewed or (ii) any other matter required thereunder to
be consented to or approved by or acceptable or satisfactory to a Lender unless
the Administrative Agent shall have received notice from such Lender prior to
the proposed Closing Date specifying its objection thereto.

 

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4.02    Conditions to all Credit Extensions.  The obligation of each Lender to
honor any Request for Credit Extension (other than a Revolving Loan Notice
requesting only a conversion of Revolving Loans to the other Type, or a
continuation of Eurodollar Rate Loans) is subject to the following conditions
precedent:

(a)    The representations and warranties of AFG contained in Article V or any
other Loan Document, or which are contained in any document furnished at any
time under or in connection herewith or therewith, shall be true and correct on
and as of the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct as of such earlier date, and except that for
purposes of this Section 4.02, the representations and warranties contained in
subsections (a), (b) and (c) of Section 5.05 shall be deemed to refer to the
most recent statements furnished pursuant to clauses (a), (b) and (c),
respectively, of Section 6.01.

(b)    No Default shall exist, or would result from such proposed Credit
Extension or from the application of the proceeds thereof.

(c)    The Administrative Agent and, if applicable, the L/C Issuer, shall have
received a Request for Credit Extension in accordance with the requirements
hereof.

Each Request for Credit Extension (other than a Revolving Loan Notice requesting
only a conversion of Revolving Loans to the other Type or a continuation of
Eurodollar Rate Loans) submitted by a Borrower shall be deemed to be a
representation and warranty that the conditions specified in Sections 4.02(a)
and (b) have been satisfied on and as of the date of the applicable Credit
Extension.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

AFG represents and warrants to the Administrative Agent and the Lenders that:

5.01    Existence, Qualification and Power.  AFG and each of its Subsidiaries
thereof (a) is duly organized or formed, validly existing and, as applicable, in
good standing under the Laws of the jurisdiction of its incorporation or
organization, (b) has all requisite power and authority and all requisite
governmental licenses, insurance licenses, authorizations, consents and
approvals to (i) own its assets and carry on its business and (ii) execute,
deliver and perform its obligations under the Loan Documents to which it is a
party, and (c) is duly qualified and is licensed and in good standing under the
Laws of each jurisdiction where its ownership, lease or operation of properties
or the conduct of its business requires such qualification or license, except in
each case referred to in clause (b)(i) or (c), to the extent that failure to do
so could not, either individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

5.02    Authorization; No Contravention.  The execution, delivery and
performance by each Loan Party of each Loan Document to which it is party, have
been duly authorized by all necessary corporate action, and do not and will not
(a) contravene the terms of any of such Loan Party’s Organization Documents;
(b) conflict with or result in any breach or contravention of, or the creation
of any Lien under, or require any payment to be made under (i) any Contractual
Obligation to which such Loan Party is a party or affecting such Loan Party or
the properties of

 

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AFG or any of its Subsidiaries or (ii) any order, injunction, writ or decree of
any Governmental Authority or any arbitral award to which such Loan Party or its
property is subject; or (c) violate any Law.

5.03    Governmental Authorization;  Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document.

5.04    Binding Effect.  This Agreement has been, and each other Loan Document,
when delivered hereunder, will have been, duly executed and delivered by each
Loan Party to the extent that it is party thereto. This Agreement constitutes,
and each other Loan Document when so delivered will constitute, a legal, valid
and binding obligation of such Loan Party that is party thereto, enforceable
against such Loan Party to the extent that it is party thereto in accordance
with its terms, subject to Debtor Relief Laws.

5.05    Financial Statements; No Material Adverse Effect.

(a)    The Audited Financial Statements (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present the financial condition
of AFG and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of AFG and its Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Indebtedness.

(b)    AFG’s Form 10-K for the fiscal year ended December 31, 2005 (including
all of the financial statements and schedules included therein) contains all
information which is required to be stated therein in accordance with the
Exchange Act and conforms in all material respects to the requirements thereof;
and AFG’s Form 10-K for the fiscal year ended December 31, 2005 did not when
filed include any untrue statement of a material fact or omit to state a
material fact which was required to be stated therein or was necessary to make
the statements therein not misleading in the light of the circumstances in which
they were made. AFG’s 10-K for the fiscal year ended December 31, 2005 sets
forth all material indebtedness and other liabilities, direct or contingent, of
AFG and its consolidated Subsidiaries as of the date of such financial
statements, including liabilities for taxes, material commitments and
Indebtedness.

(c)    The December 31, 2005 annual financial statements of GAIC, GALIC and RICA
in the form filed with the Superintendent of Insurance of the State of Ohio and
California, respectively, were prepared in accordance with applicable statutory
accounting principles and fairly present in accordance with applicable statutory
regulations and guidelines, the financial condition of GAIC, GALIC and RICA at
the dates thereof and the results of its operation for the periods covered
thereby.

 

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(d)    Since the date of the Audited Financial Statements, there has been no
event or circumstance, either individually or in the aggregate, that has had or
could reasonably be expected to have a Material Adverse Effect.

5.06    Litigation.  There is no litigation, at law or in equity, or any
proceeding before any federal, state, provincial or municipal court, board or
other Governmental Authority or administrative agency or any arbitrator pending
or to the knowledge of AFG threatened which may involve any material risk of any
final judgment or liability not adequately covered by insurance or which may
otherwise, individually or in the aggregate, result in a Material Adverse
Effect, or which questions the validity or enforceability of this Agreement or
any other Loan Document, and no judgment, decree, or order of any federal,
state, provincial or municipal court, board or other governmental or
administrative agency or arbitrator has been issued against AFG or any of its
Subsidiaries which has resulted, or poses a material risk of resulting in,
individually or in the aggregate, a Material Adverse Effect.

5.07    No Default.  Neither AFG nor any of its Subsidiaries is in default under
or with respect to any Contractual Obligation that could, either individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect. No
Default has occurred and is continuing or would result from the consummation of
the transactions contemplated by this Agreement or any other Loan Document.

5.08    Ownership of Property; Liens.  AFG and each of its Subsidiaries has good
record and marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of its business,
except for such defects in title as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The property of AFG
and its Subsidiaries is subject to no Liens, other than Liens permitted by
Section 7.01.

5.09    Environmental Compliance.  AFG and its Subsidiaries conduct in the
ordinary course of business a review of the effect of existing Environmental
Laws and claims alleging potential liability or responsibility for violation of
any Environmental Law on their respective businesses, operations and properties,
and as a result thereof AFG has reasonably concluded that such Environmental
Laws and claims could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

5.10    Insurance.  The properties of AFG and its Subsidiaries are insured with
financially sound and reputable insurance companies not a direct or indirect
Subsidiary of AFG, in such amounts (after giving effect to any self-insurance
compatible with the following standards), with such deductibles and covering
such risks as are customarily carried by companies engaged in similar businesses
and owning similar properties in localities where AFG or the applicable
Subsidiary operates.

5.11    Taxes.  AFG and its Subsidiaries have filed all Federal, state and other
material tax returns and reports required to be filed, and have paid all
Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves

 

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have been provided in accordance with GAAP. There is no proposed tax assessment
against AFG or any of its Subsidiaries that would, either individually or in the
aggregate, if made, have a Material Adverse Effect. Neither AFG nor any of its
Subsidiaries is party to any tax sharing agreement, other than the tax sharing
agreements delivered to the Administrative Agent pursuant to Section 7.12.

5.12    ERISA Compliance.

(a)    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 either Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. Each 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.

(b)    There are no pending or, to the best knowledge of AFG, threatened claims,
actions or lawsuits, or action by any Governmental Authority, with respect to
any Plan that could reasonably be expected to have a Material Adverse Effect.
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.

(c)    (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither 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); (iv) neither
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 (v) neither Borrower nor
any ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.

5.13    Subsidiaries; Equity Interests.  As of the Closing Date, AFG has no
Subsidiaries other than those specifically disclosed in Part (a) of Schedule
5.13, and all of the outstanding Equity Interests in such Subsidiaries have been
validly issued, are fully paid and nonassessable and are directly or indirectly
owned by AFG or another Subsidiary in the amounts specified on Part (a) of
Schedule 5.13 free and clear of all Liens. AFG has no equity investments in
excess of 10% of the equity capital in any other non-public corporation or
non-public entity other than those specifically disclosed in Part (b) of
Schedule 5.13. All of the outstanding Equity Interests of each Borrower have
been validly issued, and are fully paid and nonassessable.

 

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5.14    Margin Regulations; Investment Company Act; Public Utility Holding
Company Act.

(a)    Neither Borrower is engaged and will not engage, principally or as one of
its important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock.

(b)    None of AFG, any Person Controlling AFG, or any Subsidiary (i) is a
“holding company,” or a “subsidiary company” of a “holding company,” or an
“affiliate” of a “holding company” or of a “subsidiary company” of a “holding
company,” within the meaning of the Public Utility Holding Company Act of 1935,
or (ii) is or is required to be registered as an “investment company” under the
Investment Company Act of 1940.

5.15    Disclosure.  AFG has disclosed to the Administrative Agent and the
Lenders all agreements, instruments and corporate or other restrictions to which
it or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. No report, financial statement, certificate or
other information furnished (whether in writing or orally) by or on behalf of
AFG to the Administrative Agent or any Lender in connection with the
transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case, as modified
or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, AFG represents only that such information was prepared in good
faith based upon assumptions believed to be reasonable at the time.

5.16    Compliance with Laws.  AFG and each of its Subsidiaries is in compliance
in all material respects with the requirements of all Laws and all orders,
writs, injunctions and decrees applicable to it or to its properties, except in
such instances in which (a) such requirement of Law or order, writ, injunction
or decree is being contested in good faith by appropriate proceedings diligently
conducted or (b) the failure to comply therewith, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

5.17    Taxpayer Identification Number.  The Borrowers’ true and correct U.S.
taxpayer identification numbers are set forth on Schedule 10.02.

5.18    Intellectual Property; Licenses, Etc.  AFG and each of its Subsidiaries
own, or possess the right to use, all of the trademarks, service marks, trade
names, copyrights, patents, patent rights, franchises, licenses and other
intellectual property rights (collectively, “IP Rights”) that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person. To the best knowledge of AFG, no slogan or
other advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by AFG or any
Subsidiary infringes upon any rights held by any other Person.

 

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ARTICLE VI

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, AFG shall, and shall
(except in the case of the covenants set forth in Sections 6.01, 6.02, and 6.03)
cause each of its Subsidiaries to:

6.01    Financial Statements.  Deliver to the Administrative Agent and each
Lender, in form and detail satisfactory to the Administrative Agent and the
Required Lenders:

(a)    as soon as available, but in any event within 90 days after the end of
each fiscal year of AFG (commencing with the fiscal year ended December 31,
2005, the Annual Report on Form 10-K of AFG for the fiscal year then ended, a
consolidated balance sheet of AFG and its Subsidiaries, as at the end of such
fiscal year, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP, such consolidated
statements of AFG to be audited and accompanied by (i) a report and opinion of a
Registered Public Accounting Firm of nationally recognized standing reasonably
acceptable to the Required Lenders, which report and opinion shall be prepared
in accordance with generally accepted auditing standards and applicable
Securities Law and shall not be subject to any “going concern” or like
qualification or exception or any qualification or exception as to the scope of
such audit and (ii) an opinion of such Registered Public Accounting Firm
independently assessing AFG’s internal controls over financial reporting in
accordance with Item 308 of SEC Regulation S-K, PCAOB Auditing Standard No. 2
and Section 404 of Sarbanes-Oxley;

(b)    as soon as available, but in any event within 60 days after the end of
each of the first three fiscal quarters of each fiscal year of AFG (commencing
with the fiscal quarter ended March 31, 2006) the quarterly report of AFG as
required by the Exchange Act on Form 10-Q, a consolidated balance sheet of AFG
and its Subsidiaries, as at the end of such fiscal quarter, and the related
consolidated statements of income or operations, shareholders’ equity and cash
flows for such fiscal quarter and for the portion of AFG and its Subsidiaries’
fiscal year then ended, setting forth in each case in comparative form the
figures for the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail,
such consolidated statements to be certified by a Responsible Officer of AFG as
fairly presenting the financial condition, results of operations, shareholders’
equity and cash flows of AFG and its Subsidiaries, in accordance with GAAP,
subject only to normal year-end audit adjustments and the absence of footnotes;

(c)    as soon as available, but in any event within 90 days after the end of
each fiscal year of GAFRI (commencing with the fiscal year ended December 31,
2005), the Annual Report on Form 10-K of GAFRI for the fiscal year then ended, a
consolidated balance sheet of GAFRI and its Subsidiaries, as at the end of such
fiscal year, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP, such consolidated
statements of GAFRI to be audited and accompanied by (i) a report and opinion of
a Registered Public Accounting Firm of nationally

 

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recognized standing reasonably acceptable to the Required Lenders, which report
and opinion shall be prepared in accordance with generally accepted auditing
standards and applicable Securities Law and shall not be subject to any “going
concern” or like qualification or exception or any qualification or exception as
to the scope of such audit or with respect to the absence of any material
installment and (ii) an opinion of such Registered Public Accounting Firm
independently assessing GAFRI’s internal controls over financial reporting in
accordance with Item 308 of SEC Regulation S-K, PCAOB Auditing Standard No. 2
and Section 404 of Sarbanes-Oxley;

(d)    as soon as available, but in any event within 60 days after the end of
each of the first three fiscal quarters of each fiscal year of GAFRI (commencing
with the fiscal quarter ended March 31, 2006) the quarterly report of GAFRI as
required by the Exchange Act on Form 10-Q, a consolidated balance sheet of GAFRI
and its Subsidiaries, as at the end of such fiscal quarter, and the related
consolidated statements of income or operations, shareholders’ equity and cash
flows for such fiscal quarter and for the portion of GAFRI and its Subsidiaries’
fiscal year then ended, setting forth in each case in comparative form the
figures for the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail,
such consolidated statements to be certified by a Responsible Officer of GAFRI
as fairly presenting the financial condition, results of operations,
shareholders’ equity and cash flows of GAFRI and its Subsidiaries, in accordance
with GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes; and

(e)    as soon as available, all quarterly and annual statutory financial
statements, including all exhibits and schedules thereto, of the Insurance
Subsidiaries, in the form required by the respective Insurance Authorities.

As to any information contained in materials furnished pursuant to
Section 6.02(d), AFG or GAFRI, as the case may be, shall not be separately
required to furnish such information under clause (a), (b), (c) or (d) above,
but the foregoing shall not be in derogation of the obligation of AFG or GAFRI,
as the case may be, to furnish the information and materials described in
clauses (a), (b), (c) and (d) above at the times specified therein.

6.02    Certificates; Other Information.  Deliver to the Administrative Agent
and each Lender, in form and detail satisfactory to the Administrative Agent and
the Required Lenders:

(a)    concurrently with the delivery of the financial statements referred to in
Sections 6.01(a) and 6.01(c), a certificate of the Registered Public Accounting
Firm certifying such financial statements and stating that in making the
examination necessary therefor no knowledge was obtained of any Default under
the financial covenants set forth herein or, if any such Default shall exist,
stating the nature and status of such event;

(b)    concurrently with the delivery of the financial statements referred to in
Sections 6.01(a), (b), (c) and (d) (commencing with the delivery of the
financial statements for the fiscal quarter ended March 31, 2006), a duly
completed Compliance Certificate signed by a Responsible Officer of AFG with
respect to the financial statements referred to in Sections 6.01(a) and (b) and
a Responsible Officer of GAFRI with respect to the financial statements referred
to in Sections 6.01(c) and (d);

 

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(c)    promptly after any request by the Administrative Agent or any Lender,
copies of any detailed audit reports, management letters or recommendations
submitted to the board of directors (or the audit committee of the board of
directors) of either Borrower by independent accountants in connection with the
accounts or books of AFG or any Subsidiary, or any audit of any of them;

(d)    promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to the
stockholders of either Borrower, and copies of all annual, regular, periodic and
special reports and registration statements which either Borrower may file or be
required to file with the SEC under Section 13 or 15(d) of the Securities
Exchange Act of 1934, and not otherwise required to be delivered to the
Administrative Agent pursuant hereto;

(e)    promptly after the furnishing thereof, copies of any statement or report
furnished to any holder of debt securities of AFG or any of its Subsidiaries
pursuant to the terms of any indenture, loan or credit or similar agreement and
not otherwise required to be furnished to the Lenders pursuant to Section 6.01
or any other clause of this Section 6.02;

(f)    promptly, and in any event within five Business Days after receipt
thereof by AFG or any of its Subsidiaries, copies of each notice or other
correspondence received from the SEC (or comparable agency in any applicable
non-U.S. jurisdiction) concerning any investigation or possible investigation or
other inquiry by such agency regarding financial or other operational results of
AFG or any of its Subsidiaries; and

(g)    promptly, such additional information regarding the business, financial
or corporate affairs of AFG or any Subsidiary, or compliance with the terms of
the Loan Documents, as the Administrative Agent or any Lender may from time to
time reasonably request.

Documents required to be delivered pursuant to Section 6.01(a), (b), (c), (d) or
(e) or Section 6.02(d) (to the extent any such documents are included in
materials otherwise filed with the SEC) may be delivered electronically and if
so delivered, shall be deemed to have been delivered on the date (i) on which a
Borrower posts such documents, or provides a link thereto on such Borrower’s
website on the Internet at the website address listed on Schedule 10.02; or
(ii) on which such documents are posted on such Borrower’s behalf on an Internet
or intranet website, if any, to which each Lender and the Administrative Agent
have access (whether a commercial, third-party website or whether sponsored by
the Administrative Agent); provided that: (i) a Borrower shall deliver paper
copies of such documents to the Administrative Agent or any Lender that requests
such Borrower to deliver such paper copies until a written request to cease
delivering paper copies is given by the Administrative Agent or such Lender and
(ii) each Borrower shall notify the Administrative Agent and each Lender (by
telecopier or electronic mail) of the posting of any such documents and provide
to the Administrative Agent by electronic mail electronic versions (i.e., soft
copies) of such documents. Notwithstanding anything contained herein, in every
instance AFG or GAFRI, as the case may be, shall be required to provide paper
copies of the Compliance Certificates required by Section 6.02(b) to the
Administrative Agent and each Lender. Except for such Compliance Certificates,
the Administrative Agent shall have no obligation to request the delivery or to
maintain copies of the

 

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documents referred to above, and in any event shall have no responsibility to
monitor compliance by either Borrower with any such request for delivery, and
each Lender shall be solely responsible for requesting delivery to it or
maintaining its copies of such documents.

The Borrowers hereby acknowledge that (a) the Administrative Agent and/or the
Arranger will make available to the Lenders and the L/C Issuer materials and/or
information provided by or on behalf of the Borrowers hereunder (collectively,
“Borrowers’ Materials”) by posting the Borrowers’ Materials on IntraLinks or
another similar electronic system (the “Platform”) and (b) certain of the
Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive
material non-public information with respect to the Borrowers or their
respective securities) (each, a “Public Lender”). The Borrowers hereby agree
that (w) all Borrowers’ Materials that are to be made available to Public
Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum,
shall mean that the word “PUBLIC” shall appear prominently on the first page
thereof; (x) by marking Borrowers’ Materials “PUBLIC,” the Borrowers shall be
deemed to have authorized the Administrative Agent, the Arranger, the L/C Issuer
and the Lenders to treat such Borrowers’ Materials as either publicly available
information or not material information (although it may be sensitive and
proprietary) with respect to the Borrowers or their respective securities for
purposes of United States Federal and state securities laws; (y) all Borrowers’
Materials marked “PUBLIC” are permitted to be made available through a portion
of the Platform designated “Public Investor;” and (z) the Administrative Agent
and the Arranger shall be entitled to treat any Borrowers’ Materials that are
not marked “PUBLIC” as being suitable only for posting on a portion of the
Platform not designated “Public Investor.”

6.03    Notices.  Promptly notify the Administrative Agent and each Lender:

(a)    of the occurrence of any Default;

(b)    of any matter that has resulted or could reasonably be expected to result
in a Material Adverse Effect, including (i) breach or non-performance of, or any
default under, a Contractual Obligation of AFG or any Subsidiary; (ii) any
dispute, litigation, investigation, proceeding or suspension between AFG or any
Subsidiary and any Governmental Authority; or (iii) the commencement of, or any
material development in, any litigation or proceeding affecting AFG or any
Subsidiary, including pursuant to any applicable Environmental Laws;

(c)    of the occurrence of any ERISA Event;

(d)    of any material change in accounting policies or financial reporting
practices by AFG or any Subsidiary;

(e)    of any announcement by Moody’s or S&P of any change in a Debt Rating; and
(f) of the determination by the Registered Public Accounting Firm providing the
opinion required under Section 6.01(a)(ii) or 6.01(c)(ii) (in connection with
its preparation of either such opinion) or a Borrower’s determination at any
time of the occurrence or the existence of any Internal Control Event.

Each notice pursuant to this Section (other than Section 6.03(e)) shall be
accompanied by a statement of a Responsible Officer of AFG setting forth details
of the occurrence referred to

 

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therein and stating what action AFG has taken and proposes to take with respect
thereto. Each notice pursuant to Section 6.03(a) shall describe with
particularity any and all provisions of this Agreement and any other Loan
Document that have been breached.

6.04    Payment of Obligations.  Pay and discharge as the same shall become due
and payable, all its obligations and liabilities, including (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in accordance
with GAAP are being maintained by AFG or any Subsidiary; (b) all lawful claims
which, if unpaid, would by law become a Lien upon its property; and (c) all
Indebtedness, as and when due and payable, but subject to any subordination
provisions contained in any instrument or agreement evidencing such
Indebtedness.

6.05    Preservation of Existence,  Etc. (a) Preserve, renew and maintain in
full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization except in a transaction permitted by
Section 7.04 or 7.05; (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so could
not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and (c) preserve or renew all of its registered
patents, trademarks, trade names and service marks, the non-preservation of
which could, either individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

6.06    Maintenance of Properties.  (a) Maintain, preserve and protect all of
its material properties and equipment necessary in the operation of its business
in good working order and condition, ordinary wear and tear excepted; and
(b) make all necessary repairs thereto and renewals and replacements thereof
except where the failure to do so could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; and (c) use
the standard of care typical in the industry in the operation and maintenance of
its facilities.

6.07    Maintenance of Insurance.  Maintain with financially sound and reputable
insurance companies not Affiliates of AFG, insurance with respect to its
properties and business against loss or damage of the kinds customarily insured
against by Persons engaged in the same or similar business, of such types and in
such amounts (after giving effect to any self-insurance compatible with the
following standards) as are customarily carried under similar circumstances by
such other Persons and providing for not less than 30 days’ prior notice to the
Administrative Agent of termination, lapse or cancellation of such insurance.

6.08    Compliance with Laws.  Comply in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted; or
(b) the failure to comply therewith could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

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6.09    Books and Records.  (a) Maintain proper books of record and account, in
which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of AFG and each Subsidiary; and (b) maintain such books of
record and account in material conformity with all applicable requirements of
any Governmental Authority having regulatory jurisdiction over AFG and each
Subsidiary.

6.10    Inspection Rights.  Permit representatives and independent contractors
of the Administrative Agent and each Lender to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants, all
at the expense of AFG and at such reasonable times during normal business hours
and as often as may be reasonably desired, upon reasonable advance notice to
AFG; provided, however, that when an Event of Default exists the Administrative
Agent or any Lender (or any of their respective representatives or independent
contractors) may do any of the foregoing at the expense of AFG at any time
during normal business hours and without advance notice.

6.11    Use of Proceeds.  Use the proceeds of the Credit Extensions for working
capital, capital expenditures and other general corporate purposes and not in
contravention of any Law or of any Loan Document.

6.12    Maintenance of Insurance Licenses.  Maintain all insurance licenses in
good standing under the Laws of each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such license to
conduct such business.

ARTICLE VII

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied:

7.01    Liens.  AFG shall not, nor shall it permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, other than the following:

(a)    Liens pursuant to any Loan Document;

(b)    Investments on deposit with Insurance Authorities that are required by
statute or regulation;

(c)    Liens on the assets of AFG and its Subsidiaries (other than the Equity
Interest of GAIC, GALIC or any other Insurance Subsidiary that is a Significant
Subsidiary) so long as no Default exists either before or immediately after
giving effect to the creation of such Liens; provided, however, that the
aggregate amount of Indebtedness of AFG and its Subsidiaries at any time
outstanding which is secured by Liens permitted under this Section 7.01(c) and
Section 7.01(e) shall not exceed $100,000,000; and

 

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(d)    Liens securing Indebtedness of any of the Subsidiaries owing to either
Borrower;

(e)    Purchase money Liens (including mortgages, conditional sales, Capitalized
Leases and any other title retention or deferred purchase devices) in property
of AFG or any of its Subsidiaries existing or created at the time of acquisition
thereof, and the extension and refunding of any such Lien in an amount not
exceeding the amount thereof remaining unpaid immediately prior to such
extension or refunding; provided, however, that (a) the principal amount of
Indebtedness (including Indebtedness in respect of Capitalized Lease
Obligations) secured by each such Lien shall not exceed the fair market value
(including all such Indebtedness secured thereby, whether or not assumed) of the
property subject thereto and (b) the aggregate amount of Indebtedness of AFG and
its Subsidiaries at any time outstanding which is secured by Liens permitted
under this Section 7.01(e) and Section 7.01(c) shall not exceed $100,000,000;
and

(f)    Liens to secure Non-Recourse Real Estate Indebtedness of AFG and its
Subsidiaries, provided such Liens are and will remain confined to the property
or assets subject to it at the time of its creation (and to fixed improvements
thereafter) erected on such property or assets.

7.02    Investments.  AFG shall not, nor shall it permit any of its Subsidiaries
to, directly or indirectly, make any Investments, unless no Default exists both
before and immediately after giving effect to such Investment. Notwithstanding
the foregoing, if a Default shall exist, (a) any Subsidiary of AFG may make
Investments in any other Subsidiary or in AFG and (b) AFG may make Investments
in any of its Subsidiaries, provided that such Subsidiary shall not then have
outstanding any Indebtedness other than in respect of this Agreement.

7.03    Indebtedness.  AFG shall not, nor shall it permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Indebtedness, except:

(a)    Indebtedness under the Loan Documents;

(b)    Indebtedness in respect of Capitalized Leases and purchase money
obligations for fixed or capital assets within the limitations set forth in
Section 7.01(e); and

(c)    other Indebtedness at any time outstanding; provided, (i) that at the
time of incurrence of such Indebtedness and immediately after giving effect
thereto, no Default exists or could result therefrom, and (ii) no Indebtedness
shall have covenants more restrictive than the covenants set forth in this
Agreement.

7.04    Fundamental Changes.  AFG shall not, nor shall it permit any of its
Subsidiaries to, directly or indirectly, merge, dissolve, liquidate, consolidate
with or into another Person, or Dispose of any assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default exists or would result therefrom:

(a)    AFG may become party to any merger or consolidation of which AFG is the
surviving entity so long as (i) AFG continues directly, or indirectly through a
direct non-regulated subsidiary holding company in which AFG owns 100% of the
Equity Interests, to own 100% of the voting common stock of GAIC, and
(ii) immediately after giving effect to such

 

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transaction no Default shall occur or be continuing and AFG can demonstrate pro
forma compliance with the financial covenants contained in Section 7.10 of this
Agreement immediately after giving effect to such transaction;

(b)    GAFRI may become party to any merger or consolidation of which GAFRI is
the surviving entity or the surviving entity is an Affiliate of AFG and directly
owns 100% of the common stock of AAG so long as (i) GAFRI continues directly, or
indirectly through a direct non-regulated subsidiary holding company in which
GAFRI owns 100% of the Equity Interests, to own 100% of the voting common stock
of AAG, (ii) AFG, GAFRI, AAG or any of their respective Subsidiaries continues
directly to own 100% of the voting common stock of GALIC, and (iii) immediately
after giving effect to such transaction no Default shall occur or be continuing
and AFG can demonstrate pro forma compliance with the financial covenants
contained in Section 7.10 immediately after giving effect to such transaction;

(c)    subject to clauses (a) and (b) above, any Subsidiary of AFG may be merged
into or consolidated with, or may sell, lease or otherwise dispose of any of its
assets to, AFG or any other Subsidiary of AFG, so long as in the case of a
merger or consolidation involving AFG, AFG shall be the surviving or resulting
Person. Any Insurance Subsidiary may merge into or be consolidated with another
Insurance Subsidiary so long as in the case of a merger or consolidation
involving (i) GAIC, the surviving entity shall be GAIC or (ii) GALIC, the
surviving entity shall be GALIC;

(d)    AFG and its Subsidiaries may dispose of assets in the ordinary course of
business that are no longer used or useful in such business or with respect to
any business that is discontinued; and

(e)    AFG and its Subsidiaries may from time to time sell or dispose of assets
(other than stock of GAIC and GALIC) on arm’s length terms; provided, however,
that:

(i)    the net book value, determined in accordance with GAAP, of the assets
sold pursuant to this Section 7.04(d) shall not exceed on a cumulative basis 25%
of the net book value of all assets of AFG and its Subsidiaries as of
December 31, 2005 provided that, for purposes of this clause (i), the net book
value of assets sold shall not include (A) sales and dispositions of assets
among AFG and its Subsidiaries, (B) sales and dispositions of portfolio assets
among AFG and its Subsidiaries, and (C) sales and dispositions of portfolio
assets of AFG and its Subsidiaries in the ordinary course of business and

(ii)    the assets sold pursuant to this Section 7.04(d) shall not have
contributed revenue, determined in accordance with GAAP, over the period of four
fiscal quarters prior to the respective sales exceeding 25% of the revenue of
AFG and its Subsidiaries for the four fiscal quarters ended December 31, 2005.

7.05    Restricted Payments; Stock Redemptions.  AFG shall not, nor shall it
permit any of its Subsidiaries to, directly or indirectly, declare or make,
directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, except that, so long as no Default shall
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Payment or would result therefrom, AFG and its Subsidiaries may make Restricted
Payments; provided, that, if there is a Default, any Subsidiary of AFG may make
a Restricted Payment to any other Subsidiary or to AFG.

7.06    Change in Nature of Business.  AFG shall not, nor shall it permit any of
its Subsidiaries to, directly or indirectly, engage in any material line of
business other than those lines of business conducted by AFG and its
Subsidiaries described in AFG’s 2005 Form 10-K and in businesses reasonably
related thereto.

7.07    Transactions with Affiliates.  AFG shall not, nor shall it permit any of
its Subsidiaries to, directly or indirectly, enter into any transaction of any
kind with any of its Affiliates (other than AFG or any of its Subsidiaries) on a
basis less favorable to AFG or any such Subsidiary than if the transaction had
been effected with a non-Affiliate other than transactions involving less than
$10,000,000 per year in the aggregate.

7.08    Burdensome Agreements.  AFG shall not, nor shall it permit any of its
Subsidiaries to, directly or indirectly, subject to limitations imposed by Laws,
enter into any Contractual Obligation (other than this Agreement or any other
Loan Document) that (a) limits the ability (i) of any Subsidiary to make
Restricted Payments to either Borrower or to otherwise transfer property or make
extensions of credit to either Borrower or (ii) of AFG or any Subsidiary to
create, incur, assume or suffer to exist Liens on property of such Person;
provided, however, that this clause (ii) shall not prohibit any negative pledge
incurred or provided in favor of any holder of Indebtedness permitted under
Section 7.03(b) solely to the extent any such negative pledge relates to the
property financed by or the subject of such Indebtedness; or (b) requires the
grant of a Lien to secure an obligation of such Person if a Lien is granted to
secure another obligation of such Person.

7.09    Use of Proceeds.  AFG shall not, nor shall it permit any of its
Subsidiaries to, directly or indirectly, use the proceeds of any Credit
Extension, whether directly or indirectly, and whether immediately, incidentally
or ultimately, to purchase or carry margin stock (within the meaning of
Regulation U of the FRB) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness originally
incurred for such purpose.

7.10    Financial Covenants.

(a)    AFG Consolidated Net Worth.  AFG shall not permit AFG Consolidated Net
Worth on the last day of any fiscal quarter after December 31, 2005 to be less
than $1,720,000,000; provided, however, that such required minimum amount of AFG
Consolidated Net Worth shall be increased for each fiscal quarter of AFG after
December 31, 2005, by an amount equal to the excess, if any, of (i) 50% of
Consolidated Net Income of AFG for each such fiscal quarter minus (ii) cash
dividends paid by AFG during each such fiscal quarter.

(b)    AFG Consolidated Total Financing Debt to AFG Total Capitalization.  AFG
shall not permit the ratio of AFG Consolidated Total Financing Debt to AFG Total
Capitalization to exceed 0.375 to 1.00 on the last day of any fiscal quarter
during the term of this Agreement.

 

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(c)    Dividends to Interest and Dividend Charges for AFG.  AFG shall not
permit, for any period of four consecutive fiscal quarters of AFG, the greatest
of:

(i)    10% of “surplus as regards policyholders” (currently line 55, page 4 in
the NAIC form of statutory annual financial statement) (as computed by the
applicable Insurance Authorities) of the Insurance Subsidiaries owned directly
(or indirectly through a holding company in which all of the Equity Interest
thereof is owned directly by AFG) by AFG as of the end of the then most recently
completed fiscal year of AFG,

(ii)    100% of the “statutory net income” (currently line 35, page 4 in the
NAIC form of statutory annual financial statement) (as computed by the
applicable Insurance Authorities) of the Insurance Subsidiaries owned directly
(or indirectly through a holding company in which all of the Equity Interest
thereof is owned directly by AFG) by AFG for the then most recently completed
fiscal year of AFG, or

(iii)    the amount of cash dividends (or marketable securities paid in lieu of
cash dividends) actually paid by the Insurance Subsidiaries and other
Subsidiaries and received by AFG during such period of four consecutive fiscal
quarters,

to be less than 200% of Interest and Dividend Charges for such period of four
consecutive fiscal quarters.

(d)    Risk Based Capital Ratio of GAIC.  AFG shall not permit GAIC’s Risk Based
Capital Ratio (as defined by the NAIC) at any time to be less than 275%.

(e)    GAFRI Consolidated Financing Debt to GAFRI Total Capitalization.  The
ratio of GAFRI Consolidated Financing Debt to GAFRI Total Capitalization shall
not exceed 0.350 to 1.00 on the last day of any fiscal quarter during the term
of this Agreement.

(f)    Minimum Risk Based Capital Ratio of GALIC.  GALIC’s Risk Based Capital
Ratio (as defined by the NAIC) shall not at any time be less than 450%.

Notwithstanding anything in this Agreement to the contrary, any required
increases in the minimum requirements set forth in the financial covenants set
forth in this Section 7.10 shall exclude realized gains on stock already
reflected in AFG Consolidated Net Worth and GAFRI Consolidated Net Worth.

7.11    Additional Debt Subordination.  AFG shall not, nor shall it permit any
of its Subsidiaries to, create, incur, suffer or permit to exist any
Indebtedness to any Affiliate of AFG except (a) Indebtedness which is
subordinated on terms substantially similar to the manner in which the
Borrowers’ Indebtedness to their respective Affiliates is subordinated under the
Subordination Agreement, (b) public Indebtedness held from time to time by an
Affiliate and (c) Indebtedness evidenced by the Subordinated Debentures.

7.12    Tax Sharing Agreements.  AFG shall not, nor shall it permit any
Subsidiary to, enter into any tax sharing agreements, including any amendments
thereto, with any non-Affiliate unless such agreement or amendment shall be
satisfactory in form and substance to the Administrative Agent in its sole
discretion.

 

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7.13    Equity Issuances by Subsidiaries.  The Subsidiaries of AFG shall not
issue or sell any of their Equity Interests other than (a) shares issued to AFG
or any wholly-owned Subsidiary of AFG; (b) shares issued by GAFRI or National
Interstate for fair value in compliance with applicable securities laws so long
as the issuer in question remains a Subsidiary following such issuance;
(c) Capital Trust Securities (i) issued to refinance Capital Trust Securities
outstanding as of the Closing Date or (ii) issued by American Financial Capital
Trust I, AAG Trust or any other trust or similar entity, the proceeds of which
are invested by such Person in an equivalent amount of Subordinated Debentures
issued by GAFRI or AFG and (d) shares issued to employees in connection with
employee stock option plans.

7.14    AFG Bonds and AAG Bonds.  Neither AFG nor AAG shall prepay, repurchase,
defease or redeem the AFG Bonds or the AAG Bonds, respectively, in whole or in
part, if at the time of any such prepayment, repurchase, defeasance or
redemption a Default exists or would result therefrom.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

8.01    Events of Default.  Any of the following shall constitute an Event of
Default:

(a)    Non-Payment.  Any Loan Party fails to pay (i) when and as required to be
paid herein, any amount of principal of any Loan or any L/C Obligation, or
(ii) within three days after the same becomes due, any interest on any Loan or
on any L/C Obligation, or any fee due hereunder, or (iii) within five days after
the same becomes due, any other amount payable hereunder or under any other Loan
Document; or

(b)    Specific Covenants.  AFG fails to perform or observe any term, covenant
or agreement contained in any of Section 6.03(a), (b), (c) or (d), 6.05, 6.10,
or 6.11 or Article VII; or

(c)    Other Defaults.  Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained
in any Loan Document on its part to be performed or observed and such failure
continues for 30 days; or

(d)    Representations and Warranties.  Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of either
Borrower or any other Loan Party herein, in any other Loan Document, or in any
document delivered in connection herewith or therewith shall be materially
incorrect or misleading when made or deemed made; or

(e)    Cross-Default.  (i) AFG or any or its Subsidiaries (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having
an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than $20,000,000, or (B) fails to observe or perform
any other agreement or condition relating to any such Indebtedness or Guarantee
or contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event occurs, the effect of which default or other event
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holders of such Indebtedness or the beneficiary or beneficiaries of such
Guarantee (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, or such Guarantee to become payable or cash collateral in respect
thereof to be demanded; or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (A) any event
of default under such Swap Contract as to which AFG or any of its Subsidiaries
is the Defaulting Party (as defined in such Swap Contract) or (B) any
Termination Event (as so defined) under such Swap Contract as to which AFG or
any of its Subsidiaries is an Affected Party (as so defined) and, in either
event, the Swap Termination Value owed by AFG or such Subsidiary as a result
thereof is greater than $20,000,000; or

(f)    Insolvency Proceedings, Etc.  AFG or any of its Significant Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or for all or any material
part of its property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the
application or consent of such Person and the appointment continues undischarged
or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law
relating to any such Person or to all or any material part of its property is
instituted without the consent of such Person and continues undismissed or
unstayed for 60 calendar days, or an order for relief is entered in any such
proceeding; or

(g)    Inability to Pay Debts; Attachment.  (i) AFG or any of its Significant
Subsidiaries becomes unable or admits in writing its inability or fails
generally to pay its debts as they become due, or (ii) any writ or warrant of
attachment or execution or similar process is issued or levied against all or
any material part of the property of any such Person and is not released,
vacated or fully bonded within 30 days after its issue or levy; or

(h)    Judgments.  There is entered against AFG or any of its Significant
Subsidiaries (i) one or more final judgments or orders for the payment of money
in an aggregate amount (as to all such judgments or orders) exceeding
$20,000,000 (to the extent not covered by independent third-party insurance as
to which the insurer does not dispute coverage), or (ii) any one or more
non-monetary final judgments that have, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and, in either case,
(A) enforcement proceedings are commenced by any creditor upon such judgment or
order, or (B) there is a period of 10 consecutive days during which a stay of
enforcement of such judgment, by reason of a pending appeal or otherwise, is not
in effect; or

(i)    ERISA.    (i) 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 AFG under Title IV of ERISA to the Pension Plan, Multiemployer
Plan or the PBGC in an aggregate amount in excess of $20,000,000, or (ii) AFG 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 $20,000,000; or

 

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(j)    Invalidity of Loan Documents.  Any provision of any Loan Document, at any
time after its execution and delivery and for any reason other than as expressly
permitted hereunder or thereunder or satisfaction in full of all the
Obligations, ceases to be in full force and effect; or any Loan Party or any of
its Affiliates contests in any manner the validity or enforceability of any
provision of any Loan Document; or any Loan Party denies that it has any or
further liability or obligation under any Loan Document, or purports to revoke,
terminate or rescind any provision of any Loan Document; or

(k)    Change of Control.  There occurs any Change of Control; or

(l)    Business Prohibitions.  GAIC, GALIC or any other Insurance Subsidiary
shall be prohibited by law from engaging in the business of effecting and
carrying out of contracts of insurance, and such prohibition would have a
Material Adverse Effect; or

(m)    Governmental and Insurance Authority Decrees.  Any Governmental Authority
or Insurance Authority shall issue an order or decree which would require GAIC,
GALIC or any other Insurance Subsidiary to reduce or terminate any substantial
part of its insurance business, and such event would have a Material Adverse
Effect; or

(n)    Internal Control Event.  An Internal Control Event shall occur that could
reasonably be expected to have a Material Adverse Effect.

8.02    Remedies Upon Event of Default.  If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders, take any or all of the following actions:

(a)    declare the commitment of each Lender to make Loans and any obligation of
the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such
commitments shall be terminated;

(b)    declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrowers;

(c)    require that AFG Cash Collateralize the L/C Obligations (in an amount
equal to the then Outstanding Amount thereof); and

(d)    exercise on behalf of itself, the Lenders and the L/C Issuer all rights
and remedies available to it, the Lenders and the L/C Issuer under the Loan
Documents;

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to either Borrower under the Bankruptcy Code of
the United States, the obligation of each Lender to make Loans and any
obligation of the L/C Issuer to make L/C Credit Extensions shall automatically
terminate, the unpaid principal amount of all outstanding Loans and all interest
and other amounts as aforesaid shall automatically become due and payable, and
the obligation of AFG to Cash Collateralize the L/C Obligations as aforesaid
shall automatically become effective, in each case, without further act of the
Administrative Agent or any Lender.

 

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8.03    Application of Funds.  After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due and
payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Administrative
Agent in the following order:

First,  to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to the Administrative Agent and amounts payable under
Article III) payable to the Administrative Agent in its capacity as such;

Second,  to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal, interest and Letter of
Credit Fees) payable to the Lenders and the L/C Issuer (including fees, charges
and disbursements of counsel to the respective Lenders and the L/C Issuer,
including fees and time charges for attorneys who may be employees of any Lender
or the L/C Issuer, and amounts payable under Article III), ratably among them in
proportion to the amounts described in this clause Second payable to them;

Third,  to payment of that portion of the Obligations constituting accrued and
unpaid Letter of Credit Fees and interest on the Loans, L/C Borrowings and other
Obligations, ratably among the Lenders and the L/C Issuer in proportion to the
respective amounts described in this clause Third payable to them;

Fourth,  to payment of that portion of the Obligations constituting unpaid
principal of the Loans and L/C Borrowings, ratably among the Lenders and the L/C
Issuer in proportion to the respective amounts described in this clause Fourth
held by them; and

Fifth,  to the Administrative agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn
amount of Letters of Credit;

Sixth,  to any remaining outstanding unpaid Obligations, ratably among the
Lenders in proportion to the respective amounts described in this clause Fifth
held by them; and

Last,  the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the applicable Borrower or as otherwise required by Law.

ARTICLE IX

ADMINISTRATIVE AGENT

9.01    Appointment and Authority.  Each of the Lenders and the L/C Issuer
hereby irrevocably appoints Bank of America 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 Article are solely for the benefit of the
Administrative Agent, the Lenders and the L/C Issuer, and the Borrowers shall
not have rights as a third party beneficiary of any of such provisions.

 

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9.02    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. 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 AFG 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.

9.03    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 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 AFG 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 10.01 and 8.02) 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 Default unless and until notice
describing such Default is given to the Administrative Agent by AFG, a Lender or
the L/C Issuer.

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 Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other

 

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agreement, instrument or document or (v) the satisfaction of any condition set
forth in Article IV or elsewhere herein, other than to confirm receipt of items
expressly required to be delivered to the Administrative Agent.

9.04    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 in good faith 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, of the issuance of a Letter of
Credit, that by its terms must be fulfilled to the satisfaction of a Lender or
the L/C Issuer, the Administrative Agent may presume that such condition is
satisfactory to such Lender or the L/C Issuer unless the Administrative Agent
shall have received notice to the contrary from such Lender or the L/C Issuer
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
either 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.

9.05    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
Article 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.

9.06    Resignation of Administrative Agent.  The Administrative Agent may at
any time give notice of its resignation to the Lenders, the L/C Issuer and the
Borrowers. Upon receipt of any such notice of resignation, the Required Lenders
shall have the right, in consultation with AFG, to appoint a successor, which
shall be a bank with an office in the United States, or an Affiliate of any such
bank with an office in the United States. If no such successor shall have been
so appointed by the Required Lenders and shall have accepted such appointment
within 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 L/C Issuer, appoint a successor Administrative Agent meeting the
qualifications set forth above; provided that if the Administrative Agent shall
notify the Borrowers and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (a) 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 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
(b) all payments, communications and determinations provided to be made by, to
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Agent shall instead be made by or to each Lender directly, until such time as
the Required Lenders appoint a successor Administrative Agent as provided for
above in this Section. Upon 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). The fees payable by the Borrowers to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrowers and such successor. After the retiring Administrative
Agent’s resignation hereunder and under the other Loan Documents, the provisions
of this Article and Section 10.04 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.

Any resignation by Bank of America as Administrative Agent pursuant to this
Section shall also constitute its resignation as L/C Issuer. Upon the acceptance
of a successor’s appointment as Administrative Agent hereunder, (a) such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring L/C Issuer, (b) the retiring L/C Issuer
shall be discharged from all of its duties and obligations hereunder or under
the other Loan Documents, and (c) the successor L/C Issuer shall issue letters
of credit in substitution for the Letters of Credit, if any, outstanding at the
time of such succession or make other arrangements satisfactory to the retiring
L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with
respect to such Letters of Credit.

9.07    Non-Reliance on Administrative Agent and Other Lenders.  Each Lender and
the L/C Issuer 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 L/C Issuer 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.

9.08    No Other Duties, Etc.  Anything herein to the contrary notwithstanding,
none of the Co-Syndication Agents, Documentation Agent or 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 or a Lender.

9.09    Administrative Agent May File Proofs of Claim.  In case of the pendency
of any proceeding under any Debtor Relief Law or any other judicial proceeding
relative to any Loan Party, the Administrative Agent (irrespective of whether
the principal of any Loan or L/C Obligation shall then be due and payable as
herein expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on a Borrower or any other Loan
Party) shall be entitled and empowered, by intervention in such proceeding or
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(a)    to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, L/C Obligations and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of the Lenders and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders, the L/C Issuer and the
Administrative Agent and their respective agents and counsel and all other
amounts due the Lenders, the L/C Issuer and the Administrative Agent under
Sections 2.07 and 10.04) allowed in such judicial proceeding; and

(b)    to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and the L/C Issuer to make such payments to the Administrative Agent
and, in the event that the Administrative Agent shall consent to the making of
such payments directly to the Lenders and the L/C Issuer, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under Sections 2.07
and 10.04.

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender or the L/C
Issuer any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or the L/C Issuer to
authorize the Administrative Agent to vote in respect of the claim of any Lender
of the L/C Issuer in any such proceeding.

ARTICLE X

MISCELLANEOUS

10.01    Amendments, Etc.  No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by a
Borrower or any other Loan Party therefrom, shall be effective unless in writing
signed by the Required Lenders and the Borrowers or the other applicable Loan
Party, as the case may be, and acknowledged by the Administrative Agent, and
each such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no such
amendment, waiver or consent shall:

(a)    waive any condition set forth in Section 4.01(a) without the written
consent of each Lender;

(b)    extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 8.02) without the written consent of
such Lender;

(c)    postpone any date fixed by this Agreement or any other Loan Document for
any payment of principal, interest, fees or other amounts due to the Lenders (or
any of them) hereunder or under any other Loan Document without the written
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(d)    reduce the principal of, or the rate of interest specified herein on any
Loan or L/C Borrowing, or (subject to clause (ii) or (iii) of this proviso to
this Section 10.01) any fees or other amounts payable hereunder or under any
other Loan Document without the written consent of each Lender directly affected
thereby; provided, however, that only the consent of the Required Lenders shall
be necessary (i) to amend the definition of “Default Rate” or to waive any
obligation of the Borrowers to pay interest or Letter of Credit Fees at the
Default Rate or (ii) to amend any financial covenant hereunder (or any defined
term used therein) even if the effect of such amendment would be to reduce the
rate of interest on any Loan or to reduce any fee payable hereunder;

(e)    change Section 2.12 or Section 8.03 in a manner that would alter the pro
rata sharing of payments required thereby without the written consent of each
Lender;

(f)    change any provision of this Section or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender; or

(g)    amend any other voting provisions in this Section 10.01;

and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Issuer
Document relating to any Letter of Credit issued or to be issued by it; (ii) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of the Administrative Agent under this Agreement or any other
Loan Document; and (iii) the Fee Letter may be amended, or rights or privileges
thereunder waived, in a writing executed only by the parties thereto.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have
any right to approve or disapprove any amendment, waiver or consent hereunder,
except that the Commitment of such Lender may not be increased or extended
without the consent of such Lender.

10.02    Notices; Effectiveness; Electronic Communication.

(a)    Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
subsection (b) below), 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 as follows, and all
notices and other communications expressly permitted hereunder to be given by
telephone shall be made to the applicable telephone number, as follows:

(i)    if to either Borrower, the Administrative Agent or the L/C Issuer, to the
address, telecopier number, electronic mail address or telephone number
specified for such Person on Schedule 10.02; and

 

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(ii)    if to any other Lender, to the address, telecopier number, electronic
mail address or telephone number specified in its Administrative Questionnaire.

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 subsection (b) below, shall be effective as provided in such
subsection (b).

(b)    Electronic Communications. Notices and other communications to the
Lenders and the L/C Issuer 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 L/C Issuer pursuant to Article
II if such Lender or the L/C Issuer, as applicable, has notified the
Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. The Administrative Agent or either 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.

(c)    The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE
AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF
THE BORROWERS’ MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWERS’ MATERIALS. NO WARRANTY
OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT
PARTY IN CONNECTION WITH THE BORROWERS’ MATERIALS OR THE PLATFORM. In no event
shall the Administrative Agent or any of its Related Parties (collectively, the
“Agent Parties”) have any liability to either Borrower, any Lender, the L/C
Issuer or any other Person for losses, claims, damages, liabilities or expenses
of any kind (whether in tort, contract or otherwise) arising out of a Borrower’s
or the Administrative Agent’s transmission of Borrowers’ Materials through the
Internet, except to the extent that such losses, claims, damages, liabilities or
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determined by a court of competent jurisdiction by a final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Agent Party; provided, however, that in no event shall any Agent Party have
any liability to either Borrower, any Lender, the L/C Issuer or any other Person
for indirect, special, incidental, consequential or punitive damages (as opposed
to direct or actual damages).

(d)    Change of Address, Etc. Each of the Borrowers, the Administrative Agent
and the L/C Issuer may change its address, telecopier or telephone number for
notices and other communications hereunder by notice to the other parties
hereto. Each other Lender may change its address, telecopier or telephone number
for notices and other communications hereunder by notice to the Borrowers, the
Administrative Agent and the L/C Issuer. In addition, each Lender agrees to
notify the Administrative Agent from time to time to ensure that the
Administrative Agent has on record (i) an effective address, contact name,
telephone number, telecopier number and electronic mail address to which notices
and other communications may be sent and (ii) accurate wire instructions for
such Lender.

(e)    Reliance by Administrative Agent, the L/C Issuer and Lenders. The
Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely
and act, and shall be fully protected in relying and acting, upon any notice
(including any telephonic Revolving Loan Notice) writing, letter, certificate,
consent, investment, statement, fax or affidavit believed in good faith by the
Administrative Agent purportedly to have been signed, sent or made by the Person
in question, including without limitation any telephonic or oral statement by
such Person, and, with respect to legal matters, upon the opinion of counsel
selected by the Administrative Agent. Each Borrower shall indemnify the
Administrative Agent, the L/C Issuer, each Lender and the Related Parties of
each of them from all losses, costs, expenses and liabilities resulting from the
reliance by such Person on each notice purportedly given by or on behalf of such
Borrower. All telephonic notices to and other telephonic communications with the
Administrative Agent may be recorded by the Administrative Agent, and each of
the parties hereto hereby consents to such recording.

10.03    No Waiver; Cumulative Remedies.  No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in exercising,
any right, remedy, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

10.04    Expenses; Indemnity; Damage Waiver.

(a)    Costs and Expenses. The Borrowers shall pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates
(including the reasonable fees, charges and disbursements of counsel for 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
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expenses incurred by the L/C Issuer in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for payment therefor,
and (iii) all out-of-pocket expenses incurred by the Administrative Agent, any
Lender or the L/C Issuer (including the fees, charges and disbursements of any
counsel for the Administrative Agent, any Lender or the L/C Issuer), and shall
pay all fees and time charges for attorneys who may be employees of the
Administrative Agent or any 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 Letter of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans.

(b)    Indemnification by the Borrowers.  The Borrowers shall indemnify the
Administrative Agent (and any sub-agent thereof) and each Lender and the L/C
Issuer, 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 reasonable 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 a 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, or in the
case of the Administrative Agent (and any sub-agent thereof) and its Related
Parties only, the administration of this Agreement and the other Loan Documents,
(ii) any Loan or Letter of Credit or the use or proposed use of the proceeds
therefrom (including any refusal by the L/C Issuer 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) any actual or alleged presence or release of Hazardous Materials on or
from any property owned or operated by AFG or any of its Subsidiaries, or any
Environmental Liability related in any way to AFG or any of its Subsidiaries, or
(iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory, whether brought by a third party or by a Borrower, and regardless of
whether any Indemnitee is a party thereto, in all cases, whether or not caused
by or arising, in whole or in part, out of the comparative, contributory or sole
negligence of the Indemnitee; 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 a Borrower against an Indemnitee for breach in bad faith of such
Indemnitee’s obligations hereunder or under any other Loan Document, if such
Borrower has obtained a final and nonappealable judgment in its favor on such
claim as determined by a court of competent jurisdiction.

(c)    Reimbursement by Lenders.  To the extent that either Borrower for any
reason fails to indefeasibly pay any amount required under subsection (a) or
(b) of this Section to be paid by it to the Administrative Agent (or any
sub-agent thereof), the L/C Issuer or any Related

 

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Party of any of the foregoing, each Lender severally agrees to pay to the
Administrative Agent (or any such sub-agent), the L/C Issuer or such Related
Party, as the case may be, such Lender’s Applicable Percentage (determined as of
the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount (exclusive of any principal or interest with
respect to Loans owed to the Administrative Agent in its capacity as a Lender),
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 subagent) or the L/C Issuer 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 L/C Issuer in connection
with such capacity. The obligations of the Lenders under this subsection (c) are
subject to the provisions of Section 2.11(d).

(d)    Waiver of Consequential Damages, Etc.  To the fullest extent permitted by
applicable law, the Borrowers shall not assert, and hereby waive, any claim
against any 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 subsection (b) above
shall be liable for any damages arising from the use by unintended recipients of
any information or other materials distributed to such intended recipients by
such Indemnitee 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.

(e)    Payments.  All amounts due under this Section shall be payable not later
than ten Business Days after demand therefor.

(f)    Survival.  The agreements in this Section shall survive the resignation
of the Administrative Agent and the L/C Issuer, the replacement of any Lender,
the termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all the other Obligations.

10.05    Payments Set Aside.  To the extent that any payment by or on behalf of
a Borrower is made to the Administrative Agent, the L/C Issuer or any Lender, or
the Administrative Agent, the L/C Issuer or any Lender exercises its right of
setoff, and such payment or the proceeds of such setoff or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by the
Administrative Agent, the L/C Issuer or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such setoff had not occurred, and (b) each Lender
and the L/C Issuer severally agrees to pay to the Administrative Agent upon
demand its applicable share (without duplication) of any amount so recovered
from or repaid by the Administrative Agent, plus interest thereon from the date
of such demand to the date such payment is made at a rate per annum equal to the
Federal Funds Rate from time to time in effect. The obligations of the Lenders
and the L/C Issuer under clause (b) of the preceding sentence shall survive the
payment in full of the Obligations and the termination of this Agreement.

 

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10.06    Successors and Assigns.

(a)    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 neither Borrower
may 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 or Qualified Institutional Buyer in
accordance with the provisions of subsection (b) of this Section, (ii) by way of
participation in accordance with the provisions of subsection (d) of this
Section, or (iii) by way of pledge or assignment of a security interest subject
to the restrictions of subsection (f) of this Section (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, Participants to the extent provided in subsection (d) of this
Section and, to the extent expressly contemplated hereby, the Related Parties of
each of the Administrative Agent, the L/C Issuer and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

(b)    Assignments by Lenders.  Any Lender may at any time assign to one or more
assignees or a Qualified Institutional Buyer all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans (including for purposes of this subsection (b), participations in
L/C Obligations)) at the time owing to it); provided that any such assignment
shall be subject to the following conditions:

(i)    Minimum Amounts.

(A)    except 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 or an Affiliate of a Lender or an Approved
Fund, no minimum amount need be assigned; and

(B)    in any case not described in subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the 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
with respect to such assignment is delivered to the Administrative Agent or, if
“Trade Date” is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than $5,000,000, in additional $1,000,000 increments,
unless each of the Administrative Agent and, so long as no Event of Default has
occurred and is continuing, AFG otherwise consents (each such consent not to be
unreasonably withheld or delayed); provided, however, that concurrent
assignments to members of an Assignee Group and concurrent assignments from
members of an Assignee Group to a single assignee (or to an assignee and members
of its Assignee Group) will be treated as a single assignment for purposes of
determining whether such minimum amount has been met;

 

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(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 Loans or the Commitment
assigned;

(iii)    Required Consents.  No consent shall be required for any assignment
except to the extent required by subsections (b)(i)(B) of this Section and, in
addition:

(A)    the consent of AFG (such consent not to be unreasonably withheld or
delayed) shall be required unless (1) an Event of Default has occurred and is
continuing at the time of such assignment or (2) such assignment is to a Lender,
an Affiliate of a Lender or an Approved Fund;

(B)    the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required if such assignment is to a
Person that is not a Lender, an Affiliate of such Lender or an Approved Fund
with respect to such Lender; and

(C)    the consent of the L/C Issuer (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.  The parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee in the amount, if any, required as set
forth on Schedule 10.06; provided, however, that the Administrative Agent may,
in its sole discretion, elect to waive such processing and recordation fee in
the case of any assignment. The assignee or Qualified Institutional Buyer, if it
shall not be a Lender or an Affiliate of a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

(v)    No Assignment to Borrowers.  No such assignment shall be made to a
Borrower or any of a 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 subsection (c) of this Section, from and after the effective date specified
in each Assignment and Assumption, the assignee or Qualified Institutional Buyer
thereunder shall be a party to this Agreement and, to the extent of the interest
assigned by such Assignment and Assumption, 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, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender

 

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shall cease to be a party hereto) but shall continue to be entitled to the
benefits of Sections 3.01, 3.04, 3.05, and 10.04 with respect to facts and
circumstances occurring prior to the effective date of such assignment. Upon
request, the Borrowers (at no expense to the Borrowers) shall execute and
deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection 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
subsection (d) of this Section.

(c)    Register.  The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at the Administrative Agent’s Office a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive, and the Borrowers, the Administrative Agent
and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by each of the Borrowers and any Lender at any
reasonable time and from time to time upon reasonable prior notice. In addition,
at any time that a request for a consent for a material or substantive change to
the Loan Documents is pending, any Lender wishing to consult with other Lenders
in connection therewith may request and receive from the Administrative Agent a
copy of the Register.

(d)    Participations.  Any Lender may at any time, without the consent of, or
notice to, either Borrower or the Administrative Agent, sell participations to
any Person (other than a natural person or a Borrower or any of a Borrower’s
Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans (including such Lender’s
participation in L/C Obligations) 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, (iii) the Borrowers, the Administrative Agent, the Lenders and
the L/C Issuer shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement,
(iv) the amount of the participation shall not be less than $5,000,000 or
increments of $1,000,000 thereafter, (v) the participations may be sold only to
Qualified Institutional Buyers, (vi) the participants may not sell additional
participations and (vii) the Lender shall provide notice of such participation
to the Administrative Agent and the Borrowers.

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, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant. Subject to subsection (e) of this
Section, the Borrowers agree that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to subsection (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.11 as though it were a
Lender.

 

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(e)    Limitations upon Participant Rights.  A Participant shall not be entitled
to receive any greater payment under Section 3.01 or 3.04 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 AFG’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 3.01 unless AFG is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrowers, to
comply with Section 3.01(e) as though it were a Lender.

(f)    Certain Pledges.  Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including
under its Note, if any) 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.

(g)    Electronic Execution of Assignments.  The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.

(h)    Resignation as L/C Issuer after Assignment.  Notwithstanding anything to
the contrary contained herein, if at any time Bank of America assigns all of its
Commitment and Loans pursuant to subsection (b) above, Bank of America may, upon
30 days’ notice to the Borrowers and the Lenders, resign as L/C Issuer. In the
event of any such resignation as L/C Issuer, AFG shall be entitled to appoint
from among the Lenders a successor L/C Issuer hereunder; provided, however, that
no failure by AFG to appoint any such successor shall affect the resignation of
Bank of America as L/C Issuer. If Bank of America resigns as L/C Issuer, it
shall retain all the rights, powers, privileges and duties of the L/C Issuer
hereunder with respect to all Letters of Credit outstanding as of the effective
date of its resignation as L/C Issuer and all L/C Obligations with respect
thereto (including the right to require the Lenders to make Base Rate Loans or
fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)).
Upon the appointment of a successor L/C Issuer, (a) such successor shall succeed
to and become vested with all of the rights, powers, privileges and duties of
the retiring L/C Issuer, and (b) the successor L/C Issuer shall issue letters of
credit in substitution for the Letters of Credit, if any, outstanding at the
time of such succession or make other arrangements satisfactory to Bank of
America to effectively assume the obligations of Bank of America with respect to
such Letters of Credit.

10.07    Treatment of Certain Information; Confidentiality.  Each of the
Administrative Agent, the Lenders and the L/C Issuer agrees to maintain the
confidentiality of

 

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the Information (as defined below), except that Information may be disclosed
(a) to its Affiliates and to its and its Affiliates’ respective partners,
directors, officers, employees, agents, advisors and representatives who are, or
are expected to be, engaged in evaluating, approving, structuring or
administering the credit facility provided herein (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), (b) to the extent requested by any regulatory authority
purporting to have jurisdiction over it (including any self-regulatory
authority, such as the NAIC), (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
hereto, (e) 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,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the applicable
Borrower and its obligations, (g) with the consent of AFG or (h) to the extent
such Information (x) becomes publicly available other than as a result of a
breach of this Section or (y) becomes available to the Administrative Agent, any
Lender or any of their respective Affiliates on a nonconfidential basis from a
source other than AFG.

For purposes of this Section, “Information” means all information received from
AFG or any Subsidiary relating to AFG or any Subsidiary or any of their
respective businesses, other than any such information that is available to the
Administrative Agent, any Lender or the L/C Issuer on a nonconfidential basis
prior to disclosure by AFG or any Subsidiary, provided that, in the case of
information received from AFG or any Subsidiary after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section 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.

10.08    Right of Setoff.  If an Event of Default shall have occurred and be
continuing, each Lender, the L/C Issuer and each of their respective Affiliates
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 L/C Issuer or any such Affiliate to or for the credit or the account
of a Borrower against any and all of the obligations of such Borrower now or
hereafter existing under this Agreement or any other Loan Document to such
Lender or the L/C Issuer, irrespective of whether or not such Lender or the L/C
Issuer shall have made any demand under this Agreement or any other Loan
Document and although such obligations of a Borrower may be contingent or
unmatured or are owed to a branch or office of such Lender or the L/C Issuer
different from the branch or office holding such deposit or obligated on such
indebtedness. The rights of each Lender, the L/C Issuer and their respective
Affiliates under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Lender, the L/C Issuer or their
respective Affiliates may have.

 

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10.09    Interest Rate Limitation.  Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loans or, if it
exceeds such unpaid principal, refunded to the applicable Borrower. In
determining whether the interest contracted for, charged, or received by the
Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to
the extent permitted by applicable Law, (a) characterize any payment that is not
principal as an expense, fee, or premium rather than interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.

10.10    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 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. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and 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    Survival of Representations and Warranties.  All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

10.12    Severability.  If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

10.13    Replacement of Lenders.  If any Lender requests compensation under
Section 3.04, or if a Borrower is required to pay any additional amount to any
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Governmental Authority for the account of any Lender pursuant to Section 3.01,
or if any Lender is a Defaulting Lender or if any other circumstance exists
hereunder that gives the Borrower the right to replace a Lender as a party
hereto, then AFG may, at its sole expense and effort, 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 10.06), 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:

(a)    AFG shall have paid to the Administrative Agent the assignment fee
specified in Section 10.06(b);

(b)    such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and L/C 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 3.05) from the assignee (to
the extent of such outstanding principal and accrued interest and fees) or AFG
(in the case of all other amounts);

(c)    in the case of any such assignment resulting from a claim for
compensation under Section 3.04 or payments required to be made pursuant to
Section 3.01, such assignment will result in a reduction in such compensation or
payments thereafter; and

(d)    such assignment does not conflict with applicable Laws.

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 AFG to require such assignment and delegation cease to
apply.

10.14    Governing Law; Jurisdiction; Etc.

(a)    GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK

(b)    SUBMISSION TO JURISDICTION. EACH BORROWER IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED
STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, 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 NEW YORK 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

 

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THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE
ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AGAINST EITHER BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c)    WAIVER OF VENUE.  EACH 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 PARAGRAPH (B) OF THIS SECTION. 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.

(d)    SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

10.15    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 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.

10.16    No Advisory or Fiduciary Responsibility.  In connection with all
aspects of each transaction contemplated hereby, each Borrower acknowledges and
agrees that: (a) the credit facility provided for hereunder and any related
arranging or other services in connection therewith (including in connection
with any amendment, waiver or other modification hereof or of any other Loan
Document) are an arm’s-length commercial transaction between each Borrower and
its Affiliates, on the one hand, and the Administrative Agent and the Arranger,
on the other hand, and each Borrower is capable of evaluating and understanding
and understands and accepts the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents (including any amendment,
waiver or other modification hereof or thereof); (b) in connection with the
process leading to such transaction, the Administrative Agent

 

83

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

and the Arranger each is and has been acting solely as a principal and is not
the financial advisor, agent or fiduciary, for each Borrower or any of its
Affiliates, or, to its knowledge, stockholders, creditors or employees or any
other Person; (c) neither the Administrative Agent nor the Arranger has assumed
or will assume an advisory, agency or fiduciary responsibility in favor of
either Borrower with respect to any of the transactions contemplated hereby or
the process leading thereto, including with respect to any amendment, waiver or
other modification hereof or of any other Loan Document (irrespective of whether
the Administrative Agent or the Arranger has advised or is currently advising
either Borrower or any of its Affiliates on other matters) and neither the
Administrative Agent nor the Arranger has any obligation to either Borrower or
any of its Affiliates with respect to the transactions contemplated hereby
except those obligations expressly set forth herein and in the other Loan
Documents; (iv) the Administrative Agent and the Arranger and their respective
Affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of each Borrower and its Affiliates, and
neither the Administrative Agent nor the Arranger has any obligation to disclose
any of such interest by virtue of any advisory, agency or fiduciary relationship
and (v) the Administrative Agent and the Arranger have not provided and will not
provide any legal, accounting, regulatory or tax advice with respect to any of
the transactions contemplated hereby (including any amendment, waiver or other
modification hereof or of any other Loan Document) and each Borrower has
consulted its own legal, accounting, regulatory an tax advisors to the extent it
has deemed appropriate. Each Borrower hereby waives and releases, to the fullest
extent permitted by Law, any claims that it may have against the Administrative
Agent and the Arranger with respect to any breach or alleged breach of agency or
fiduciary duty.

10.17    USA PATRIOT Act Notice.  Each Lender that is subject to the Act (as
hereinafter defined) and the Administrative Agent (for itself and not on behalf
of any Lender) hereby notifies the Borrower that pursuant to the requirements of
the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record information that
identifies the Borrowers, which information includes the name and address of the
Borrowers and other information that will allow such Lender or the
Administrative Agent, as applicable, to identify the Borrower in accordance with
the Act.

10.18    Entire Agreement.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

 

 

84

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

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

AMERICAN FINANCIAL GROUP, INC.

By:

 

 

 

Name:

 

 

 

Title:

 

 

AAG HOLDING COMPANY, INC.

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

BANK OF AMERICA, N.A., as

Administrative Agent

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

BANK OF AMERICA, N.A., as a Lender

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

NATIONAL CITY BANK, as Co-Syndication

Agent and as a Lender

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

KEYBANK NATIONAL ASSOCIATION, as

Co-Syndication Agent and as a Lender

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

US BANK, N.A., as Documentation Agent and as a Lender

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

WACHOVIA BANK, NATIONAL

ASSOCIATION, as a Lender

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

THE HUNTINGTON NATIONAL BANK, as a

Lender

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

MERRILL LYNCH BANK USA, as a Lender

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

UBS LOAN FINANCE LLC, as a Lender

By:

 

 

 

Name:

 

 

 

Title:

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

THE BANK OF NEW YORK, as a Lender

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

LASALLE BANK NATIONAL ASSOCIATION,

as a Lender

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

CREDIT SUISSE FIRST BOSTON, acting

through its Cayman Islands Branch, as a Lender

By:

 

 

 

Name:

 

 

 

Title:

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

PNC BANK, NATIONAL ASSOCIATION, as a Lender

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

REGIONS BANK, as a Lender

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

JPMORGAN CHASE BANK, as a Lender

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

NORTHERN TRUST BANK, as a Lender

By:

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Credit Agreement

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

NOTE

 

$ 72,500,000.00

  March 29, 2006

FOR VALUE RECEIVED, the undersigned AMERICAN FINANCIAL GROUP, INC., hereby
promises to pay to BANK OF AMERICA, N.A. or registered assigns (the “Lender”),
in accordance with the provisions of the Agreement (as hereinafter defined), the
principal amount of SEVENTY-TWO MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($72,500,000.00) or such lesser principal amount of Loans (as defined in such
Agreement) due and payable by American Financial Group, Inc. to the Lender on
the Maturity Date under that certain Credit Agreement, dated as of March 29,
2006 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), among American Financial Group, Inc., AAG Holding
Company, Inc., the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent.

American Financial Group, Inc. promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

American Financial Group, Inc., for itself, its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

1

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

AMERICAN FINANCIAL GROUP, INC.

 

By:

 

 

   

Name:

 

 

   

Title:

 

 

 

2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date   Type of
Loan Made   Amount of
Loan Made   End of
Interest
Period   Amount of
Principal or
Interest
Paid This
Date   Outstanding
Principal
Balance
This Date   Notation
Made By

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

 

3

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

NOTE

 

$ 55,000,000.00

  March 29, 2006

FOR VALUE RECEIVED, the undersigned AMERICAN FINANCIAL GROUP, INC., hereby
promises to pay to KEYBANK NATIONAL ASSOCIATION or registered assigns (the
“Lender”), in accordance with the provisions of the Agreement (as hereinafter
defined), the principal amount of FIFTY-FIVE MILLION AND NO/100 DOLLARS
($55,000,000.00) or such lesser principal amount of Loans (as defined in such
Agreement) due and payable by American Financial Group, Inc. to the Lender on
the Maturity Date under that certain Credit Agreement, dated as of March 29,
2006 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), among American Financial Group, Inc., AAG Holding
Company, Inc., the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent.

American Financial Group, Inc. promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

American Financial Group, Inc., for itself, its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

1

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

AMERICAN FINANCIAL GROUP, INC.

 

By:

 

 

   

Name:

 

 

   

Title:

 

 

 

2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date   Type of
Loan Made   Amount of
Loan Made   End of
Interest
Period   Amount of
Principal or
Interest
Paid This
Date   Outstanding
Principal
Balance
This Date   Notation
Made By

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

 

3

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

NOTE

 

$ 55,000,000.00

  March 29, 2006

FOR VALUE RECEIVED, the undersigned AMERICAN FINANCIAL GROUP, INC., hereby
promises to pay to NATIONAL CITY BANK or registered assigns (the “Lender”), in
accordance with the provisions of the Agreement (as hereinafter defined), the
principal amount of FIFTY-FIVE MILLION AND NO/100 DOLLARS ($55,000,000.00) or
such lesser principal amount of Loans (as defined in such Agreement) due and
payable by American Financial Group, Inc. to the Lender on the Maturity Date
under that certain Credit Agreement, dated as of March 29, 2006 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to
time, the “Agreement;” the terms defined therein being used herein as therein
defined), among American Financial Group, Inc., AAG Holding Company, Inc., the
Lenders from time to time party thereto, and Bank of America, N.A., as
Administrative Agent.

American Financial Group, Inc. promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

American Financial Group, Inc., for itself, its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

1

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

AMERICAN FINANCIAL GROUP, INC.

 

By:

 

 

   

Name:

 

 

   

Title:

 

 

 

2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date   Type of
Loan Made   Amount of
Loan Made   End of
Interest
Period   Amount of
Principal or
Interest
Paid This
Date   Outstanding
Principal
Balance
This Date   Notation
Made By

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

 

3

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

NOTE

 

$ 55,000,000.00

  March 29, 2006

FOR VALUE RECEIVED, the undersigned AMERICAN FINANCIAL GROUP, INC., hereby
promises to pay to U. S. BANK, NATIONAL ASSOCIATION or registered assigns (the
“Lender”), in accordance with the provisions of the Agreement (as hereinafter
defined), the principal amount of FIFTY-FIVE MILLION AND NO/100 DOLLARS
($55,000,000.00) or such lesser principal amount of Loans (as defined in such
Agreement) due and payable by American Financial Group, Inc. to the Lender on
the Maturity Date under that certain Credit Agreement, dated as of March 29,
2006 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), among American Financial Group, Inc., AAG Holding
Company, Inc., the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent.

American Financial Group, Inc. promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

American Financial Group, Inc., for itself, its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

1

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

AMERICAN FINANCIAL GROUP, INC.

 

By:

 

 

   

Name:

 

 

   

Title:

 

 

 

2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date   Type of
Loan Made   Amount of
Loan Made   End of
Interest
Period   Amount of
Principal or
Interest
Paid This
Date   Outstanding
Principal
Balance
This Date   Notation
Made By

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

 

3

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

NOTE

 

$ 40,000,000.00

  March 29, 2006

FOR VALUE RECEIVED, the undersigned AMERICAN FINANCIAL GROUP, INC., hereby
promises to pay to THE BANK OF NEW YORK or registered assigns (the “Lender”), in
accordance with the provisions of the Agreement (as hereinafter defined), the
principal amount of FORTY MILLION AND NO/100 DOLLARS ($40,000,000.00) or such
lesser principal amount of Loans (as defined in such Agreement) due and payable
by American Financial Group, Inc. to the Lender on the Maturity Date under that
certain Credit Agreement, dated as of March 29, 2006 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined),
among American Financial Group, Inc., AAG Holding Company, Inc., the Lenders
from time to time party thereto, and Bank of America, N.A., as Administrative
Agent.

American Financial Group, Inc. promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

American Financial Group, Inc., for itself, its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

1

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

AMERICAN FINANCIAL GROUP, INC.

 

By:

 

 

   

Name:

 

 

   

Title:

 

 

 

2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date   Type of
Loan Made   Amount of
Loan Made   End of
Interest
Period   Amount of
Principal or
Interest
Paid This
Date   Outstanding
Principal
Balance
This Date   Notation
Made By

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

 

3

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

NOTE

 

$ 40,000,000.00

  March 29, 2006

FOR VALUE RECEIVED, the undersigned AMERICAN FINANCIAL GROUP, INC., hereby
promises to pay to WACHOVIA BANK, NATIONAL ASSOCIATION or registered assigns
(the “Lender”), in accordance with the provisions of the Agreement (as
hereinafter defined), the principal amount of FORTY MILLION AND NO/100 DOLLARS
($40,000,000.00) or such lesser principal amount of Loans (as defined in such
Agreement) due and payable by American Financial Group, Inc. to the Lender on
the Maturity Date under that certain Credit Agreement, dated as of March 29,
2006 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), among American Financial Group, Inc., AAG Holding
Company, Inc., the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent.

American Financial Group, Inc. promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

American Financial Group, Inc., for itself, its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

1

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

AMERICAN FINANCIAL GROUP, INC.

 

By:

 

 

   

Name:

 

 

   

Title:

 

 

 

2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date   Type of
Loan Made   Amount of
Loan Made   End of
Interest
Period   Amount of
Principal or
Interest
Paid This
Date   Outstanding
Principal
Balance
This Date   Notation
Made By

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

 

3

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

NOTE

 

$ 30,000,000.00

  March 29, 2006

FOR VALUE RECEIVED, the undersigned AMERICAN FINANCIAL GROUP, INC., hereby
promises to pay to REGIONS BANK or registered assigns (the “Lender”), in
accordance with the provisions of the Agreement (as hereinafter defined), the
principal amount of THIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00) or such
lesser principal amount of Loans (as defined in such Agreement) due and payable
by American Financial Group, Inc. to the Lender on the Maturity Date under that
certain Credit Agreement, dated as of March 29, 2006 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined),
among American Financial Group, Inc., AAG Holding Company, Inc., the Lenders
from time to time party thereto, and Bank of America, N.A., as Administrative
Agent.

American Financial Group, Inc. promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

American Financial Group, Inc., for itself, its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

1

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

AMERICAN FINANCIAL GROUP, INC.

 

By:

 

 

   

Name:

 

 

   

Title:

 

 

 

2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date   Type of
Loan Made   Amount of
Loan Made   End of
Interest
Period   Amount of
Principal or
Interest
Paid This
Date   Outstanding
Principal
Balance
This Date   Notation
Made By

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

 

3

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

NOTE

 

$ 20,000,000.00

  March 29, 2006

FOR VALUE RECEIVED, the undersigned AMERICAN FINANCIAL GROUP, INC., hereby
promises to pay to CREDIT SUISSE FIRST BOSTON or registered assigns (the
“Lender”), in accordance with the provisions of the Agreement (as hereinafter
defined), the principal amount of TWENTY MILLION AND NO/100 DOLLARS
($20,000,000.00) or such lesser principal amount of Loans (as defined in such
Agreement) due and payable by American Financial Group, Inc. to the Lender on
the Maturity Date under that certain Credit Agreement, dated as of March 29,
2006 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), among American Financial Group, Inc., AAG Holding
Company, Inc., the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent.

American Financial Group, Inc. promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

American Financial Group, Inc., for itself, its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

1

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

AMERICAN FINANCIAL GROUP, INC.

 

By:

 

 

   

Name:

 

 

   

Title:

 

 

 

2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date   Type of
Loan Made   Amount of
Loan Made   End of
Interest
Period   Amount of
Principal or
Interest
Paid This
Date   Outstanding
Principal
Balance
This Date   Notation
Made By

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

 

3

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

NOTE

 

$ 20,000,000.00

  March 29, 2006

FOR VALUE RECEIVED, the undersigned AMERICAN FINANCIAL GROUP, INC., hereby
promises to pay to THE HUNTINGTON NATIONAL BANK or registered assigns (the
“Lender”), in accordance with the provisions of the Agreement (as hereinafter
defined), the principal amount of TWENTY MILLION AND NO/100 DOLLARS
($20,000,000.00) or such lesser principal amount of Loans (as defined in such
Agreement) due and payable by American Financial Group, Inc. to the Lender on
the Maturity Date under that certain Credit Agreement, dated as of March 29,
2006 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), among American Financial Group, Inc., AAG Holding
Company, Inc., the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent.

American Financial Group, Inc. promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

American Financial Group, Inc., for itself, its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

1

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

AMERICAN FINANCIAL GROUP, INC.

 

By:

 

 

   

Name:

 

 

   

Title:

 

 

 

2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date   Type of
Loan Made   Amount of
Loan Made   End of
Interest
Period   Amount of
Principal or
Interest
Paid This
Date   Outstanding
Principal
Balance
This Date   Notation
Made By

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

 

3

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

NOTE

 

$ 20,000,000.00

  March 29, 2006

FOR VALUE RECEIVED, the undersigned AMERICAN FINANCIAL GROUP, INC., hereby
promises to pay to LASALLE BANK NATIONAL ASSOCIATION or registered assigns (the
“Lender”), in accordance with the provisions of the Agreement (as hereinafter
defined), the principal amount of TWENTY MILLION AND NO/100 DOLLARS
($20,000,000.00) or such lesser principal amount of Loans (as defined in such
Agreement) due and payable by American Financial Group, Inc. to the Lender on
the Maturity Date under that certain Credit Agreement, dated as of March 29,
2006 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), among American Financial Group, Inc., AAG Holding
Company, Inc., the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent.

American Financial Group, Inc. promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

American Financial Group, Inc., for itself, its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

1

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

AMERICAN FINANCIAL GROUP, INC.

 

By:

 

 

   

Name:

 

 

   

Title:

 

 

 

2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date   Type of
Loan Made   Amount of
Loan Made   End of
Interest
Period   Amount of
Principal or
Interest
Paid This
Date   Outstanding
Principal
Balance
This Date   Notation
Made By

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

 

3

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

NOTE

 

$ 20,000,000.00

  March 29, 2006

FOR VALUE RECEIVED, the undersigned AMERICAN FINANCIAL GROUP, INC., hereby
promises to pay to MERRILL LYNCH BANK USA or registered assigns (the “Lender”),
in accordance with the provisions of the Agreement (as hereinafter defined), the
principal amount of TWENTY MILLION AND NO/100 DOLLARS ($20,000,000.00) or such
lesser principal amount of Loans (as defined in such Agreement) due and payable
by American Financial Group, Inc. to the Lender on the Maturity Date under that
certain Credit Agreement, dated as of March 29, 2006 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined),
among American Financial Group, Inc., AAG Holding Company, Inc., the Lenders
from time to time party thereto, and Bank of America, N.A., as Administrative
Agent.

American Financial Group, Inc. promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

American Financial Group, Inc., for itself, its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

1

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

AMERICAN FINANCIAL GROUP, INC.

 

By:

 

 

   

Name:

 

 

   

Title:

 

 

 

2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date   Type of
Loan Made   Amount of
Loan Made   End of
Interest
Period   Amount of
Principal or
Interest
Paid This
Date   Outstanding
Principal
Balance
This Date   Notation
Made By

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

 

3

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

NOTE

 

$ 20,000,000.00

  March 29, 2006

FOR VALUE RECEIVED, the undersigned AMERICAN FINANCIAL GROUP, INC., hereby
promises to pay to PNC BANK, NATIONAL ASSOCIATION or registered assigns (the
“Lender”), in accordance with the provisions of the Agreement (as hereinafter
defined), the principal amount of TWENTY MILLION AND NO/100 DOLLARS
($20,000,000.00) or such lesser principal amount of Loans (as defined in such
Agreement) due and payable by American Financial Group, Inc. to the Lender on
the Maturity Date under that certain Credit Agreement, dated as of March 29,
2006 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), among American Financial Group, Inc., AAG Holding
Company, Inc., the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent.

American Financial Group, Inc. promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

American Financial Group, Inc., for itself, its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

1

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

AMERICAN FINANCIAL GROUP, INC.

 

By:

 

 

   

Name:

 

 

   

Title:

 

 

 

2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date   Type of
Loan Made   Amount of
Loan Made   End of
Interest
Period   Amount of
Principal or
Interest
Paid This
Date   Outstanding
Principal
Balance
This Date   Notation
Made By

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

 

3

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

NOTE

 

$ 20,000,000.00

  March 29, 2006

FOR VALUE RECEIVED, the undersigned AMERICAN FINANCIAL GROUP, INC., hereby
promises to pay to UBS LOAN FINANCE LLC or registered assigns (the “Lender”), in
accordance with the provisions of the Agreement (as hereinafter defined), the
principal amount of TWENTY MILLION AND NO/100 DOLLARS ($20,000,000.00) or such
lesser principal amount of Loans (as defined in such Agreement) due and payable
by American Financial Group, Inc. to the Lender on the Maturity Date under that
certain Credit Agreement, dated as of March 29, 2006 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined),
among American Financial Group, Inc., AAG Holding Company, Inc., the Lenders
from time to time party thereto, and Bank of America, N.A., as Administrative
Agent.

American Financial Group, Inc. promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

American Financial Group, Inc., for itself, its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

1

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

AMERICAN FINANCIAL GROUP, INC.

 

By:

 

 

   

Name:

 

 

   

Title:

 

 

 

2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date   Type of
Loan Made   Amount of
Loan Made   End of
Interest
Period   Amount of
Principal or
Interest
Paid This
Date   Outstanding
Principal
Balance
This Date   Notation
Made By

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

 

3

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

NOTE

 

$ 17,500,000.00

  March 29, 2006

FOR VALUE RECEIVED, the undersigned AMERICAN FINANCIAL GROUP, INC., hereby
promises to pay to JPMORGAN CHASE BANK, N.A. or registered assigns (the
“Lender”), in accordance with the provisions of the Agreement (as hereinafter
defined), the principal amount of SEVENTEEN MILLION FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($17,500,000.00) or such lesser principal amount of Loans (as
defined in such Agreement) due and payable by American Financial Group, Inc. to
the Lender on the Maturity Date under that certain Credit Agreement, dated as of
March 29, 2006 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement;” the terms defined
therein being used herein as therein defined), among American Financial Group,
Inc., AAG Holding Company, Inc., the Lenders from time to time party thereto,
and Bank of America, N.A., as Administrative Agent.

American Financial Group, Inc. promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

American Financial Group, Inc., for itself, its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

1

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

AMERICAN FINANCIAL GROUP, INC.

 

By:

 

 

   

Name:

 

 

   

Title:

 

 

 

2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date   Type of
Loan Made   Amount of
Loan Made   End of
Interest
Period   Amount of
Principal or
Interest
Paid This
Date   Outstanding
Principal
Balance
This Date   Notation
Made By

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

 

3

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

NOTE

 

$ 15,000,000.00

  March 29, 2006

FOR VALUE RECEIVED, the undersigned AMERICAN FINANCIAL GROUP, INC., hereby
promises to pay to NORTHERN TRUST BANK or registered assigns (the “Lender”), in
accordance with the provisions of the Agreement (as hereinafter defined), the
principal amount of FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000.00) or such
lesser principal amount of Loans (as defined in such Agreement) due and payable
by American Financial Group, Inc. to the Lender on the Maturity Date under that
certain Credit Agreement, dated as of March 29, 2006 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined),
among American Financial Group, Inc., AAG Holding Company, Inc., the Lenders
from time to time party thereto, and Bank of America, N.A., as Administrative
Agent.

American Financial Group, Inc. promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable all as provided in the Agreement. Loans made by the Lender shall be
evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this
Note and endorse thereon the date, amount and maturity of its Loans and payments
with respect thereto.

American Financial Group, Inc., for itself, its successors and assigns, hereby
waives diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.

 

1

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

 

AMERICAN FINANCIAL GROUP, INC.

 

By:

 

 

   

Name:

 

 

   

Title:

 

 

 

2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date   Type of
Loan Made   Amount of
Loan Made   End of
Interest
Period   Amount of
Principal or
Interest
Paid This
Date   Outstanding
Principal
Balance
This Date   Notation
Made By

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

__________

  __________   __________   __________   __________   __________   __________

 

3

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

GUARANTY

GUARANTY (this “Guaranty”), dated as of March 29, 2006, made by the party listed
on the signature page hereof (the “Guarantor”), in favor of the Guarantied
Parties referred to below.

W I T N E S S E T H:

WHEREAS, American Financial Group, Inc., an Ohio corporation and AAG Holding
Company, Inc. (“AAG”), an Ohio corporation (the “Borrowers”), have entered into
a Credit Agreement dated as of March 29, 2006, among the Lenders party thereto,
and Bank of America, N.A., as the Administrative Agent (hereinafter, the
“Administrative Agent”) for the Lenders, (said Credit Agreement, as it may be
amended, supplemented or otherwise modified from time to time, being the “Credit
Agreement”, and capitalized terms not defined herein but defined therein being
used herein as therein defined); and

WHEREAS, the Borrowers are members of the same consolidated group of companies
and are engaged in operations which require financing on a basis in which credit
can be made available from time to time to the Borrowers, and the Guarantor will
derive direct and indirect economic benefit from the Revolving Loans made to AAG
under the Credit Agreement; and

WHEREAS, it is a condition precedent to the obligation of the Lenders to make
Revolving Loans under the Credit Agreement that the Guarantor shall have
executed and delivered this Guaranty; and

WHEREAS, the Lenders, the Administrative Agent, any Lender or Affiliate of any
Lender entering into a Swap Contract (provided that such Lender was a Lender at
the time such Swap Contract was entered into) with either Borrower or any
Affiliate of either Borrower, and the beneficiaries of each indemnification
obligation undertaken by any Loan Party under any Loan Document are herein
referred to as the “Guarantied Parties”;

NOW, THEREFORE, in consideration of the premises and to induce the Lenders to
make Revolving Loans, the Guarantor hereby agrees as follows:

1. Guaranty. The Guarantor hereby unconditionally and irrevocably guarantees the
full and prompt payment when due, whether at stated maturity, by acceleration or
otherwise, of, and the performance of, (a) the principal of and interest on the
Loans made to, and any Notes held by the Lenders of, AAG, (b) all other amounts
from time to time owing to the Lenders, the Administrative Agent or any
indemnified party under the Credit Agreement, the Notes or the other Loan
Documents, including all Obligations of AAG, whether now or hereafter existing
and whether for principal, interest, fees, expenses or otherwise, (c) all Swap
Obligations owed to any Lender or any Affiliate of a Lender (provided at the
time of execution of the Swap Contract related to such Swap Obligations such
Lender is a party to the Credit Agreement), (d) any and all reasonable
out-of-pocket expenses (including, without limitation, reasonable expenses and
reasonable counsel fees and expenses of the Administrative Agent and the
Lenders) incurred by any of the Guarantied Parties in enforcing any rights under
this Guaranty and (e) all present and future amounts that would become due but
for the operation of any provision of Debtor Relief Laws, and all present and
future accrued and unpaid interest, including, without limitation, all

 

- 1 -

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

post-petition interest if AAG or the Guarantor voluntarily or involuntarily
becomes subject to any Debtor Relief Laws (the items set forth in clauses (a),
(b), (c), (d) and (e) immediately above being herein referred to as the
“Guarantied Obligations”). Upon failure of AAG to pay any of the Guarantied
Obligations when due after the giving by the Administrative Agent and/or the
Lenders of any notice and the expiration of any applicable cure period in each
case provided for in the Credit Agreement and other Loan Documents (whether at
stated maturity, by acceleration or otherwise), the Guarantor hereby further
agrees to promptly pay the same after the Guarantor’s receipt of notice from the
Administrative Agent of AAG’s failure to pay the same, without any other demand
or notice whatsoever, including without limitation, any notice having been given
to the Guarantor of either the acceptance by the Guarantied Parties of this
Guaranty or the creation or incurrence of any of the Guarantied Obligations.
This Guaranty is an absolute guaranty of payment and performance of the
Guarantied Obligations and not a guaranty of collection, meaning that it is not
necessary for the Guarantied Parties, in order to enforce payment by the
Guarantor, first or contemporaneously to accelerate payment of any of the
Guarantied Obligations, to institute suit or exhaust any rights against any Loan
Party, or to enforce any rights against any collateral. Notwithstanding anything
herein or in any other Loan Document to the contrary, in any action or
proceeding involving any state corporate law, or any state or federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if, as a result of applicable law relating to fraudulent
conveyance or fraudulent transfer, including Section 548 of Bankruptcy Code or
any applicable provisions of comparable state law (collectively, “Fraudulent
Transfer Laws”), the obligations of the Guarantor under this Section 1 would
otherwise, after giving effect to (a) all other liabilities of the Guarantor,
contingent or otherwise, that are relevant under such Fraudulent Transfer Laws
(specifically excluding, however, any liabilities of the Guarantor in respect of
intercompany Indebtedness to AAG to the extent that such Indebtedness would be
discharged in an amount equal to the amount paid by the Guarantor hereunder) and
(b) to the value as assets of the Guarantor (as determined under the applicable
provisions of such Fraudulent Transfer Laws) of any rights of subrogation,
contribution, reimbursement, indemnity or similar rights held by the Guarantor
pursuant to (i) applicable requirements of Law, (ii) Section 10 hereof or
(iii) any other contractual obligations providing for an equitable allocation
among the Guarantor and other Subsidiaries or Affiliates of AAG of obligations
arising under this Guaranty or other guaranties of the Guarantied Obligations by
such parties, be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under this Section 1, then the amount of such liability shall,
without any further action by the Guarantor, any Lender, the Administrative
Agent or any other Person, be automatically limited and reduced to the highest
amount that is valid and enforceable and not subordinated to the claims of other
creditors as determined in such action or proceeding.

2. Guaranty Absolute. The Guarantor guarantees that the Guarantied Obligations
will be paid strictly in accordance with the terms of the Credit Agreement, the
Notes and the other Loan Documents, without set-off or counterclaim, and
regardless of any applicable Law now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Guarantied Parties with respect
thereto. The liability of the Guarantor under this Guaranty shall be absolute
and unconditional irrespective of:

 

- 2 -

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

2.1 any lack of validity or enforceability of any provision of any other Loan
Document or any other agreement or instrument relating to any Loan Document, or
avoidance or subordination of any of the Guarantied Obligations;

2.2 any change in the time, manner or place of payment of, or in any other term
of, or any increase in the amount of, all or any of the Guarantied Obligations,
or any other amendment or waiver of any term of, or any consent to departure
from any requirement of, the Credit Agreement, the Notes or any of the other
Loan Documents;

2.3 any exchange, release or non-perfection of any Lien on any collateral for,
or any release of any Loan Party or amendment or waiver of any term of any other
guaranty of, or any consent to departure from any requirement of any other
guaranty of, all or any of the Guarantied Obligations;

2.4 the absence of any attempt to collect any of the Guarantied Obligations from
AAG or from any other Loan Party or any other action to enforce the same or the
election of any remedy by any of the Guarantied Parties;

2.5 any waiver, consent, extension, forbearance or granting of any indulgence by
any of the Guarantied Parties with respect to any provision of any other Loan
Document;

2.6 the election by any of the Guarantied Parties in any proceeding under any
Debtor Relief Law;

2.7 any borrowing or grant of a security interest by AAG, as
debtor-in-possession, under any Debtor Relief Law; or

2.8 any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of AAG or the Guarantor other than payment or performance
of the Guarantied Obligations.

3. Waiver.

3.1 The Guarantor hereby (i) waives (A) promptness, diligence, and, except as
otherwise provided herein, notice of acceptance and any and all other notices,
including, without limitation, notice of intent to accelerate and notice of
acceleration, with respect to any of the Guarantied Obligations or this
Guaranty, (B) any requirement that any of the Guarantied Parties protect,
secure, perfect or insure any security interest in or other Lien on any property
subject thereto or exhaust any right or take any action against AAG or any other
Person or any collateral, (C) the filing of any claim with a court in the event
of receivership or bankruptcy of AAG or any other Person, (D) except as
otherwise provided herein, protest or notice with respect to nonpayment of all
or any of the Guarantied Obligations, (E) the benefit of any statute of
limitation, (F) except as otherwise provided herein, all demands whatsoever (and
any requirement that demand be made on AAG or any other Person as a condition
precedent to the Guarantor’s obligations hereunder), (G) all rights by which the
Guarantor might be entitled to require suit on an accrued right of action in
respect of any of the Guarantied Obligations or require suit against AAG or any
other Person, (H) any defense based upon an election of remedies by any
Guarantied Party, or (I) notice of any events or circumstances set forth in

 

- 3 -

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

clauses (a) through (h) of Section 2 hereof; and (ii) covenants and agrees that,
except as otherwise agreed by the parties, this Guaranty will not be discharged
except by complete payment and performance of the Guarantied Obligations and any
other obligations of the Guarantor contained herein.

3.2 If, in the exercise of any of its rights and remedies in accordance with the
provisions of applicable Law, any of the Guarantied Parties shall forfeit any of
its rights or remedies, including, without limitation, its right to enter a
deficiency judgment against AAG or any other Person, whether because of any
applicable Laws pertaining to “election of remedies” or the like, the Guarantor
hereby consents to such action by such Guarantied Party and waives any claim
based upon such action. Any election of remedies which, by reason of such
election, results in the denial or impairment of the right of such Guarantied
Party to seek a deficiency judgment against AAG shall not impair the obligation
of the Guarantor to pay the full amount of the Guarantied Obligations or any
other obligation of the Guarantor contained herein.

3.3 In the event any of the Guarantied Parties shall bid at any foreclosure or
trustee’s sale or at any private sale permitted by Law or under any of the Loan
Documents, to the extent not prohibited by applicable Law, such Guarantied Party
may bid all or less than the amount of the Guarantied Obligations and the amount
of such bid, if successful, need not be paid by such Guarantied Party but shall
be credited against the Guarantied Obligations.

3.4 The Guarantor agrees that notwithstanding the foregoing and without limiting
the generality of the foregoing if, after the occurrence and during the
continuance of an Event of Default, the Guarantied Parties are prevented by
applicable Law from exercising their respective rights to accelerate the
maturity of the Guarantied Obligations, to collect interest on the Guarantied
Obligations, or to enforce or exercise any other right or remedy with respect to
the Guarantied Obligations, or the Administrative Agent is prevented from taking
any action to realize on the Collateral, the Guarantor agrees to pay to the
Administrative Agent for the account of the Guarantied Parties, upon demand
therefore, for application to the Guarantied Obligations, the amount that would
otherwise have been due and payable had such rights and remedies been permitted
to be exercised by the Guarantied Parties.

3.5 The Guarantor hereby assumes responsibility for keeping itself informed of
the financial condition of AAG and of each other Loan Party, and of all other
circumstances bearing upon the risk of nonpayment of the Guarantied Obligations
or any part thereof, that diligent inquiry would reveal. The Guarantor hereby
agrees that the Guarantied Parties shall have no duty to advise the Guarantor of
information known to any of the Guarantied Parties regarding such condition or
any such circumstance. In the event that any of the Guarantied Parties in its
sole discretion undertakes at any time or from time to time to provide any such
information to the Guarantor, such Guarantied Party shall be under no obligation
(i) to undertake any investigation not a part of its regular business routine,
(ii) to disclose any information which, pursuant to accepted or reasonable
banking or commercial finance practices, such Guarantied Party wishes to
maintain as confidential, or (iii) to make any other or future disclosures of
such information or any other information to the Guarantor.

 

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3.6 The Guarantor consents and agrees that the Guarantied Parties shall be under
no obligation to marshal any assets in favor of the Guarantor or otherwise in
connection with obtaining payment of any or all of the Guarantied Obligations
from any Person or source.

4. Representations and Warranties. The Guarantor hereby represents and warrants
to the Guarantied Parties that the representations and warranties set forth in
Article V of the Credit Agreement as they relate to the Guarantor or to the Loan
Documents to which the Guarantor is a party are true and correct in all material
respects in the manner specified in the Credit Agreement and the Guarantied
Parties shall be entitled to rely on each of them as if they were fully set
forth herein.

5. Amendments. Etc. No amendment or waiver of any provision of this Guaranty nor
consent to any departure by the Guarantor herefrom shall in any event be
effective unless the same shall be in writing, approved by the Required Lenders
(or by all the Lenders where the approval of each Lender is required under the
Credit Agreement) and signed by the Administrative Agent, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.

6. Addresses for Notices. All notices and other communications provided for
hereunder shall be effectuated in the manner provided for in Section 10.02 of
the Credit Agreement.

7. No Waiver; Remedies.

7.1 No failure on the part of any Guarantied Party to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by applicable
Law or any of the other Loan Documents.

7.2 No waiver by the Guarantied Parties of any default shall operate as a waiver
of any other default or the same default on a future occasion, and no action by
any of the Guarantied Parties permitted hereunder shall in way affect or impair
any of the rights of the Guarantied Parties or the obligations of the Guarantor
under this Guaranty or under any of the other Loan Documents, except as
specifically set forth in any such waiver. Any determination by a court of
competent jurisdiction of the amount of any principal and/or interest or other
amount constituting any of the Guarantied Obligations shall be conclusive and
binding on the Guarantor irrespective of whether the Guarantor was a party to
the suit or action in which such determination was made.

8. Right of Set-off. Upon the occurrence and during the continuance of any Event
of Default under the Credit Agreement, each of the Guarantied Parties 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
(except trust and escrow accounts), time or demand, provisional or final) at any
time held and other Indebtedness at any time owing by such Guarantied Party to
or for the credit or the account of the Guarantor against any and all of the
obligations of the Guarantor now or hereafter existing under this Guaranty,
irrespective of whether or not such Guarantied Party shall have made any demand
under this Guaranty;

 

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provided, however, such Guarantied Party shall promptly notify the Guarantor and
AAG after such set-off and the application made by such Guarantied Party. The
rights of each Guarantied Party under this Section 8 are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which such Guarantied Party may have.

9. Continuing Guaranty; Transfer of Notes. This Guaranty (a)(i) is a continuing
guaranty

and shall remain in full force and effect until the date that the Aggregate
Commitments have been terminated and all Loans and other Obligations have been
paid in full (the “Release Date”) and (ii) binding upon the Guarantor, its
permitted successors and assigns, and (b) inures to the benefit of and be
enforceable by the Guarantied Parties and their respective successors, permitted
transferees, and permitted assigns. Without limiting the generality of the
foregoing clause (b), each of the Guarantied Parties may assign or otherwise
transfer any Note held by it or the Guarantied Obligations owed to it to any
other Person, and such other Person shall thereupon become vested with all the
rights in respect thereof granted to such Guarantied Party herein or otherwise
with respect to such of the Notes and the Guarantied Obligations so transferred
or assigned, subject, however, to compliance with the provisions of
Section 10.06 of the Credit Agreement in respect of assignments. Except as the
result of the consummation of a transaction permitted under Section 7.04 of the
Credit Agreement, the Guarantor may not assign any of its obligations under this
Guaranty without first obtaining the written consent of the Lenders as set forth
in the Credit Agreement. If upon any merger, dissolution, liquidation or
consolidation permitted under Section 7.04 of the Credit Agreement, the
Guarantor no longer exists, the Guarantor shall be released of its obligations
hereunder.

10. Reinstatement. This Guaranty shall remain in full force and effect and
continue to be effective should any petition be filed by or against any Loan
Party for liquidation or reorganization, should any Loan Party become insolvent
or make an assignment for the benefit of creditors or should a receiver or
trustee be appointed for all or any significant part of any Loan Party’s assets,
and shall, to the fullest extent permitted by applicable Law, continue to be
effective or be reinstated, as the case may be, if at any time payment and
performance of the Guarantied Obligations, or any part thereof, is, pursuant to
applicable Law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligees of the Guarantied Obligations or such part thereof,
whether as a “voidable preference,” “fraudulent transfer,” or otherwise, all as
though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Guarantied Obligations shall, to the fullest extent permitted by law, be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.

11. GOVERNING LAW.

11.1 THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE: PROVIDED THAT EACH PARTY SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.

11.2 ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER
LOAN DOCUMENT MAY BE BROUGHT IN THE

 

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COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY, NEW YORK OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION, DELIVERY AND ACCEPTANCE OF THIS GUARANTY, THE GUARANTOR, THE
ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE GUARANTOR, THE
ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER
DOCUMENT RELATED THERETO. THE GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH
LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

12. Waiver of Jury Trial. THE GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH
LENDER HEREBY (OR BY ACCEPTANCE HEREOF) EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN
DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF ANY ONE OR MORE OF THE GUARANTOR, AAG, THE ADMINISTRATIVE AGENT AND EACH
LENDER WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN
CONTRACT OR TORT OR OTHERWISE; AND THE GUARANTOR, THE ADMINISTRATIVE AGENT AND
EACH LENDER HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT THE
GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY.

13. Section Titles. The Section titles contained in this Guaranty are and shall
be without substantive meaning or content of any kind whatsoever and are not a
part of this Guaranty.

14. Execution in Counterparts. This Guaranty may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute one and the same Guaranty.

15. Miscellaneous. All references herein to AAG or to the Guarantor shall
include their respective successors and assigns, including, without limitation,
a receiver, trustee or debtor-inpossession of or for AAG or the Guarantor. All
references to the singular shall be deemed to include the plural where the
context so requires.

 

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16.

Subrogation and Subordination.

16.1 Subrogation. Notwithstanding any reference to subrogation contained herein
to the contrary, until the Release Date, the Guarantor hereby irrevocably waives
any claim or other rights which it may have or hereafter acquire against AAG
that arise from the existence, payment, performance or enforcement of the
Guarantor’s obligations under this Guaranty, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution, indemnification,
any right to participate in any claim or remedy of any Lender against AAG or any
collateral which any Lender now has or hereafter acquires, whether or not such
claim, remedy or right arises in equity, or under contract, statutes or common
law, including without limitation, the right to take or receive from AAG,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to the Guarantor in violation of the preceding sentence and
the Guarantied Obligations shall not have been paid in full, such amount shall
be deemed to have been paid to the Guarantor for the benefit of, and held in
trust for the benefit of, the Lenders, and shall forthwith be paid to the
Administrative Agent to be credited and applied upon the Guarantied Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement. The Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Credit Agreement
and that the waiver set forth in this Section 16 is knowingly made in
contemplation of such benefits.

16.2 Subordination. All debt and other liabilities of AAG to the Guarantor
(“Borrower Debt”) are expressly subordinate and junior to the Guarantied
Obligations and any instruments evidencing the Borrower Debt to the extent
provided below.

(i) Until the Release Date, the Guarantor agrees that it will not request,
demand, accept, or receive (by set-off or other manner) any payment amount,
credit or reduction of all or any part of the amounts owing under the Borrower
Debt or any security therefor, except as specifically allowed pursuant to clause
(ii) below;

(ii) Notwithstanding the provisions of clause (i) above, AAG may pay to the
Guarantor and the Guarantor may request, demand, accept and receive and retain
from AAG payments, credits or reductions of all or any part of the amounts owing
under the Borrower Debt or any security therefor on the Borrower Debt, provided
that AAG’s right to pay and the Guarantor’s right to receive any such amount
shall automatically and be immediately suspended and cease (A) upon the
occurrence and during the continuance of an Event of Default or (B) if, after
taking into account the effect of such payment, an Event of Default would occur
and be continuing. The Guarantor’s right to receive amounts under this clause
(ii) (including any amounts which theretofore may have been suspended) shall
automatically be reinstated at such time as the Event of Default which was the
basis of such suspension has been cured or waived (provided that no subsequent
Event of Default has occurred) or such earlier date, if any, as the
Administrative Agent gives notice to the Guarantor of reinstatement by the
Required Lenders, in the Required Lenders’ sole discretion;

 

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(iii) If the Guarantor receives any payment on the Borrower Debt in violation of
this Guaranty, the Guarantor will hold such payment in trust for the Lenders and
will immediately deliver such payment to the Administrative Agent; and

(iv) In the event of the commencement or joinder of any suit, action or
proceeding of any type (judicial or otherwise) or proceeding under any Debtor
Relief Law against AAG (an “Insolvency Proceeding”) and subject to court orders
issued pursuant to the Bankruptcy Code, the Guarantied Obligations shall first
be paid, discharged and performed in full before any payment or performance is
made upon the Borrower Debt notwithstanding any other provisions which may be
made in such Insolvency Proceeding. In the event of any Insolvency Proceeding,
the Guarantor will at any time prior to the Release Date (A) file, at the
request of any Guarantied Party, any claim, proof of claim or similar instrument
necessary to enforce AAG’s obligation to pay the Borrower Debt, and (B) hold in
trust for and pay to the Guarantied Parties any and all monies, obligations,
property, stock dividends or other assets received in any such proceeding on
account of the Borrower Debt in order that the Guarantied Parties may apply such
monies or the cash proceeds of such other assets to the Obligations.

17. Guarantor Insolvency. Should the Guarantor voluntarily seek, consent to, or
acquiesce in the benefits of any Debtor Relief Law or become a party to or be
made the subject of any proceeding provided for by any Debtor Relief Law (other
than as a creditor or claimant) that could suspend or otherwise adversely affect
the rights of any Guarantied Party granted hereunder, then, the obligations of
the Guarantor under this Guaranty shall be, as between the Guarantor and such
Guarantied Party, a fully-matured, due, and payable obligation of the Guarantor
to such Guarantied Party (without regard to whether there is an Event of Default
under the Credit Agreement or whether any part of the Guarantied Obligations is
then due and owing by AAG to such Guarantied Party), payable in full by the
Guarantor to such Guarantied Party upon demand, which shall be the estimated
amount owing in respect of the contingent claim created hereunder.

18. Rate Provision. It is not the intention of any Guarantied Party to make an
agreement violative of the laws of any applicable jurisdiction relating to
usury. Regardless of any provision in this Guaranty, no Guarantied Party shall
ever be entitled to contract, charge, receive, collect or apply, as interest on
the Guarantied Obligations, any amount in excess of any applicable Laws. In no
event shall the Guarantor be obligated to pay any amount in excess of applicable
Laws. If from any circumstance the Administrative Agent or any Guarantied Party
shall ever receive, collect or apply anything of value deemed excess interest
under applicable Laws, an amount equal to such excess shall be applied to the
reduction of the principal amount of outstanding Revolving Loans and any
remainder shall be promptly refunded to the payor. In determining whether or not
interest paid or payable with respect to the Guarantied Obligations, under any
specified contingency, exceeds the amount allowed by applicable Law, the
Guarantor and the Guarantied Parties shall, to the maximum extent permitted by
applicable Laws, (a) characterize any non-principal payment as an expense, fee
or premium rather than as interest, (b) amortize, prorate, allocate and spread
the total amount of interest throughout the full term of such Guarantied
Obligations so that the interest paid on account of such Guarantied Obligations
does not exceed the amount permitted by applicable Laws and/or (c) allocate
interest between portions of such Guarantied Obligations; provided that if the
Guarantied Obligations are paid and

 

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performed in full prior to the end of the full contemplated term thereof, and if
the interest received for the actual period of existence thereof exceeds the
amount permitted by applicable Laws, the Guarantied Parties shall refund to the
payor the amount of such excess or credit the amount of such excess against the
total principal amount owing, and, in such event, no Guarantied Party shall be
subject to any penalties provided by any laws for contracting for, charging or
receiving interest in excess of the amount permitted by applicable Law.

19. Severability. Any provision of this Guaranty which is for any reason
prohibited or found or held invalid or unenforceable by any court or
governmental agency shall be ineffective to the extent of such prohibition or
invalidity or unenforceability, without invalidating the remaining provisions
hereof in such jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.

20. Taxes.

20.1 Any and all payments by or on account of any obligations of the Guarantor
hereunder shall be made free and clear of and without reduction or withholding
for any Indemnified Taxes or Other Taxes, provided that if the Guarantor 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 applicable
Guarantied Party receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Guarantor shall make such deductions and
(iii) the Guarantor shall timely pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable Law.

20.2 Without limiting the provisions of subsection (a) above, the Guarantor
shall timely pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable Law.

20.3 The Guarantor shall indemnify each Guarantied Party, within 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) paid by such Guarantied
Party 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 Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Guarantor by such Guarantied Party (with a copy to the Administrative Agent), or
by the Administrative Agent on its own behalf or on behalf of any Guarantied
Party shall be conclusive absent manifest error.

20.4 As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Guarantor to a Governmental Authority, the Guarantor shall deliver
to the Administrative Agent the original or a certified copy of a receipt issued
by such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.

 

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20.5 If any Guarantied Party 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 Guarantor or with respect to which the Guarantor has paid
additional amounts pursuant to this Section, it shall pay to the Guarantor an
amount equal to such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by the Guarantor under this Section with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of such Guarantied Party, and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund),
provided that the Guarantor, upon the request of such Guarantied Party, agrees
to repay the amount paid over to the Guarantor (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to such Guarantied
Party in the event such Guarantied Party is required to repay such refund to
such Governmental Authority. This subsection shall not be construed to require
any Guarantied Party to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to the Guarantor or any other
Person.

20.6 The obligations of the Guarantor and Guarantied Party under this Section 20
shall survive termination of the Aggregate Commitments and repayment of all
Guarantied Obligations.

21. ENTIRE AGREEMENT. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS. OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

 

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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed
and delivered by its duly authorized officer on the date first above written.

 

AMERICAN FINANCIAL GROUP, INC.,
an Ohio corporation

By:

      

James C. Kennedy

Vice President

 

Signature Page to Guaranty