Exhibit 10.1

EXECUTION VERSION

$175,000,000

CREDIT AGREEMENT

dated as of

March 7, 2014

among

ARGO GROUP INTERNATIONAL HOLDINGS, LTD.,

ARGO GROUP US, INC.,

ARGO INTERNATIONAL HOLDINGS LIMITED, and

ARGO UNDERWRITING AGENCY LIMITED,

as Borrowers,

The Lenders Party Hereto

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent,

WELLS FARGO BANK, N.A.,

as Syndication Agent

and

U.S. BANK NATIONAL ASSOCIATION,

as Documentation Agent

 

 

J.P. MORGAN SECURITIES LLC,

and

WELLS FARGO SECURITIES, LLC,

as Joint Bookrunners and Joint Lead Arrangers

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TABLE OF CONTENTS

 

     Page  

ARTICLE I Definitions

     1   

SECTION 1.01. Defined Terms

     1   

SECTION 1.02. Classification of Loans and Borrowings

     24   

SECTION 1.03. Terms Generally

     24   

SECTION 1.04. Accounting Terms; GAAP

     25   

SECTION 1.05. Foreign Currency Calculations

     25   

ARTICLE II The Credits

     26   

SECTION 2.01. Commitments

     26   

SECTION 2.02. Loans and Borrowings

     26   

SECTION 2.03. Requests for Revolving Borrowings

     27   

SECTION 2.04. [Intentionally Omitted]

     28   

SECTION 2.05. [Intentionally Omitted]

     28   

SECTION 2.06. Letters of Credit

     28   

SECTION 2.07. Funding of Borrowings

     33   

SECTION 2.08. Interest Elections

     33   

SECTION 2.09. Termination and Reduction and Increase of Commitments

     35   

SECTION 2.10. Repayment of Loans; Evidence of Debt

     36   

SECTION 2.11. Prepayment of Loans

     37   

SECTION 2.12. Fees

     37   

SECTION 2.13. Interest

     38   

SECTION 2.14. Alternate Rate of Interest

     39   

SECTION 2.15. Increased Costs

     40   

SECTION 2.16. Break Funding Payments

     42   

SECTION 2.17. Taxes

     42   

SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs

     47   

SECTION 2.19. Mitigation Obligations; Replacement of Lenders

     49   

SECTION 2.20. Joint and Several Liability of the Borrowers

     50   

SECTION 2.21. Defaulting Lenders

     52   

SECTION 2.22. Extension of Maturity Date

     53   

ARTICLE III Representations and Warranties

     55   

SECTION 3.01. Organization; Powers

     55   

SECTION 3.02. Authorization; Enforceability

     55   

SECTION 3.03. Governmental Approvals; No Conflicts

     55   

SECTION 3.04. Financial Condition; No Material Adverse Change

     56   

SECTION 3.05. Properties

     56   

SECTION 3.06. Litigation

     56   

SECTION 3.07. Compliance with Laws and Agreements

     56   

SECTION 3.08. Investment Company Status

     56   

 

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SECTION 3.09. Taxes

     57   

SECTION 3.10. ERISA

     57   

SECTION 3.11. Insurance Licenses

     57   

SECTION 3.12. Subsidiaries

     57   

SECTION 3.13. Material Agreements

     57   

SECTION 3.14. Disclosure

     58   

SECTION 3.15. Solvency

     58   

SECTION 3.16. Foreign Pension Plan

     58   

SECTION 3.17. Anti-Corruption Laws and Sanctions

     58   

ARTICLE IV Conditions

     59   

SECTION 4.01. Effective Date

     59   

SECTION 4.02. Each Credit Event

     60   

ARTICLE V Affirmative Covenants

     61   

SECTION 5.01. Financial Statements; Ratings Change and Other Information

     61   

SECTION 5.02. Notices of Material Events

     63   

SECTION 5.03. Existence; Conduct of Business

     64   

SECTION 5.04. Payment of Obligations

     64   

SECTION 5.05. Maintenance of Properties; Insurance

     64   

SECTION 5.06. Books and Records; Inspection Rights

     64   

SECTION 5.07. Compliance with Laws

     65   

SECTION 5.08. Use of Proceeds and Letters of Credit

     65   

ARTICLE VI Negative Covenants

     65   

SECTION 6.01. Indebtedness

     65   

SECTION 6.02. Liens

     67   

SECTION 6.03. Fundamental Changes

     67   

SECTION 6.04. Investments and Acquisitions

     68   

SECTION 6.05. Swap Agreements

     68   

SECTION 6.06. Restricted Payments

     69   

SECTION 6.07. Transactions with Affiliates

     69   

SECTION 6.08. Restrictive Agreements

     69   

SECTION 6.09. Maximum Leverage Ratio

     70   

SECTION 6.10. Tangible Net Worth

     70   

SECTION 6.11. Sale and Leaseback Transactions

     70   

SECTION 6.12. Rating

     70   

ARTICLE VII Events of Default

     70   

ARTICLE VIII The Administrative Agent

     73   

ARTICLE IX Miscellaneous

     75   

 

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SECTION 9.01. Notices

     75   

SECTION 9.02. Waivers; Amendments

     77   

SECTION 9.03. Expenses; Indemnity; Damage Waiver

     79   

SECTION 9.04. Successors and Assigns

     80   

SECTION 9.05. Survival

     84   

SECTION 9.06. Counterparts; Integration; Effectiveness

     84   

SECTION 9.07. Severability

     85   

SECTION 9.08. Right of Setoff

     85   

SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process

     85   

SECTION 9.10. WAIVER OF JURY TRIAL

     86   

SECTION 9.11. Headings

     86   

SECTION 9.12. Confidentiality

     86   

SECTION 9.13. Interest Rate Limitation

     87   

SECTION 9.14. USA PATRIOT Act

     87   

SECTION 9.15. Conversion of Currencies

     87   

SECTION 9.16. Appointment and Authorization of Borrower Representative

     88   

SECTION 9.17. No Fiduciary Duty

     89   

SECTION 9.18. Termination of Existing Agreement

     89   

 

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SCHEDULES:

 

Schedule 1.01   —    Existing Letters of Credit Schedule 1.02   —    Pricing
Schedule Schedule 1.03   —    Trust Preferred Securities Schedule 2.01   —   
Commitments Schedule 3.11   —    Licenses Schedule 3.12   —    Subsidiaries
Schedule 6.01   —    Existing Indebtedness Schedule 6.02   —    Existing Liens
Schedule 6.08   —    Existing Restrictions

EXHIBITS:

 

Exhibit A   —    Form of Assignment and Assumption Exhibit B-1   —    U.S. Tax
Compliance Certificate (For Non-U.S. Lenders that are not Partnerships for U.S.
Federal; Income Tax Purposes Exhibit B-2   —    U.S. Tax Compliance Certificate
(For Non-U.S. Participants that are Partnerships for U.S. Federal; Income Tax
Purposes Exhibit B-3   —    U.S. Tax Compliance Certificate (For Non-U.S.
Participants that are not Partnerships for U.S. Federal; Income Tax Purposes
Exhibit B-4   —    U.S. Tax Compliance Certificate (For Non-U.S. Lenders that
are Partnerships for U.S. Federal; Income Tax Purposes

 

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CREDIT AGREEMENT dated as of March 7, 2014, among ARGO GROUP INTERNATIONAL
HOLDINGS, LTD, a company organized under the laws of Bermuda, ARGO GROUP US,
INC., a Delaware corporation, ARGO INTERNATIONAL HOLDINGS LIMITED, a corporation
organized under the laws of the United Kingdom, and ARGO UNDERWRITING AGENCY
LIMITED, a corporation organized under the laws of the United Kingdom, as
Borrowers, the LENDERS party hereto from time to time, and JPMORGAN CHASE BANK,
N.A., as Administrative Agent.

WHEREAS, 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;

NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

“Acquired Entity or Business” means either (a) the assets constituting a
business, division, facility, product line or line of business of any Person not
already a Subsidiary or (b) all of the Equity Interests of any such Person,
which Person shall, as a result of such acquisition or merger, become a
Wholly-Owned Subsidiary of the Parent (or shall be merged with and into the
Parent or a Wholly-Owned Subsidiary, with the Parent or such Wholly-Owned
Subsidiary being the surviving Person).

“Acquisition” means any transaction, or any series of related transactions, by
which any Borrower and/or any of their Subsidiaries directly or indirectly
(i) acquires any ongoing business or all or substantially all of the assets of
any Person or division thereof, whether through purchase of assets, merger or
otherwise, (ii) acquires (in one transaction or as the most recent transaction
in a series of transactions) Control of at least a majority in ordinary voting
power of the securities of a Person which have ordinary voting power for the
election of directors or (iii) otherwise acquires Control of a more than 50%
ownership interest in any such Person.

“Act” has the meaning assigned to it in Section 9.14.

“Additional Commitment Lender” has the meaning assigned to it in
Section 2.22(d).

 

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“Adjusted Eurocurrency Rate” means, with respect to any Eurocurrency Borrowing
in Dollars for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (a) the Eurocurrency Rate for
such Interest Period multiplied by (b) the Statutory Reserve Rate. For all other
Eurocurrency Borrowings, “Adjusted Eurocurrency Rate” means the Eurocurrency
Rate.

“Administrative Agent” means JPMCB, together with its permitted successors and
assigns, in its capacity as administrative agent for the Lenders hereunder.

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

“Advance” means any Loan or any Letter of Credit.

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

“Agreement” means this Credit Agreement, as amended, restated, modified or
supplemented from time to time.

“Agreement Currency” shall have the meaning assigned to such term in
Section 9.15(b).

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective
Rate in effect on such day (or if such day is not a Business Day, the
immediately preceding Business Day) plus  1⁄2 of 1% and (c) the Adjusted
Eurocurrency Rate for a one month Interest Period on such day (or if such day is
not a Business Day, the immediately preceding Business Day) plus 1%, provided
that, for the avoidance of doubt, the Adjusted Eurocurrency Rate for any day
shall be based on the LIBOR Screen Rate for Dollars for such Interest Period at
approximately 11:00 a.m. London time on such day. Any change in the Alternate
Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or
the Adjusted Eurocurrency Rate shall be effective from and including the
effective date of such change in the Prime Rate, the Federal Funds Effective
Rate or the Adjusted Eurocurrency Rate, respectively.

“Annual Statement” means the annual statutory financial statement of any
Insurance Subsidiary required to be filed with the insurance commissioner (or
similar authority) of its jurisdiction of incorporation, which statement shall
be in the form required by such Insurance Subsidiary’s jurisdiction of
incorporation or, if no specific form is so required, in the form of financial
statements recommended by the NAIC to be used for filing annual statutory
financial statements and shall contain the type of information recommended by
the NAIC to be disclosed therein, together with all exhibits or schedules filed
therewith, or, in the case of an Insurance Subsidiary not domiciled in the
United States, any comparable statement.

“Anti-Corruption Laws” means all laws, rules, and regulations of any
jurisdiction applicable to the Borrowers or their Subsidiaries from time to time
concerning or relating to bribery or corruption.

“Applicable Creditor” has the meaning assigned to such term in Section 9.15(b).

 

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“Applicable Lending Installation” is defined in Section 2.02(e).

“Applicable Percentage” means, with respect to any Lender, the percentage of the
total Commitments represented by such Lender’s Commitment; provided that in the
case of Section 2.21 when a Defaulting Lender shall exist, “Applicable
Percentage” shall mean the percentage of the total Commitments (disregarding any
Defaulting Lender’s Commitment) represented by such Lender’s Commitment. If the
Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments and to any Lender’s status as a Defaulting Lender at the time of
determination.

“Applicable Rate” means, for any day, with respect to any ABR Loan or
Eurocurrency Loan or with respect to the facility fees payable hereunder, the
applicable rate per annum set forth on Schedule 1.01 under the caption
“Eurocurrency Spread”, “Alternative Base Rate Spread” or “Facility Fee Rate”.

“Approved Fund” has the meaning assigned to such term in Section 9.04(b).

“Argo US” means Argo Group US, Inc., a Delaware corporation.

“Argo Investment Policy” means the investment policy of the Parent and its
Subsidiaries delivered to the Administrative Agent and the Lenders prior to the
Effective Date, together with any amendments or supplements thereto which do not
materially alter or change the guidelines or objectives of such policy as exist
on the Effective Date, except as approved by the board of directors of the
Parent and would not reasonably be expected to have a Material Adverse Effect.

“Asset Disposition” means any sale, transfer or other disposition (excluding any
loss portfolio transfer or any surplus relief transaction (within the meanings
prescribed by SAP) through assumption, reinsurance, cancellation and rewriting
of insurance business or otherwise) of any asset of a Borrower or any Subsidiary
in a single transaction or in a series of related transactions (other than the
sale of inventory or products in the ordinary course of business, the sale of
obsolete or worn out property in the ordinary course of business or the sale of
cash, cash equivalents and other investments made in accordance with
Section 6.04(a) in the ordinary course of business).

“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 9.04), and accepted by the Administrative Agent, in the form of
Exhibit A or any other form approved by the Administrative Agent.

“Availability Period” means the period from and including the Effective Date to
but excluding the earlier of the Maturity Date and the date of termination of
the Commitments.

“Bankruptcy Event” means, with respect to any Person, such Person becomes the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, administrator, custodian, assignee for the benefit of
creditors or similar Person charged with the reorganization or liquidation of
its business appointed for it, or, in the good faith determination

 

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of the Administrative Agent, has taken any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any such proceeding
or appointment, provided that a Bankruptcy Event shall not result solely by
virtue of any ownership interest, or the acquisition of any ownership interest,
in such Person by a Governmental Authority or instrumentality thereof, provided,
further, that such ownership interest does not result in or provide such Person
with immunity from the jurisdiction of courts within the United States or from
the enforcement of judgments or writs of attachment on its assets or permit such
Person (or such Governmental Authority or instrumentality) to reject, repudiate,
disavow or disaffirm any contracts or agreements made by such Person.

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

“Borrower Representative” shall mean Argo US in its capacity as borrowing agent
and Loan administrator for the Borrowers hereunder and under each of the other
Credit Documents.

“Borrowers” means, individually and collectively, the Parent, Argo US, Argo
International Holdings Limited, a private limited liability company organized
under the laws of England and Wales and registered under company number:
06543704 and Argo Underwriting Agency Limited, a private limited liability
company organized under the laws of England and Wales and registered under
company number: 03741768.

“Borrowing” means Revolving Loans of the same Type, made, converted or continued
on the same date and, in the case of Eurocurrency Loans, as to which a single
Interest Period is in effect.

“Borrowing Request” means a request by the Borrower Representative for a
Revolving Borrowing in accordance with Section 2.03.

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; and when used in connection with a Eurocurrency Loan, the term
“Business Day” shall also exclude any day on which banks are not open for
general business in London; and, if the Borrowing or LC Disbursements which are
the subject of a borrowing, drawing, payment, reimbursement or rate selection
are denominated in Euro, the term “Business Day” shall also exclude any day on
which the TARGET2 payment system is not open for the settlement of payments in
Euro).

“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.

 

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“Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect on the date hereof), of Equity Interests representing
more than 35% of the aggregate ordinary voting power represented by the issued
and outstanding Equity Interests of the Parent; (b) occupation of a majority of
the seats (other than vacant seats) on the board of directors of the Parent by
Persons who were neither (i) nominated by the board of directors of the Parent
nor (ii) appointed by directors so nominated; (c) the acquisition of direct or
indirect Control of the Parent by any Person or group; (d) except as otherwise
expressly permitted under the terms of this Agreement (including a disposition
permitted under Section 6.03(b)), the Parent shall cease to own and control,
directly or indirectly, free and clear of all Liens (other than Permitted
Encumbrances) all of the economic and voting rights associated with all of the
outstanding Equity Interests of each of its Insurance Subsidiaries or shall
cease to have the power, directly or indirectly, to elect all of the members of
the board of directors of each of its Insurance Subsidiaries; (e) except as
otherwise expressly permitted under the terms of this Agreement (including a
disposition permitted under Section 6.03(b)), Argo US shall cease to own and
control, directly or indirectly, free and clear of all Liens (other than
Permitted Encumbrances) all of the economic and voting rights associated with
all of the outstanding Equity Interests of each of its Insurance Subsidiaries or
shall cease to have the power, directly or indirectly, to elect all of the
members of the board of directors of each of its Insurance Subsidiaries or
(f) the Parent shall cease to own and control, directly or indirectly, free and
clear of all Liens and other encumbrances all of the economic and voting rights
associated with all of the outstanding Equity Interests of any of the other
Borrowers or shall cease to have the power, directly or indirectly, to elect all
of the members of the board of directors of any of the other Borrowers.

“Change in Law” means the occurrence after the date of this Agreement or, with
respect to any Lender, such later date on which such Lender becomes a party to
this Agreement, (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) compliance by any Lender or the Issuing Bank (or, for purposes
of Section 2.15(b), by any lending office of such Lender or by such Lender’s or
the Issuing Bank’s holding company, if any) with any request, guideline or
directive (whether or not having the force of law) of any Governmental Authority
made or issued after the date of this Agreement; provided that, notwithstanding
anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and
Consumer Protection Act and all requests, rules, guidelines, requirements and
directives thereunder or issued in connection therewith and (y) all requests,
rules, guidelines or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case pursuant to Basel III, shall be deemed to be a “Change in “Law”,
regardless of the date enacted, adopted, issued or implemented; provided that,
notwithstanding anything in this definition to the contrary, the enactment of
the changes to the UK bank levy contained in the draft Finance Bill 2014
provisions as published on December 10, 2013 shall be deemed not to be a “Change
in Law” regardless of the date of their enactment or entry into effect.

“Change of Tax Law” means any change in (or in the interpretation,
administration or application of) any law relating to Taxes or any Treaty, or in
any published practice or published concession of any relevant Governmental
Authority.

 

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“Charges” has the meaning set forth in Section 9.13.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Collateral” means all property with respect to which any security interest has
been granted (or purported to be granted) pursuant to any Security Document.

“Collateral Account” means a depositary account or securities custody account
constituting Collateral and with respect to which a Control Agreement has been
entered into and is in effect.

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Revolving Loans and to acquire participations in Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender’s Revolving Credit Exposure hereunder, as such commitment may be
(a) reduced or increased from time to time pursuant to Section 2.09 and
(b) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. The initial amount of each Lender’s Commitment
is set forth on Schedule 2.01, or in the Assignment and Assumption pursuant to
which such Lender shall have assumed its Commitment, as applicable. The initial
aggregate amount of the Lenders’ Commitments is $175,000,000.

“Communications” has the meaning assigned to it in Section 9.01(d).

“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

“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.

“Control Agreement” means one or more agreements, in form and substance
reasonably satisfactory to the Administrative Agent, among a Borrower, a
securities intermediary or depository institution holding Collateral (which
shall be JPMorgan Chase Bank, N.A. or an Affiliate thereof), and the
Administrative Agent with respect to collection and control of all financial
assets or deposits held in the applicable securities custody or depository
account maintained by such Borrower with such institution in the United States
of America.

“Credit Documents” means this Agreement, any Security Document, after the
execution and delivery thereof pursuant to the terms of this Agreement, each
promissory note delivered pursuant to Section 2.10(e), each Security Document,
each other document or agreement executed and delivered from time to time by any
of the Borrowers in connection with or pursuant to the terms of this Agreement
or any other Credit Document, each amendment or waiver hereof or thereof, and
each other document related to the Credit Documents which is from time to time
designated as a Credit Document by any Borrower and the Administrative Agent.

 

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“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.

“Defaulting Lender” means any Lender that (a) has failed, within two Business
Days of the date required to be funded or paid, to (i) fund any portion of its
Loans, (ii) fund any portion of its participations in Letters of Credit or
(iii) pay over to any Lender Party any other amount required to be paid by it
hereunder, unless, in the case of clause (i) above, such Lender notifies the
Administrative Agent in writing that such failure is the result of such Lender’s
good faith determination that a condition precedent to funding (specifically
identified and including the particular default, if any) has not been satisfied,
(b) has notified any Borrower or any Lender Party in writing, or has made a
public statement to the effect, that it does not intend or expect to comply with
any of its funding obligations under this Agreement (unless such writing or
public statement indicates that such position is based on such Lender’s good
faith determination that a condition precedent (specifically identified and
including the particular default, if any) to funding a loan under this Agreement
cannot be satisfied) or generally under other agreements in which it commits to
extend credit, (c) has failed, within three Business Days after request by a
Lender Party, acting in good faith, to provide a certification in writing from
an authorized officer of such Lender that it will comply with its obligations
(and is financially able to meet such obligations) to fund prospective Loans and
participations in then outstanding Letters of Credit under this Agreement,
provided that such Lender Party shall cease to be a Defaulting Lender pursuant
to this clause (c) upon such Lender’s receipt of such certification in form and
substance satisfactory to it and the Administrative Agent, or (d) has become the
subject of a Bankruptcy Event.

“Designated Person” means a person or entity.

“Dollar Equivalent” means, on any date of determination (a) with respect to any
amount in Dollars, such amount, and (b) with respect to any amount in any
Foreign Currency, the equivalent in Dollars of such amount, determined by the
Administrative Agent pursuant to Section 1.05 using the Exchange Rate with
respect to such Foreign Currency at the time in effect under the provisions of
such Section.

“Dollars” or “$” refers to lawful money of the United States of America.

“Effective Date” means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).

“Electronic Signature” means an electronic sound, symbol, or process attached
to, or associated with, a contract or other record and adopted by a person with
the intent to sign, authenticate or accept such contract or record.

“Electronic System” means any electronic system, including e-mail, e-fax,
Intralinks®,ClearPar® and any other Internet or extranet-based site, whether
such electronic system is owned, operated or hosted by the Administrative Agent
and the Issuing Bank and any of its respective Related Parties or any other
Person, providing for access to data protected by passcodes or other security
system.

“Environmental Laws” means all applicable laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material.

 

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“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Parent or any Subsidiary 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; provided that the definition of “Environmental Liability” shall not
include any liability arising out of any insurance policy issued by the Parent,
the Borrowers or any Subsidiary thereof.

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person (in each case, whether
voting or non-voting or common or preferred), and in each case, any warrants,
options or other rights entitling the holder thereof to purchase or acquire any
such equity interest.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with any Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30 day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by any Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by any
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by any Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from any Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

 

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“Euro” or “€” means the single currency unit of the Participating Member States.

“Eurocurrency”, when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted Eurocurrency Rate.

“Eurocurrency Rate” means, with respect to (a) any Eurocurrency Borrowing and
for any applicable Interest Period, the London interbank offered rate
administered by ICE Benchmark Administration (or any other Person that takes
over the administration of such rate) for the applicable currency for a period
equal in length to such Interest Period as displayed on pages LIBOR01 or LIBOR02
of the Reuters screen or, in the event such rate does not appear on a Reuters
page or screen, on any successor or substitute page on such screen that displays
such rate, or on the appropriate page of such other information service that
publishes such rate as shall be selected by the Administrative Agent from time
to time in its reasonable discretion (the “LIBOR Screen Rate”) at approximately
11:00 a.m., London time, on the Quotation Date for such Interest Period;
provided, that, if the LIBOR Screen Rate shall be less than zero, such rate
shall be deemed to be zero for purposes of this Agreement; and further provided
that if a LIBOR Screen Rate shall not be available at the applicable time for a
period equal in length to such Interest Period, then the Eurocurrency Rate shall
be the Interpolated Rate at such time, subject to Section 2.14 in the event that
the Administrative Agent shall conclude that it shall not be possible to
determine such Interpolated Rate (which conclusion shall be conclusive and
binding absent manifest error).

“Event of Default” has the meaning assigned to such term in Article VII.

“Exchange Rate” means on any day, for purposes of determining the Dollar
Equivalent of any currency other than Dollars, the rate at which such currency
may be exchanged into Dollars at 11:00 a.m. Local Time on such day on the
Reuters Currency pages, if available, for such currency. In the event that such
rate does not appear on any Reuters Currency pages, the Exchange Rate shall be
determined by reference to such other publicly available service for displaying
exchange rates as may be agreed upon by the Administrative Agent and the
Borrowers, or, in the absence of such an agreement, such Exchange Rate shall
instead be the arithmetic average of the spot rates of exchange of the
Administrative Agent in the market where its foreign currency exchange
operations in respect of such currency are then being conducted, at or about
such time as the Administrative Agent shall elect after determining that such
rates shall be the basis for determining the Exchange Rate, on such date for the
purchase of Dollars for delivery two Business Days later; provided that if at
the time of any such determination, for any reason, no such spot rate is being
quoted, the Administrative Agent may use any reasonable method it deems
appropriate to determine such rate, and such determination shall be conclusive
absent manifest error.

“Exchange Rate Date” means, if on such date any outstanding Loan or Letter of
Credit is (or any Loan or Letter of Credit that has been requested at such time
would be) denominated in a currency other than Dollars, each of:

(a) the last Business Day of each calendar month,

 

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(b) if an Event of Default has occurred and is continuing, any Business Day
designated as an Exchange Rate Date by the Administrative Agent in its sole
discretion, and

(c) each date (with such date to be reasonably determined by the Administrative
Agent) that is on or about the date of (i) a Borrowing Request or an Interest
Election Request with respect to any Revolving Borrowing or (ii) each request
for the issuance, amendment, renewal or extension of any Letter of Credit.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable lending office located in,
the jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. Federal
withholding Taxes imposed on amounts payable to or for the account of such
Lender with respect to an applicable interest in a Loan or Commitment pursuant
to a law in effect on the date on which (i) such Lender acquires such interest
in the Loan or Commitment (other than pursuant to an assignment request by the
Parent under Section 2.19(b)) or (ii) such Lender changes its lending office,
except in each case to the extent that, pursuant to Section 2.17, amounts with
respect to such Taxes were payable either to such Lender’s assignor immediately
before such Lender acquired the applicable interest in a Loan or Commitment or
to such Lender immediately before it changed its lending office, (c) Taxes
attributable to such Recipient’s failure to comply with Section 2.17(f) or (g),
(d) any U.S. Federal withholding Taxes imposed under FATCA, and (e) in the case
of a Lender, UK income tax deductible at source from interest payable to or for
the account of such Lender with respect to an applicable participation in a Loan
(i) if on the date on which the payment of interest falls due the payment could
have been made to the relevant Lender without a deduction on account of UK
income tax if the Lender had been a Qualifying Treaty Lender but on that date
that Lender is not or has ceased to be a Qualifying Treaty Lender other than as
a result of a Change of Tax Law occurring after the date it became a Lender, or
(ii) if such Lender acquired such participation in the Loan or Commitment by way
of an Assignment and Assumption (other than pursuant to an assignment request by
the Parent under Section 2.19(b)), except to the extent that, pursuant to
Section 2.17, amounts with respect to such Taxes were payable to such Lender’s
assignor immediately before such Lender acquired the applicable participation in
the Loan or Commitment.

“Existing Letter of Credit” means the letters of credit identified on
Schedule 1.01.

“Existing Termination Date” has the meaning assigned to it in Section 2.22(a).

“Extending Lender” has the meaning assigned to it in Section 2.22(b).

“Extension Date” has the meaning assigned to it in Section 2.22(a).

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreement entered into
pursuant to Section 1471(b)(1) of the Code.

 

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“Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

“Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of any Borrower.

“Foreign Currency” means Euros or Sterling.

“Foreign Lender” means (a) if the applicable Borrower is a U.S. Person, a
Lender, with respect to such Borrower, that is not a U.S. Person, and (b) if the
applicable Borrower is not a U.S. Person, a Lender, with respect to such
Borrower, that is resident or organized under the laws of a jurisdiction other
than that in which such Borrower is resident for tax purposes.

“Foreign Pension Plan” means any plan, fund (including, without limitation, any
superannuation fund) or other similar program established or maintained outside
the United States by a Borrower or any Subsidiary primarily for the benefit of
employees of such Borrower or any one or more of the Subsidiaries residing
outside the United States, which plan, fund or other similar program provides,
or results in, retirement income, a deferral of income in contemplation of
retirement or payments to be made upon termination or severance of employment,
and which plan is not subject to ERISA or the Code.

“GAAP” means generally accepted accounting principles in the United States of
America.

“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity, including any insurance commissioner or other insurance
regulatory authority, exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government.

“Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the

 

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payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation or
(d) as an account party in respect of any letter of credit or letter of guaranty
issued to support such Indebtedness or obligation; provided, that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Guarantee made by any guarantor
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
is made and (b) the maximum amount for which such guarantor may be liable
pursuant to the terms of the instrument embodying such Guarantee, unless (in the
case of a primary obligation that is not Indebtedness) such primary obligation
and the maximum amount for which such guarantor may be liable are not stated or
determinable, in which case the amount of such Guarantee shall be such
guarantor’s maximum reasonably anticipated liability in respect thereof as
determined by the Borrowers in good faith.

“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.

“HMRC DT Treaty Passport scheme” means the Board of H.M. Revenue and Customs
Double Taxation Treaty Passport scheme.

“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid, (d) all obligations of
such Person under conditional sale or other title retention agreements relating
to property acquired by such Person, (e) all obligations of such Person in
respect of the deferred purchase price of property or services (excluding
current accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person,
(i) all obligations, contingent or otherwise, of such Person as an account party
in respect of letters of credit and letters of guaranty, (j) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances,
(k) all Off-Balance Sheet Liabilities and (l) all Trust Preferred Securities and
similarly structured indebtedness. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of any
Borrower under any Credit Document and (b) to the extent not otherwise described
in (a), Other Taxes.

 

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“Industry Loss Warranty” means an agreement, whether in the form of a
reinsurance agreement or a Swap Agreement or other similar agreement entered
into by any Insurance Subsidiary in accordance with its customary insurance or
reinsurance underwriting procedures, which creates a payment obligation arising
from an industry wide loss.

“Ineligible Institution” has the meaning assigned to it in Section 9.04(b).

“Insurance Subsidiary” means any Subsidiary which is licensed by any
Governmental Authority to engage in the insurance business including, without
limitation, issuing Primary Policies and/or entering into Reinsurance
Agreements.

“Interest Election Request” means a request by the Borrower Representative to
convert or continue a Revolving Borrowing in accordance with Section 2.08.

“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of
each March, June, September and December and (b) with respect to any
Eurocurrency Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurocurrency
Borrowing with an Interest Period of more than three months’ duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months’ duration after the first day of such Interest Period.

“Interest Period” means, with respect to any Eurocurrency Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower Representative may elect; provided, that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period pertaining to a Eurocurrency Borrowing that commences on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and thereafter shall be the effective
date of the most recent conversion or continuation of such Borrowing.

“Interpolated Rate” means, at any time, for any Interest Period, the rate per
annum determined by the Administrative Agent (which determination shall be
conclusive and binding absent manifest error) to be equal to the rate that
results from interpolating on a linear basis between: (a) the applicable Screen
Rate for the longest period (for which the applicable Screen Rate is available
for the applicable currency) that is shorter than the impacted Interest Period
and (b) the applicable Screen Rate for the shortest period (for which such
Screen Rate is available for the applicable currency) that exceeds the Impacted
Interest Period, in each case, at such time.

“IRS” means the United States Internal Revenue Service.

“Issuing Bank” means JPMCB, in its capacity as the issuer of Letters of Credit
hereunder, and its successors in such capacity as provided in Section 2.06(i).
The Issuing Bank may, in its discretion, arrange for one or more Letters of
Credit to be issued by Affiliates of the Issuing Bank, in which case the term
“Issuing Bank” shall include any such Affiliate with respect to Letters of
Credit issued by such Affiliate.

 

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“JPMCB” means JPMorgan Chase Bank, N.A., a national banking association, and its
successors.

“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter
of Credit.

“LC Exposure” means, at any time, the sum of (a) the Dollar Equivalent of the
aggregate undrawn amount of all outstanding Letters of Credit at such time plus
(b) the Dollar Equivalent of the aggregate amount of all LC Disbursements that
have not yet been reimbursed by or on behalf of the Borrowers at such time. The
LC Exposure of any Lender at any time shall be its Applicable Percentage of the
total LC Exposure at such time.

“Lenders” means the Persons listed on Schedule 2.01 and any other Person that
shall have become a party hereto pursuant to an Assignment and Assumption or as
provided in Section 2.09(d), other than any such Person that ceases to be a
party hereto pursuant to an Assignment and Assumption.

“Lender Parent” means, with respect to any Lender, any Person as to which such
Lender is, directly or indirectly, a subsidiary.

“Lender Party” means the Administrative Agent, the Issuing Bank and each other
Lender.

“Letter of Credit” means any letter of credit issued pursuant to this Agreement.

“Leverage Ratio” means at any time, the ratio of Total Debt at such time to
Total Capitalization at such time.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.

“Loans” means the loans made by the Lenders to the Borrowers pursuant to this
Agreement.

“Local Time” means (a) with respect to a Loan or Borrowing denominated in
Dollars, Chicago time and (b) with respect to a Loan or Borrowing denominated in
any Foreign Currency, London time.

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, operations or financial condition of the Parent and the Subsidiaries
taken as a whole, (b) the ability of the Borrowers, taken as a whole, to perform
any of their payment or other material obligations under this Agreement or any
other Credit Document or (c) the material rights of or benefits available to the
Administrative Agent or the Lenders under this Agreement or any other Credit
Document.

 

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“Material Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or
more of the Borrowers and the Subsidiaries in an aggregate principal amount
exceeding $20,000,000. For purposes of determining Material Indebtedness, the
“principal amount” of the obligations of a Borrower or any Subsidiary in respect
of any Swap Agreement at any time shall be the maximum aggregate amount (giving
effect to any legally enforceable netting agreements) that such Borrower or such
Subsidiary would be required to pay if such Swap Agreement were terminated at
such time.

“Maturity Date” means March 7, 2018, subject to extension pursuant to
Section 2.22.

“Maximum Rate” has the meaning set forth in Section 9.13.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.

“NAIC” means the National Association of Insurance Commissioners or any
successor thereto, or in lieu thereof, any other association, agency or other
organization performing substantially similar advisory, coordination or other
like functions among insurance departments, insurance commissions and similar
governmental authorities of the various states of the United States of America
toward the promotion of uniformity in the practices of such governmental
authorities.

“Net Income” means, for any computation period, with respect to the Parent on a
consolidated basis with its Subsidiaries, cumulative net income earned during
such period (determined before the deduction of minority interests) as
determined in accordance with GAAP.

“Net Worth Maintenance Agreement” means net worth maintenance agreements and
similar agreements entered into by any Borrower or any of its respective
Subsidiaries with respect to any Wholly-Owned Subsidiary.

“Non-Extending Lender” has the meaning assigned to it in Section 2.22(b).

“Non-Replaced Lender” has the meaning assigned to it in Section 2.22(e).

“Notice Date” has the meaning assigned to it in Section 2.22(b).

“Obligations” means all unpaid principal of and accrued and unpaid interest on
the Loans, all LC Exposure, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations and indebtedness (including
interest and fees accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), obligations and liabilities of any of the
Borrowers to any of the Lenders, the Administrative Agent, any LC Issuer or any
indemnified

 

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party under this Agreement, individually or collectively, existing on the
Effective Date or arising thereafter, direct or indirect, joint or several,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
secured or unsecured, arising by contract, operation of law or otherwise,
arising or incurred under this Agreement or any of the other Credit Documents or
in respect of any of the Loans made or reimbursement or other obligations
incurred or any of the Letters of Credit or other instruments at any time
evidencing any thereof.

“Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by
such Person, (b) any liability under any Sale and Leaseback Transaction other
than Capital Lease Obligations, (c) any liability under any so-called “synthetic
lease” arrangement or transaction entered into by such Person, or (d) any
obligation arising with respect to any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the balance sheets of such Person.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Taxes (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Credit Document, or sold or assigned an interest in any Loan or Credit
Document).

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Credit Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 2.19).

“Parent” means Argo Group International Holdings, Ltd., a company formed under
the laws of Bermuda.

“Participant” has the meaning set forth in Section 9.04(c).

“Participant Register” has the meaning assigned to such term in Section 9.04(c).

“Participating Member State” means any member state of the European Communities
that adopts or has adopted the Euro as its lawful currency in accordance with
the legislation of the European Community relating to the Economic and Monetary
Union.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

“Permitted Acquisition” means the acquisition by the Parent or a Wholly-Owned
Subsidiary thereof of an Acquired Entity or Business (including by way of merger
of such Acquired Entity or Business with and into the Parent (so long as the
Parent is the surviving corporation) or a Wholly-Owned Subsidiary thereof (so
long as the Wholly-Owned Subsidiary is the surviving corporation); provided that
(a) in the case of the acquisition of the Equity Interests

 

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of any Person (including by way of merger), such Person shall own no Equity
Interests of any other Person (excluding de minimis amounts) unless either
(i) such Person owns 100% of the Equity Interests of such other Person or
(ii) (x) such Person and its Wholly-Owned Subsidiaries own at least 80% of the
consolidated assets of such other Person and its Subsidiaries and (y) any
non-Wholly-Owned Subsidiary of such Person was a non-Wholly-Owned Subsidiary
prior to the date of such Permitted Acquisition of such Person; (b) the Acquired
Entity or Business acquired pursuant to the respective Permitted Acquisition is
in a business permitted by Section 6.03(c); and (c) in the case of a stock
acquisition, such acquisition shall have been approved by the board of directors
of the Acquired Entity or Business.

“Permitted Encumbrances” means:

(a) Liens imposed by law for Taxes that are not yet due or are being contested
in compliance with Section 5.04;

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other
like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.04;

(c) pledges and deposits made in the ordinary course of business for insurance
regulatory or licensing purposes or in compliance with workers’ compensation,
unemployment insurance and other social security laws or regulations;

(d) deposits required for insurance regulatory or licensing purposes or to
secure the performance of bids, trade contracts, leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature, in each case in the ordinary course of business;

(e) judgment liens in respect of judgments that do not constitute an Event of
Default under clause (k) of Article VII;

(f) easements, zoning restrictions, rights-of-way and similar encumbrances on
real property imposed by law or arising in the ordinary course of business that
do not secure any monetary obligations and do not materially detract from the
value of the affected property or interfere with the ordinary conduct of
business of a Borrower or any Subsidiary; and

(g) licenses, sublicenses, leases or subleases granted to other Persons not
materially interfering with the conduct of the business of a Borrower or any
Subsidiary;

(h) Liens incurred pursuant to ordinary course investing, clearing and settling
activities;

(i) bankers’ Liens, rights of setoff and other similar Liens not granted to
secure specific Indebtedness existing solely with respect to cash and cash
equivalents on deposit in one or more accounts maintained by a Borrower or any
Subsidiary, in each case granted in the ordinary course of business in favor of
the bank or banks with which such accounts are maintained;

 

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(j) any Lien on any property or asset of the Borrowers or any Subsidiary
existing on the date hereof and set forth in Schedule 6.02; provided that
(i) such Lien shall not apply to any other property or asset of the Borrowers or
any Subsidiary and (ii) such Lien shall secure only those obligations which it
secures on the date hereof and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;

(k) any Lien existing on any property or asset prior to the acquisition thereof
by a Borrower or any Subsidiary or existing on any property or asset of any
Person that becomes a Subsidiary after the date hereof prior to the time such
Person becomes a Subsidiary; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other
property or assets of the Borrowers or any Subsidiary and (iii) such Lien shall
secure only those obligations which it secures on the date of such acquisition
or the date such Person becomes a Subsidiary, as the case may be;

(l) Liens securing Indebtedness at no time exceeding $25,000,000 in outstanding
aggregate principal amount;

(m) [Reserved]; and

(n) Liens upon assets subject to, and arising out of, Sale and Leaseback
Transactions permitted by Section 6.11 and Permitted Purchase Money Indebtedness
at no time exceeding $100,000,000 in outstanding aggregate principal amount;

provided that the term “Permitted Encumbrances” shall not, with respect to
clauses (a)-(i) above, include any Lien securing Indebtedness.

“Permitted Purchase Money Indebtedness” means, with respect to any Person, any
Indebtedness, whether secured or unsecured, including Capital Lease Obligations,
incurred by such Person to finance the acquisition of fixed assets, so long as
(a) at the time of such incurrence, no Default has occurred and is continuing or
would result from such incurrence, (b) such Indebtedness has a scheduled
maturity and is not due on demand and (c) such Indebtedness does not exceed the
lower of the fair market value or the cost of the applicable fixed assets on the
date acquired.

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

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which a Borrower or any ERISA Affiliate
is (or, if such plan were terminated, would under Section 4069 of ERISA be
deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Primary Policies” means any insurance policies issued by any Insurance
Subsidiary.

 

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“Prime Rate” means the rate of interest per annum publicly announced from time
to time by JPMCB as its prime rate in effect at its office located at 270 Park
Avenue, New York, New York; each change in the Prime Rate shall be effective
from and including the date such change is publicly announced as being
effective.

“Qualifying Treaty Lender” means a Lender which (a) is beneficially entitled to
the interest payable under any Credit Document and (b) is treated as a resident
of a Treaty State for the purposes of the relevant Treaty and (c) does not carry
on a business in the United Kingdom through a permanent establishment with which
the Lender’s participation in the Loans or Commitment is effectively connected
and (d) is entitled to claim the benefits of such Treaty with respect to
payments made by any U.K. Borrower hereunder.

“Quotation Date” means, with respect to any Eurocurrency Borrowing and any
Interest Period, (i) if the currency is Euro, the day two TARGET Days before the
first day of such Interest Period and (iii) if the currency is Dollars or
Sterling, the day two Business Days prior to the commencement of such Interest
period (or such day as the Administrative Agent shall determine is the day on
which it is market practice in the relevant interbank market for prime banks to
give quotations for deposits in the currency of such Borrowing for delivery on
the first day of such Interest Period).

“Rating” has the meaning set forth in Schedule 1.01.

“Recipient” means, as applicable, (a) the Administrative Agent, (b) any Lender
and (c) any Issuing Bank.

“Register” has the meaning set forth in Section 9.04(b).

“Reinsurance Agreements” means any agreement, contract, treaty, certificate or
other arrangement whereby a Borrower or any Subsidiary agrees to assume from or
reinsure an insurer or reinsurer all or part of the liability of such insurer or
reinsurer under a policy or policies of insurance issued by such insurer or
reinsurer.

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents, advisors
and representatives of such Person and such Person’s Affiliates.

“Removal Effective Date” has the meaning assigned to it in Article VIII.

“Required Lenders” means, at any time, subject to Section 2.21, Lenders having
Revolving Credit Exposures and unused Commitments representing at least a
majority of the sum of the total Revolving Credit Exposures and unused
Commitments at such time.

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in the Parent
or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such Equity Interests in the Parent or any Subsidiary or any option, warrant
or other right to acquire any such Equity Interests in the Parent or any
Subsidiary.

 

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“Revolving Credit Exposure” means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender’s Revolving Loans and its
LC Exposure at such time.

“Revolving Loan” means a Loan made pursuant to Section 2.01.

“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial
Services LLC business.

“Sale and Leaseback Transaction” means any sale or other transfer of property by
any Person with the intent to lease such property as lessee.

“Sanctions” means economic or financial sanctions or trade embargoes imposed,
administered or enforced from time to time by (a) the U.S. government, including
those administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury or the U.S. Department of State, or (b) the United
Nations Security Council, the European Union or Her Majesty’s Treasury of the
United Kingdom.

“Sanctioned Country” means, at any time, a country or territory which is the
subject or target of any Sanctions.

“Sanctioned Person” means, at any time, (a) any Person listed in any
Sanctions-related list of Designated Persons maintained by the Office of Foreign
Assets Control of the U.S. Department of the Treasury, the U.S. Department of
State, the or by the United Nations Security Council, the European Union or any
EU member state, (b) any Person operating, organized or resident in a Sanctioned
Country or (c) any Person controlled by any such Person.

“SAP” means, with respect to any Insurance Subsidiary, the statutory accounting
practices prescribed or permitted by the insurance commissioner (or other
similar authority) as of the date hereof in the jurisdiction of incorporation of
such Insurance Subsidiary for the preparation of annual statements and other
financial reports by insurance companies of the same type as such Insurance
Subsidiary.

“SEC” means the Securities and Exchange Commission of the United States of
America or any succeeding Governmental Authority thereto.

“Secured Letter of Credit” means a Letter of Credit issued at the request of a
Borrower which has been designated as a “Secured Letter of Credit” in the
applicable Letter of Credit Application.

“Security Agreement” means, individually and collectively, each security
agreement or other collateral document, each in form and substance satisfactory
to the Administrative Agent, entered into between the Administrative Agent and a
Borrower pursuant hereto.

“Security Documents” means the Security Agreement, each Control Agreement and
each other document or instrument pursuant to which security or collateral is
from time to time provided for the obligations of the Borrowers hereunder.

 

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“Significant Insurance Subsidiary” means any Significant Subsidiary which is an
Insurance Subsidiary.

“Significant Subsidiary” of a Person means a “significant subsidiary” as defined
in Rule 1 02(w) of Regulation S-X of the SEC (17 CFR Part 210). Unless otherwise
expressly provided, all references herein to a “Significant Subsidiary” shall
mean a Significant Subsidiary of any of the Borrowers; provided that any entity
that is a Significant Subsidiary on the Effective Date or becomes a Significant
Subsidiary thereafter shall remain a Significant Subsidiary for all purposes of
this Agreement.

“Solvent” means, when used with respect to a Person, that (a) the fair saleable
value of the assets of such Person is in excess of the total amount of the
present value of its liabilities (including for purposes of this definition all
liabilities (including loss reserves as determined by such Person), whether or
not reflected on a balance sheet prepared in accordance with GAAP and whether
direct or indirect, fixed or contingent, secured or unsecured, disputed or
undisputed), (b) such Person is able to pay its debts or obligations in the
ordinary course as they mature and (c) such Person does not have unreasonably
small capital to carry out its business as conducted and as proposed to be
conducted. “Solvency” shall have a correlative meaning.

“Special Purpose Entity” means any Subsidiary formed after the date hereof for
the sole purpose of incurring Indebtedness, which Subsidiary (a) promptly remits
to a Borrower the net proceeds of any such Indebtedness by way of loan or
otherwise and (b) has received from the Parent and its Subsidiaries aggregate
capital contributions or other payments in respect of the Equity Interests
thereof not exceeding five percent of the total assets of such Subsidiary.

“Specified Amount” has the meaning set forth in the definition of Total Debt.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted Eurocurrency Rate, for eurocurrency funding (currently
referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurocurrency Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

“Sterling” or “£” means the lawful currency of the United Kingdom of Great
Britain and Northern Ireland.

“Subordinated Indebtedness” means Indebtedness the payment of which is
subordinated to any of the obligations of the applicable Borrower or Borrowers
hereunder or in connection herewith, including without limitation the
obligations of the Borrowers in respect of the Trust Preferred Securities.

 

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“subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.

“Subsidiary” means any subsidiary of the Parent.

“Subsidiary Rating” has the meaning set forth in Schedule 1.01

“Substantial Portion” means, with respect to the property of the Parent and its
Subsidiaries, property which represents more than 10% of the consolidated assets
of the Parent and its Subsidiaries as would be shown in the consolidated
financial statements of the Parent and its Subsidiaries as at the beginning of
the twelve-month period ending with the last day of the fiscal quarter or year
end for which financial statements have most recently been delivered pursuant to
Section 5.01(a) or (b), as applicable, preceding the date upon which such
determination is made.

“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement involving, or settled
by reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of a Borrower or the
Subsidiaries shall be a Swap Agreement.

“Tangible Net Worth” means, with respect to the Parent, an amount equal to
(a) the Parent’s total shareholder’s equity determined in accordance with GAAP,
minus (b) the aggregate book value of the intangible assets, including goodwill,
all determined on a consolidated basis in accordance with GAAP; provided,
however, that the effect of the application of FASB ASC 320 (formerly known as
FAS 115) shall be excluded in the computation of Tangible Net Worth.

“TARGET2” means the Trans-European Automated Real-time Gross Settlement Express
Transfer (TARGET2) payment system (or, if such payment system ceases to be
operative, such other payment system (if any) reasonably determined by the
Administrative Agent to be a suitable replacement) for the settlement of
payments in Euro.

“TARGET Day” means any day on which TARGET2 (or, if such payment system ceases
to be operative, such other payment system, if any, determined by the
Administrative Agent to be a suitable replacement) is open for the settlement of
payments in Euro.

 

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

“Total Capitalization” means an amount equal to the sum of Tangible Net Worth of
the Parent plus Total Debt plus (without duplication) the Specified Amount.

“Total Debt” means all Indebtedness of the Parent and its Subsidiaries, on a
consolidated basis, which appears on a balance sheet calculated in accordance
with GAAP plus, (a) without duplication (i) the face amount of all outstanding
letters of credit in respect of which the Parent or any Subsidiary has any
actual or contingent reimbursement obligation (excluding letters of credit which
are issued to support the reinsurance obligations of Subsidiaries of the Parent
which have been fully collateralized and fully collateralized letters of credit
which are issued to support the capital requirements at Lloyd’s of London,
otherwise known as “Funds at Lloyd’s”), (ii) the maximum aggregate amount
(giving effect to any legally enforceable netting agreements) that the Parent
and its Subsidiaries would be required to pay if all Swap Agreements of the
Parent and its Subsidiaries with respect to interest on indebtedness for money
borrowed were terminated at any date of determination and (iii) the principal
amount of all Guarantees of Indebtedness by the Parent and its Subsidiaries;
provided that this clause (iii) shall not include Guarantees between or among
the Parent and/or its consolidated Subsidiaries, minus (b) that portion of the
outstanding principal amount of all Trust Preferred Securities and similar
long-term hybrid capital that is deemed to constitute equity, as determined in
accordance with S&P’s methodology at such time (but only to the extent that such
amount does not exceed 15% of Total Capitalization) the amount described in this
clause (b) being the “Specified Amount”.

“Transactions” means the execution, delivery and performance by the Borrowers of
this Agreement and the other Credit Documents, the borrowing of Loans and other
credit extensions hereunder, the use of the proceeds thereof and the issuance of
Letters of Credit hereunder.

“Treaty State” means a jurisdiction which has entered into a double taxation
agreement (a “Treaty”) with the United Kingdom which makes provision for full
exemption from Tax imposed by the United Kingdom on interest.

“Trust Preferred Securities” means those securities listed on Schedule 1.03
hereto.

“Trust Preferred Security Indebtedness” means any Indebtedness of a Borrower or
a Subsidiary arising under Trust Preferred Securities.

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted Eurocurrency Rate or the Alternate Base
Rate.

“UK Borrower” means any Borrower (i) that is organized or formed under the laws
of the United Kingdom or (ii) payments from which under this Agreement or any
Loan Document are subject to withholding Taxes imposed by the laws of the United
Kingdom.

 

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“Unsecured Letter of Credit” means a Letter of Credit which is not a Secured
Letter of Credit.

“U.S. Person” means a “United States person” within the meaning of
Section 7701(a)(30) of the Code.

“U.S. Tax Compliance Certificate” has the meaning assigned to such term in
Section 2.17(f)(ii)(B)(3).

“Wholly-Owned Subsidiary” of a Person means (a) any subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (b) any partnership, limited liability company, association,
joint venture or similar business organization 100% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled (other than in the case of Foreign Subsidiaries, director’s
qualifying shares and/or other nominal amounts of shares required to be held by
Persons other than the Parent and its Subsidiaries under applicable law).

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.

SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by class (e.g., a “Revolving
Loan”) or by Type (e.g., a “Eurocurrency Loan”) or by class and Type (e.g., a
“Eurocurrency Revolving Loan”). Borrowings also may be classified and referred
to by class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurocurrency
Borrowing”) or by class and Type (e.g., a “Eurocurrency Revolving Borrowing”).

SECTION 1.03. Terms Generally. 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”. The
word “law” shall be construed as referring to all statutes, rules, regulations,
codes and other laws (including official rulings and interpretations thereunder
having the force of law or with which affected Persons customarily comply), and
all judgments, orders and decrees, of all Governmental Authorities. Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended, restated,
supplemented or otherwise modified (subject to any restrictions on such
amendments, restatements, supplements or modifications set forth herein),
(b) any definition of or reference to any statute, rule or regulation shall be
construed as referring thereto as from time to time amended, supplemented or
otherwise modified (including by succession of comparable successor laws),
(c) any reference herein to any Person shall be construed to include such
Person’s successors and assigns (subject to any restrictions on assignment set
forth herein) and, in the case

 

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of any Governmental Authority, any other Governmental Authority that shall have
succeeded to any or all functions thereof, (d) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (e) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (f) 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.

SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower Representative notifies the Administrative Agent that the Borrowers
request an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower Representative that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith. Notwithstanding any other provision contained herein, all terms of an
accounting or financial nature used herein shall be construed, and all
computations of amounts and ratios referred to herein shall be made, (i) without
giving effect to any election under Financial Accounting Standards Board
Accounting Standards Codification 825 (or any other Financial Accounting
Standard having a similar result or effect) to value any Indebtedness or other
liabilities of any Borrower or any Subsidiary at “fair value”, as defined
therein, and (ii) in a manner such that any obligations relating to a lease
that, in accordance with GAAP as in effect on the Effective Date, would be
accounted for by the Parent as an operating lease shall be accounted for as
obligations relating to an operating lease and not as obligations relating to a
Capitalized Lease (and shall not constitute Indebtedness hereunder).

SECTION 1.05. Foreign Currency Calculations. (a) For purposes of determining the
Dollar Equivalent of any Advance denominated in a Foreign Currency or any
related amount, the Administrative Agent shall determine the Exchange Rate as of
the applicable Exchange Rate Date with respect to each Foreign Currency in which
any requested or outstanding Advance or Letter of Credit is denominated and
shall apply such Exchange Rates to determine such amount (in each case after
giving effect to any Advance to be made or repaid on or prior to the applicable
date for such calculation).

(b) For purposes of any determination hereunder (including determinations under
Section 6.01, 6.02, 6.04, 6.09 or 6.10 or under Article VII), all amounts
incurred, outstanding or proposed to be incurred or outstanding in currencies
other than Dollars shall be translated into Dollars at the appropriate currency
Exchange Rate; provided that no Default shall arise as a result of any
limitation set forth in Dollars in Section 6.01 or 6.02 being exceeded solely as
a result of changes in Exchange Rates from those rates applicable at the time or
times Indebtedness or Liens were initially consummated in reliance on the
exceptions under such Sections. For purposes of any determination under
Section 6.04, 6.09 or 6.10, the amount of each investment, asset disposition or
other applicable transaction denominated in a currency other than Dollars shall
be translated into Dollars at the applicable Exchange Rate. Such Exchange Rates
shall be determined in good faith by the Borrowers.

 

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ARTICLE II

The Credits

SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein,
each Lender agrees to make Revolving Loans denominated in Dollars and Foreign
Currencies to the Borrowers from time to time during the Availability Period in
an aggregate principal amount that will not result in (a) such Lender’s
Revolving Credit Exposure exceeding such Lender’s Commitment, (b) the sum of the
total Revolving Credit Exposures exceeding the total Commitments, or (c) the sum
of the total Revolving Credit Exposures exceeding the total Commitments. Within
the foregoing limits and subject to the terms and conditions set forth herein,
the Borrowers may borrow, prepay and reborrow Revolving Loans.

SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan shall be made as
part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in
accordance with their respective Commitments. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments of the Lenders are several
and no Lender shall be responsible for any other Lender’s failure to make Loans
as required hereby.

(b) Subject to Section 2.14, (i) each Revolving Borrowing denominated in Dollars
shall be comprised entirely of ABR Loans or Eurocurrency Loans as the Borrower
Representative may request in accordance herewith and (ii) each Revolving
Borrowing denominated in a Foreign Currency shall be comprised entirely of
Eurocurrency Loans. Each Lender at its option may make any Eurocurrency Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation
of the Borrowers to repay such Loan in accordance with the terms of this
Agreement.

(c) At the commencement of each Interest Period for any Eurocurrency Revolving
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 (or, for any Foreign Currency Borrowing, an approximate
equivalent thereof as determined by the Administrative Agent) and not less than
$1,000,000 (or, for any Foreign Currency Borrowing, an approximate equivalent
thereof as determined by the Administrative Agent). At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $1,000,000 and not less than $1,000,000; provided
that an ABR Revolving Borrowing may be in an aggregate amount (i) that is equal
to the entire unused balance of the total Commitments or (ii) that is required
to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.06(e). Borrowings of more than one Type may be outstanding at the same
time; provided that there shall not at any time be more than a total of twelve
Eurocurrency Revolving Borrowings outstanding. Notwithstanding the foregoing,
Loans which are not denominated in Dollars may be made in amounts and increments
in the applicable Foreign Currency satisfactory to the Administrative Agent.

 

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(d) Notwithstanding any other provision of this Agreement, the Borrowers shall
not be entitled to request, or to elect to convert or continue, any Borrowing if
the Interest Period requested with respect thereto would end after the Maturity
Date.

(e) Notwithstanding any other provision of this Agreement, each Lender at its
option may make any ABR Loan or Eurocurrency Loan by causing any domestic or
foreign office, branch or Affiliate of such Lender (an “Applicable Lending
Installation”) to make such Loan that has been designated by such Lender to the
Administrative Agent. All terms of this Agreement shall apply to any such
Applicable Lending Installation of such Lender and the Loans and any Notes
issued hereunder shall be deemed held by each Lender for the benefit of any such
Applicable Lending Installation. Each Lender may, by written notice to the
Administrative Agent and the Borrower Representative, designate replacement or
additional Applicable Lending Installations through which Loans will be made by
it and for whose account Loan payments are to be made. Any exercise of such
option shall not affect the obligation of the Borrowers to repay such Loan in
accordance with the terms of this Agreement.

SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving
Borrowing, the Borrower Representative shall notify the Administrative Agent of
such request by telephone (a) in the case of a Eurocurrency Borrowing, not later
than 10:00 a.m., Local Time, three Business Days before the date of the proposed
Borrowing or (b) in the case of an ABR Borrowing, not later than 10:00 a.m.,
Local Time, one Business Day before the date of the proposed Borrowing. Each
such telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy (or by electronic communication if, after
the date hereof, arrangements for doing so shall be approved by the
Administrative Agent) to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by the Borrower
Representative. Each such telephonic and written Borrowing Request shall specify
the following information in compliance with Section 2.02:

(i) the Borrower to which the proceeds of the requested Borrowing shall be
disbursed;

(ii) the aggregate amount of the requested Borrowing;

(iii) the currency (which may be Dollars or a Foreign Currency) in which such
Borrowing is to be denominated;

(iv) the date of such Borrowing, which shall be a Business Day;

(v) in the case of a Borrowing denominated in Dollars, whether such Borrowing is
to be an ABR Borrowing or a Eurocurrency Borrowing;

(vi) in the case of a Eurocurrency Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”; and

 

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(vii) the location and number of the account of a Borrower to which funds are to
be disbursed, which shall comply with the requirements of Section 2.07.

If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing, unless such Revolving
Borrowing is denominated in a Foreign Currency, in which case such Revolving
Borrowing shall be a Eurocurrency Borrowing. If no Interest Period is specified
with respect to any requested Eurocurrency Revolving Borrowing, then the
Borrower Representative shall be deemed to have selected an Interest Period of
one month’s duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, but in any event prior to 11:00 a.m., Local Time
on the date received if received before 10:00 a.m. Local Time, the
Administrative Agent shall advise each applicable Lender of the details thereof
and of the amount of such Lender’s Loan to be made as part of the requested
Borrowing.

SECTION 2.04. [Intentionally Omitted].

SECTION 2.05. [Intentionally Omitted].

SECTION 2.06. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower Representative may request the
issuance of Letters of Credit denominated in Dollars or Foreign Currencies for
the joint and several account of the Borrowers, in a form reasonably acceptable
to the Administrative Agent and the Issuing Bank (which form may include having
such Letters of Credit, though issued for the joint and several account of the
Borrowers, reflect on their face Subsidiaries of the Parent as the account party
and name as the beneficiaries thereof commercial counterparties or creditors of
such Subsidiaries), at any time and from time to time during the Availability
Period. In the event of any inconsistency between the terms and conditions of
this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by any Borrower to, or entered into by
any Borrower with, the Issuing Bank relating to any Letter of Credit, the terms
and conditions of this Agreement shall control. Upon the effectiveness of this
Agreement, the Existing Letter of Credit shall, without any further action by
any party, be deemed to have been issued as a Letter of Credit hereunder on the
date of such effectiveness and shall for all purposes hereof be treated as a
Letter of Credit under this Agreement.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower Representative shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (reasonably in advance of the requested date
of issuance, amendment, renewal or extension) a notice requesting the issuance
of a Letter of Credit, or identifying the Letter of Credit to be amended,
renewed or extended, and specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section), the
amount of such Letter of Credit, the name and address of the beneficiary
thereof, whether such Letter of Credit will be a Secured Letter of Credit or an
Unsecured Letter of Credit and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by the
Issuing Bank, the Borrower Representative also shall

 

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submit a letter of credit application on the Issuing Bank’s standard form in
connection with any request for a Letter of Credit. A Letter of Credit shall be
issued, amended, renewed or extended by the Issuing Bank only if (and upon
issuance, amendment, renewal or extension of each Letter of Credit each Borrower
shall be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed
the Dollar Equivalent of an amount equal to 10% of the aggregate amount of the
Commitments and (ii) the sum of the total Revolving Credit Exposures shall not
exceed the total Commitments.

(c) Expiration Date. Unless approved by the Issuing Bank and each Lender, each
Letter of Credit shall expire at or prior to the close of business on the date
one year or less after the date of the issuance of such Letter of Credit (or, in
the case of any renewal or extension thereof, one year or less after such
renewal or extension); provided that any Letter of Credit will include, if
requested, customary “evergreen” provisions; provided further that (i) no Letter
of Credit shall have a expiry date more than one year after the Maturity Date,
(ii) the Issuing Bank shall be under no obligation to renew or extend any Letter
of Credit after the Maturity Date and (iii) with respect to of any Letter of
Credit expiring after the Maturity Date, the Borrowers shall cash collateralize
such Letter of Credit on or before the date five (5) Business Days prior to the
Maturity Date in the manner and to the extent described in Section 2.06(j).

(d) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action
on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants
to each Lender, and each Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Lender’s Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank, such Lender’s Applicable Percentage of each LC
Disbursement made by the Issuing Bank and not reimbursed by the Borrowers on the
date due as provided in paragraph (e) of this Section, or of any reimbursement
payment required to be refunded to the Borrowers for any reason. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.

(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect
of a Letter of Credit, the Borrowers shall reimburse such LC Disbursement by
paying to the Administrative Agent an amount equal to such LC Disbursement not
later than 3:00 p.m., Local Time, on the second Business Day following the date
that such LC Disbursement is made, if the Borrower Representative shall have
received notice of such LC Disbursement prior to 10:00 a.m., Local Time, on such
date, or, if such notice has not been received by the Borrower Representative
prior to such time on such date, then not later than 3:00 p.m., Local Time, on
(i) the second Business Day following the date that the Borrower Representative
receives such notice, if such notice is received prior to 10:00 a.m., Local
Time, on the day of receipt, or (ii) the Business Day immediately following the
second Business Day after the day that the Borrower Representative receives such
notice, if such notice is not received prior to such time on the day

 

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of receipt; provided that the Borrowers may, subject to the conditions to
borrowing set forth herein, request in accordance with Section 2.03 that such
payment be financed with an ABR Revolving Borrowing in an equivalent amount and,
to the extent so financed, the Borrowers’ obligation to make such payment shall
be discharged and replaced by the resulting ABR Revolving Borrowing. If the
Borrowers fail to make such payment when due, such amount shall bear interest at
the Alternate Base Rate and the Administrative Agent shall notify each Lender of
the applicable LC Disbursement, the payment then due from the Borrowers in
respect thereof and such Lender’s Applicable Percentage thereof. Promptly
following receipt of such notice, each Lender shall pay to the Administrative
Agent its Applicable Percentage of the payment then due from the Borrowers, in
the same manner as provided in Section 2.07 with respect to Loans made by such
Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to
the Issuing Bank the amounts so received by it from the Lenders. Promptly
following receipt by the Administrative Agent of any payment from the Borrowers
pursuant to this paragraph, the Administrative Agent shall distribute such
payment to the Issuing Bank or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders
and the Issuing Bank as their interests may appear. Any payment made by a Lender
pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement
(other than the funding of ABR Revolving Loans as contemplated above) shall not
constitute a Loan and shall not relieve the Borrowers of their obligation to
reimburse such LC Disbursement.

(f) Obligations Absolute. The Borrowers’ obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrowers’ obligations hereunder. Neither
the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Borrowers to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrowers to the extent permitted by applicable law) suffered by
the Borrowers that are caused by the Issuing Bank’s failure to exercise care
when determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent

 

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jurisdiction), the Issuing Bank shall be deemed to have exercised care in each
such determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in substantial compliance with the terms of a
Letter of Credit, the Issuing Bank may, in its sole discretion, either accept
and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.

(g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower Representative by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrowers of their obligation
to reimburse the Issuing Bank and the Lenders with respect to any such LC
Disbursement.

(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then,
unless the Borrowers shall reimburse such LC Disbursement in full on the date
such LC Disbursement is made, the unpaid amount thereof shall bear interest, for
each day from and including the date such LC Disbursement is made to but
excluding the date that the Borrowers reimburse such LC Disbursement, at the
rate per annum then applicable to ABR Revolving Loans; provided that, if the
Borrowers fail to reimburse such LC Disbursement when due pursuant to paragraph
(e) of this Section, then Section 2.13(c) shall apply. Interest accrued pursuant
to this paragraph shall be for the account of the Issuing Bank, except that
interest accrued on and after the date of payment by any Lender pursuant to
paragraph (e) of this Section to reimburse the Issuing Bank shall be for the
account of such Lender to the extent of such payment.

(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any
time by written agreement among the Borrowers, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Borrowers shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(b). From and after the effective date of any such replacement,
(i) the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.

 

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(j) Cash Collateralization. If (i) any Event of Default shall occur and be
continuing and if all outstanding Loans have been declared to be due and payable
pursuant to Article VII, then, on the Business Day that the Borrowers receive
notice from the Administrative Agent or the Required Lenders demanding the
deposit of cash collateral pursuant to this paragraph, the Borrowers shall
deposit in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount in cash equal
to the LC Exposure as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrowers described in clause (h) or (i) of
Article VII or (ii) any Letter of Credit shall have an expiration date after the
Maturity Date, on the date five Business Days prior to the Maturity Date the
Borrowers shall deposit in an account with the Administrative Agent, in the name
of the Administrative Agent and for the benefit of the Lenders, (A) in the case
of Letters of Credit denominated in Dollars, an amount in cash in Dollars equal
to 105% of the face amount of such Letters of Credit and (B) in the case of
Letters of Credit denominated in a Foreign Currency, in cash in Dollars equal to
120% of the face amount of such Letter of Credit or, at the request of the
Issuing Bank, in cash in the relevant Foreign Currency equal to 105% of the face
amount of such Letter of Credit. Any such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
obligations of the Borrowers under this Agreement. The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest earned on the investment
of such deposits, which investments shall be made at the option and sole
discretion of the Administrative Agent and at the Borrowers’ risk and expense,
such deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall be
applied by the Administrative Agent to reimburse the Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrowers for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated, be applied to satisfy other obligations of the Borrowers
under this Agreement. If the Borrowers are required to provide an amount of cash
collateral hereunder (i) as a result of the occurrence of an Event of Default,
such amount (to the extent not applied as aforesaid) shall be returned to the
Borrowers within three Business Days after all Events of Default have been cured
or waived and (ii) as a result of the expiration of a Letter of Credit extending
past the Maturity Date, such amount (to the extent not applied as aforesaid)
shall be returned to the Borrowers within three Business Days after the
surrender or expiration of such Letter of Credit.

(k) Collateral for Secured Letters of Credit. If a Borrower requests that any
Letter of Credit be issued as a Secured Letter of Credit pursuant to
Section 2.06(b), then at or prior to the time of issuance of such Letter of
Credit such Borrower shall deposit in a Collateral Account an amount in cash
equal to 100% of the face amount of such Letter of Credit. If at any time the LC
Exposure associated with such Letter of Credit shall exceed the amount in such
Collateral Account, such Borrower shall, within three Business Days of receipt
of written request therefor from the Administrative Agent, deposit into such
Collateral Account such additional cash as may be required to eliminate such
excess. The Administrative Agent shall determine the Dollar Equivalent of the LC
Exposure in respect of Secured Letters of Credit from time to time in its
discretion. If at any time the aggregate amount of LC Exposure in respect of
Secured Letters of Credit exceeds 105% of the amount of cash collateral on
deposit in such Collateral Account, the Borrowers shall, upon the request of the
Administrative Agent, promptly deposit additional cash to such Collateral
Account in an amount sufficient to eliminate such excess.

 

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SECTION 2.07. Funding of Borrowings. (a) Each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, Local Time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders. The Administrative Agent will make such Loans available to the
Borrowers by promptly crediting the amounts so received, in like funds, to the
account specified pursuant to Section 2.03, which shall be an account of a
Borrower maintained with the Administrative Agent in New York City (or, in the
case of Loans denominated in a Foreign Currency, in such other location as may
be designated by the Administrative Agent) and designated by the Borrowers in
the applicable Borrowing Request; provided that ABR Revolving Loans made to
finance the reimbursement of an LC Disbursement as provided in Section 2.06(e)
shall be remitted by the Administrative Agent to the Issuing Bank.

(b) Unless the Administrative Agent shall have received notice from a Lender
prior to the proposed date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with this Section 2.07 and may, in reliance upon such
assumption, make available to the Borrowers a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the
Borrowers severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and including
the date such amount is made available to the Borrowers to but excluding the
date of payment to the Administrative Agent, at (i) in the case of such Lender,
(x) the greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation (in the case of a Borrowing denominated in Dollars) or (y) the rate
reasonably determined by the Administrative Agent to be the cost to it of
funding such amount (in the case of a Borrowing denominated in a Foreign
Currency) or (ii) in the case of the Borrowers, the interest rate applicable to
ABR Loans. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Loan included in such Borrowing.

SECTION 2.08. Interest Elections. (a) Each Revolving Borrowing initially shall
be of the Type specified in the applicable Borrowing Request and, in the case of
a Eurocurrency Revolving Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. Thereafter, the Borrower Representative may
elect to convert such Borrowing to a different Type, in the case of Borrowings
denominated in Dollars, or to continue such Borrowing and, in the case of a
Eurocurrency Revolving Borrowing, may elect Interest Periods therefor, all as
provided in this Section. The Borrower Representative may elect different
options with respect to different portions of the affected Borrowing, in which
case each such portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each such portion
shall be considered a separate Borrowing.

(b) To make an election pursuant to this Section, the Borrower Representative
shall notify the Administrative Agent of such election by telephone by the time
that a Borrowing Request would be required under Section 2.03 if the Borrower
Representative were requesting a

 

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Revolving Borrowing of the Type and denominated in the currency resulting from
such election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Interest Election Request in a form approved by the Administrative Agent and
signed by the Borrower Representative.

(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:

(i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurocurrency Borrowing; and

(iv) if the resulting Borrowing is a Eurocurrency Borrowing, the Interest Period
to be applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”;

If any such Interest Election Request requests a Eurocurrency Borrowing but does
not specify an Interest Period, then the Borrower Representative shall be deemed
to have selected an Interest Period of one month’s duration.

(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each applicable Lender of the details thereof
and of such Lender’s portion of each resulting Borrowing.

(e) If the Borrower Representative fails to deliver a timely Interest Election
Request with respect to a Eurocurrency Revolving Borrowing prior to the end of
the Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing (unless such Borrowing is denominated in a Foreign
Currency, in which case such Borrowing shall be continued as a Eurocurrency
Borrowing with an Interest Period of one month’s duration commencing on the last
day of such Interest Period). Notwithstanding any contrary provision hereof, if
an Event of Default has occurred and is continuing and the Administrative Agent,
at the request of the Required Lenders, so notifies the Borrower Representative
then, so long as an Event of Default is continuing (i) no outstanding Revolving
Borrowing may be converted to or continued as a Eurocurrency Borrowing,
(ii) unless repaid, each Eurocurrency Revolving Borrowing denominated in Dollars
shall be converted to an ABR Borrowing at the end of the Interest Period
applicable thereto, and (iii) unless repaid, each Eurocurrency Revolving
Borrowing denominated in a Foreign Currency shall be continued as a Eurocurrency
Revolving Borrowing with an Interest Period of one month’s duration.

 

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SECTION 2.09. Termination and Reduction and Increase of Commitments. (a) Unless
previously terminated (or extended pursuant to Section 2.22), the Commitments
shall terminate on the Maturity Date.

(b) The Borrowers may at any time terminate, or from time to time reduce, the
Commitments; provided that (i) each reduction of the Commitments shall be in an
amount that is an integral multiple of $1,000,000 and not less than $5,000,000
and (ii) the Borrowers shall not terminate or reduce the Commitments if, after
giving effect to any concurrent prepayment of the Loans in accordance with
Section 2.11, the sum of the Revolving Credit Exposures would exceed the total
Commitments.

(c) The Borrower Representative shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) or (c) of
this Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the applicable Lenders of the contents thereof. Each notice
delivered by the Borrower Representative pursuant to this Section shall be
irrevocable; provided that a notice of termination of the Commitments delivered
by the Borrower Representative may state that such notice is conditioned upon
the effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower Representative (by notice to the Administrative Agent on
or prior to the specified effective date) if such condition is not satisfied.
Any termination or reduction of the Commitments shall be permanent. Each
reduction of the Commitments shall be made ratably among the Lenders, in each
case accordance with their respective Commitments.

(d) The Borrower Representative at its option may, from time to time, after the
Effective Date, seek to increase the total Commitments by up to an aggregate
amount of $50,000,000 (resulting in maximum total Commitments of $225,000,000)
upon at least three (3) Business Days’ prior written notice to the
Administrative Agent, which notice shall specify the amount of any such increase
(which shall not be less than $10,000,000 or such lesser amount to which the
Administrative Agent may agree) and shall certify that no Default has occurred
and is continuing. After delivery of such notice, the Parent, in its discretion,
may offer the increase (which may be declined by any Lender in its sole
discretion) in the total Commitments on either a ratable basis to the Lenders or
on a non pro-rata basis to one or more Lenders and/or to other Lenders or
entities reasonably acceptable to the Administrative Agent, the Issuing Bank and
the Borrower Representative; provided that no increase may be offered to any
entity that is an Ineligible Institution. No increase in the total Commitments
shall become effective until the existing or new Lenders extending such
incremental Commitment amount and the Borrowers shall have delivered to the
Administrative Agent a document in form and substance reasonably satisfactory to
the Administrative Agent pursuant to which (i) any such existing Lender agrees
to the amount of its Commitment increase, (ii) any such new Lender agrees to its
Commitment and agrees to assume and accept the obligations and rights of a
Lender hereunder, (iii) the Borrowers accept such incremental Commitments,
(iv) the effective date of any increase in the Commitments is specified and
(v) the Borrowers certify that on such date the conditions for a new Loan set
forth in Section 4.02 are satisfied. Upon the effectiveness of any increase in
the total Commitments pursuant hereto, (i) each Lender (new or existing) shall
be deemed to have accepted an assignment from the existing Lenders, and the
existing Lenders shall be deemed to

 

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have made an assignment to each new or existing Lender accepting a new or
increased Commitment, of an interest in each then outstanding Revolving Loan (in
each case, on the terms and conditions set forth in the Assignment and
Assumption) and (ii) the LC Exposure of the existing and new Lenders shall be
automatically adjusted such that, after giving effect to such assignments and
adjustments, all Revolving Credit Exposure hereunder is held ratably by the
Lenders in proportion to their respective Commitments. Assignments pursuant to
the preceding two sentences shall be made in exchange for, and substantially
contemporaneously with the payment to the assigning Lenders of, the principal
amount assigned. Payments received by assigning Lenders pursuant to this
Section in respect of the principal amount of any Eurocurrency Loan shall, for
purposes of Section 2.16 be deemed prepayments of such Loan. Any increase of the
total Commitments pursuant to this Section 2.09(d) shall be subject to receipt
by the Administrative Agent from the Borrowers of such supplemental opinions,
resolutions, certificates and other documents as the Administrative Agent may
reasonably request. No consent of any Lender (other than the Lenders agreeing to
new or increased Commitments) shall be required for any incremental Commitment
provided or Loan made pursuant to this Section 2.09(d).

SECTION 2.10. Repayment of Loans; Evidence of Debt. (a) The Borrowers hereby
jointly and severally unconditionally promise to pay to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each Loan on
the Maturity Date.

(b) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the indebtedness of the Borrowers to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

(c) The Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Type thereof and the Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrowers to each Lender hereunder
and (iii) the amount of any sum received by the Administrative Agent hereunder
for the account of the Lenders and each Lender’s share thereof.

(d) The entries made in the accounts maintained pursuant to paragraph (b) or
(c) of this Section shall be prima facie evidence of the existence and amounts
of the obligations recorded therein; provided that the failure of any Lender or
the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrowers to repay the Loans in
accordance with the terms of this Agreement.

(e) Any Lender may request that Loans made by it be evidenced by a promissory
note. In such event, the Borrowers shall prepare, execute and deliver to such
Lender a promissory note payable to such Lender (or, if requested by such
Lender, to such Lender and its registered assigns) and in a form approved by the
Administrative Agent. Thereafter, the Loans evidenced by such promissory note
and interest thereon shall at all times (including after assignment pursuant to
Section 9.04) be represented by one or more promissory notes in such form
payable to the payee named therein (or, if such promissory note is a registered
note, to such payee and its registered assigns).

 

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(f) If as of any date a determination is required or authorized to be made under
the Credit Documents the aggregate Revolving Credit Exposure of the Lenders
exceeds the aggregate Commitments of the Lenders, the Borrowers shall within two
(2) Business Days prepay the Loans in the amount of such excess. To the extent
that, after the prepayment of all Loans an excess of the Credit Exposure over
the aggregate Commitments still exists, the Borrowers shall promptly cash
collateralize the Letters of Credit in the manner described in Section 2.06(j)
in an amount sufficient to eliminate such excess.

(g) The Administrative Agent will determine the Dollar Equivalent of the
aggregate LC Exposure and the Dollar Equivalent of each Loan on each Exchange
Rate Date. If at any time the sum of such amounts exceeds 105% of the aggregate
Commitments of the Lenders, the Borrowers shall within two (2) Business Days
prepay the Loans in an amount sufficient to reduce the sum of such amounts to no
greater than the amount of the aggregate Commitments of the Lenders. To the
extent that, after the prepayment of all Loans an excess of the sum of such
amounts over the aggregate Commitments still exists, the Borrowers shall
promptly cash collateralize the Letters of Credit in the manner described in
Section 2.06(j) in an amount sufficient to eliminate such excess.

SECTION 2.11. Prepayment of Loans. (a) The Borrowers shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part and
without prepayment or penalty, subject to prior notice in accordance with
paragraph (b) of this Section.

(b) The Borrower Representative shall notify the Administrative Agent by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurocurrency Revolving Borrowing, not later than 11:00 a.m.,
Local Time, three Business Days before the date of prepayment or (ii) in the
case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m.,
Local Time, one Business Day before the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.09(d), then such
notice of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.09(d). Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Administrative Agent shall advise the
applicable Lenders of the contents thereof. Each partial prepayment of any
Revolving Borrowing shall be in an amount that would be permitted in the case of
an advance of a Revolving Borrowing of the same Type as provided in
Section 2.02. Each prepayment of a Revolving Borrowing shall be applied ratably
to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied
by accrued interest to the extent required by Section 2.13.

SECTION 2.12. Fees. (a) Subject to Section 2.21(a), the Borrowers agree to pay
to the Administrative Agent for the account of each Lender a commitment fee,
which shall accrue at the Applicable Rate on the daily amount of the difference
between the Commitment of such Lender and the Revolving Credit Exposure of such
Lender during the period from and including the date hereof to but excluding the
date on which such Commitment terminates. Accrued commitment fees shall be
payable quarterly in arrears on the fifth Business Day after receipt by the
Borrowers of an invoice with respect to such fees. All commitment fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).

 

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(b) Subject to Section 2.21(c), the Borrowers agree to pay (i) to the
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, equal to (A) in the case of
Unsecured Letters of Credit, the Applicable Rate used to determine the interest
rate applicable to Eurocurrency Revolving Loans on the average daily amount
available to be drawn under such Unsecured Letter of Credit (excluding any
portion thereof attributable to unreimbursed LC Disbursements) and (B) in the
case of Secured Letters of Credit, 0.45% per annum on the average daily amount
available to be drawn under such Secured Letter of Credit, in each case, during
the period from and including the Effective Date to but excluding the later of
the date on which such Lender’s Commitment terminates and the date on which such
Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting
fee, which shall accrue at the rate or rates per annum separately agreed upon
between the Borrowers and the Issuing Bank on the average daily amount of the LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date of termination of the Commitments and the date
on which there ceases to be any LC Exposure, as well as the Issuing Bank’s
standard fees and commissions with respect to the issuance, amendment,
cancellation, negotiation, transfer, presentment, renewal or extension of any
Letter of Credit or processing of drawings thereunder. Participation fees and
fronting fees accrued through and including the last day of March, June,
September and December of each year shall be payable on the fifth Business Day
following receipt by the Borrowers of an invoice thereof, commencing on the
first such date to occur after the Effective Date; provided that all such fees
shall be payable on the date on which the Commitments terminate and any such
fees accruing after the date on which the Commitments terminate shall be payable
on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).

(c) The Borrowers agree to pay to the Administrative Agent, for its own account,
fees payable in the amounts and at the times separately agreed upon between the
Borrowers and the Administrative Agent.

(d) All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Administrative Agent (or to the Issuing Bank, in the
case of fees payable to it) for distribution, in the case of facility fees and
participation fees, to the Lenders. Fees paid shall not be refundable under any
circumstances.

SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing shall bear
interest at the Alternate Base Rate plus the Applicable Rate.

(b) The Loans comprising each Eurocurrency Borrowing shall bear interest at the
Adjusted Eurocurrency Rate for the Interest Period in effect for such Borrowing
plus the Applicable Rate.

 

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(c) Notwithstanding the foregoing, if any principal of or interest on any Loan
or any fee or other amount payable by any of the Borrowers hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.

(d) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan, upon the final maturity thereof and upon termination
of the Commitments; provided that (i) interest accrued pursuant to paragraph
(c) of this Section shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR Loan
prior to the end of the Availability Period), accrued interest on the principal
amount repaid or prepaid shall be payable on the date of such repayment or
prepayment and (iii) in the event of any conversion of any Eurocurrency Loan
prior to the end of the current Interest Period therefor, accrued interest on
such Loan shall be payable on the effective date of such conversion.

(e) All interest hereunder shall be computed on the basis of a year of 360 days,
except that (i) interest on Borrowings denominated in Sterling shall be computed
on the basis of a year of 365 days, (ii) interest on Borrowings denominated in
any other Foreign Currency for which it is required by applicable law or
customary to compute interest on the basis of a year of 365 days or, if required
by applicable law or customary, 366 days in a leap year, shall be computed on
such basis, and (iii) interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted Eurocurrency Rate shall be determined by the Administrative Agent, and
such determination shall be conclusive absent manifest error.

SECTION 2.14. Alternate Rate of Interest. (a) If prior to the commencement of
any Interest Period for a Eurocurrency Borrowing denominated in any currency:

(i) the Administrative Agent determines (which determination shall be conclusive
absent manifest error) that adequate and reasonable means (including by means of
an Interpolated Rate) do not exist for ascertaining the Adjusted Eurocurrency
Rate for such Interest Period; or

(ii) the Administrative Agent is advised by the Required Lenders that the
Adjusted Eurocurrency Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (or Lender) of making or maintaining
their Loans (or its Loan) included in such Borrowing for such Interest Period,
which notice is accompanied by a written rationale for the determination of the
Required Lenders, which will be shared with the Borrowers;

 

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then the Administrative Agent shall give notice thereof to the Borrowers and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrowers and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurocurrency Borrowing denominated
in such currency shall be ineffective, (ii) such Borrowing shall be converted to
or continued as on the last day of the Interest Period applicable thereto (A) if
such Borrowing is denominated in Dollars, an ABR Borrowing or (B) if such
Borrowing is denominated in a Foreign Currency, as a Borrowing in respect of
which the rate to apply to each Lender’s participation is an interest rate to
include (1) the Applicable Rate for Eurocurrency Loans and (2) the rate notified
to the Administrative Agent by such Lender as soon as practicable and in any
event before interest is due to be paid in respect of the applicable Interest
Period, to be that which expresses as a percentage rate per annum the cost to
such Lender of funding its participation in the applicable Borrowing from
whatever source it may reasonably select; and (iii) if any Borrowing Request
requests a Eurocurrency Borrowing in such currency, such Borrowing shall be made
as an ABR Borrowing (if such Borrowing is requested to be made in Dollars) or
shall be made as a Borrowing bearing interest at the rate described under
(ii)(B) above.

(b) If, after the date hereof, any Change in Law shall make it unlawful or
impossible for any of the Lenders to honor its obligations hereunder to make or
maintain any Eurocurrency Loan or any ABR Loan as to which the interest rate is
determined by reference to the Adjusted Eurocurrency Rate, such Lender shall
promptly give notice thereof to the Administrative Agent and the Administrative
Agent shall promptly give notice to the Parent and the other Lenders.
Thereafter, until the Administrative Agent notifies the Parent that such
circumstances no longer exist, (i) the obligations of the Lenders to make
Eurocurrency Loans or ABR Loans as to which the interest rate is determined by
reference to the Adjusted Eurocurrency Rate, and the right of the Borrowers to
convert any Loan to a Eurodollar Loan or continue any Loan as a Eurodollar Loan
or an ABR Loan as to which the interest rate is determined by reference to the
Adjusted Eurocurrency Rate shall be suspended and thereafter the Borrowers may
select only ABR Loans as to which the interest rate is not determined by
reference to the Adjusted Eurocurrency Rate hereunder, (ii) all ABR Loans shall
cease to be determined by reference to the Adjusted Eurocurrency Rate and
(iii) if any of the Lenders may not lawfully continue to maintain a Eurodollar
Loan to the end of the then current Interest Period applicable thereto, the
applicable Loan shall immediately be converted to an ABR Loan as to which the
interest rate is not determined by reference to the Adjusted Eurocurrency Rate
for the remainder of such Interest Period.

SECTION 2.15. Increased Costs. (a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, liquidity or
similar requirement (including any compulsory loan requirement, insurance charge
or other assessment) against assets of, deposits with or for the account of, or
credit extended by, any Lender (except any such reserve requirement reflected in
the Adjusted Eurocurrency Rate) or the Issuing Bank;

(ii) impose on any Lender or the Issuing Bank or the London interbank market any
other condition, cost or expense (other than Taxes) affecting this Agreement or
Eurocurrency Loans made by such Lender or any Letter of Credit or participation
therein; or

 

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(iii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes,
(B) Taxes described in clauses (b) through (e) of the definition of Excluded
Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of
credit, commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto;

and the result of any of the foregoing shall be to increase the cost to such
Lender or such other Recipient of making, converting into, continuing or
maintaining any Loan (or of maintaining its obligation to make any such Loan) or
to increase the cost to such Lender, the Issuing Bank or such other Recipient of
participating in, issuing or maintaining any Letter of Credit or to reduce the
amount of any sum received or receivable by such Lender, the Issuing Bank or
such other Recipient hereunder (whether of principal, interest or otherwise),
then the Borrowers will pay to such Lender, the Issuing Bank or such other
Recipient, as the case may be, such additional amount or amounts as will
compensate such Lender, the Issuing Bank or such other Recipient, as the case
may be, for such additional costs incurred or reduction suffered.

(b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital or liquidity requirements has or would have the effect of
reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on
the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in Letters
of Credit held by, such Lender, or the Letters of Credit issued by the Issuing
Bank, to a level below that which such Lender or the Issuing Bank or such
Lender’s or the Issuing Bank’s holding company could have achieved but for such
Change in Law (taking into consideration such Lender’s or the Issuing Bank’s
policies and the policies of such Lender’s or the Issuing Bank’s holding company
with respect to capital adequacy or liquidity), then from time to time the
Borrowers will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank
or such Lender’s or the Issuing Bank’s holding company for any such reduction
suffered.

(c) A certificate of a Lender or the Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or the Issuing Bank or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to the Borrower Representative and shall be
conclusive absent manifest error. The Borrowers shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.

(d) Failure or delay on the part of any Lender or the Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or the Issuing Bank’s right to demand such compensation; provided that
the Borrowers shall not be required to compensate a Lender or the Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 270 days prior to the date that such Lender or the Issuing Bank, as the
case may be, notifies the Borrower Representative of the Change in Law giving
rise to such increased costs or reductions and of such Lender’s or the Issuing
Bank’s intention to claim compensation therefor; provided further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the 270-day period referred to above shall be extended to include the
period of retroactive effect thereof.

 

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Notwithstanding the above, a Lender will not be entitled to demand compensation
for any increased cost or reduction set forth in this Section 2.15 at any time
if it is not the general practice of such Lender to demand such compensation
from similarly situated borrowers in similar circumstances at such time.

SECTION 2.16. Break Funding Payments. In the event of (a) the payment of any
principal of any Eurocurrency Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default or as a
result of any prepayment pursuant to Section 2.11), (b) the conversion of any
Eurocurrency Loan other than on the last day of the Interest Period applicable
thereto, (c) the failure to borrow, convert, continue or prepay any Eurocurrency
Loan on the date specified in any notice delivered pursuant hereto (regardless
of whether such notice may be revoked under Section 2.11(b) and is revoked in
accordance therewith) or (d) the assignment of any Eurocurrency Loan other than
on the last day of the Interest Period applicable thereto as a result of a
request by a Borrower pursuant to Section 2.19, then, in any such event, the
Borrowers shall compensate each Lender for the loss, cost and expense (excluding
any loss of anticipated profits or loss of margin) attributable to such event.
In the case of a Eurocurrency Loan, such loss, cost or expense to any Lender
shall be deemed to be an amount determined by such Lender to be the excess, if
any, of (i) the amount of interest which would have accrued on the principal
amount of such Loan had such event not occurred, at the Adjusted Eurocurrency
Rate that would have been applicable to such Loan, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the amount of
interest which would accrue on such principal amount for such period at the
interest rate which such Lender would bid were it to bid, at the date of such
event, for Dollar deposits in the applicable currency of a comparable amount and
period from other banks in the eurocurrency market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section and setting forth in reasonable detail the basis for
such claim shall be delivered to the Borrower Representative and shall be
conclusive absent manifest error. The Borrowers shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.

SECTION 2.17. Taxes. (a) Payments Free of Taxes. Any and all payments by or on
account of any obligation of any Borrower under any Credit Document shall be
made without deduction or withholding for any Taxes, except as required by
applicable law. If any applicable law (as determined in the good faith
discretion of an applicable withholding agent) requires the deduction or
withholding of any Tax from any such payment by a withholding agent, then the
applicable withholding agent shall be entitled to make such deduction or
withholding and shall timely pay the full amount deducted or withheld to the
relevant Governmental Authority in accordance with applicable law and, if such
Tax is an Indemnified Tax, then the sum payable by the applicable Borrower shall
be increased as necessary so that after such deduction or withholding has been
made (including such deductions and withholdings applicable to additional sums
payable under this Section 2.17) the applicable Recipient receives an amount
equal to the sum it would have received had no such deduction or withholding
been made.

 

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(b) Payment of Other Taxes by the Borrowers. The Borrowers shall timely pay to
the relevant Governmental Authority in accordance with applicable law, or at the
option of the Administrative Agent timely reimburse it for, Other Taxes.

(c) Evidence of Payments. As soon as practicable after any payment of Taxes by
any Borrower to a Governmental Authority pursuant to this Section 2.17, such
Borrower 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.

(d) Indemnification by the Borrowers. The Borrowers shall jointly and severally
indemnify each Recipient, within 10 days after demand therefor, for the full
amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted
on or attributable to amounts payable under this Section) payable or paid by
such Recipient or required to be withheld or deducted from a payment to such
Recipient and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified 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 Borrowers by a Lender (with a copy
to the Administrative Agent), or by the Administrative Agent on its own behalf
or on behalf of a Lender, shall be conclusive absent manifest error.

(e) Indemnification by the Lenders. Each Lender shall severally indemnify the
Administrative Agent, within 10 days after demand therefor, for (i) any
Indemnified Taxes attributable to such Lender (but only to the extent that any
Borrower has not already indemnified the Administrative Agent for such
Indemnified Taxes and without limiting the obligation of the Borrowers to do
so), (ii) any Taxes attributable to such Lender’s failure to comply with the
provisions of Section 9.04(c) relating to the maintenance of a Participant
Register and (iii) any Excluded Taxes attributable to such Lender, in each case,
that are payable or paid by the Administrative Agent in connection with any
Credit Document, and any reasonable expenses arising therefrom or with respect
thereto, whether or not such 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 any Lender by the Administrative Agent shall
be conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Credit Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due
to the Administrative Agent under this paragraph (e).

(f) Status of Lenders. (i) Any Lender that is entitled to an exemption from or
reduction of withholding Tax with respect to payments made under any Credit
Document shall deliver to the Borrowers and the Administrative Agent, at the
time or times reasonably requested by the Borrowers or the Administrative Agent,
such properly completed and executed documentation reasonably requested by the
Borrowers or the Administrative Agent as will permit such payments to be made
without withholding or at a reduced rate of withholding. In addition, any
Lender, if reasonably requested by the Borrowers or the Administrative Agent,
shall deliver such other documentation prescribed by applicable law or
reasonably requested by the Borrowers or the Administrative Agent as will enable
the Borrowers or the Administrative Agent to determine whether or not such
Lender is subject to backup withholding or information

 

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reporting requirements. Notwithstanding anything to the contrary in the
preceding two sentences, the completion, execution and submission of such
documentation (other than such documentation set forth in
Section 2.17(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in
the Lender’s reasonable judgment such completion, execution or submission would
subject such Lender to any material unreimbursed cost or expense or would
materially prejudice the legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing, in the event that any
Borrower is a U.S. Person,

(A) any Lender that is a U.S. Person shall deliver to such Borrower and the
Administrative Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of such Borrower or the Administrative Agent), executed
originals of IRS Form W-9 certifying that such Lender is exempt from U.S.
Federal backup withholding tax;

(B) any Foreign Lender (with respect to such Borrower) shall, to the extent it
is legally entitled to do so, 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 reasonable request of such
Borrower or the Administrative Agent), whichever of the following is applicable:

(1) in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party (x) with respect to payments of
interest under any Credit Document, executed originals of IRS Form W-8BEN
establishing an exemption from, or reduction of, U.S. Federal withholding Tax
pursuant to the “interest” article of such tax treaty and (y) with respect to
any other applicable payments under any Credit Document, IRS Form W-8BEN
establishing an exemption from, or reduction of, U.S. Federal withholding Tax
pursuant to the “business profits” or “other income” article of such tax treaty;

(2) executed originals of IRS Form W-8ECI;

(3) 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
substantially in the form of Exhibit B-1 to the effect that such Foreign Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10
percent shareholder” of such Borrower within the meaning of Section 881(c)(3)(B)
of the Code, or a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and
(y) executed originals of IRS Form W-8BEN; or

(4) to the extent a Foreign Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a
U.S. Tax Compliance Certificate substantially in the form of Exhibit B-2 or
Exhibit B-3, IRS Form W-9, and/or other certification documents from each
beneficial owner, as applicable; provided that if the Foreign Lender is a
partnership and one or more direct or indirect partners of such Foreign Lender
are claiming the portfolio interest exemption, such Foreign Lender may provide a
U.S. Tax Compliance Certificate substantially in the form of Exhibit B-4 on
behalf of each such direct and indirect partner;

 

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(C) any Foreign Lender (with respect to such Borrower) shall, to the extent it
is legally entitled to do so, 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 reasonable request of such
Borrower or the Administrative Agent), executed originals of any other form
prescribed by applicable law as a basis for claiming exemption from or a
reduction in U.S. Federal withholding Tax, duly completed, together with such
supplementary documentation as may be prescribed by applicable law to permit
such Borrower or the Administrative Agent to determine the withholding or
deduction required to be made; and

(D) if a payment made to a Lender under any Credit Document would be subject to
U.S. Federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to such Borrower and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by such
Borrower or the Administrative Agent such documentation prescribed by applicable
law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by such Borrower or the
Administrative Agent as may be necessary for such Borrower and the
Administrative Agent to comply with their obligations under FATCA and to
determine that such Lender has complied with such Lender’s obligations under
FATCA or to determine the amount to deduct and withhold from such payment.
Solely for purposes of this clause (D), “FATCA” shall include any amendments
made to FATCA after the date of this Agreement.

(iii) Each Lender agrees that if any form or certification it previously
delivered expires or becomes obsolete or inaccurate in any respect, it shall
update such form or certification or promptly notify the Borrowers and the
Administrative Agent in writing of its legal inability to do so.

(g) Additional United Kingdom Withholding Tax Matters.

(i) Without limiting the generality of the foregoing and subject to (ii) below,
each Lender and each UK Borrower which makes a payment to such Lender shall
cooperate in completing as soon as reasonably possible any procedural
formalities necessary for such UK Borrower to obtain authorization to make such
payment without withholding or deduction or subject to a reduced rate of
withholding or deduction for Taxes imposed under the laws of the United Kingdom.

(ii) (A) A Lender on the day on which this Agreement closes that (x) holds a
passport under the HMRC DT Treaty Passport scheme and (y) wishes such scheme to
apply to this Agreement, shall confirm its scheme reference number and its
jurisdiction of tax residence opposite its name in Schedule 2.01; and

 

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(B) a Lender which becomes a Lender hereunder after the day on which this
Agreement closes that (x) holds a passport under the HMRC DT Treaty Passport
scheme and (y) wishes such scheme to apply to this Agreement, shall confirm its
scheme reference number and its jurisdiction of tax residence to the Borrower
Representative and in the relevant documentation it executes to becomes a
Lender, and

(C) Upon satisfying either clause (A) or (B) above, such Lender shall have
satisfied its obligation under paragraph (g)(i) above.

(iii) If a Lender has confirmed its scheme reference number and its jurisdiction
of tax residence in accordance with paragraph (g)(ii) above, the UK Borrower(s)
shall duly complete and file HMRC form DTTP2 with HMRC within 30 days of the
date of this Agreement in respect of a Lender falling within
Section 2.17(g)(ii)(A) and within 30 days of the date a Lender falling under
Section 2.17(g)(ii)(B) becomes a Lender under this Agreement (a “Borrower DTTP
Filing”) with respect to such Lender, and shall promptly provide such Lender
with a copy of such filing; provided that, if:

(A) each UK Borrower making a payment to such Lender has not made a Borrower
DTTP Filing in respect of such Lender; or

(B) each UK Borrower making a payment to such Lender has made a Borrower DTTP
Filing in respect of such Lender but:

(1) such Borrower DTTP Filing has been rejected by HM Revenue & Customs; or

(2) HM Revenue & Customs has not given such UK Borrower authority to make
payments to such Lender without a deduction for tax within 60 days of the date
of such Borrower DTTP Filing;

and in each case, such UK Borrower has notified that Lender in writing of either
(1) or (2) above, then such Lender and such UK Borrower shall co-operate in
completing any additional procedural formalities necessary for such UK Borrower
to obtain authorization as soon as reasonably possible to make that payment
without withholding or deduction for Taxes imposed under the laws of the United
Kingdom.

(iv) If a Lender has not confirmed its scheme reference number and jurisdiction
of tax residence in accordance with paragraph (g)(ii) above, no UK Borrower
shall make a Borrower DTTP Filing or file any other form relating to the HMRC DT
Treaty Passport scheme in respect of that Lender’s Commitment(s) or its
participation in any Loan unless the Lender otherwise agrees.

 

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(v) Each UK Borrower shall, promptly on making a Borrower DTTP Filing, deliver a
copy of such Borrower DTTP Filing to the Administrative Agent for delivery to
the relevant Lender.

(vi) Each Lender shall promptly notify the Parent and Administrative Agent if it
determines in its sole discretion that it ceases to be entitled to claim the
benefits of an income tax treaty to which the United Kingdom is a party with
respect to payments made by any U.K. Borrower hereunder.

(h) Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 2.17 (including by
the payment of additional amounts pursuant to this Section 2.17), it shall pay
to the indemnifying party an amount equal to such refund (but only to the extent
of indemnity payments made under this Section 2.17 with respect to the Taxes
giving rise to such refund), net of all out-of-pocket expenses (including Taxes)
of such indemnified party and without interest (other than any interest paid by
the relevant Governmental Authority with respect to such refund). Such
indemnifying party, upon the request of such indemnified party, shall repay to
such indemnified party the amount paid over pursuant to this paragraph (g) (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary
in this paragraph (g), in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this paragraph (g) the payment
of which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid. This paragraph shall not be construed
to require any indemnified party to make available its Tax returns (or any other
information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.

(i) Survival. Each party’s obligations under this Section 2.17 shall survive the
resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Commitments
and the repayment, satisfaction or discharge of all obligations under any Credit
Document.

(j) Issuing Bank. For purposes of this Section 2.17, the term “Lender” includes
any Issuing Bank and the term “applicable law” includes FATCA.

SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) Each of the Borrowers shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or reimbursement of LC
Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or
otherwise) prior to 12:00 noon, Local Time, on the date when due, in immediately
available funds, without set off or counterclaim. Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the
Administrative Agent at its offices at 10 South Dearborn, Floor 19, Chicago,
Illinois 60603 (or, for payments denominated in a Foreign

 

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Currency, to J.P. Morgan Europe Limited, 125 London Wall, London EC2Y 5AJ),
except payments to be made directly to the Issuing Bank as expressly provided
herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03
shall be made directly to the Persons entitled thereto. The Administrative Agent
shall distribute any such payments received by it for the account of any other
Person to the appropriate recipient promptly following receipt thereof. If any
payment hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder of (i) principal or interest in
respect of any Loan shall be made in the currency in which such Loan is
denominated, (ii) reimbursement obligations shall be made in the currency in
which the Letter of Credit in respect of which such reimbursement obligation
exists is denominated or (iii) any other amount due hereunder or under another
Credit Document shall be made in Dollars. Any payment required to be made by the
Administrative Agent hereunder shall be deemed to have been made by the time
required if the Administrative Agent shall at or before such time have taken the
necessary steps to make such payment in accordance with the regulations or
operating procedures of the clearing or settlement system used by the
Administrative Agent to make such payment.

(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.

(c) If any Lender shall, by exercising any right of set off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans or participations in LC Disbursements resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its Loans
and participations in LC Disbursements and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
and participations in LC Disbursements of other Lenders without recourse or
warranty from the other Lenders except as contemplated by Section 9.04 in
respect of assignments to the extent necessary so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest on their respective Loans and
participations in LC Disbursements; provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by any of the Borrowers pursuant to and in accordance with the express terms of
this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrowers
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). Each of the Borrowers consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a

 

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participation pursuant to the foregoing arrangements may exercise against any of
the Borrowers rights of set-off 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.

(d) Unless the Administrative Agent shall have received notice from the Borrower
Representative prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrowers will not make such payment, the Administrative
Agent may assume that the Borrowers have made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the Issuing Bank, as the case may be, the amount due. In such event,
if the Borrowers have not in fact made such payment, then each of the Lenders or
the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank 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, (i) at the greater of the Federal Funds Effective
Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation (in the case of an amount
denominated in Dollars) and (ii) the rate reasonably determined by the
Administrative Agent to be the cost to it of funding such amount (in the case of
an amount denominated in a Foreign Currency).

(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.06(d) or (e), 2.07(c), 2.18(d) or 9.03(c), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), (i) apply any amounts thereafter received by the
Administrative Agent for the account of such Lender and for the benefit of the
Administrative Agent or the Issuing Bank to satisfy such Lender’s obligations
under such Sections until all such unsatisfied obligations are fully paid,
and/or (ii) hold any such amounts in a segregated account as cash collateral
for, and application to, any future funding obligations of such Lender under
such Sections; in the case of each of (i) and (ii) above, in any order as
determined by the Administrative Agent in its discretion.

SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If any Lender
requests compensation under Section 2.15, or if any of the Borrowers is required
to pay any Indemnified Taxes or additional amounts to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
then such Lender (at the written request of such Borrower) 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 2.15 or 2.17, as the case may be, in the future and (ii) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Borrowers hereby agree to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.

(b) If any Lender requests compensation under Section 2.15, or if any of the
Borrowers is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender becomes a Defaulting Lender, then the Borrowers may, at their
sole expense and effort, upon notice to such

 

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Lender and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 9.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
Representative shall have received the prior written consent of the
Administrative Agent (and if a Commitment is being assigned, the Issuing Bank),
which consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
and participations in LC Disbursements, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder, from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Borrowers
(in the case of all other amounts), (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.15 or payments required
to be made pursuant to Section 2.17, such assignment will result in a reduction
in such compensation or payments and (iv) such assignee shall not be an
Ineligible Institution. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrowers to require such
assignment and delegation cease to apply.

SECTION 2.20. Joint and Several Liability of the Borrowers.

(a) Each of the Borrowers shall be jointly and severally liable hereunder and
under each of the other Credit Documents with respect to all Loans and all other
Obligations, regardless of which of the Borrowers actually receives the proceeds
of the Loans or the benefit of any other extensions of credit hereunder, or the
manner in which the Borrowers, the Administrative Agent, the Lenders or the
Issuing Bank accounts therefore in their respective books and records. In
furtherance and not in limitation of the foregoing, (i) each Borrower’s
obligations and liabilities with respect to proceeds of Loans which it receives
or Letters of Credit issued for its account, and related fees, costs and
expenses, and (ii) each Borrower’s obligations and liabilities arising as a
result of the joint and several liability of Borrowers hereunder with respect to
proceeds of Loans received by, or Letters of Credit issued for the account of,
any of the other Borrowers, together with the related fees, costs and expenses,
shall be separate and distinct obligations, both of which are primary
obligations of such Borrower. The joint and several liability of each of the
Borrowers shall not be impaired or released by (A) the failure of the
Administrative Agent, any Lender or the Issuing Bank, any successors or assigns
thereof, or any holder of any of the Obligations to assert any claim or demand
or to exercise or enforce any right, power or remedy against any Borrower, any
Subsidiary, any other Person or otherwise; (B) any extension or renewal for any
period (whether or not longer than the original period) or exchange of any of
the Obligations or the release or compromise of any obligation of any nature of
any Person with respect thereto; (C) the surrender, release or exchange of all
or any part of any property securing payment, performance and/or observance of
any of the Obligations or the compromise or extension or renewal for any period
(whether or not longer than the original period) of any obligations of any
nature of any Person with respect to any such property; (D) any action or
inaction on the part of the Administrative Agent, any Lender or the Issuing
Bank, or any other event or condition with respect to any other Borrower,
including any such action or inaction or other event or condition, which might
otherwise constitute a defense available to, or a discharge of, such Borrower,
or a guarantor or surety of or for any or all of the Obligations; and (E) any
other act, matter or thing (other than indefeasible payment in full or
performance of the Obligations) which would or might, in the absence of this
provision, operate to release, discharge or otherwise prejudicially affect the
obligations of such Borrower or any other Borrower.

 

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(b) Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents, to the extent the joint obligations of a Borrower
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of Section 548 of Chapter 11 of the Bankruptcy Code
or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar U.S. or foreign statute or common law) then
the Obligations of each Borrower hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether foreign, federal or
state and including, without limitation, the federal Bankruptcy Code).

(c) To the extent that any Borrower shall make a payment under this Section 2.20
of all or any of the Obligations (other than Loans the proceeds of which were
received by such Borrower) (a “Surety Payment”) that, taking into account all
other Surety Payments then previously or concurrently made by any other
Borrower, exceeds the amount that such Borrower would otherwise have paid if
each Borrower had paid the aggregate Obligations satisfied by such Surety
Payment in the same proportion that such Borrower’s “Allocable Amount” (as
defined below) (as determined immediately prior to such Surety Payment) bore to
the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Surety Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Surety Payment. As of any date of
determination, the “Allocable Amount” of any Borrower shall be equal to the
maximum amount of the claim that could then be recovered from such Borrower
under this Section 2.20 without rendering such claim voidable or avoidable under
Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state
Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar
U.S. or foreign statute or common law. This Section 2.20(c) is intended only to
define the relative rights of Borrowers and nothing set forth in this
Section 2.20(c) is intended to or shall impair the obligations of Borrowers,
jointly and severally, to pay any amounts as and when the same shall become due
and payable in accordance with the terms of this Agreement, including
Section 2.20(a). Nothing contained in this Section 2.20(c) shall limit the
liability of any Borrower to pay the Loans made directly or indirectly to that
Borrower and accrued interest, fees and expenses with respect thereto for which
such Borrower shall be primarily liable. The parties hereto acknowledge that the
rights of contribution and indemnification hereunder shall constitute assets of
the Borrowers to which such contribution and indemnification is owing. The
rights of the indemnifying Borrowers against other Borrowers under this
Section 2.20(c) shall be exercisable only upon the full and indefeasible payment
of the Obligations and the termination of the Commitments.

(d) The liability of Borrowers under this Section 2.20 is in addition to and
shall be cumulative with all liabilities of each Borrower to the Administrative
Agent and Lenders under this Agreement and the other Credit Documents to which
such Borrower is a party, without any limitation as to amount.

 

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SECTION 2.21. Defaulting Lenders. Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions shall apply for so long as such Lender is a Defaulting
Lender:

(a) fees shall cease to accrue on the unfunded portion of the Commitment of such
Defaulting Lender pursuant to Section 2.12;

(b) the Commitment and Revolving Credit Exposure of such Defaulting Lender shall
not be included in determining whether all Lenders, the Required Lenders or the
Required Lenders have taken or may take any action hereunder (including any
consent to any amendment or waiver pursuant to Section 9.02), provided that any
waiver, amendment or modification requiring the consent of all Lenders or each
affected Lender which affects such Defaulting Lender differently than other
affected Lenders shall require the consent of such Defaulting Lender;

(c) if any LC Exposure exists at the time a Lender becomes a Defaulting Lender
then:

(i) all or any part of such LC Exposure shall be reallocated among the
non-Defaulting Lenders in accordance with their respective Applicable
Percentages but only to the extent (x) the sum of all non-Defaulting Lenders’
Revolving Credit Exposures plus such Defaulting Lender’s LC Exposure does not
exceed the total of all non-Defaulting Lenders’ Commitments and (y) the
conditions set forth in Section 4.02 are satisfied at such time; and

(ii) if the reallocation described in clause (i) above cannot, or can only
partially, be effected, the Borrowers shall within one Business Day following
notice by the Administrative Agent cash collateralize such Defaulting Lender’s
LC Exposure (after giving effect to any partial reallocation pursuant to clause
(i) above) in accordance with the procedures set forth in Section 2.06(j) for so
long as such LC Exposure is outstanding;

(iii) if the Borrowers cash collateralize any portion of such Defaulting
Lender’s LC Exposure pursuant to Section 2.21(c), the Borrowers shall not be
required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b)
with respect to such Defaulting Lender’s LC Exposure during the period such
Defaulting Lender’s LC Exposure is cash collateralized;

(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to
Section 2.21(c), then the fees payable to the Lenders pursuant to Section 2.12
shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable
Percentages; or

(v) if any Defaulting Lender’s LC Exposure is neither cash collateralized nor
reallocated pursuant to Section 2.21(c), then, without prejudice to any rights
or remedies of the Issuing Bank or any Lender hereunder, all facility fees that
otherwise would have been payable to such Defaulting Lender (solely with respect
to the portion of such Defaulting Lender’s Commitment that was utilized by such
LC Exposure) and letter of credit fees payable under Section 2.12(b) with
respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing
Bank until such LC Exposure is cash collateralized and/or reallocated; and

 

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(d) so long as any Lender is a Defaulting Lender, the Issuing Bank shall not be
required to issue, amend or increase any Letter of Credit, unless it is
satisfied that the related exposure will be 100% covered by the Commitments of
the non-Defaulting Lenders and/or cash collateral will be provided by the
Borrowers in accordance with Section 2.21(c), and participating interests in any
such newly issued or increased Letter of Credit shall be allocated among
non-Defaulting Lenders in a manner consistent with Section 2.21(c)(i) (and
Defaulting Lenders shall not participate therein).

(e) If (i) a Bankruptcy Event with respect to a Lender Parent shall occur
following the date hereof and for so long as such event shall continue or
(ii) the Issuing Bank has a good faith belief that any Lender has defaulted in
fulfilling its obligations under one or more other agreements in which such
Lender commits to extend credit, the Issuing Bank shall not be required to
issue, amend or increase any Letter of Credit, unless the Issuing Bank shall
have entered into arrangements with a Borrower or such Lender, satisfactory to
the Issuing Bank to defease any risk to it in respect of such Lender hereunder.

(f) In the event that the Administrative Agent, the Borrowers and the Issuing
Bank each agrees that a Defaulting Lender has adequately remedied all matters
that caused such Lender to be a Defaulting Lender, then the LC Exposure of the
Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment
and on such date such Lender shall purchase at par such of the Loans of the
other Lenders as the Administrative Agent shall determine may be necessary in
order for such Lender to hold such Loans in accordance with its Applicable
Percentage.

SECTION 2.22. Extension of Maturity Date.

(a) Requests for Extension. The Parent may, on up to two (2) occasions and by
notice to the Administrative Agent (who shall promptly notify the Lenders) not
less than sixty (60) days prior to the then effective Maturity Date (the
“Extension Date”), request that each Lender extend such Lender’s Maturity Date
for an additional one year from the Maturity Date then in effect hereunder (the
“Existing Termination Date”).

(b) Lender Elections to Extend. Each Lender, acting in its sole and individual
discretion, shall, by notice to the Administrative Agent given not later than
the date that is ten (10) Business Days after receipt of notice from the
Administrative Agent of the Borrower’s request for an extension (the “Notice
Date”) advise the Administrative Agent whether or not such Lender agrees to such
extension (each such Lender that determines to so extend its Maturity Date,
being an “Extending Lender” and each Lender that determines not to so extend its
Maturity Date, being a “Non-Extending Lender”). In the event that a Lender that
does not so advise the Administrative Agent on or before the Notice Date such
Lender shall be deemed to be a Non-Extending Lender. The election of any Lender
to agree to such extension shall not obligate any other Lender to so agree.

 

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(c) Notification by Administrative Agent. The Administrative Agent shall notify
the Parent of each Lender’s determination under this Section no later than the
date fifteen (15) days prior to the Extension Date (or, if such date is not a
Business Day, on the next preceding Business Day).

(d) Additional Commitment Lenders. If (and only if) the Required Lenders have
agreed to extend the Maturity Date then in effect hereunder, the Parent shall
have the right at any time prior to the date 30 days prior to the existing
Maturity Date applicable to any Non-Extending Lender to replace such
Non-Extending Lender with, and add as “Lenders” under this Agreement, one or
more entities that are not Ineligible Institutions with the consent of the
Administrative Agent (such consent not to be unreasonably withheld or denied)
(each, an “Additional Commitment Lender”) in accordance with the provisions
contained in Section 2.09(d), provided that each of such Additional Commitment
Lenders shall have entered into an Assignment and Assumption Agreement pursuant
to which such Additional Commitment Lender shall, effective as of the date of
the Assignment and Assumption, accept a new or incremental Commitment which
results in there being aggregate Commitments in an amount no greater than the
aggregate amount of Commitments before giving effect to assignments contemplated
by this Section 2.22(d).

(e) Minimum Extension Requirement. If (and only if) the Required Lenders have
agreed so to extend the Maturity Date then in effect hereunder as described in
this Section 2.22, then, effective as of such Extension Date, the Maturity Date
of each Extending Lender and each Additional Commitment Lender shall be extended
to the date falling one year after the Existing Termination Date (except that,
if such date is not a Business Day, such date shall be the next preceding
Business Day) and each Additional Commitment Lender shall thereupon become a
“Lender” for all purposes of this Agreement; provided, however, that there shall
be no change in the Maturity Date of any Non-Extending Lender that has not been
replaced by an Additional Commitment Lender (each a “Non-Replaced Lender”).

(f) Conditions to Effectiveness of Extensions. Notwithstanding the foregoing,
the extension of the Maturity Date pursuant to this Section shall not be
effective with respect to any Lender unless:

(i) no Default shall have occurred and be continuing on the date of such
extension and after giving effect thereto;

(ii) the representations and warranties contained in Article V or any other
Credit Document are true and correct on and as of the date of such extension and
after giving effect thereto, as though made on and as of such date, except to
the extent any such representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall have been true
and correct on and as of such earlier date;

(iii) since the date of the financial statements most recently delivered
pursuant to Section 5.01(a) or (c), no event, circumstance or development shall
have occurred that has had or could reasonably be expected to have a Material
Adverse Effect;

 

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(iv) the Parent shall have delivered to the Administrative Agent a certificate
dated the Effective Date in form satisfactory to the Administrative Agent as to
the satisfaction of the conditions set forth in clauses (i) – (iii) above and
other relevant documentation, including legal opinions, reasonably requested by
the Administrative Agent; and

(v) on the Maturity Date of each Non-Replaced Lender, the Borrowers shall prepay
any Loans outstanding on such date (and pay any additional amounts required
pursuant to Section 2.16) to the extent necessary to repay, nonratably, the
Loans of such Non-Replaced Lenders and the Commitment of such Non-Replaced
Lenders shall be terminated. The Applicable Percentages of the remaining Lenders
shall be revised accordingly as of such date.

(g) Conflicting Provisions. This Section shall supersede any provisions in
Section 2.18 or 9.02 to the contrary.

ARTICLE III

Representations and Warranties

Each of the Borrowers represents and warrants to the Administrative Agent and
the Lenders that:

SECTION 3.01. Organization; Powers. Each of the Parent and its Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power and authority to
carry on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.

SECTION 3.02. Authorization; Enforceability. The Transactions are within the
Borrowers’ corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder action. This Agreement has been duly
executed and delivered by the Borrowers and constitutes a legal, valid and
binding obligation of the Borrowers, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.

SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority, except such as have been obtained or made
and are in full force and effect, (b) will not violate any applicable law or
regulation or the charter, by-laws, memorandum or articles of association or
other organizational documents of the Parent or any of its Subsidiaries or any
order of any Governmental Authority applicable to the Parent or any of its
Subsidiaries and (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon the Parent or any of its
Subsidiaries or its assets, or give rise to a right thereunder to require any
payment to be made by the Parent or any of its Subsidiaries, but only to the
extent that such violation or default could reasonably be expected to result in
a Material Adverse Effect.

 

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SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The Borrowers
have heretofore furnished to the Lenders the consolidated balance sheet and
statements of income, stockholders equity and cash flows (including
consolidating statements and schedules) of the Parent as of and for the fiscal
years ended December 31, 2012 and December 31, 2013, reported on without
qualification by Ernst & Young LLP, independent public accountants. Such
financial statements present fairly, in all material respects, the financial
position and results of operations and cash flows of the Parent and its
consolidated Subsidiaries as of such dates and for such periods in accordance
with GAAP.

(b) Since December 31, 2013, there has been no material adverse change in the
business, assets, operations, prospects or financial condition of the Parent and
its Subsidiaries, taken as a whole.

SECTION 3.05. Properties. (a) The Parent and its Subsidiaries have good title
to, or valid leasehold interests in, all their real and personal property
material to their business, taken as a whole, except for minor defects in title
that do not interfere with their ability to conduct their business as currently
conducted or to utilize such properties for their intended purposes.

(b) Each of the Parent and its Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and, to the knowledge of the Borrowers, the use
thereof by the Parent and its Subsidiaries does not infringe upon the rights of
any other Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

SECTION 3.06. Litigation. There are no actions, suits or proceedings by or
before any arbitrator or Governmental Authority pending against or, to the
knowledge of the Borrowers, threatened against or affecting the Parent or any of
its Subsidiaries (i) that could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or (ii) that involve this
Agreement or the Transactions.

SECTION 3.07. Compliance with Laws and Agreements. Each of the Parent and its
Subsidiaries is in compliance with: (i) the charter, by-laws, memorandum or
articles of association or other organizational documents applicable to it and
(ii) all laws, regulations and orders of any Governmental Authority applicable
to it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

SECTION 3.08. Investment Company Status. Neither the Parent nor any of its
Subsidiaries is an “investment company” as defined in, or subject to regulation
under, the Investment Company Act of 1940.

 

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SECTION 3.09. Taxes. Each of the Parent and its Subsidiaries has timely filed or
caused to be filed all Tax returns and reports required to have been filed and
has paid or caused to be paid all Taxes required to have been paid by it, except
(a) Taxes that are being contested in good faith by appropriate proceedings and
for which the Parent or such Subsidiary, as applicable, has set aside on its
books adequate reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.

SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $10,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $10,000,000 the fair
market value of the assets of all such underfunded Plans.

SECTION 3.11. Insurance Licenses. As of the Effective Date, (i) Schedule 3.11
attached hereto lists all of the jurisdictions in which any Significant
Insurance Subsidiary holds active Licenses and is authorized to transact
insurance business, (ii) no such License is the subject of a proceeding for
suspension or revocation, there is no sustainable basis for such suspension or
revocation, and to any Borrower’s knowledge, no such suspension or revocation
has been threatened by any Governmental Authority, except as could not
reasonably be expected to result in a Material Adverse Effect, (iii) Schedule
3.11 also indicates the type or types of insurance in which each such Insurance
Subsidiary is permitted to engage with respect to each License therein listed,
and (iv) none of the Significant Insurance Subsidiaries transacts any insurance
business, directly or indirectly, in any state other than those enumerated in
Schedule 3.11.

SECTION 3.12. Subsidiaries. As of the Effective Date, the Parent has no
Subsidiaries other than those Subsidiaries listed on Schedule 3.12. Schedule
3.12 correctly sets forth, as of the Effective Date, (i) the percentage
ownership (direct or indirect) of the Parent in the Equity Interests of its
Subsidiaries and also identifies the direct owner thereof, (ii) the jurisdiction
of organization of each such Subsidiary and (iii) with respect to each such
Subsidiary, whether such Subsidiary is a Significant Subsidiary or Significant
Insurance Subsidiary; provided that the identification of Significant
Subsidiaries on Schedule 3.12 may be provided within thirty (30) days after the
Effective Date. Notwithstanding anything in Section 9.02 to the contrary,
Schedule 3.12 shall be amended to reflect such Significant Subsidiaries upon
identification thereof as contemplated thereby.

SECTION 3.13. Material Agreements. Neither the Parent nor any Subsidiary is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement to which it is a party, which
default could reasonably be expected to have a Material Adverse Effect.

 

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SECTION 3.14. Disclosure. Each of the Borrowers has disclosed to 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. None of the reports, financial statements, certificates
or other information furnished by or on behalf of the Borrowers to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or delivered hereunder taken as a whole (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, the Borrowers
represent only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time (it being understood that
projected financial information is as to future events and is not to be viewed
as fact and that actual results during the period or periods covered by any such
information may differ significantly from the projected results and such
differences may be material).

SECTION 3.15. Solvency. The Parent and its Subsidiaries are, on a consolidated
basis, Solvent.

SECTION 3.16. Foreign Pension Plan. Except as, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect,
(i) each Foreign Pension Plan has been maintained in compliance with its terms
and in compliance with the requirements of any and all applicable laws,
statutes, rules, regulations and orders (including all funding requirements and
the respective requirements of the governing documents for each such Foreign
Pension Plan) and has been maintained, where required, in good standing with
applicable regulatory authorities, (ii) all contributions required to be made
with respect to a Foreign Pension Plan have been timely made, (iii) no actions
or proceedings have been taken or instituted to terminate or wind up a Foreign
Pension Plan, and (iv) neither any Borrower nor any Subsidiary has incurred any
obligation in connection with the termination of or withdrawal from any Foreign
Pension Plan. The present value of the accrued benefit liabilities (whether or
not vested) under each Foreign Pension Plan, determined as of the end of the
Parent’s most recently ended fiscal year on the basis of actuarial assumptions,
each of which is reasonable, did not exceed by more than $10,000,000 the current
value of the assets of such Foreign Pension Plan allocable to such benefit
liabilities.

SECTION 3.17. Anti-Corruption Laws and Sanctions. The Borrowers have implemented
and maintain in effect policies and procedures reasonably designed to ensure
compliance in all material respects by the Borrowers, their Subsidiaries and
their respective directors, officers, employees and agents with Anti-Corruption
Laws and applicable Sanctions, and the Borrowers, their Subsidiaries and their
respective officers and employees and to the knowledge of the Borrowers its
directors and agents (under the control of any Borrower or Subsidiary), are in
compliance with Anti-Corruption Laws and applicable Sanctions in all material
respects. None of (a) the Borrowers, any Subsidiary or to the knowledge of the
Borrowers or such Subsidiary any of their respective directors, officers or
employees, or (b) to the knowledge of the Borrowers, any agent (under the
control of any Borrower or Subsidiary) of the Borrowers or any Subsidiary that
will act in any capacity in connection with or benefit from the credit facility
established hereby, is a Sanctioned Person. No Borrowing or Letter of Credit,
use of proceeds or other transaction contemplated by the Credit Agreement will
violate Anti-Corruption Laws or applicable Sanctions.

 

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ARTICLE IV

Conditions

SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans and
participate in Letters of Credit and of the Issuing Bank to issue Letters of
Credit hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):

(a) The Administrative Agent (or its counsel) shall have received from each
party hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent (which
may include telecopy transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement.

(b) The Administrative Agent shall have received a favorable written opinion
(addressed to the Administrative Agent and the Lenders and dated the Effective
Date) of (i) Willkie Farr & Gallagher LLP, US counsel for the Borrowers,
(ii) Conyers Dill & Pearman, Bermuda counsel for the Borrowers, (iii) Willkie
Farr & Gallagher (UK) LLP, UK counsel for the Borrowers and (iv) in house
counsel to Argo US, in form and substance reasonably satisfactory to the
Administrative Agent and covering such other matters relating to the Borrowers,
this Agreement or the Transactions as the Administrative Agent shall reasonably
request. The Borrowers hereby request such counsel to deliver such opinion.

(c) The Administrative Agent shall have received such documents and certificates
as the Administrative Agent or its counsel may reasonably request relating to
the organization, existence and good standing of the Borrowers, the
authorization of the Transactions and any other legal matters relating to the
Borrowers, this Agreement or the Transactions, all in form and substance
reasonably satisfactory to the Administrative Agent and its counsel.

(d) The Administrative Agent shall have received a certificate relating to the
solvency of each of the Borrowers in form and substance reasonably satisfactory
to the Administrative Agent.

(e) The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by the President, a Vice President or a Financial
Officer of the Parent, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02, stating (i) the Argo US Rating and
(ii) the Subsidiary Rating of each Insurance Subsidiary of Argo US.

(f) All obligations of the Borrowers under their Credit Agreement dated
April 30, 2010 with JPMCB as administrative agent and the lenders party thereto
(other than any obligations in respect of outstanding letters of credit
thereunder which are continued under this Agreement) shall have been or shall
substantially contemporaneously be repaid in full and all commitments to extend
credit pursuant to such agreement shall be terminated.

 

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(g) The Lenders shall have received audited (without qualification) consolidated
financial statements of Argo Group International Holdings, Ltd. for the fiscal
years ended December 31, 2012 and December 31, 2013.

(h) The Administrative Agent shall have received all fees and other amounts due
and payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out of pocket expenses required to be
reimbursed or paid by the Borrowers hereunder.

The Administrative Agent shall notify the Borrower Representative and the
Lenders of the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 3:00 p.m., Chicago time, on March 15,
2014 (and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).

SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or
extend any Letter of Credit, is subject to the satisfaction of the following
conditions:

(a) The representations and warranties of the Borrowers set forth in this
Agreement shall be true and correct in all material respects (except that any
representation or warranty which is already qualified as to materiality or by
reference to Material Adverse Effect shall be true and correct in all respects)
on and as of the date of such Borrowing or the date of issuance, amendment,
renewal or extension of such Letter of Credit, as applicable, except to the
extent such representations and warranties expressly relate to an earlier date
(in which case such representations and warranties shall be true and correct in
all material respects (except that any representation or warranty which is
already qualified as to materiality or by reference to Material Adverse Effect
shall be true and correct in all respects) as of such earlier date).

(b) At the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.

(c) If a Secured Letter of Credit is being requested, (i) the Borrowers shall
have executed a Security Agreement and Control Agreement and the Administrative
Agent shall have received such resolutions, certificates and opinions with
respect thereto as the Administrative Agent may reasonably request and (ii) the
Borrowers shall have cash collateralized such Letter of Credit as set forth in,
and to the extent required by, Section 2.06(l).

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrowers on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.

 

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ARTICLE V

Affirmative Covenants

Until the Commitments have expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated (or, in the case
of any Letter of Credit extending past the Maturity Date, been cash
collateralized in accordance with Section 2.06(j)) and all LC Disbursements
shall have been reimbursed, each of the Borrowers covenants and agrees with the
Lenders that:

SECTION 5.01. Financial Statements; Ratings Change and Other Information. The
Borrowers will furnish to the Administrative Agent for distribution to each
Lender:

(a) within 90 days after the end of each fiscal year of the Parent, audited
consolidated balance sheet and related statements of operations, stockholders’
equity and cash flows as of the end of and for such year (including unaudited
consolidated balance sheet and income statement schedules, as customarily
prepared by the Parent, for the Parent and its consolidated subsidiaries). The
consolidated financial statements will set forth in each case in comparative
form the figures for the previous fiscal year as available, all reported on by
Ernst & Young LLP or other independent public accountants of recognized national
standing (without a “going concern” or like qualification or exception and
without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the
Parent and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;

(b) with respect to Argonaut Insurance Company, Colony Insurance Company,
Rockwood Casualty Insurance Company, Argo Re, Ltd, Syndicate 1200 and other
Significant Insurance Subsidiaries created subsequent to the Closing Date, as
soon as available, and in any event (i) within 15 days after the date required
to be filed, a copy of each such entity’s statutory Annual Statement for such
year ended December 31, as filed with the insurance department (or other
equivalent insurance regulatory authority) of the state or other jurisdiction of
domicile of such entity, and (ii) within 15 days after the date required to be
filed, a copy of each such entity’s audited or unaudited, as the case may be,
financial statements for such year ended December 31, as filed with the
insurance department (or other equivalent insurance regulatory authority) of the
state or other jurisdiction of domicile of such entity. The financial statements
referred to in this Section 5.01(b)(ii) shall fairly present in all material
respects the statutory financial position of each such entity as of the dates
therein specified and the statutory results of operations and cash flow of each
such entity for the periods therein specified, and shall be prepared in
conformity with SAP (or an equivalent standard in the applicable jurisdiction).
The financial statements referred to in sub-clause (ii) of this Section 5.01(b)
shall, if required, be accompanied by an audit report thereon of Ernst & Young
LLP or such other firm of independent auditors of recognized national standing
selected by the Parent that is reasonably satisfactory to the Administrative
Agent to the effect that such financial statements present fairly, in all
material respects, the financial position of each such entity as of the end of
the fiscal year being reported on in conformity with SAP and that the
examination of such auditors in connection with such financial statements has
been conducted in accordance with generally accepted auditing standards and
included such tests of the accounting records and such other auditing procedures
as said auditors deemed necessary in the circumstances.

 

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(c) within 60 days after the end of each of the first three fiscal quarters of
each fiscal year of the Parent, unaudited consolidated balance sheet and related
statements of operations, stockholders’ equity and cash flows as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year
(including unaudited consolidated balance sheet and income statement schedules,
as customarily prepared by the Parent, for the Parent and its consolidated
subsidiaries). The consolidated financial statements will set forth in each case
in comparative form the figures for the corresponding period or periods of (or,
in the case of the balance sheet, as of the end of) the previous fiscal year as
available, all certified by a Financial Officer of either the Parent or the
Borrower Representative as presenting fairly in all material respects the
financial condition and results of operations of the Parent and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;

(d) concurrently with any delivery of financial statements under clause (a) or
(c) above, a certificate of a Financial Officer of either the Parent or the
Borrower Representative (i) certifying as to whether a Default has occurred and,
if a Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Sections 6.09 and 6.10,
(iii) stating whether any change in GAAP or in the application thereof has
occurred since the date of the audited financial statements referred to in
Section 3.04 and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate and (iv) solely
with respect to certificates delivered with Section 5.01(a) deliveries, updated
versions of Schedules 3.11 and 3.12 providing current lists of the information
required thereby;

(e) promptly after the same become publicly available, copies of all 10-K, 10-Q
and 8-K reports (or successor forms thereof) and other material reports, proxy
statements and other materials filed by any Borrower or a Subsidiary with the
SEC or with any national securities exchange, as the case may be, in any event
other than routine reports which are required to be provided to any of the
above-listed entities concerning the management of employee benefit plans,
including, without limitation, stock purchases or the exercise of stock options
made under any such employee benefit plan;

(f) promptly after S&P or any other nationally recognized rating agency shall
have announced a change in Rating, written notice of such rating change;

(g) promptly after A.M. Best, S&P or any other nationally recognized rating
agency shall have announced a change in its financial strength rating of an
Insurance Subsidiary or any Affiliate thereof, or shall have first assigned a
rating thereto, written notice of such changed or initial rating;

(h) promptly after the creation of any Significant Subsidiary or of any Person
becoming a Significant Subsidiary, notice of such creation or occurrence; and

 

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(i) promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of the Parent or any
Subsidiary, or compliance with the terms of this Agreement, as the
Administrative Agent or any Lender may reasonably request, including any
actuarial reports prepared regarding any Insurance Subsidiary, provided, that
the delivery of any actuarial reports shall be subject to the consent of the
applicable independent actuarial consulting firm (if then required).

Information required to be delivered pursuant to the foregoing Section 5.01(a),
(c) and (e) shall be deemed to have been delivered on the date on which the
Borrowers deliver copies of such information to the Administrative Agent on
behalf of the Lenders or on the date on which the Borrowers provide notice
(including notice by electronic transmission) to the Administrative Agent that
such information has been posted on the SEC website on the Internet at
sec.gov/edgar/searches.htm or at another website identified in such notice and
accessible by the Lenders without charge.

SECTION 5.02. Notices of Material Events. The Borrowers will furnish to the
Administrative Agent for distribution to each Lender as soon as possible but in
any event within five (5) Business Days after any officer of a Borrower becomes
aware thereof, written notice of the following:

(a) the occurrence of any Default;

(b) the filing or commencement of any action, suit or proceeding by or before
any arbitrator or Governmental Authority against or affecting any Borrower or
any Affiliate thereof that could reasonably be expected to result in a Material
Adverse Effect;

(c) the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in
liability of the Parent and its Subsidiaries in an aggregate amount exceeding
$10,000,000;

(d) the receipt by the Parent or any Subsidiary of any notice from any
Governmental Authority, trustee or actuary in relation to any non-compliance
with any laws, regulations and rules applicable to any Foreign Pension Plan,
including funding requirements and the respective requirements of the governing
documents for such Foreign Pension Plan, which could reasonably be expected to
result in liability of the Parent and its Subsidiaries in an aggregate amount
which, either alone or with any other such events which have occurred, exceeds
$10,000,000;

(e) (i) the receipt by any Borrower or any Insurance Subsidiary of any notice
from any Governmental Authority of the expiration without renewal, revocation or
suspension of, or the institution of any proceedings to revoke or suspend, any
License now or hereafter held by any Insurance Subsidiary which is required to
conduct insurance business in compliance with all applicable laws and
regulations, other than such expiration, revocation or suspension which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, (ii) the receipt of any notice from any Governmental
Authority of the institution of any disciplinary proceedings against or in
respect of any Insurance Subsidiary, or the issuance of any order, the taking of
any action or any request for an extraordinary audit for cause by any
Governmental Authority which, if adversely determined, could reasonably be
expected to have a

 

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Material Adverse Effect or (iii) any judicial or administrative order limiting
or controlling the insurance business of any Insurance Subsidiary (and not the
insurance industry generally) which has been issued or adopted and which could
reasonably be expected to have a Material Adverse Effect; and

(f) any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of either the Parent or the
Borrower Representative setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.

SECTION 5.03. Existence; Conduct of Business. The Borrowers will, and will cause
each Subsidiary to, do or cause to be done all things necessary to preserve,
renew and keep in full force and effect (i) its legal existence and (ii) the
rights, licenses, permits, privileges and franchises (including without
limitation, certificates of authority and other required insurance licenses)
material to the conduct of the business of the Borrowers and their Subsidiaries,
taken as a whole, except, in the case of clause (ii), where failure to do so,
individually or in the aggregate, could not be expected to result in a Material
Adverse Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.03.

SECTION 5.04. Payment of Obligations. The Borrowers will, and will cause each
Subsidiary to, pay its obligations, including Tax liabilities, that, if not
paid, could result in a Material Adverse Effect before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) such Borrower or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.05. Maintenance of Properties; Insurance. The Borrowers will, and will
cause each Subsidiary to, (a) keep and maintain all property material to the
conduct of the business of the Borrowers and their Subsidiaries taken as a whole
in good working order and condition, ordinary wear and tear excepted, and
(b) maintain, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as are customarily maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations.

SECTION 5.06. Books and Records; Inspection Rights. The Borrowers will, and will
cause each Subsidiary to, keep proper books of record and account in which full,
true and correct entries are made of all dealings and transactions in relation
to its business and activities. The Borrowers will, and will cause each
Subsidiary to, permit any representatives designated by the Administrative Agent
or any Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.

 

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SECTION 5.07. Compliance with Laws. The Borrowers will, and will cause each
Subsidiary to, comply with all applicable laws, rules, regulations and orders of
any Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. The Borrowers will maintain in
effect and enforce policies and procedures reasonably designed to ensure
compliance in all material respects by the Borrowers, their Subsidiaries and
their respective directors, officers, employees and agents under their control
with Anti-Corruption Laws and applicable Sanctions.

SECTION 5.08. Use of Proceeds and Letters of Credit. The proceeds of the Loans
will be used only for general corporate purposes, including working capital and
acquisitions permitted hereby. No part of the proceeds of any Loan will be used,
whether directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Board, including Regulations T, U and X. Letters of
Credit shall be used solely to support the ordinary course obligations of the
Parent and its Subsidiaries. Notwithstanding anything herein to the contrary, no
Letter of Credit hereunder shall be issued to support the capital requirements
at Lloyd’s of London, otherwise known as “Funds at Lloyd’s”. The Borrowers will
not request any Borrowing or Letter of Credit, and the Borrowers shall not use,
and shall procure that their Subsidiaries and its or their respective directors,
officers, employees and agents shall not use, the proceeds of any Borrowing or
Letter of Credit (A) in furtherance of an offer, payment, promise to pay, or
authorization of the payment or giving of money, or anything else of value, to
any Person in violation of any Anti-Corruption Laws, (B) for the purpose of
funding, financing or facilitating any activities, business or transaction of or
with any Sanctioned Person, or in any Sanctioned Country, or (C) in any manner
that would result in the violation of any Sanctions applicable to any party
hereto.

ARTICLE VI

Negative Covenants

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated (or, in the case of any Letter
of Credit extending past the Maturity Date, been cash collateralized in
accordance with Section 2.06(j)) and all LC Disbursements shall have been
reimbursed, each of the Borrowers covenants and agrees with the Lenders that:

SECTION 6.01. Indebtedness. The Borrowers will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:

(a) Indebtedness created hereunder;

(b) Indebtedness and commitments to provide Indebtedness existing on the date
hereof and set forth on Schedule 6.01 (and any guaranties by the Borrowers
thereof) and extensions, renewals and replacements of any such Indebtedness that
do not increase the outstanding principal amount thereof;

 

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(c) Indebtedness of any Borrower to any Subsidiary and of any Subsidiary to any
Borrower or any other Subsidiary;

(d) Guarantees, including Net Worth Maintenance agreements or similar capital
support or credit enhancement agreements, by the Parent or any Subsidiary of the
obligations of the Parent or any Wholly-Owned Subsidiary of the Parent;
provided, however, that (i) this clause (d) shall not permit any Guarantee by a
Subsidiary which is not a Borrower of the obligations of a Borrower unless such
Subsidiary has also guaranteed the Obligations pursuant to a guarantee in form
and substance reasonably satisfactory to the Administrative Agent), (ii) no
Subsidiary other than a Borrower shall Guarantee the Indebtedness of any Special
Purpose Entity and (iii) any Guarantee by a Borrower of the Indebtedness of a
Special Purpose Entity shall rank pari passu with, or be subordinated to, the
Obligations;

(e) Indebtedness in respect of Trust Preferred Securities or other instruments
of the same or a similar character issued by a trust or other special purpose
entity formed by a Borrower as to which no Subsidiary (other than a Borrower,
such trust or other special purpose entity) has any obligation, together with
all guaranty obligations owing by a Borrower in respect thereof and constituting
Subordinated Indebtedness;

(f) Indebtedness assumed in connection with any Acquisition, provided that such
Indebtedness is not incurred in contemplation of such Acquisition and no other
Subsidiary (other than the Subsidiary being acquired, if applicable) has any
liability or obligations in respect of such Indebtedness;

(g) Indebtedness in respect of (i) collateralized letters of credit in the
ordinary course of business of insurance or reinsurance operations or (ii) fully
collateralized letters of credit which are to support the capital requirements
applicable to the Borrowers or any Subsidiary at Lloyd’s of London;

(h) Indebtedness in respect of letters of credit in the ordinary course of
business in an outstanding undrawn face amount and/or unreimbursed drawn amount
not to exceed $10,000,000 in the aggregate at any time;

(i) Indebtedness incurred by the Borrowers and Special Purpose Entities in
addition to the foregoing to the extent that after giving effect thereto the
Borrowers are in compliance with Section 6.09; and

Indebtedness incurred by the Subsidiaries of the Borrowers (which Subsidiaries
are not themselves Borrowers), provided that the aggregate outstanding principal
amount of Indebtedness permitted by this clause shall not at any time exceed
$25,000,000.

For purposes of determining compliance with this Section 6.01, the Borrowers
will be entitled to divide an item of Indebtedness that meets the criteria of
one of the categories of Indebtedness described in clauses (a) through (j) above
between such applicable clause and any other clause of this Section 6.01 the
criteria of which such item of Indebtedness also meets.

 

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SECTION 6.02. Liens. The Borrowers will not, and will not permit any Subsidiary
to, create, incur, assume or permit to exist any Lien on any property or asset
now owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:

(a) Permitted Encumbrances;

(b) Liens which (x) do not secure Indebtedness and (y) are incurred in the
ordinary course of business, including Liens granted in connection with any Swap
Agreement or investments, trades, facilities or other arrangements with any
counterparty, securities or other broker/dealer or clearing exchange; provided
that the aggregate amount of all obligations secured pursuant to this clause
(b) shall at no time exceed $100,000,000; and

Liens on cash or debt securities and other investments pursuant to
Section 6.04(a) securing (i) Indebtedness permitted pursuant to Section 6.01(g)
or (ii) obligations under or in respect of any Primary Policy, Reinsurance
Agreement, Industry Loss Warranty and/or collateralized trusts, withheld
balances or other collateral or security arrangements in the ordinary course of
reinsurance or insurance business.

For purposes of determining compliance with this Section 6.02, the Borrowers
will be entitled to divide an item of Liens that meets the criteria of one of
the categories of Liens described in clauses (a) and (b) above between or among
such applicable clause and any other clause of this Section 6.02 the criteria of
which such item of Liens also meets.

SECTION 6.03. Fundamental Changes. (a) The Borrowers will not, and will not
permit any Subsidiary to, merge into or consolidate with any other Person, or
permit any other Person to merge into or consolidate with it, or liquidate or
dissolve, except that, if at the time thereof and immediately after giving
effect thereto no Default shall have occurred and be continuing (i) any
Subsidiary may merge into a Borrower in a transaction in which such Borrower is
the surviving corporation, (ii) any Subsidiary (other than a Borrower) may merge
into any Subsidiary in a transaction in which the surviving entity is a
Subsidiary, (iii) a Person may be merged into a Borrower or any Subsidiary
pursuant to a Permitted Acquisition, and (iv) any Subsidiary (other than a
Borrower) may liquidate or dissolve if the Borrowers determine in good faith
that such liquidation or dissolution is in the best interests of the Borrowers
and is not materially disadvantageous to the Lenders; provided that any such
merger involving a Person that is not a wholly owned Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by
Section 6.04.

The Borrowers will not, nor will they permit any Subsidiary to, make any Asset
Disposition except for (i) Asset Dispositions expressly permitted by Sections
6.04, 6.06 or 6.07 and (ii) other Asset Dispositions of property that, together
with all other property of the Borrowers and the Subsidiaries previously leased,
sold or disposed of in Asset Dispositions made pursuant to Section 6.03(b)
during the twelve-month period ending with the month in which any such lease,
sale or other disposition occurs, do not constitute a Substantial Portion of the
property of the Parent and its Subsidiaries; provided that under no
circumstances shall the Equity Interests in a Borrower be included in a
permitted Asset Disposition.

(b) The Borrowers will not, and will not permit any Subsidiary to, engage to any
material extent in any business other than businesses of the type conducted by
the Parent and its Subsidiaries on the date of execution of this Agreement and
businesses complementary, reasonably related or incidental thereto.

 

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SECTION 6.04. Investments and Acquisitions. The Borrowers will not, and will not
permit any Subsidiary to, purchase, hold or acquire (including pursuant to any
merger with any Person that was not a Wholly-Owned Subsidiary prior to such
merger) any capital stock or other equity securities (including any option,
warrant or other right to acquire any of the foregoing) of any other Person, or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person constituting a business unit, except:

(a) investments complying with the terms of the Argo Investment Policy;

(b) subject to the provisions of this Section 6.04 and, as applicable, the
requirements contained in the definition of Permitted Acquisition, the Parent
and its Wholly-Owned Subsidiaries may from time to time (i) effect Permitted
Acquisitions for aggregate consideration (including Equity Interests and the
assumption of Indebtedness) such that the Borrowers remain in compliance with
the financial covenants set forth in Sections 6.09 and 6.10 and (ii) make
investments in joint ventures; provided that (A) no Default is existing either
at the time of the consummation of such proposed investment and immediately
after giving effect thereto; (B) with respect to any such proposed investment
for aggregate consideration (including Equity Interests and the assumption of
Indebtedness) exceeding $50,000,000, (1) the Rating shall be at least BBB - both
immediately before the consummation of such proposed investment and immediately
after giving effect thereto (and after giving effect to any adjustment of the
Rating associated with the consummation of such proposed investment) and (2) the
Administrative Agent shall have received written notice of any such proposed
investment and information materials related thereto in form and substance
reasonably satisfactory to it from the Borrower Representative not less than 7
days prior to the consummation of such investment and (C) the aggregate amount
invested in joint ventures pursuant to this Section 6.04(b) (valued at initial
cost less capital distributions) shall not exceed $50,000,000;

(c) investments of any Person in existence at the time such Person becomes a
Subsidiary pursuant to a Permitted Acquisition; provided that such investment
was not made in connection with or in anticipation of such Person becoming a
Subsidiary; and

(d) investments by the Parent or any Subsidiary in the capital stock of a
Subsidiary.

SECTION 6.05. Swap Agreements. The Borrowers will not, and will not permit any
Subsidiary to, enter into any Swap Agreement, except (a) non-speculative Swap
Agreements entered into to hedge or mitigate risks to which a Borrower or any
Subsidiary has (or reasonably expects to have) actual exposure (other than those
in respect of Equity Interests of a Borrower or any of its Subsidiaries),
(b) non-speculative Swap Agreements entered into in order to effectively cap,
collar or exchange interest rates (from fixed to floating rates, from one
floating rate to another floating rate or otherwise) with respect to any
interest-bearing liability or investment of a Borrower or any Subsidiary and
(c) Swap Agreements entered into in connection with any Restricted Payments
permitted to be made under Section 6.06(a)(ii).

 

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SECTION 6.06. Restricted Payments. The Borrowers will not, and will not permit
any Subsidiary to, declare, pay or make, or agree to declare, pay or make,
directly or indirectly, any Restricted Payment, except:

(a) (i) the Parent may declare and pay publicly announced and regularly
scheduled dividends on its issued and outstanding common stock that is traded
publicly on a national securities exchange, and (ii) the Parent or any
Subsidiary may make stock repurchases and other Restricted Payments, in each
case of or relating to the Equity Interests of the Parent, after the Effective
Date; provided, however that no Restricted Payment shall be permitted to be
declared, and no Restricted Payment (other than dividends declared in compliance
herewith) shall be permitted to be paid, under this clause (a) if any Default is
existing either at the time of the proposed Restricted Payment or immediately
after giving effect thereto;

(b) the Parent may pay dividends payable solely in its common stock;

(c) any Subsidiary may declare and pay or make Restricted Payments to any of the
Borrowers or to a Wholly-Owned Subsidiary provided, however, that Argo US shall
not make any Restricted Payment pursuant to this clause (c) upon the occurrence
and during the continuance of a Default or if a Default would result therefrom;
and

(d) the Parent or any Subsidiary may make Restricted Payments in respect of
Trust Preferred Securities or other instruments described in Section 6.01(e) so
long as no Default is existing either at the time of the proposed Restricted
Payment or immediately thereafter.

SECTION 6.07. Transactions with Affiliates. The Borrowers will not, and will not
permit any Subsidiary to, sell, lease or otherwise transfer any property or
assets to, or purchase, lease or otherwise acquire any property or assets from,
or otherwise engage in any other transactions with, any of its Affiliates,
except (a) in the ordinary course of business at prices and on terms and
conditions not less favorable to such Borrower or such Subsidiary than could be
obtained on an arm’s-length basis from unrelated third parties, (b) transactions
between or among the Parent and its Wholly Owned Subsidiaries not involving any
other Affiliate, (c) any Restricted Payment permitted by Section 6.06 and (d) as
permitted by Section 6.01(d) or Section 6.04.

SECTION 6.08. Restrictive Agreements. The Borrowers will not, and will not
permit any Subsidiary to, directly or indirectly, enter into, incur or permit to
exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (a) the ability of the Borrowers or any Subsidiary to create,
incur or permit to exist any Lien upon any of its property or assets to secure
the obligations of the Borrowers hereunder or under any guaranty thereof, or
(b) the ability of any Subsidiary to pay dividends or other distributions with
respect to its Equity Interests or to make or repay loans or advances to the
Borrowers or any other Subsidiary or to Guarantee Indebtedness of the Borrowers
or any other Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement, (ii) the
foregoing shall not apply to restrictions and conditions existing on the date
hereof identified on Schedule 6.08 (but shall apply to any extension or renewal
of, or any amendment or modification expanding the scope of, any such
restriction or condition) or to restrictions and conditions similar to those set
forth in the Trust Preferred Securities upon the ability of special purpose
trust

 

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Subsidiaries and other entities to pay dividends or make distributions related
to Indebtedness of the same or similar character as the Trust Preferred
Securities, (iii) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary or
assets pending such sale, provided that such restrictions and conditions apply
only to the Subsidiary or assets to be sold and such sale is permitted
hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or
conditions imposed by any agreement relating to secured Indebtedness permitted
by this Agreement if such restrictions or conditions apply only to the property
or assets securing such Indebtedness and (v) clause (a) of the foregoing shall
not apply to customary provisions in leases and other contracts restricting the
assignment thereof.

SECTION 6.09. Maximum Leverage Ratio. The Borrowers will not permit the Leverage
Ratio to exceed .35 to 1.00 at any time.

SECTION 6.10. Tangible Net Worth. The Parent will not permit at any time its
Tangible Net Worth to be less than the sum of (i) $838,300,000 plus (ii) 50% of
the positive Net Income of the Parent and its subsidiaries for each fiscal
quarter ending after September 30, 2013 plus (iii) 50% of the net proceeds
received by the Parent and its Subsidiaries from the issuance and sale of Equity
Interests of the Parent or any Subsidiary (other than the issuance to the Parent
or a Wholly-Owned Subsidiary), including any conversion of debt securities of
the Parent or any Subsidiary into Equity Interests after September 30, 2013.

SECTION 6.11. Sale and Leaseback Transactions. Except for Sale and Leaseback
Transactions entered into in the ordinary course of business with respect to
real property owned by the Borrowers on the Effective Date or acquired
thereafter pursuant to a Permitted Acquisition or with respect to any personal
property, the Borrowers will not, and will not permit any Subsidiary to, enter
into or suffer to exist any Sale and Leaseback Transaction.

SECTION 6.12. Rating. All Significant Insurance Subsidiaries of Argo US will at
all times maintain an AM Best Financial Strength Rating of at least B++.

ARTICLE VII

Events of Default

If any of the following events (“Events of Default”) shall occur:

(a) any of the Borrowers shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement or any cash
collateral amount due pursuant to Section 2.06(j) when and as the same shall
become due and payable (including under Section 2.20 hereof), whether at the due
date thereof or at a date fixed for prepayment thereof or otherwise;

(b) any of the Borrowers shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
Business Days;

 

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(c) any representation or warranty made or deemed made by or on behalf of the
Borrowers or any Subsidiary in or in connection with this Agreement or any
amendment or modification hereof or waiver hereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with this Agreement or any amendment or modification hereof or waiver
hereunder, shall prove to have been incorrect when made or deemed made;

(d) the Borrowers shall fail to observe or perform any covenant, condition or
agreement contained in Sections 5.02, 5.03 (with respect to any Borrower’s
existence), 5.08 or in Article VI;

(e) the Borrowers shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those specified in clause (a),
(b) or (d) of this Article), and such failure shall continue unremedied for a
period of 30 days after notice thereof from the Administrative Agent to the
Borrower Representative (which notice will be given at the request of any
Lender);

(f) any of the Borrowers or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness (other than the Obligations), when and as the same shall
become due and payable (giving effect to any applicable cure period relating
thereto);

(g) any event or condition occurs that results in any Material Indebtedness or
any Trust Preferred Security Indebtedness becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of notice, the
lapse of time or both) the holder or holders of any Material Indebtedness or
Trust Preferred Security Indebtedness or any trustee or agent on its or their
behalf to cause any Material Indebtedness or Trust Preferred Security
Indebtedness to become due, or to require the prepayment, repurchase, redemption
or defeasance thereof, prior to its scheduled maturity; provided that this
clause (g) shall not apply to secured Indebtedness that becomes due as a result
of the voluntary sale or transfer of the property or assets securing such
Indebtedness;

(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, winding-up, administration,
reorganization or other relief in respect of any of the Borrowers or any
Significant Subsidiary or its debts, or of a substantial part of its assets,
under any Federal, state or foreign bankruptcy, insolvency, administration,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a liquidator, receiver, trustee, custodian, sequestrator, conservator,
administrator, administrative receiver or similar official for any of the
Borrowers or any Significant Subsidiary or for a substantial part of its assets,
and, in any such case, such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the foregoing
shall be entered;

(i) any of the Borrowers or any Significant Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, winding-up,
administration, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of

 

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this Article, (iii) apply for or consent to the appointment of a liquidator,
receiver, trustee, custodian, sequestrator, conservator, administrator or
similar official for any of the Borrowers or any Significant Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;

(j) any Borrower or any Significant Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;

(k) one or more judgments for the payment of money in an aggregate amount in
excess of $20,000,000 shall be rendered against any Borrower, any Significant
Subsidiary or any combination thereof and the same shall remain undischarged for
a period of 45 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of any Borrower or any Significant Subsidiary to enforce
any such judgment;

(l) an ERISA Event or circumstance in respect of any Foreign Pension Plan shall
have occurred that, in the opinion of the Required Lenders, when taken together
with all other ERISA Events and such circumstances that have occurred, could
reasonably be expected to result in a Material Adverse Effect and continues
unremedied for five (5) Business Days;

(m) a Change in Control shall occur;

(n) obligations owing in connection with the Trust Preferred Securities or any
other Subordinated Indebtedness shall at any time and for any reason cease to be
fully subordinated to the Obligations outstanding in connection with the Credit
Documents;

(o) any governmental authority revokes or fails to renew any material license,
permit or franchise of any Borrower or any Significant Insurance Subsidiary, or
any Borrower or any Significant Insurance Subsidiary for any reason loses any
material license, permit or franchise, or any Borrower or any Significant
Insurance Subsidiary suffers the imposition of any restraining order, escrow,
suspension or impound of funds in connection with any proceeding (judicial or
administrative) with respect to any material license, permit or franchise, which
could reasonably be expected to result in losses or liability of the Borrowers
or any of the Significant Insurance Subsidiaries, individually or in the
aggregate, in excess of $10,000,000 and such event shall continue unremedied for
a period of five (5) Business Days;

then, and in every such event (other than an event with respect to any of the
Borrowers described in clause (h) or (i) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower
Representative, take either or both of the following actions, at the same or
different times: (i) terminate the Commitments, and thereupon the Commitments
shall terminate immediately, and (ii) declare the Loans then outstanding to be
due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all fees and other
obligations of the

 

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Borrowers accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrowers; and in case of any event with respect to any of
the Borrowers described in clause (h) or (i) of this Article, the Commitments
shall automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrowers accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrowers.

ARTICLE VIII

The Administrative Agent

Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent 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, together with such actions and
powers as are reasonably incidental thereto.

The bank 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 such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrowers or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.

The Administrative Agent shall not have any duties or obligations except those
expressly set forth herein. Without limiting the generality of the foregoing,
(a) the Administrative Agent shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(b) the Administrative Agent shall not have any duty to take any discretionary
action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated hereby that the Administrative Agent is required
to exercise in writing as directed by the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02), and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrowers or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as 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
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02) or 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 written notice thereof is given to the
Administrative Agent by the Borrower Representative or a Lender, and 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, (ii) the contents of any certificate, report or
other document delivered hereunder or in connection herewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other 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.

 

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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 believed by it to be genuine
and to have been signed or sent 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 be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrowers), 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.

The Administrative Agent may perform any and all its duties and exercise its
rights and powers 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 its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs 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.

Subject to the appointment and acceptance of a successor Administrative Agent as
provided in this paragraph, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Bank and the Borrowers. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Borrowers, to appoint a successor. If no 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 Issuing
Bank, appoint a successor Administrative Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. 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 Administrative Agent’s
resignation hereunder, the provisions of this Article and Section 9.03 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 it was acting as Administrative
Agent.

If the Person serving as Administrative Agent is a Defaulting Lender pursuant to
clause (d) of the definition thereof, the Required Lenders may, to the extent
permitted by applicable law, by notice in writing to the Borrower and such
Person remove such Person as Administrative Agent and, in consultation with the
Borrowers, appoint a successor. If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days (or such earlier day as shall be agreed by the Required Lenders)
(the “Removal Effective Date”), then such removal shall nonetheless become
effective in accordance with such notice on the Removal Effective Date.

 

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Each Lender acknowledges and agrees that the extensions of credit made hereunder
are commercial loans and letters of credit and not investments in a business
enterprise or securities. Each Lender further represents that it is engaged in
making, acquiring or holding commercial loans in the ordinary course of its
business and has, independently and without reliance upon the Administrative
Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement as a Lender, and to make, acquire or hold Loans hereunder. Each Lender
shall, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information (which may contain
material, non-public information within the meaning of the United States
securities laws concerning the Borrowers and their Affiliates) 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 related agreement or
any document furnished hereunder or thereunder and in deciding whether or to the
extent to which it will continue as a lender or assign or otherwise transfer its
rights, interests and obligations hereunder.

The Administrative Agent shall be permitted from time to time to designate one
of its Affiliates to perform the duties to be performed by the Administrative
Agent hereunder with respect to Loans and Borrowings denominated in Foreign
Currencies. The provisions of this Article VIII shall apply to any such
Affiliate mutatis mutandis.

The Lenders identified on the front page of this Agreement as Syndication Agent
or Co-Documentation Agents shall not have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Lenders as such. Without limiting the foregoing, none of such
Lenders shall have or be deemed to have a fiduciary relationship with any
Lender. Each Lender hereby makes the same acknowledgments with respect to such
Lenders as it makes with respect to the Administrative Agent in this
Article VIII.

ARTICLE IX

Miscellaneous

SECTION 9.01. Notices. (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (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 telecopy, as follows:

(i) if to any Borrower, to it c/o Argo Group US, Inc., 10101 Reunion Place,
Suite 500, San Antonio, Texas 78216, Attention of Jay Bullock, (Telecopy No.
(210) 377-2637); with a copy to Lynn Geurin, (email: lgeurin@argogroupus.com)
and Craig Comeaux, (email: ccomeaux@argogroupus.com);

 

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(ii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., 10 S.
Dearborn, 9th Floor, Suite IL1-0364, Chicago, IL 60603, Attention of Danielle
Babine (Telecopy No. (312) 325-3190);

(iii) if to the Administrative Agent for Eurocurrency Loans in Foreign
Currencies, to J.P. Morgan Europe Limited, 125 London Wall, London EC1W 2JD,
Attention of Ching Loh/The Manager, Telecopy No. +44(0) 207 777 2360);

(iv) if to the Issuing Bank, to it at JPMorgan Chase Bank, N.A., 10 S. Dearborn,
9th Floor, Suite IL1-0364, Chicago, IL 60603, Attention of Danielle Babine
(Telecopy No. (312) 325-3190); and

(v) if to any other Lender, to it at its address (or telecopy number) set forth
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 facsimile 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 Systems, to the extent provided
in paragraph (b) below, shall be effective as provided in said paragraph (b).

(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by using Electronic Systems electronic communications pursuant to
procedures approved by the Administrative Agent; provided that the foregoing
shall not apply to notices pursuant to Article II unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Borrower Representative 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), 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; provided that, for both clauses
(i) and (ii) above, if such notice, email 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.

(c) Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

 

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(d) Electronic Systems.

(i) Each Borrower agrees that the Administrative Agent may, but shall not be
obligated to, make Communications (as defined below) available to the Issuing
Banks and the other Lenders by posting the Communications on Debt Domain,
Intralinks, Syndtrak, ClearPar or a substantially similar Electronic System.

(ii) Any Electronic System used by the Administrative Agent is provided “as is”
and “as available.” The Agent Parties (as defined below) do not warrant the
adequacy of such Electronic Systems and expressly disclaim liability for errors
or omissions in the Communications. No warranty of any kind, express, implied or
statutory, including, without limitation, 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 Communications or any Electronic System. In no event shall
the Administrative Agent or any of its Related Parties (collectively, the “Agent
Parties”) have any liability to the Borrowers, any Lender, the Issuing Bank or
any other Person or entity for damages of any kind, including, without
limitation, direct or indirect, special, incidental or consequential damages,
losses or expenses (whether in tort, contract or otherwise) arising out of any
Borrower’s or the Administrative Agent’s transmission of Communications through
an Electronic System. “Communications” means, collectively, any notice, demand,
communication, information, document or other material provided by or on behalf
of any Borrower pursuant to any Credit Document or the transactions contemplated
therein which is distributed by the Administrative Agent, any Lender or any
Issuing Bank by means of electronic communications pursuant to this Section,
including through an Electronic System.

SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the Administrative
Agent, the Issuing Bank or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Issuing Bank and the Lenders hereunder are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by the
Borrowers therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender or the
Issuing Bank may have had notice or knowledge of such Default at the time.

(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrowers and the Required Lenders or by the Borrowers and the
Administrative Agent with the consent of the Required Lenders; provided that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
LC Disbursement or reduce the rate of interest thereon, or reduce any

 

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fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan or LC Disbursement, or any interest thereon, or any fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change any portion of this
Agreement in a manner that would alter the pro rata nature of payments, loans
and Commitment reductions under this Agreement, without the written consent of
each Lender, (v) change any of the provisions of this Section or the definitions
of “Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender, (vi) release any Borrower from any of its joint and
several liabilities in respect of the Obligations without the written consent of
each Lender or (vii) change any provision of Sections 2.06(c), 2.06(j), 2.10(g)
or 2.10(h) without the consent of each Lender adversely affected thereby;
provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent or the Issuing Bank hereunder
without the prior written consent of the Administrative Agent or the Issuing
Bank, as the case may be.

(c) Notwithstanding the foregoing, Schedule 3.11 hereto shall be deemed amended
without the consent of any other party solely to reflect revisions or
supplements of the type described in the parenthetical in the first sentence of
Section 3.11 upon the delivery by the Borrower Representative to the
Administrative Agent of a revised Schedule 3.11 reflecting such revisions and
supplements.

(d) Notwithstanding the foregoing, no amendment or amendment and restatement of
this Agreement which is in all other respects approved by the Lenders in
accordance with this Section 9.02 shall require the consent or approval of any
Lender (i) which immediately after giving effect to such amendment or amendment
and restatement, shall have no Commitment or other obligation to maintain or
extend credit under this Agreement (as so amended or amended and restated),
including, without limitation, any obligation in respect of any drawing under or
participation in any Letter of Credit and (ii) which, substantially
contemporaneously with the effectiveness of such amendment or amendment and
restatement, is paid in full all amounts owing to it hereunder (including,
without limitation principal, interest and fees, but excluding unmatured
contingent obligations). From and after the effectiveness of any such amendment
or amendment and restatement, any such Lender shall be deemed to no longer be a
“Lender” hereunder or a party hereto; provided, that any such Lender shall
retain the benefit of indemnification and other provisions hereof which, by the
terms hereof would survive a termination of this Agreement.

(e) Notwithstanding the foregoing, upon the execution and delivery of all
documentation required by Section 2.09(e) to be delivered in connection with an
increase to the aggregate Commitments, the Administrative Agent, the Borrowers
and the new or existing Lenders whose Commitments have been affected may and
shall enter into an amendment hereof (which shall be binding on all parties
hereto and the new Lenders) solely for the purpose of reflecting any new Lenders
and their new Commitments and any increase in the Commitment of any existing
Lender.

 

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(f) Notwithstanding the foregoing, the Administrative Agent and the Borrowers
may amend any Credit Document to correct administrative or technical errors or
omissions, or to effect administrative changes that are not adverse to any
Lender and any such amendment shall become effective without any further consent
of any other party to such Credit Document.

SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrowers shall pay
(i) all reasonable, documented out of pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of one firm of legal counsel for the Administrative Agent plus
any required local counsel, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of this
Agreement or any amendments, modifications or waivers of the provisions hereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) without duplication of amounts otherwise payable hereunder,
all reasonable, documented out-of-pocket expenses incurred by the Issuing Bank
in connection with the issuance, amendment, renewal or extension of any Letter
of Credit or any demand for payment thereunder and (iii) all reasonable,
documented out-of-pocket expenses incurred by the Administrative Agent, the
Issuing Bank or any Lender, including the fees, charges and disbursements of
(A) (1) one primary counsel and, as deemed appropriate by the Administrative
Agent, one additional local counsel and/or regulatory counsel in each applicable
jurisdiction for the Administrative Agent and (2) one primary counsel and, as
deemed appropriate by the Lenders, one additional local and/or regulatory
counsel for all the Lenders in each applicable jurisdiction (as well as
additional counsel for the Lenders in light of actual or potential conflicts of
interest), and (B) a financial advisor for the Administrative Agent, the Issuing
Bank and the Lenders, in connection with the enforcement or protection of its
rights in connection with this Agreement, including its rights under this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.

(b) The Borrowers shall indemnify the Administrative Agent, the Issuing Bank and
each Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an “Indemnitee”) against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, penalties, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of the Transactions or any other transactions contemplated hereby, (ii) any Loan
or Letter of Credit or the use of the proceeds therefrom (including any refusal
by the Issuing Bank 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
the Borrowers or any of its Subsidiaries, or any Environmental Liability related
in any way to the Borrowers 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 any Borrower or any of the Borrowers’ directors,
shareholders or creditors, and regardless of whether any Indemnitee is a party
thereto; provided

 

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that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses resulting
from the gross negligence or willful misconduct of such Indemnitee. This
Section 9.03(b) shall not apply with respect to Taxes other than any Taxes that
represent losses, claims or damages arising from any non-Tax claim.

(c) To the extent that the Borrowers fail to pay any amount required to be paid
by them to the Administrative Agent or the Issuing Bank under paragraph (a) or
(b) of this Section, each Lender severally agrees to pay to the Administrative
Agent or the Issuing Bank, as the case may be, such Lender’s Revolving
Commitment Exposure Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent or the Issuing Bank in its capacity as such.

(d) To the 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 or any agreement or instrument contemplated hereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof; provided that,
nothing in this clause (d) shall relieve any Borrower of any obligation it may
have to indemnify an Indemnitee against special, indirect, consequential or
punitive damages asserted against such Indemnitee by a third party.

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

SECTION 9.04. Successors and Assigns. (a) 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 (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), except that (i) the
Borrowers may not assign or otherwise transfer any of their respective rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrowers without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section. 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 (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal
or equitable right, remedy or claim under or by reason of this Agreement.

(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more assignees (other than an Ineligible
Institution) all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it) with the prior written consent (such consent not to be unreasonably
withheld) of:

 

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(ii) the Parent; provided that after the passage of ten (10) Business Days from
receipt of written notice to the Parent from the Administrative Agent of a
proposed assignment without the Parent giving the Administrative Agent written
notice of the Parent’s objection to such assignment, the Parent shall be deemed
to have consented to such assignment; provided further that no consent of the
Parent shall be required for an assignment to a Lender, an Affiliate of a
Lender, an Approved Fund or, if an Event of Default has occurred and is
continuing, any other assignee;

(iii) the Administrative Agent, provided that no consent of the Administrative
Agent shall be required for an assignment of any Commitment to an assignee that
is a Lender with a Commitment immediately prior to giving effect to such
assignment; and

(iv) the Issuing Bank.

(v) Assignments shall be subject to the following additional conditions:

(vi) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender’s
Commitment or Loans, the amount of the Commitment or 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) shall not be less than $5,000,000 unless the Parent and
the Administrative Agent otherwise consent, provided that no such consent of the
Parent shall be required if an Event of Default has occurred and is continuing;

(vii) 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;

(viii) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and

(ix) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire in which the assignee
designates one or more credit contacts to whom all syndicate-level information
(which may contain material non-public information about the Borrowers and their
affiliates and their Related Parties or their respective securities) will be
made available and who may receive such information in accordance with the
assignee’s compliance procedures and applicable laws, including Federal and
state securities laws.

For the purposes of this Section 9.04(b), the term “Approved Fund” and
“Ineligible Institution” have the following meanings:

“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.

 

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“Ineligible Institution” means (a) a natural person, (b) a Defaulting Lender,
(c) any Borrower or any of their Affiliates, or (d) a holding company,
investment vehicle or trust for, or owned and operated for the primary benefit
of, a natural person or relative(s) thereof.

(x) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of
this Section, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto 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 shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 2.15,
2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 9.04
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 paragraph (c) of
this Section.

(xi) The Administrative Agent, acting for this purpose as an agent of the
Borrowers, shall maintain at one of its offices 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 Commitment of, and principal amount of the
Loans and LC Disbursements 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, the Issuing Bank and
the Lenders shall 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 the Borrowers, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

(xii) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register; provided that if
either the assigning Lender or the assignee shall have failed to make any
payment required to be made by it pursuant to Section 2.06(d) or (e), 2.07(b),
2.18(d) or 9.03(c), the Administrative Agent shall have no obligation to accept
such Assignment and Assumption and record the information therein in the
Register unless and until such payment shall have been made in full, together
with all accrued interest thereon. No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.

 

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(c) Any Lender may, without the consent of the Borrowers, the Administrative
Agent or the Issuing Bank, sell participations to one or more banks or other
entities (a “Participant”) other than an Ineligible Institution in all or a
portion of such Lender’s rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans owing to it); provided that
(A) such Lender’s obligations under this Agreement shall remain unchanged,
(B) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations and (C) the Borrowers, the Administrative
Agent, the Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
The Borrowers agrees that each Participant shall be entitled to the benefits of
Sections 2.15, 2.16 and 2.17 (subject to the requirements and limitations
therein, including the requirements under 2.17(f) and (g) (it being understood
that the documentation required under Section 2.17(f) shall be delivered to the
participating Lender and the information and documentation required under
2.17(g) will be delivered to the Borrowers and the Administrative Agent)) to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section; provided that such Participant
(A) agrees to be subject to the provisions of Section 2.19 as if it were an
assignee under paragraph (b) of this Section; and (B) shall not be entitled to
receive any greater payment under Section 2.15 or 2.17, with respect to any
participation, than its participating Lender would have been entitled to
receive, except to the extent such entitlement to receive a greater payment
results from a Change in Law that occurs after the Participant acquired the
applicable participation. Each Lender that sells a participation agrees, at any
Borrower’s request and expense, to use reasonable efforts to cooperate with such
Borrower to effectuate the provisions of Section 2.19(b) with respect to any
Participant. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.08 as though it were a Lender; provided
that such Participant agrees to be subject to Section 2.18(c) as though it were
a Lender. Each Lender that sells a participation shall, acting solely for this
purpose as a non-fiduciary agent of the Borrowers, maintain a register on which
it enters the name and address of each Participant and the principal amounts
(and stated interest) of each Participant’s interest in the Loans or other
obligations under the Credit Documents (the “Participant Register”); provided
that no Lender shall have any obligation to disclose all or any portion of the
Participant Register (including the identity of any Participant or any
information relating to a Participant’s interest in any Commitments or its other
obligations under any Credit Document) to any Person except to the extent that
such disclosure is necessary to establish that such Commitment or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations. The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each Person whose
name is recorded in the Participant Register as the owner of such participation
for all purposes of this Agreement notwithstanding any notice to the contrary.
For the avoidance of doubt, the Administrative Agent (in its capacity as
Administrative Agent) shall have no responsibility for maintaining a Participant
Register.

 

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(d) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrowers herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article
VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.

SECTION 9.06. Counterparts; Integration; Effectiveness. (a) This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. 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.

(b) Delivery of an executed counterpart of a signature page of this Agreement by
telecopy, emailed pdf. or any other electronic means that reproduces an image of
the actual executed signature page shall be effective as delivery of a manually
executed counterpart of this Agreement. The words “execution,” “signed,”
“signature,” “delivery,” and words of like import in or relating to any document
to be signed in connection with this Agreement and the transactions contemplated
hereby shall be deemed to include Electronic Signatures, deliveries 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, physical
delivery thereof 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.

 

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SECTION 9.07. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of any of the Borrowers
against any of and all the obligations of such Person now or hereafter existing
under this Agreement held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.

SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.

(b) Each of the Borrowers hereby irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of the Supreme Court of
the State of New York sitting in New York County, Borough of Manhattan, 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 for recognition or enforcement of any judgment,
and each of the parties hereto hereby 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 or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent,
the Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement against the Borrowers or their respective
properties in the courts of any jurisdiction.

(c) Each of the Borrowers hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Credit 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 law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 9.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

 

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SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY 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 THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY 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 BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 9.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

SECTION 9.12. Confidentiality. Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (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, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process,
(d) to any other party to this Agreement, (e) in connection with the exercise of
any remedies hereunder or any suit, action or proceeding relating to this
Agreement or the enforcement of rights hereunder, (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 any Borrower and its obligations, (g) with
the consent of the Borrowers or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or
(ii) becomes available to the Administrative Agent, the Issuing Bank or any
Lender on a non-confidential basis from a source other than the Borrowers. For
the purposes of this Section, “Information” means all information received from
the Borrowers relating to any Borrower or its business, other than any such
information that is available to the Administrative Agent, the Issuing Bank or
any Lender on a non-confidential basis prior to disclosure by the Borrowers. 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.

EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN THE PRECEDING PARAGRAPH
FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC
INFORMATION CONCERNING THE PARENT AND ITS RELATED PARTIES OR THEIR

 

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RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES
REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE
SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND
APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE
BORROWERS OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF
ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY
CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWERS AND THEIR AFFILIATES
AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES) AND ITS SECURITIES.
ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWERS AND THE ADMINISTRATIVE
AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT
CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC
INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.

SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.

SECTION 9.14. USA PATRIOT Act. Each Lender that is subject to the requirements
of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”) hereby notifies the Borrowers that pursuant to the
requirements of the Act, it is required to obtain, verify and record information
that identifies such Person, which information includes the names and addresses
of the Borrowers and other information that will allow such Lender to identify
the Borrowers in accordance with the Act.

SECTION 9.15. Conversion of Currencies. (a) If, for the purpose of obtaining
judgment in any court, it is necessary to convert a sum owing hereunder in one
currency into another currency, each party hereto agrees, to the fullest extent
that it may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures in the relevant jurisdiction
the first currency could be purchased with such other currency on the Business
Day immediately preceding the day on which final judgment is given.

 

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(b) The obligations of each Borrower in respect of any sum due to any party
hereto or any holder of the obligations owing hereunder (the “Applicable
Creditor”) shall, notwithstanding any judgment in a currency (the “Judgment
Currency”) other than the currency in which such sum is stated to be due
hereunder (the “Agreement Currency”), be discharged only to the extent that, on
the Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, the Borrowers agree, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Applicable Creditor against such loss. The obligations of the Borrowers
contained in this Section 9.15 shall survive the termination of this Agreement
and the payment of all other amounts owing hereunder.

SECTION 9.16. Appointment and Authorization of Borrower Representative.

(a) Each Borrower hereby designates, appoints, authorizes and empowers Argo US
as its agent to act as specified in the capacity of Borrower Representative
under this Agreement and each of the other Credit Documents and Argo US hereby
acknowledges such designation, authorization and empowerment, and accepts such
appointment. Each Borrower hereby irrevocably authorizes and directs the
Borrower Representative to take such action on its behalf under the respective
provisions of this Agreement and the other Credit Documents, and any other
instruments, documents and agreements referred to herein or therein, and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Borrower Representative by the
respective terms and provisions hereof and thereof, and such other powers as are
reasonably incidental thereto, including, without limitation, to take the
following actions for and on such Borrower’s behalf:

(i) to submit on behalf of each Borrower Borrowing Requests, and notices of
conversion or continuation of Loans to the Administrative Agent in accordance
with the provisions of this Agreement, each such notice to be submitted by the
Borrower Representative to the Administrative Agent as soon as practicable after
its receipt of a request to do so from a Borrower; and

(ii) to submit on behalf of each Borrower requests for the issuance of Letters
of Credit in accordance with the provisions of this Agreement, each such request
for the issuance of a Letter of Credit to be submitted by the Borrower
Representative as soon as practicable after its receipt of a request to do so
from any Borrower.

(b) The Borrower Representative is further authorized and directed by each of
the Borrowers to take all such actions on behalf of such Borrower necessary to
exercise the specific powers granted in clauses (i) and (ii) above and to
perform such other duties hereunder and under the other Credit Documents, and
deliver such documents as delegated to or required of the Borrower
Representative by the terms hereof or thereof. The Administrative Agent and each
Lender may regard any notice or other communication pursuant to any Credit
Documents from the Borrower Representative as a notice or communication from all
Borrowers, and may give any notice or communication required or permitted to be
given to any Borrower or Borrowers

 

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hereunder to the Borrower Representative on behalf of such Borrower or
Borrowers. Each Borrower agrees that each notice, election, representation and
warranty, covenant, agreement and undertaking made on its behalf by the Borrower
Representative shall be deemed for all purposes to have been made by such
Borrower and shall be binding upon and enforceable against such Borrower to the
same extent as if the same had been made directly by such Borrower.

(c) The Borrower Representative may perform any of its duties hereunder or under
any of the other Credit Documents by or through its agents or employees.

(d) Each Borrower (other than Argo US) hereby irrevocably appoints Argo US as
its agent to receive on behalf of itself and its property service of copies of
the summons and complaint and any other process which may be served in any such
action or proceeding. Such service may be made by mailing or delivering a copy
of such process to such Borrower in care of Argo US at its address set forth in
Section 9.01(a) hereto. Each Borrower hereby irrevocably authorizes and directs
Argo US to accept such service on its behalf.

SECTION 9.17. No Fiduciary Duty. The Administrative Agent, each Lender and their
Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”)
may have economic interests that conflict with those of the Parent, its
stockholders and/or its Affiliates. The Borrowers agrees that nothing in the
Credit Documents or otherwise will be deemed to create an advisory, fiduciary or
agency relationship or fiduciary or other implied duty between any Lender, on
the one hand, and any Borrower, its stockholders or its Affiliates, on the
other. The Borrowers acknowledge and agree that (i) the transactions
contemplated by the Credit Documents (including the exercise of rights and
remedies hereunder and thereunder) are arm’s-length commercial transactions
between the Lenders, on the one hand, and the Borrowers, on the other, and
(ii) in connection therewith and with the process leading thereto, (x) no Lender
has assumed an advisory or fiduciary responsibility in favor of the Borrowers,
its stockholders or its Affiliates with respect to the transactions contemplated
hereby (or the exercise of rights or remedies with respect thereto) or the
process leading thereto (irrespective of whether any Lender has advised, is
currently advising or will advise the Borrowers, their respective stockholders
or Affiliates on other matters) or any other obligation to the Borrowers except
the obligations expressly set forth in the Credit Documents and (y) each Lender
is acting solely as principal and not as the agent or fiduciary of the
Borrowers, their management, stockholders, creditors or any other Person. The
Borrowers acknowledge and agree that it has consulted its own legal and
financial advisors to the extent it deemed appropriate and that it is
responsible for making its own independent judgment with respect to such
transactions and the process leading thereto. The Borrowers agree that it will
not claim that any Lender has rendered advisory services of any nature or
respect, or owes a fiduciary or similar duty, to the Borrowers in connection
with such transactions or the process leading thereto.

SECTION 9.18. Termination of Existing Agreement. The Lenders party to this
Agreement, in their capacities as “Lenders” under the Credit Agreement dated as
of April 30, 2010 among the Borrowers, the lenders party thereto and the
Administrative Agent (as amended, the “Existing Agreement”), constituting the
Required Lenders (as such term is defined in the Existing Agreement) thereunder,
hereby waive (a) the notice required pursuant to Section 2.11(b) thereof of the
prepayment of obligations thereunder contemplated by Section 4.01(f) hereof and
(b) the notice required pursuant to Section 2.09(d) thereof to terminate the
Commitments (as

 

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such term is defined in the Existing Agreement) thereunder and agree with
Borrower that upon effectiveness of this Agreement, the Existing Agreement, the
other Loan Documents (as such term is defined in the Existing Agreement), the
Commitments (as such term is defined in the Existing Agreement) and the
Obligations (as such term is defined in the Existing Agreement) (other than
those that expressly survive termination) will be terminated without any further
act of any Person.

[Signature pages follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

ARGO GROUP INTERNATIONAL HOLDINGS, LTD. By:  

/s/ George Luecke

Name:   George Luecke Title:   Senior Vice President and Treasurer ARGO GROUP
US, INC. By:  

/s/ Lynn K. Geurin

Name:   Lynn K. Geurin Title:   Vice President and Treasurer ARGO INTERNATIONAL
HOLDINGS LIMITED By:  

/s/ Darren Argyle

Name:   Darren Argyle Title:   Director ARGO UNDERWRITING AGENCY LIMITED By:  

/s/ Darren Argyle

Name:   Darren Argyle Title:   Director

[Signature Page to Argo Credit Agreement]

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JPMORGAN CHASE BANK, N.A., individually

and as Administrative Agent

By:  

/s/ Thomas A. Kiepura

Name:   Thomas A. Kiepura Title:   Sr. Credit Executive

[Signature Page to Argo Credit Agreement]

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WELLS FARGO BANK, N.A. By:  

/s/ William R. Goley

Name:   William Goley Title:   Director

[Signature Page to Argo Credit Agreement]

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U.S. BANK NATIONAL ASSOCIATION

By:

 

/s/ Bonnie S. Wiskowski

Name:   Bonnie S. Wiskowski Title:   Vice President

[Signature Page to Argo Credit Agreement]

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BARCLAYS BANK PLC

By:

 

/s/ Samuel Coward

Name:   Samuel Coward Title:   VP, Debt Finance

[Signature Page to Argo Credit Agreement]

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BANK OF AMERICA, N.A.

By:

 

/s/ Jason Cassity

Name:   Jason Cassity Title:   Director

[Signature Page to Argo Credit Agreement]

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

THE FROST NATIONAL BANK

By:

 

/s/ Julie Glass

Name:   Julie Glass Title:   Senior Vice President

[Signature Page to Argo Credit Agreement]

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HSBC BANK BERMUDA LTD.

By:

 

/s/ Louise Twiss West

Name:   Louise Twiss West Title:  

Associate Director,

Financial Institutions Group

 

By:

 

/s/ Neville Grant

Name:   Neville Grant Title:   Head of Corporate Banking

[Signature Page to Argo Credit Agreement]

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Schedule 1.02

PRICING SCHEDULE

 

APPLICABLE MARGIN

   LEVEL I
STATUS     LEVEL II
STATUS     LEVEL III
STATUS     LEVEL IV
STATUS     LEVEL V
STATUS  

Eurocurrency Spread

     1.375 %      1.50 %      1.625 %      1.875 %      2.25 % 

Alternative Base Rate Spread

     .375 %      .50 %      .625 %      .875 %      1.25 % 

 

APPLICABLE FEE RATE

   LEVEL I
STATUS     LEVEL II
STATUS     LEVEL III
STATUS     LEVEL IV
STATUS     LEVEL V
STATUS  

Commitment Fee

     .175 %      .225 %      .25 %      .30 %      .40 % 

Letter of Credit Fee

     1.375 %      1.50 %      1.625 %      1.875 %      2.25 % 

“Level I Status” exists at any date if, on such date, the S&P Rating is BBB+ or
better or the Moody’s Rating is Baa1 or better.

“Level II Status” exists at any date if, on such date, (i) the Borrowers have
not qualified for Level I Status and (ii) the S&P Rating is BBB or better or the
Moody’s Rating is Baa2 or better.

“Level III Status” exists at any date if, on such date, (i) the Borrowers have
not qualified for Level I Status or Level II Status and (ii) the S&P Rating is
BBB- or better or the Moody’s Rating is Baa3 or better.

“Level IV Status” exists at any date if, on such date, (i) the Borrowers have
not qualified for Level I Status, Level II Status or Level III Status and
(ii) the S&P Rating is BB+ or better or the Moody’s Rating is Ba1 or better.

“Level V Status” exists at any date if, on such date, the Borrowers have not
qualified for Level I Status, Level II Status, Level III Status or Level IV
Status.

“Moody’s Rating” means, at any time, the issuer credit rating (or comparable
rating) issued by Moody’s Investors Service, Inc. and then in effect with
respect to Argo US or AGII.

“Rating” means a Moody’s Rating or an S&P Rating.

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“S&P Rating” means, at any time, the issuer credit rating issued by Standard and
Poor’s Financial Services LLC and then in effect with respect to Argo US or
AGII.

The Applicable Rate shall be determined in accordance with the foregoing table
based on the Borrowers’ Status as determined from the then-current Moody’s and
S&P Ratings. The Rating in effect on any date for the purposes of this Schedule
is that in effect at the close of business on such date. If at any time one
Rating exists but the other does not, then Status shall be determined on the
basis of the existing Rating. If at any time a Borrower has no Moody’s Rating
and no S&P Rating, Level V Status shall exist. If at any time a different credit
rating is issued by either Moody’s or S&P, then the higher of such credit
ratings shall apply (with the credit rating for Level I being the highest and
the credit rating for Level V being the lowest), unless there is a split in
credit ratings of more than one Level, in which case the Level that is one Level
higher than the Level of the lower credit rating shall apply.

If on any date of determination of the Moody’s Rating or S&P Rating, as
applicable, there exists both an Argo US rating by such rating agency and a
Parent rating by such rating agency and there is a split between such ratings,
then the higher of such ratings shall apply for purposes of determining the
Moody’s Rating or S&P Rating, as applicable, (unless there is a split in the
ratings of such ratings agency by more than one level, in which case the level
that is one level higher than the lower rating shall apply).

 

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Schedule 2.01

Commitments

 

JPMorgan Chase Bank, N.A.

   $ 35,000,000   

Wells Fargo Bank, N.A.

   $ 35,000,000   

U.S. Bank National Association

   $ 27,500,000   

Barclays Bank PLC

   $ 20,000,000   

Bank of America, N.A.

   $ 15,000,000   

Frost Bank

   $ 22,500,000   

HSBC Bank Bermuda Ltd.

   $ 20,000,000   

TOTAL

   $ 175,000,000   

 

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