Exhibit 10.1

 

 

 

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

dated as of

 

November 8, 2019

 

among

 

JAMES RIVER GROUP HOLDINGS, LTD. and
JRG REINSURANCE COMPANY LTD., as Borrowers

 

THE LENDERS PARTY HERETO

 

KEYBANK NATIONAL ASSOCIATION,
as Administrative Agent and Letter of Credit Issuer

 

KEYBANK NATIONAL ASSOCIATION, SUNTRUST ROBINSON HUMPHREY, INC.,
and BMO CAPITAL MARKETS CORP.,
as Joint Book Runners

 

KEYBANK NATIONAL ASSOCIATION, SUNTRUST ROBINSON HUMPHREY, INC.
and BMO CAPITAL MARKETS CORP.,
as Joint Lead Arrangers

 

BANK OF MONTREAL and SUNTRUST BANK,
as Co- Syndication Agents

 

 

 

 

 

 

Table of Contents

 

    Page         Article 1    DEFINITIONS   2            Section 1.01  Defined
Terms   2  Section 1.02  Classification of Loans and Borrowings   30  Section
1.03  Terms Generally   30  Section 1.04  Accounting Terms; Changes in GAAP 
 30  Section 1.05  Same Indebtedness; Other References   31  Section 1.06 
Divisions   32            Article 2    THE CREDITS   32            Section 2.01 
Commitments   32  Section 2.02  Revolving Loans   33  Section 2.03  Requests to
Borrow Loans   33  Section 2.04  James River as a Borrower   34  Section 2.05 
Letters of Credit   34  Section 2.06  Funding of Loans   38  Section 2.07 
Interest Elections   38  Section 2.08  Termination or Reduction of Commitments 
 39  Section 2.09  Payment at Maturity; Evidence of Debt   40  Section 2.10 
Optional and Mandatory Prepayments   41  Section 2.11  Optional Increase in
Commitments   42  Section 2.12  Fees   43  Section 2.13  Interest   45  Section
2.14  Alternate Rate of Interest   45  Section 2.15  Increased Costs; Capital
Adequacy   47  Section 2.16  Break Funding Payments   48  Section 2.17  Taxes 
 48  Section 2.18  Payments Generally; Pro Rata Treatment; Sharing of Set-Offs 
 51  Section 2.19  Defaulting Lenders   52  Section 2.20  Cash Collateral   54 
Section 2.21  Lender’s Obligation to Mitigate   55  Section 2.22  Illegality 
 55            Article 3    REPRESENTATIONS AND WARRANTIES   56           
Section 3.01  Organization; Powers   56  Section 3.02  Authorization;
Enforceability   56  Section 3.03  Governmental Approvals; No Conflicts   56 
Section 3.04  Financial Statements; No Material Adverse Change   57  Section
3.05  Insurance Licenses   57  Section 3.06  Parent Subsidiaries   58  Section
3.07  Litigation   58  Section 3.08  Compliance with Laws and Agreements;
Anti-Terrorism Laws   58  Section 3.09  Investment Company Status   59  Section
3.10  Taxes   60  Section 3.11  Material Debt Agreements and Liens   60 

 

 1 

 

 

Table of Contents

(continued)

 

       Page            Section 3.12  Environmental Matters   60  Section 3.13 
Equity Obligations   61  Section 3.14  No Reliance   61  Section 3.15  ERISA 
 61  Section 3.16  Regulation U   61  Section 3.17  Disclosure   62  Section
3.18  Solvency   62            Article 4    CONDITIONS   62            Section
4.01  Restatement Effective Date   62  Section 4.02  Conditions to Initial
Utilization and Each Subsequent Utilization   64            Article
5    AFFIRMATIVE COVENANTS   65            Section 5.01  Financial Statements
and Other Information   65  Section 5.02  Insurance Subsidiary Reporting   67 
Section 5.03  Notice of Material Events   68  Section 5.04  Existence; Conduct
of Business   69  Section 5.05  Payment of Obligations   69  Section 5.06 
Insurance   70  Section 5.07  NAIC Ratio   70  Section 5.08  Proper Records;
Rights to Inspect   70  Section 5.09  Compliance with Laws   70  Section 5.10 
Use of Proceeds and Letters of Credit   71            Article 6    NEGATIVE
COVENANTS   71            Section 6.01  Debt; Certain Equity Securities;
Prepayments   71  Section 6.02  Liens   72  Section 6.03  Fundamental Changes 
 74  Section 6.04  Investments, Loans, Advances, Guarantees and Acquisitions 
 75  Section 6.05  Asset Sales   75  Section 6.06  Ceded Reinsurance   76 
Section 6.07  Sale and Leaseback Transactions   76  Section 6.08  Restricted
Payments   77  Section 6.09  Transactions with Affiliates   77  Section 6.10 
Restrictive Agreements   77  Section 6.11  Leverage Ratio   78  Section 6.12 
Consolidated Net Worth   78  Section 6.13  [Reserved]   79  Section 6.14 
[Reserved]   79  Section 6.15  Minimum Best Ratings   79  Section 6.16 
Amendment of Material Documents   79  Section 6.17  Lines of Business   79 

 

 2 

 

 

Table of Contents

(continued)

 

    Page         Article 7    EVENTS OF DEFAULT   80            Section 7.01 
Events of Default   80  Section 7.02  Application of Proceeds   82           
Article 8    THE ADMINISTRATIVE AGENT   83            Section 8.01  Appointment
and Authorization   83  Section 8.02  Rights and Powers as a Lender   83 
Section 8.03  Limited Duties and Responsibilities   84  Section 8.04  Authority
to Rely on Certain Writings, Statements and Advice   84  Section 8.05 
Sub-Agents and Related Parties   84  Section 8.06  Resignation; Successor Agent 
 85  Section 8.07  Credit Decisions by Lenders   86  Section 8.08  Agent’s Fees 
 86  Section 8.09  Arranger, Syndication Agent, Etc.   86  Section 8.10  No
Reliance on Administrative Agent’s Customer Identification Program   86       
    Article 9    MISCELLANEOUS   86            Section 9.01  Notices   86 
Section 9.02  Waivers; Amendments   87  Section 9.03  Expenses; Indemnity;
Damage Waiver   89  Section 9.04  Successors and Assigns   90  Section 9.05  USA
PATRIOT Act   93  Section 9.06  Survival   94  Section 9.07  Counterparts;
Integration; Effectiveness   94  Section 9.08  Severability   94  Section 9.09 
Right of Setoff   94  Section 9.10  Governing Law; Jurisdiction; Consent to
Service of Process   95  Section 9.11  WAIVER OF JURY TRIAL   96  Section 9.12 
Headings   96  Section 9.13  Confidentiality   96  Section 9.14  Interest Rate
Limitation   97  Section 9.15  Replacement of Lenders   97  Section 9.16 
Bermuda Law Event   98  Section 9.17  Borrower Agent   98  Section 9.18 
Acknowledgement and Consent to Bail-In of EEA Financial Institutions   99 
Section 9.19  Certain ERISA Matters   99 

 

 3 

 

 

Table of Contents

(continued)

 

    Page         Article 10 JOINT AND SEVERAL OBLIGATIONS OF BORROWERS   101    
       Section 10.01  Joint and Several Obligations   101  Section 10.02 
Lenders Parties’ Rights to Administer Credit   101  Section 10.03  Primary
Obligation   102  Section 10.04  Payments Recovered From Lender   102  Section
10.05  No Release   103  Section 10.06  Actions Not Required   103  Section
10.07  Deficiencies   103  Section 10.08  Borrower Bankruptcy   104  Section
10.09  Limited Subrogation   104  Section 10.10  Borrowers’ Financial Condition 
 104  Section 10.11  Relationship of Borrowers   105  Section 10.12  Limitation 
 105 

 

 4 

 

 

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (“this Agreement”) is made and
entered into as of November 8, 2019 among:

 

(i)JAMES RIVER GROUP HOLDINGS, LTD., a Bermuda company, and its successors and
permitted assigns, as a Borrower;

 

(ii)JRG REINSURANCE COMPANY LTD., a regulated insurance company domiciled in
Bermuda, as a Borrower;

 

(iii)the LENDERS party hereto;

 

(iv)KEYBANK NATIONAL ASSOCIATION, a national banking association, in its
capacity as Administrative Agent;

 

(v)KEYBANK NATIONAL ASSOCIATION, a national banking association, in its capacity
as a Letter of Credit Issuer;

 

(vi)KEYBANK NATIONAL ASSOCIATION and SUNTRUST ROBINSON HUMPHREY, INC., as Joint
Book Runners;

 

(vii)KEYBANK NATIONAL ASSOCIATION, SUNTRUST ROBINSON HUMPHREY, INC. and BMO
CAPITAL MARKETS CORP., as Joint Lead Arrangers; and

 

(viii)BANK OF MONTREAL and SUNTRUST BANK, as Co-Syndication Agents.

 

Recitals:

 

A.      The Borrowers, the Administrative Agent, the Lenders, and certain other
parties are the parties to that certain Amended and Restated Credit Agreement
dated as of December 7, 2016, as amended by a First Amendment dated June 8, 2017
(as heretofore amended and supplemented, the “Existing Credit Agreement”).

 

B.       Pursuant and subject to the Existing Credit Agreement and the Lenders
agreed to (i) advance to the Borrowers unsecured revolving credit loans
(collectively, as their respective outstanding principal balances exist
immediately prior to the effectiveness of the amendment and restatement effected
by this Agreement, the “Existing Revolving Loans”), and purchase participations
in unsecured letters of credit (none of which is outstanding as of the date
hereof), up to an aggregate principal amount and letter of credit exposure not
to exceed $112,500,000 and (ii) purchase participations in secured letters of
credit up to an aggregate letter of credit exposure of $102,500,000
(collectively, as their respective letter of credit exposure exists immediately
prior to the effectiveness of the amendment and restatement effected by this
Agreement, the “Existing Secured Letters of Credit”).

 

 

 

 

C.       The Borrowers have requested the Lenders and the Letter of Credit
Issuer to amend and restate in their entirety the terms and conditions of the
Existing Credit Agreement as herein provided.

 

D.      The Lenders and the Letter of Credit Issuer are willing to amend and
restate in their entirety the terms and conditions of the Existing Credit
Agreement upon and subject to the terms and conditions set forth in this
Agreement, the Security Documents and the other Loan Documents.

 

Agreements:

 

NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual
agreements of the parties hereto and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, subject to the
satisfaction of the terms and conditions set forth in this Agreement, the
parties to this Agreement agree that all of the terms and conditions of the
Existing Credit Agreement shall be amended and restated in their entirety to
provide as follows:

 

Article 1

 

DEFINITIONS

 

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

 

“Accumulated Other Comprehensive Income” or “Accumulated Other Comprehensive
Loss” means, as at any date of determination, the amount of Consolidated
accumulated other comprehensive income (or loss), as applicable, of the Parent
and its Subsidiaries, as reflected on the balance sheet of the Parent as of such
date in accordance with GAAP.

 

“Acquisition” means, with respect to any Person, (i) the purchase by such Person
of all or a significant part of a business, division or other business unit
conducted by any other Person, whether such purchase is of assets or Equity
Interests, (ii) the merger, consolidation or amalgamation of such Person with
any other Person or (iii) any transaction that is considered to be a change in
control of such Person under the “Insurance Holding Company Systems Act” of the
Applicable Insurance Code, to the extent applicable.

 

“Adjusted Consolidated Debt” means, as of any date, Consolidated Debt of the
Parent of the type described in any or all of clauses (a), (b), (c), (d), (e),
(h) and (i) of the definition of “Debt”, but:

 

(i)          as to clause (b) of such definition of Debt, excluding Hybrid
Securities, except to the extent that the aggregate amount outstanding on any
date of determination of all such Hybrid Securities exceeds an amount equal to
fifteen percent (15%) of Total Capitalization on such date (or, if such date is
not a Fiscal Quarter-end, as of the end of the Fiscal Quarter most recently
ended for which financial statements are required to have been furnished to the
Administrative Agent pursuant to Section 5.01) and

 

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(ii)         as to clause (i) of such definition of Debt, only to the extent
that it is an unpaid obligation in respect of a letter of credit or letter of
guaranty that is then due and payable (and not contingent) on such date.

 

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

 

“Administrative Agent” means KeyBank National Association, in its capacity as
administrative agent under the Loan Documents, and its successors in such
capacity.

 

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

 

“Affected Lender” has the meaning specified in Section 2.15(e).

 

“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 under common Control with such specified Person.

 

“Agent” means the Administrative Agent.

 

“Alternate Base Rate” means, for any day, a fluctuating 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 plus one-half percent (0.50%), (c) the
Adjusted LIBO Rate for an Interest Period of one month beginning on such day (or
if such day is not a Business Day, the most recent Business Day), plus one
percent (1.00%) and (d) zero percent (0.00%). Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate will
be effective from and including the effective date of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.

 

“Anti-Terrorism Laws” means any Laws relating to terrorism or money laundering,
including Executive Order No. 13224, the USA PATRIOT Act, the Laws comprising or
implementing the Bank Secrecy Act, and the Laws administered by the United
States Treasury Department’s Office of Foreign Asset Control (as any of the
foregoing Laws may from time to time be amended, renewed, extended, or
replaced).

 

“Applicable FHLB” means, as to any Domestic Insurance Subsidiary, the Federal
Home Loan Bank of which such Domestic Insurance Subsidiary is a member.

 

“Applicable Insurance Code” means, as to any Insurance Subsidiary or any other
Person that is a regulated insurance company, the insurance code or other
statute of any state where such Insurance Subsidiary or other Person is
domiciled or doing insurance business and any successor statute of similar
import, together with the regulations thereunder, as amended or otherwise
modified and in effect from time to time. References to sections of the
Applicable Insurance Code shall be construed to also refer to successor
sections.

 

- 3 -

 

 

“Applicable Insurance Regulatory Authority” means, when used with respect to any
Insurance Subsidiary, the insurance department or similar administrative
authority or agency located in the state in which such Insurance Subsidiary is
domiciled.

 

“Applicable Rate” means for any day:

 

(a)         with respect to any Loan that is a Eurodollar Loan, the applicable
rate per annum set forth in the Pricing Schedule in the row opposite the caption
“Eurodollar Margin” and in the column corresponding to the “Pricing Level” that,
pursuant to the Pricing Schedule, is in effect for such day;

 

(b)         with respect to any Loan that is a Base Rate Loan, the applicable
rate per annum set forth in the Pricing Schedule in the row opposite the caption
“Base Rate Margin” and in the column corresponding to the “Pricing Level” that,
pursuant to the Pricing Schedule, is in effect for such day; and

 

(c)         with respect to the commitment fees payable hereunder, the
applicable rate per annum set forth in the Pricing Schedule in the row opposite
the caption “Commitment Fee Rate” and in the column corresponding to the
“Pricing Level” that, pursuant to the Pricing Schedule, is in effect for such
day.

 

In each case, the “Applicable Rate” will be determined by reference to the
Leverage Ratio as provided in the Pricing Schedule; provided that at any time
when an Event of Default has occurred and is continuing, such Applicable Rates
will be those set forth in the Pricing Schedule as “Pricing Level III”.

 

“Arranger” means KeyBank National Association, in its capacity as lead arranger
of the credit facility provided under this Agreement.

 

“Assignment” means an assignment and assumption agreement 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.

 

“Assumed Reinsurance” means reinsurance assumed by any Insurance Subsidiary from
another Person (other than from another Insurance Subsidiary).

 

“Availability Rate” means, with respect to any category of Eligible Collateral
(as those categories are set forth on Exhibit B hereto), the percentage listed
on Exhibit B hereto in the “Availability Rate” column that corresponds to such
category of Eligible Collateral.

 

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by
the applicable EEA Resolution Authority in respect of any liability of an EEA
Financial Institution.

 

“Bail-In Legislation” means, with respect to any EEA Member Country implementing
Article 55 of Directive 2014/59/EU of the European Parliament and of the Council
of the European Union, the implementing law for such EEA Member Country from
time to time which is described in the EU Bail-In Legislation Schedule.

 

- 4 -

 

 

“Base Rate”, when used with respect 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.

 

“Beneficial Ownership Certification” means a certification regarding beneficial
ownership as required by the Beneficial Ownership Regulation.

 

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

 

“Bermuda Law Event” has the meaning specified in Section 9.16.

 

“Best” means A.M. Best Company, Inc. and its successors and assigns or, if it
shall be dissolved or shall no longer assign ratings to insurance companies,
then any other nationally recognized insurance statistical rating agency
designated by the Administrative Agent.

 

“Best Rating” means, as of any date, the financial strength rating by Best on
such date of an Insurance Subsidiary.

 

“Blocked Person” has the meaning specified in Section 3.08(d).

 

“Board of Directors” means, the Board of Directors of the Parent or any
committee thereof duly authorized to act on behalf of such Board of Directors.

 

“Borrower” means, on the Restatement Effective Date, the Parent and JRG
Reinsurance and thereafter at such time, if ever, as James River becomes a
Borrower upon and subject to the provisions of Section 2.04, each of the Parent,
JRG Reinsurance and James River, it being understood and agreed that unless and
until, if ever, James River becomes a Borrower as aforesaid, all references to
the “Borrowers” or “Borrower” shall be deemed to refer to the Parent and JRG
Reinsurance, collectively or individually.

 

“Borrower Agent” means the Parent or such other Person as the Borrowers may from
time to time designate to the Administrative Agent in writing, in its capacity
as the agent of the Borrowers under and pursuant to the provisions of this
Agreement and the other Loan Documents.

 

“Borrowing” means Loans under the Unsecured Facility of the same Interest Type
made, converted or continued on the same day and, in the case of Eurodollar
Loans, as to which the same Interest Period is in effect.

 

“Borrowing Request” means a request by the Borrower Agent, for and on behalf of
the Borrowers 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 Cleveland, Ohio are authorized or required by Law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.

 

- 5 -

 

 

“Capital Lease Obligations” of any Person means 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 under GAAP to be classified and accounted for as
capital leases on a balance sheet of such Person. The amount of such obligations
will be the capitalized amount thereof determined in accordance with GAAP.

 

“Carolina Re” means Carolina Re Ltd., a regulated insurance company domiciled in
Bermuda.

 

“Cash Collateralize” means, to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of one or more of the Letter of Credit
Issuers or Lenders, as collateral for LC Exposure or obligations of Lenders to
fund participations in respect of LC Exposure, cash or deposit account balances
or, if the Administrative Agent and each applicable Letter of Credit Issuer
shall agree in their sole discretion, other credit support, in each case
pursuant to documentation in form and substance reasonably satisfactory to the
Administrative Agent and each applicable Letter of Credit Issuer. “Cash
Collateral” shall have a meaning correlative to the foregoing and shall include
the proceeds of such cash collateral and other credit support.

 

“Ceded Reinsurance” means risk that is ceded (whether by co-insurance,
reinsurance or equivalent relationship otherwise named) by any Insurance
Subsidiary to any other Person (other than to another Insurance Subsidiary),
other than Surplus Relief Reinsurance.

 

“Change in Control” means, the occurrence of any of the following:

 

(a)         at any time that the Parent ceases to own (directly or indirectly
through one or more Subsidiaries the issued and outstanding Equity Interests of
which it owns at least 100%), one hundred percent (100%) of all of the issued
and outstanding Equity Interests of each other Loan Party;

 

(b)        at any time that any “person” (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), is or becomes the “beneficial owner” (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that for the purposes of
this clause (b) such person shall be deemed to have “beneficial ownership” of
all shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than any one or more of the following: (i) 50% of the
aggregate ordinary voting power represented by the issued and outstanding Equity
Interests in the Parent and (ii) 50% of the aggregate economic interests
represented by the issued and outstanding Equity Interests in the Parent;

 

(c)         during any period of eighteen (18) consecutive calendar months,
individuals who at the beginning of such period constituted the board of
directors of a Loan Party, other than the Parent (together with any new
directors (i) whose election by the applicable board of directors was or (ii)
whose nomination for election by the Parent was, prior to the date of the proxy
or consent solicitation relating to such nomination, approved by a vote of at
least two-thirds of the directors then still in office who either were directors
at the beginning of such period or whose election or nomination for election was
previously so approved) shall cease for any reason to constitute a majority of
the members of the board of directors of such Loan Party then in office;

 

- 6 -

 

 

(d)         during any period of eighteen (18) consecutive calendar months,
individuals who at the beginning of such period constituted the Board of
Directors of the Parent (together with any new directors (i) whose election by
the Board of Directors was or (ii) whose nomination for election by the Parent’s
shareholders was, prior to the date of the proxy or consent solicitation
relating to such nomination, approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) shall cease for any reason to constitute a majority of the members of
the Board of Directors of the Parent then in office; or

 

(e)         the adoption of a plan relating to the liquidation or dissolution of
the Parent or another Loan Party.

 

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption of any Law, rule or regulation, (b) any
change in any Law, rule or regulation or in the interpretation or application
thereof by any Governmental Authority or (c) compliance by any Lender or Letter
of Credit Issuer (or, for purposes of Section 2.15(b), by any lending office of
such Lender or Letter of Credit Issuer or by such Lender’s or Letter of Credit
Issuer’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 such date; provided that, notwithstanding anything herein to the
contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith and (ii) 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 in
each case be deemed to be a “Change in Law”, regardless of the date enacted,
adopted or issued.

 

“Collateral Value” means, as of any date, with respect to any category of
Eligible Collateral (as those categories are set forth on Exhibit B hereto), an
amount equal to (i) the market value on such date of all Eligible Collateral in
such category, multiplied by (ii) the Availability Rate for such category.

 

“Commitment” means a Secured Facility Commitment or an Unsecured Facility
Commitment. The aggregate amount of the Commitments as of the Restatement
Effective Date is $315,000,000.

 

“Consolidated” means the Parent and its Subsidiaries, taken as a whole in
accordance with GAAP, or, where the context requires, another Loan Party and its
Subsidiaries, taken as a whole in accordance with GAAP.

 

“Consolidated Assets” means, as at the date of any determination, the net book
value of all assets of the Parent and its Subsidiaries as of such date
classified as assets in accordance with GAAP and determined on a Consolidated
basis.

 

- 7 -

 

 

“Consolidated Interest Expense” means Interest Expense of the Parent and its
Subsidiaries determined on a Consolidated basis.

 

“Consolidated Liabilities” means, as at any date of determination, all
liabilities of the Parent and its Subsidiaries as of such date classified as
liabilities in accordance with GAAP and determined on a Consolidated basis.

 

“Consolidated Net Worth” means, as at any date of determination, the remainder
of (i) all Consolidated Assets (less the net book value of all patents,
copyrights, goodwill and similar intangible property) as of such date, (ii)
minus all Consolidated Liabilities as of such date and (iii) as applicable, plus
Accumulated Other Comprehensive Loss or minus Accumulated Other Comprehensive
Income.

 

“Control” means possession, directly or indirectly, of the power (a) to vote 20%
or more of any class of voting Equity Interests of a Person or (b) to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting Equity Interests, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

 

“Control Agreement” means, as applicable, each securities account control
agreement dated, with respect to JRG Reinsurance, October 29, 2014 and, with
respect to the Parent, the date hereafter on which the Parent establishes a
securities account to which Eligible Collateral is credited entered into among,
as the case may be, JRG Reinsurance or the Parent, the Administrative Agent and
the securities intermediary party thereto and any other securities account
control agreement (in substantially the same form as such October 29, 2014
securities account control agreement) hereafter entered into among a Loan Party,
the Administrative Agent and a securities intermediary, in each case, as the
same heretofore may have been, or hereafter may be, confirmed, supplemented,
amended or otherwise modified from time to time pursuant and subject to the
applicable provisions of this Agreement.

 

“Current Redeemable Equity” means any preferred stock or other preferred Equity
Interests, which in either case, is subject to mandatory redemption at any time
prior to the first anniversary of the Maturity Date (as it exists on any date of
determination).

 

“Debt” of any Person means, without duplication:

 

(a)         all obligations of such Person for borrowed money or with respect to
deposits or advances of any kind (other than unspent cash deposits held in
escrow by or in favor of such Person, or in a segregated deposit account
controlled by such Person, in each case in the ordinary course of business to
secure the performance obligations of, or damages owing from, one or more third
parties),

 

(b)         all obligations of such Person evidenced by bonds, debentures, notes
(including, without limitation, Hybrid Securities) or similar instruments,

 

(c)         all obligations of such Person on which interest charges are
customarily paid (other than obligations where interest is levied only on late
or past due amounts),

 

- 8 -

 

 

(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 Debt of others secured by (or for which the holder of such Debt
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 Debt secured
thereby has been assumed,

 

(g)         all Guarantees by such Person of Debt of others,

 

(h)         all Capital Lease Obligations of such Person,

 

(i)          all unpaid obligations, contingent or otherwise, of such Person as
an account party in respect of letters of credit and letters of guaranty (other
than cash collateralized letters of credit to secure the performance of workers’
compensation, unemployment insurance, other social security Laws or regulations,
bids, trade contracts, leases, environmental and other statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature, in each case, obtained in the ordinary course of business),

 

(j)          all capital stock of such Person which is required to be redeemed
or is redeemable at the option of the holder if certain events or conditions
occur or exist or otherwise, and

 

(k)        all obligations, contingent or otherwise, of such Person in respect
of bankers’ acceptances.

 

The Debt of any Person shall include the Debt of any other entity (including any
partnership in which such Person is a general partner) to the extent that such
Person is liable therefor pursuant to Law or judicial holding as a result of
such Person’s ownership interest in or other relationship with such entity,
except to the extent that contractual provisions binding on the holder of such
Debt provide that such Person is not liable therefor; provided that Debt shall
not include (i) obligations with respect to insurance policies, annuities,
guaranteed investment contracts and similar products underwritten by, or
Reinsurance Agreements or Retrocession Agreements entered into by, an Insurance
Subsidiary, or (ii) obligations with respect to Surplus Relief Reinsurance ceded
by an Insurance Subsidiary in the ordinary course of its business.

 

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

 

“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.

 

- 9 -

 

 

“Defaulting Lender” means, subject to Section 2.19(b), any Lender that (a) has
failed to (i) fund all or any portion of its Loans within two (2) Business Days
of the date such Loans were required to be funded hereunder unless such Lender
notifies the Administrative Agent and the Borrower Agent in writing that such
failure is the result of such Lender’s good faith determination that one or more
conditions precedent to funding (each of which conditions precedent, together
with any applicable Default, shall be specifically identified in such writing)
has not been satisfied, or (ii) pay to the Administrative Agent, any Letter of
Credit Issuer, or any other Lender any other amount required to be paid by it
hereunder (including in respect of its participation in Letters of Credit)
within two (2) Business Days of the date when due, (b) has notified the Borrower
Agent, the Administrative Agent, any Letter of Credit Issuer or any other Lender
in writing that it does not intend to comply with its funding obligations
hereunder, or has made a public statement to that effect (unless such writing or
public statement relates to such Lender’s obligation to fund a Loan hereunder
and states that such position is based on such Lender’s good faith determination
that a condition precedent to funding (which condition precedent, together with
any applicable Default, shall be specifically identified in such writing or
public statement) cannot be satisfied), (c) has failed, within three (3)
Business Days after written request by the Administrative Agent or the Borrower
Agent, to confirm in writing to the Administrative Agent and the Borrower Agent
that it will comply with its prospective funding obligations hereunder (provided
that such Lender shall cease to be a Defaulting Lender pursuant to this clause
(c) upon receipt of such written confirmation by the Administrative Agent and
the Borrower Agent), or (d) has, or has a direct or indirect parent company that
has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii)
had appointed for it a receiver, custodian, conservator, trustee, administrator,
assignee for the benefit of creditors or similar Person charged with
reorganization or liquidation of its business or assets, including the Federal
Deposit Insurance Corporation or any other state or federal regulatory authority
acting in such a capacity or (iii) become the subject of a Bail-in Action;
provided that a Lender shall not be a Defaulting Lender solely by virtue of the
ownership or acquisition of any equity interest in that Lender or any direct or
indirect parent company thereof by a Governmental Authority so long as such
ownership interest does not result in or provide such Lender 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 Lender (or such
Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts
or agreements made with such Lender. Any determination by the Administrative
Agent that a Lender is a Defaulting Lender under any one or more of clauses (a)
through (d) above shall be conclusive and binding absent manifest error, and
such Lender shall be deemed to be a Defaulting Lender (subject to Section
2.19(b) hereof) upon delivery of written notice of such determination to the
Borrower Agent, each Letter of Credit Issuer and each Lender.

 

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

 

“Domestic Insurance Subsidiary” means each Insurance Subsidiary that is a
Domestic Subsidiary. As of the Restatement Effective Date, Falls Lake Fire and
Casualty, Falls Lake National, James River Casualty, James River Insurance, and
Stonewood Insurance constitute the Domestic Insurance Subsidiaries.

 

“Domestic Subsidiary” means each Subsidiary that is not a Foreign Subsidiary.

 

- 10 -

 

 

“EEA Financial Institution” means (a) any credit institution or investment firm
established in any EEA Member Country which is subject to the supervision of an
EEA Resolution Authority, (b) any entity established in an EEA Member Country
which is a parent of an institution described in clause (a) of this definition,
or (c) any financial institution established in an EEA Member Country which is a
subsidiary of an institution described in clauses (a) or (b) of this definition
and is subject to consolidated supervision with its parent;

 

“EEA Member Country” means any of the member states of the European Union,
Iceland, Liechtenstein, and Norway.

 

“EEA Resolution Authority” means any public administrative authority or any
person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.

 

“Eligible Collateral” has the meaning specified on Exhibit B hereto.

 

“Environmental Laws” means all Laws, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, the preservation or reclamation of
natural resources, the management, release or threatened release of any
Hazardous Material or the effects of the environment on health and safety.

 

“Equity Interests” means (a) 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 or (b) any Equity Rights
in such Person.

 

“Equity Rights” means, with respect to any Person, any subscriptions, options,
warrants, commitments, preemptive rights or agreements of any kind (including,
without limitation, any stockholders’ or voting trust agreements) for the
issuance, sale, registration or voting of, or securities convertible into, any
additional shares of capital stock of any class, or partnership or other
ownership interests of any type in, such Person.

 

“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 the Parent or any Subsidiary, is treated as a single
employer under Section 4 14(b) or (c) of the Internal Revenue Code or, solely
for purposes of Section 302 of ERISA and Section 412 of the Internal Revenue
Code, is treated as a single employer under Section 414 of the Internal Revenue
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 (except 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 Internal Revenue Code or Section 302 of ERISA), whether or
not waived; (c) the filing pursuant to Section 412(d) of the Internal Revenue
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 the Parent or
any ERISA Affiliate of any liability under any of Sections 4062, 4063, 4064 or
4069 of ERISA; (e) the receipt by the Parent 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 the Parent or any ERISA Affiliate of any liability with respect to
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Parent or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Parent 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.

 

- 11 -

 

 

“Eurodollar”, when used with respect 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 LIBO Rate.

 

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor person), as in effect
from time to time.

 

“Events of Default” has the meaning specified in Article 7.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time.

 

“Excluded Taxes” means, with respect to any Lender Party or other recipient of a
payment made by or on account of any obligation of a Loan Party hereunder:

 

(a)         income or franchise taxes imposed on (or measured by) its net
income, receipts, capital or net worth by the United States (or any jurisdiction
within the United States), except to the extent that the United States (or any
such jurisdiction within the United States) imposes such taxes solely in
connection with such Lender Party’s enforcement of its rights or exercise of its
remedies under the Loan Documents, or by the jurisdiction under the Laws of
which such recipient is organized or in which its principal office is located
or, in the case of any Lender, in which its applicable lending office is located
(collectively, “Income Taxes”);

 

(b)         any branch profits taxes imposed by the United States or any similar
tax imposed by any other jurisdiction described in clause (a) above;

 

(c)         in the case of a Foreign Lender, any United States federal
withholding tax that (i) is in effect and would apply to amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
or designates a new lending office or (ii) is attributable to such Foreign
Lender’s failure to comply with Section 2.17(e); and

 

(d)         any United States federal withholding taxes imposed pursuant to
FATCA.

 

Notwithstanding the foregoing, a withholding tax will not be an “Excluded Tax”
to the extent that (A) it is imposed on amounts payable to a Foreign Lender by
reason of an assignment made to such Foreign Lender at the Borrower Agent’s
request pursuant to Section 9.15, (B) it is imposed on amounts payable to a
Foreign Lender by reason of any other assignment and does not exceed the amount
for which the assignor would have been indemnified pursuant to Section 2.17(a)
or (C) in the case of designation of a new lending office, it does not exceed
the amount for which such Foreign Lender would have been indemnified if it had
not designated a new lending office.

 

- 12 -

 

 

“Existing Credit Agreement” has the meaning specified in the Recitals hereto.

 

“Existing Revolving Loans” has the meaning specified in the Recitals hereto.

 

“Existing Secured Letters of Credit” has the meaning specified in the Recitals
hereto. A list of the Existing Secured Letters of Credit is set forth on
Schedule 1.01 hereto.

 

“Exposure” means, with respect to any Lender at any time, the sum of (a) the
aggregate outstanding principal amount of such Lender’s Loans at such time and
(b) such Lender’s LC Exposure at such time.

 

“Falls Lake Fire and Casualty” means Falls Lake Fire and Casualty Company, a
regulated insurance company domiciled in the State of California.

 

“Falls Lake National” means Falls Lake National Insurance Company, a regulated
insurance company domiciled in the State of Ohio.

 

“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, as in
effect on the date of this Agreement (or any amended or successor version of
FATCA that is substantively comparable and not materially more onerous to comply
with), and any current or future regulations thereunder or official governmental
interpretations thereof.

 

“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 Cleveland, or, if such rate is not so published on
such 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.

 

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

 

“Financial Officer” means the chief financial officer, the president, the chief
executive officer or a vice president (whose duties include financial matters)
of a Loan Party.

 

“Financing Transactions” means any one or more of the execution, delivery and
performance by a Loan Party of the Loan Documents to which it is to be a party,
and the borrowing of Loans, the use of the proceeds thereof and the issuance of
Letters of Credit hereunder.

 

“Fiscal Quarter” means a fiscal quarter of the Parent.

 

“Fiscal Quarter Increase” means, as to any Fiscal Quarter, the sum of (a) the
greater of (i) an amount equal to twenty-five percent (25%) of the Parent’s
Consolidated net, after tax earnings (determined in accordance with GAAP) for
such Fiscal Quarter and (ii) zero dollars ($0) and (b) an amount equal to
twenty-five percent (25%) of Net Available Proceeds received by the Parent or
any of its Subsidiaries in such Fiscal Quarter.

 

- 13 -

 

 

“Fiscal Year” means a fiscal year of the Parent.

 

“Foreign Insurance Subsidiary” means each Insurance Subsidiary that is a Foreign
Subsidiary. As of the Restatement Effective Date JRG Reinsurance is the sole
Foreign Insurance Subsidiary.

 

“Foreign Lender” means (a) as to a Borrower that is a U.S. Person, a Lender that
is not a U.S. Person and (b) as to a Borrower that is not a U.S. Person, a
Lender that is resident or organized under the Laws of a jurisdiction other than
that in which such Borrower is a resident for Tax purposes.

 

“Foreign Subsidiary” means a Subsidiary (which may be a corporation, limited
liability company, partnership or other legal entity) organized under the Laws
of a jurisdiction outside the United States, and conducting a material portion
of its operations outside the United States.

 

“Fronting Exposure” means, at any time there is a Defaulting Lender, with
respect to any Letter of Credit Issuer, such Defaulting Lender’s Percentage of
the outstanding LC Reimbursement Obligations with respect to Letters of Credit
issued by such Letter of Credit Issuer other than LC Reimbursement Obligations
as to which such Defaulting Lender’s participation obligation has been
reallocated to other Lenders or Cash Collateralized in accordance with the terms
hereof.

 

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, applied on a basis consistent (except for changes
concurred in by the Parent’s independent public accountants) with the most
recent audited Consolidated financial statements of the Parent and its
Consolidated Subsidiaries delivered to the Lenders. If at any time the SEC
permits or requires U.S.-domiciled companies subject to the reporting
requirements of the Exchange Act to use, in whole or in part, IFRS in lieu of
GAAP for financial reporting purposes, the Parent may elect by written notice to
the Administrative Agent to so use IFRS (or, to the extent permitted by the SEC
and consistent with pronouncements of the Financial Accounting Standards Board
and the International Accounting Standards Board, portions thereof from time to
time) in lieu of GAAP and, upon any such notice, references herein to GAAP shall
thereafter be construed to mean (a) for periods beginning on and after the date
specified in such notice, IFRS (or, if applicable, such portions) as in effect
from time to time and (b) for prior periods, GAAP as defined in the first
sentence of this definition (and as theretofore modified pursuant to this
sentence), in each case subject to Section 1.04.

 

“Governmental Authority” means the government of the United States or 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 exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

“Guarantee” by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Debt or other obligations to pay money 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 Debt or other
obligation or to purchase (or 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 Debt or other
obligation of the 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 Debt or other obligation
or (d) as an account party in respect of any letter of credit or letter of
guaranty issued to support such Debt or other obligation; provided that the term
“Guarantee” shall not include endorsements for collection or deposit in the
ordinary course of business.

 

- 14 -

 

 

“Guarantor” means, as of the Restatement Effective Date, each of James River UK
and, until, if ever, James River becomes a Borrower upon and subject to the
provisions of Section 2.04, James River, it being understood and agreed that
after, if ever, James River becomes a Borrower as aforesaid, all references to
the “Guarantors” shall be deemed to refer to James River UK.

 

“Guarantor Guaranteed Amount” means at any time, without duplication, the
aggregate principal amount of all Debt for which Guarantees have been made by
any and all Guarantors under Section 6.04(a)(iv)(C) that is outstanding at such
time; provided, however, that, by way of clarification and not limitation, the
Guarantor Guaranteed Amount shall not apply to a Guarantee made by JRG
Reinsurance of Debt of the Parent under Section 6.04(a)(iv)(D).

 

“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.

 

“Hedging Agreement” means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest rate, currency exchange rate or commodity price hedging arrangement.

 

“Hybrid Securities” means (a) the Restatement Effective Date Trust Preferred
Securities and (b) any so-called ‘hybrid preferred securities’ consisting of
other Trust Preferred Securities, deferrable interest Subordinated Debt,
mandatory convertible debt or other hybrid securities (i) that are shown on the
Consolidated financial statements of the Parent as liabilities, (ii) that, if
evaluated by S&P, would be classified by S&P as possessing a minimum of
intermediate equity content or, if evaluated by Moody’s, would be classified as
possessing Basket C equity credit, and (iii) that, by their terms (or by the
terms of any security into which they are convertible or for which they are
exchangeable) or upon the happening of any event or otherwise, does not mature,
are not mandatorily redeemable and are not subject to any mandatory repurchase
requirement at any time earlier than November 8, 2025.

 

“IFRS” means the International Financial Reporting Standards and applicable
accounting requirements set by the International Accounting Standards Board or
any successor thereto (or the Financial Accounting Standards Board, the
Accounting Principles Board of the American Institute of Certified Public
Accountants, or any successor to either such Board, or the SEC, as the case may
be), as in effect from time to time.

 

- 15 -

 

 

“Income Taxes” has the meaning specified in clause (a) of the definition of
Excluded Taxes.

 

“Indemnified Taxes” means all Taxes except Excluded Taxes.

 

“Insurance Subsidiary” means a Subsidiary that is a regulated insurance company.
As of the date of the Restatement Effective Date, Falls Lake Fire and Casualty,
Falls Lake National, James River Casualty, James River Insurance, JRG
Reinsurance, Carolina Re and Stonewood Insurance constitute the Insurance
Subsidiaries.

 

“Interest Election” means an election by the Borrower Agent, for and on behalf
the Borrowers, to change or continue the Interest Type of a Borrowing in
accordance with Section 2.07.

 

“Interest Expense” means, for any fiscal period, all expense of the Parent or
any of its Subsidiaries for such fiscal period classified as interest expense
for such period, including interest on capitalized interest and interest under
“synthetic” leases, in accordance with GAAP; provided that Interest Expense
shall not include interest expense, if any, in respect of Hedging Agreements
that would otherwise be included pursuant to Financial Accounting Standard 133.

 

“Interest Payment Date” means (a) with respect to any Base Rate Loan, the last
Business Day of each calendar quarter in respect of the quarter then ending and
(b) with respect to any Eurodollar Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, if such Interest
Period is longer than three months, each day during 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 Eurodollar Borrowing, the period
beginning 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 Agent, for and on behalf the Borrowers, may elect;
provided that (a) 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 (b) any Interest Period 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 deemed to be the effective date
of the most recent conversion or continuation of such Borrowing.

 

“Interest Type”, when used with respect 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 LIBO Rate or the Alternate
Base Rate.

 

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

 

- 16 -

 

 

 

“Investment” means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of capital stock, bonds, notes,
debentures, partnership or other ownership interests or other securities of any
other Person or any agreement to make any such acquisition (including, without
limitation, any “short sale” or any sale of any securities at a time when such
securities are not owned by the Person entering into such sale); (b) the making
of any deposit with, or advance, loan or other extension of credit or capital
contribution to, any other Person (including the purchase of Property from
another Person subject to an understanding or agreement, contingent or
otherwise, to resell such Property to such Person), but excluding any such
advance, loan or extension of credit having a term not exceeding 90 days arising
in connection with the sale of inventory or supplies by such Person in the
ordinary course of business; (c) the entering into of any Guarantee of, or other
contingent obligation with respect to, Debt or other liability of any other
Person and (without duplication) any amount committed to be advanced, lent or
extended to such Person; or (d) the entering into of any Hedging Agreement.

 

“James River” means James River Group, Inc., a Delaware corporation, its
successors and permitted assigns.

 

“James River Casualty” means James River Casualty Company, a regulated insurance
company domiciled in the State of Virginia.

 

“James River Insurance” means James River Insurance Company, a regulated
insurance company domiciled in the State of Ohio.

 

“James River UK” means James River Group Holdings UK Limited, a private limited
company incorporated under the Laws of England and Wales that at all times shall
be a Wholly Owned Subsidiary of the Parent.

 

“JRG Reinsurance” means JRG Reinsurance Company Ltd., a regulated insurance
company domiciled in Bermuda.

 

“Law” means any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, code, guideline, release, ruling, or order of,
including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration
thereof, or any agreement with, any Governmental Authority.

 

“LC Disbursement” means a payment made by a Letter of Credit Issuer in respect
of a drawing under a Letter of Credit.

 

“LC Exposure” means, as applicable, Secured LC Exposure or Unsecured LC
Exposure.

 

“LC Reimbursement Obligations” means, as applicable, Secured Facility LC
Reimbursement Obligations or Unsecured Facility LC Reimbursement Obligations.

 

“Lender Affiliate” means, (a) with respect to any Lender, (i) an Affiliate of
such Lender or (ii) any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by such Lender or an Affiliate of such
Lender and (b) with respect to any Lender that is a fund which invests in bank
loans and similar extensions of credit, any other fund that invests in bank
loans and similar extensions of credit and is managed by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.

 

 - 17 - 

 

 

“Lender Parties” means the Lenders, the Letter of Credit Issuers and the
Administrative Agent.

 

“Lenders” means the Persons listed on Schedule 2.01(a) and Schedule 2.01(b) and
any other Person that shall have become a party hereto pursuant to an Assignment
or Section 2.11, other than any such Person that ceases to be a party hereto
pursuant to an Assignment.

 

“Letter of Credit” means a Secured Facility Letter of Credit or an Unsecured
Facility Letter of Credit.

 

“Letter of Credit Issuer” means KeyBank National Association or any of its
Affiliates (and their successors) and each other Lender or Lender Affiliate that
is requested by the Borrower Agent, for and on behalf the Borrowers, and agrees
to be a Letter of Credit Issuer hereunder and is approved by the Administrative
Agent (such approval not to be unreasonably withheld or delayed).

 

“Leverage Ratio” means, as of the end of any Fiscal Quarter, the ratio of (a)
Adjusted Consolidated Debt as of such Fiscal Quarter-end to (b) Total
Capitalization as of such Fiscal Quarter-end.

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the greater of (i) zero percent (0.00%) per annum and (ii) the per annum
rate of interest, determined by the Administrative Agent in accordance with its
usual procedures (which determination shall be conclusive and binding absent
manifest error) as of approximately 11:00 a.m. (London time) two (2) Business
Days prior to the beginning of such Interest Period pertaining to such
Eurodollar Borrowing, equal to the London Interbank Offered Rate, as published
by Bloomberg (or other commercially available source providing quotations of
such London Interbank Offered Rate as designated by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market), having a maturity
comparable to such Interest Period. In the event that such a rate quotation is
not available for any reason (including, without limitation, the phase-out of
LIBOR pursuant to a rule, regulation or order of the United Kingdom’s Financial
Conduct Authority), then the rate for such period (or, as applicable,
thereafter) shall be a comparable replacement rate determined by the
Administrative Agent in its good faith commercial judgment at such time in
accordance with Section 2.14(b).

 

“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.

 

“Loan Documents” means this Agreement, any promissory note issued by the
Borrowers pursuant to Section 2.09(e), the Letters of Credit and any related
reimbursement agreement, each Payment Guaranty, the Security Documents, and any
certificate or writing required to be delivered by a Loan Party pursuant to
Article 2 or Article 5.

 

 - 18 - 

 

 

“Loan Parties” means, collectively, the Borrowers and the Guarantors.

 

“Loans” means loans made by the Lenders under the Unsecured Facility pursuant to
Section 2.01(b) and Section 2.02, which shall be deemed to include, without
limitation, the Existing Revolving Loans.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, properties, assets, financial condition, contingent liabilities or
material agreements of the Parent and its Subsidiaries taken as a whole, (b) the
ability of a Loan Party to perform any of its obligations under any Loan
Document or (c) the rights of or benefits available to any Lender Party under,
or the validity or enforceability of, any Loan Document.

 

“Material Debt” means Debt (other than obligations in respect of the Loans and
the Letters of Credit) or obligations in respect of one or more Hedging
Agreements, of any one or more of the Parent and its Subsidiaries in an
aggregate principal amount exceeding $5,000,000. For purposes of determining
Material Debt, the “principal amount” of the obligations of the Parent or any
Subsidiary in respect of any Hedging Agreement at any time will be the maximum
aggregate amount (after giving effect to any netting agreements) that the Parent
or such Subsidiary would be required to pay if such Hedging Agreement were
terminated at such time.

 

“Material Insurance Subsidiary” means a Material Subsidiary that is also an
Insurance Subsidiary. As of the Restatement Effective Date, Falls Lake Fire and
Casualty, Falls Lake National, James River Insurance, JRG Reinsurance, Carolina
Re and Stonewood Insurance constitute the Material Insurance Subsidiaries.

 

“Material Subsidiary” means a Subsidiary that holds, directly or indirectly,
more than 5% of the Consolidated assets of the Parent and its Subsidiaries at
such time or that accounts for more than 5% of the Consolidated gross income of
the Parent and its Subsidiaries at such time, in each instance determined in
accordance with GAAP; provided that the aggregate consolidated gross income or
assets for all Subsidiaries that are not Material Subsidiaries shall not as of
the end of any Fiscal Quarter exceed 10% of the Consolidated gross income or
Consolidated assets of the Parent and its Subsidiaries. To conform to the
preceding sentence, the Parent shall designate additional Material Subsidiaries
(or may reclassify existing Material Subsidiaries from being such) in a writing
delivered to the Administrative Agent concurrently with its delivery of
quarterly or annual financial statements pursuant to Section 5.01. As of the
Restatement Effective Date, Falls Lake Fire and Casualty, Falls Lake National,
James River, James River Insurance, James River UK, JRG Reinsurance, Carolina Re
and Stonewood Insurance constitute the Material Subsidiaries.

 

“Maturity Date” means the Revolving Availability Termination Date.

 

“Minimum Collateral Amount” means, at any time, (a) with respect to Cash
Collateral consisting of cash or deposit account balances, an amount equal to
105% of the Fronting Exposure of all Letter of Credit Issuers with respect to
Letters of Credit issued and outstanding at such time and (b) otherwise, an
amount determined by the Administrative Agent and the Letter of Credit Issuers
in their sole discretion.

 

 - 19 - 

 

 

“Minimum Net Worth” means, for any Fiscal Quarter, the minimum Consolidated Net
Worth required to be maintained by the Parent as of the end of such Fiscal
Quarter pursuant to Section 6.12.

 

“Moody’s” means Moody’s Investors Service, Inc. and its successors and assigns
or, if it shall be dissolved or shall no longer assign credit ratings to
long-term debt, then any other nationally recognized statistical rating agency
designated by the Administrative Agent.

 

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

 

“Multiple Employer Plan” means an employee benefit plan, other than a
Multiemployer Plan, to which the Parent or any ERISA Affiliate, and one or more
employers other than the Parent or an ERISA Affiliate, is making or accruing an
obligation to make contributions or, in the event that any such plan has been
terminated, to which the Parent or an ERISA Affiliate made or accrued an
obligation to make contributions during any of the five plan years preceding the
date of termination of such plan.

 

“NAIC” means the National Association of Insurance Commissioners and any
successor thereto.

 

“Net Available Proceeds” means, with respect to the sale or other disposition of
Equity Interests of the Parent, the aggregate amount of all cash received by the
Parent in respect of such sale or other disposition, net of reasonable expenses
incurred by the Parent in connection therewith.

 

“Non-Defaulting Lender” shall mean, at any time, each Lender that is not a
Defaulting Lender at such time.

 

“Other Taxes” means any and all present or future recording, stamp, documentary,
excise, transfer, sales, property or similar taxes, charges or levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.

 

“Parent” means James River Group Holdings, Ltd., a Bermuda company, and its
successors and permitted assigns, the former company name of which was Franklin
Holdings (Bermuda), Ltd.

 

“Participants” has the meaning specified in Section 9.04(e).

 

“Participant Register” has the meaning specified in Section 9.04(e).

 

“Payment Guaranty” means, as applicable, each of (a) the Continuing Guaranty of
Payment dated June 5, 2013 executed and delivered by James River to the
Administrative Agent for the benefit of the Guaranteed Creditors (as defined
therein), (b) the Continuing Guaranty of Payment dated December 15, 2015
executed and delivered by James River UK to the Administrative Agent for the
benefit of said Guaranteed Creditors and (c) any other Continuing Guaranty of
Payment (in substantially the same form as such June 5, 2013 and December 15,
2015 Continuing Guaranties of Payment) hereafter delivered to the Administrative
Agent, in each case, as the same heretofore may have been, or hereafter may be,
confirmed, amended or otherwise modified from time to time pursuant and subject
to the applicable provisions of this Agreement.

 

 - 20 - 

 

 

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

 

“Percentage” means, with respect to any Lender, as applicable, (a) the
percentage of the Total Secured Facility Commitment represented by such Lender’s
Secured Facility Commitment or (b) the percentage of the Total Unsecured
Facility Commitment represented by such Lender’s Unsecured Facility Commitment.
If, as the case may be, the Secured Facility Commitments or the Unsecured
Facility Commitments have terminated or expired, the Percentages will be
determined based on, respectively, the Secured Facility Commitments or the
Unsecured Facility Commitments most recently in effect, adjusted to give effect
to any assignments.

 

“Permitted Acquisition” means any Acquisition by the Parent or a Subsidiary if
all of the following conditions (to the extent, as to clauses (c) and (d),
below, applicable to such Acquisition) are met:

 

(a)       no Default exists immediately prior to, and after giving effect to,
the consummation of such Acquisition;

 

(b)      all transactions related to such Acquisition are consummated in
compliance, in all material respects, with applicable Law;

 

(c)       in the case of an Acquisition of Equity Interests in a Person, after
giving effect to such Acquisition, 100% of the Equity Interests in such Person,
and any other Subsidiary resulting from such Acquisition, shall be owned
directly or indirectly by the Parent;

 

(d)       in the case of an Acquisition of assets of a Person, 100% of the
Equity Interests in any Subsidiary formed for the purpose of or resulting from
such Acquisition shall be owned directly or indirectly by the Parent;

 

(e)       such Acquisition is not actively opposed by the board of directors (or
similar governing body) of the selling Person or the Person whose Equity
Interests are to be acquired;

 

(f)        without limiting the generality of clause (a), above, (i) after
giving effect to such Acquisition, the Parent and its Subsidiaries shall be in
compliance with the requirements of Sections 6.15 and 6.17, and (ii) if such
Acquisition is in the form of a merger, consolidation or amalgamation, such
merger, consolidation or amalgamation shall conform to the requirements of
Section 6.03(d);

 

(g)       if the aggregate consideration (including assumed Debt) for such
Acquisition and all other Permitted Acquisitions consummated within the
preceding 365-day period exceeds $50,000,000, the Borrower Agent shall have
delivered to the Administrative Agent at least twenty (20) days prior to the
consummation of such Acquisition (i) copies of the most recent drafts of the
purchase agreement (or equivalent agreement otherwise named) and related
material documents pursuant to which such Acquisition is to be effected (which
draft purchase agreement and other documents the Borrower Agent shall promptly
supplement with modifications thereto that effect material changes in terms of
such Acquisition and, concurrently with consummation thereof, the final forms of
such purchase agreement and other documents) and (ii) a certificate of a
Financial Officer showing to the reasonable satisfaction of the Administrative
Agent that the Borrowers are (A) in compliance on a pro forma basis after giving
effect to such Acquisition, with the covenants contained in Sections 6.11 and
6.12, recomputed as of the last day of the most recently ended Fiscal Quarter
for which financial statements are available as if such Acquisition had occurred
on such last day and (B) in compliance with the provisions of clauses (a)
through (f), above, inclusive, which certificate the Administrative Agent shall
forward to the Lenders promptly following receipt thereof by the Administrative
Agent;

 

 - 21 - 

 

 

(h)      with respect to all Acquisitions other than those described in clause
(g), above, the Borrower Agent shall have delivered to the Administrative Agent
written notice of such Acquisition, accompanied by such information relating
thereto as the Administrative Agent may reasonably request, promptly following
the consummation of such Acquisition; and

 

(i)       the aggregate consideration (including assumed Debt) for such
Acquisition shall not exceed an amount equal to fifty percent (50%) of
Consolidated Net Worth as of the end of the Fiscal Quarter most recently ended
prior to the date on which such Acquisition is consummated for which financial
statements are required to have been furnished to the Administrative Agent
pursuant to Section 5.01.

 

“Permitted Investments” means any of the following: (a) any investment in direct
obligations of the United States of America or any agency thereof; (b)
investments in time deposit accounts, certificates of deposit and money market
deposits maturing within 90 days of the date of acquisition thereof issued by
any Lender or a bank or trust company which is organized under the Laws of the
United States of America, any State thereof or any foreign country recognized by
the United States of America, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $500,000,000 (or the
foreign currency equivalent thereof) and whose long-term debt is rated “A-” (or
such similar equivalent rating) or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 436 under the Exchange Act)
or any money market fund sponsored by a registered broker dealer or mutual fund
distributor; (c) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (a) above entered into
with a Lender or a bank meeting the qualifications described in clause (b)
above; (d) investments in commercial paper, maturing not more than 90 days after
the date of acquisition, issued by a corporation (other than an Affiliate of the
Parent) organized and in existence under the Laws of the United States of
America or any foreign country recognized by the United States of America with a
rating at the times as of which any investment therein is made of “P-l” (or
higher) by Moody’s or “A-1” (or higher) by S&P; (e) investments in securities
with maturities of six months or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least “A” by S&P or “A” by Moody’s; and (f) as to any Insurance Subsidiary,
any other investment permitted by its Applicable Insurance Regulatory Authority
(which other investments, by way of clarification and not limitation, shall be
deemed not to include the Equity Interests of a Subsidiary).

 

 - 22 - 

 

 

“Permitted Liens” means:

 

(a)       Liens imposed by Law for taxes that are not yet due or are being
contested in compliance with Section 5.05;

 

(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 5.05;

 

(c)       pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security Laws (including, without limitation, deposits made in the ordinary
course of business to cash collateralize letters of credit described in the
parenthetical in clause (i) of the definition of “Debt”);

 

(d)      deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, and Liens imposed by statutory or common Law
relating to banker’s liens or rights of setoff or similar rights relating to
deposit accounts, in each case in the ordinary course of business;

 

(e)       Liens arising under escrows, trusts, custodianships, separate
accounts, funds withheld procedures, and similar deposits, arrangements, or
agreements established with respect to insurance policies, annuities, guaranteed
investment contracts and similar products underwritten by, or Reinsurance
Agreements entered into by, any Insurance Subsidiary in the ordinary course of
business;

 

(f)       deposits with insurance regulatory authorities in the ordinary course
of business (which deposits may be in the form of cash collateralized letters of
credit);

 

(g)      banker’s liens, rights of set-off or similar rights in favor of a
depository institution with respect to deposit accounts maintained with a
depository institution in the ordinary course of business and securing only
obligations with respect to the maintenance of such accounts; and

 

(h)      easements, zoning restrictions, rights-of-way, licenses, reservations,
minor irregularities of title and similar encumbrances on real property imposed
by Law or arising in the ordinary course of business that do not secure any
monetary obligation and do not materially detract from the value of the affected
property or interfere with the ordinary conduct of business of the Parent or any
Subsidiary;

 

provided that, except as provided in clause (c), above, the term “Permitted
Liens” shall not include any Lien that secures Debt.

 

 - 23 - 

 

 

“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 (except a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Internal
Revenue Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate (i) is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) a “contributing sponsor” as defined in
Section 400 l(a)(13) of ERISA, or (ii) with respect to which the Borrower or any
ERISA Affiliate otherwise could incur liability under Title IV of ERISA or
Section 412 of the Internal Revenue Code or Section 302 of ERISA.

 

“Pledge Agreement” means, as applicable, each Pledge and Security Agreement
dated June 5, 2013 entered into between, as the case may be, the Parent or JRG
Reinsurance and the Administrative Agent and any other Pledge and Security
Agreement (in substantially the same form as such June 5, 2013 Pledge and
Security Agreements) hereafter entered into between a Loan Party and the
Administrative Agent, in each case, as the same heretofore may have been, or
hereafter may be, confirmed, supplemented, amended or otherwise modified from
time to time pursuant and subject to the applicable provisions of this
Agreement.

 

“Prevailing Eastern Time” means “eastern standard time” as defined in 15 USC
§263 as modified by 15 USC §260a.

 

“Pricing Schedule” means the Pricing Schedule attached hereto.

 

“Prime Rate” means, for any day, the rate of interest per annum then most
recently publicly announced by KeyBank National Association as its “prime” rate
(or equivalent rate otherwise named) in effect at its principal office in
Cleveland, Ohio, which prime rate is not necessarily the lowest rate of interest
charged by KeyBank National Association to commercial borrowers. Each change in
the Prime Rate will be effective for purposes hereof from and including the date
such change is publicly announced as being effective.

 

“Register” has the meaning specified in Section 9.04(c).

 

“Regulatory Condition Satisfaction” has the meaning specified in Section
4.01(l).

 

“Reinsurance Agreement” means any agreement, contract, treaty or other
arrangement providing for Ceded Reinsurance by any Insurance Subsidiary or any
Subsidiary of such Insurance Subsidiary in the ordinary course of its business.

 

“Regulation U” means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

 

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

 

“Required Lenders” means, at any time, both (a) Lenders having aggregate Secured
Facility Exposures and unused Secured Facility Commitments representing more
than 50% of the sum of all Secured Facility Exposures and unused Secured
Facility Commitments at such time and (b) Lenders having aggregate Unsecured
Facility Exposures and unused Unsecured Facility Commitments representing more
than 50% of the sum of all Unsecured Facility Exposures and unused Unsecured
Facility Commitments at such time; provided that the outstanding Exposure and
unused Commitment of any Defaulting Lender shall be disregarded in determining
Required Lenders at any time; and provided, further, that (i) if the matter
directly affects only those Lenders having Secured Facility Exposures and unused
Secured Facility Commitments, “Required Lenders” shall be determined solely by
reference to clause (a) of this definition, and (ii) if the matter directly
affects only those Lenders having Unsecured Facility Exposures and unused
Unsecured Facility Commitments, “Required Lenders” shall be determined solely by
reference to clause (b) of this definition.

 

 - 24 - 

 

 

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

 

“Restatement Effective Date Trust Preferred Securities” means Trust Preferred
Securities issued by any of the following Delaware business trusts that are
Affiliates of the Parent or any other Subsidiary as of the Restatement Effective
Date: Franklin Holdings II (Bermuda) Capital Trust I, James River Capital Trust
I, James River Capital Trust II, James River Capital Trust III, and James River
Capital Trust IV.

 

“Restricted Payment” means, without duplication, (a) any dividend or other
distribution (whether in cash, securities or other property) with respect to any
Equity Interest in the Parent or (b) any payment (whether in cash, securities or
other property) or incurrence of an obligation by the Parent or any of its
Subsidiaries, including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any Equity Interest in the Parent.

 

“Retrocession Agreement” means any agreement, contract, treaty or other
arrangement (other than Surplus Relief Reinsurance) whereby any Insurance
Subsidiary or any Subsidiary of such Insurance Subsidiary in the ordinary course
of its business cedes reinsurance to other insurers (other than to another
Insurance Subsidiary or any of its Subsidiaries).

 

“Revolving Availability Period” means the period from and including the
Restatement Effective Date to but excluding the Revolving Availability
Termination Date (or, if earlier, the date on which all outstanding Commitments
terminate).

 

“Revolving Availability Termination Date” means November 8, 2024 (or if such
date is not a Business Day with respect to Eurodollar Loans, the next preceding
day that is a Business Day with respect to Eurodollar Loans).

 

“Sale-Leaseback Transaction” has the meaning specified in Section 6.07.

 

“SAP” means, with respect to any Insurance Subsidiary, the accounting procedures
and practices prescribed or permitted by the Applicable Insurance Regulatory
Authority, applied on a basis consistent with those that, in accordance with the
last sentence of Section 1.04(a), are to be used in making the calculations for
purposes of determining compliance with this Agreement.

 

 - 25 - 

 

 

“S&P” means Standard & Poor’s Financial Services LLC, and its successors and
assigns or, if it shall be dissolved or shall no longer assign credit ratings to
long-term debt, then any other nationally recognized statistical rating agency
designated by the Administrative Agent.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Secured Facility” means the secured revolving credit facility described and
defined in Section 2.01(a).

 

“Secured Facility Commitment” means, with respect to each Lender, the commitment
of such Lender to acquire participations in Secured Letters of Credit hereunder,
expressed as an amount representing the maximum aggregate amount of such
Lender’s Secured Exposure under the Secured Facility, as such commitment may be
(a) reduced from time to time pursuant to Section 2.08, (b) increased from time
to time pursuant to Section 2.11 and (c) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.04. As of the
Restatement Effective Date, the initial amount of each Lender’s Secured Facility
Commitment is set forth on Schedule 2.01(a), or in the Assignment pursuant to
which such Lender shall have assumed its initial Commitment, as applicable. The
aggregate amount of the Secured Facility Commitments as of the Restatement
Effective Date is $102,500,000.

 

“Secured Facility Exposure” means, with respect to any Lender at any time, such
Lender’s Secured LC Exposure at such time.

 

“Secured Facility Letter of Credit” means any letter of credit issued under the
Secured Facility pursuant to this Agreement and shall include, without
limitation, each of the Existing Secured Letters of Credit.

 

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

 

“Secured Facility LC Reimbursement Obligations” means, at any time, all
obligations of the Borrowers to reimburse the Letter of Credit Issuers for
amounts paid by any of them in respect of drawings under Secured Facility
Letters of Credit, including any portion of such obligations to which Lenders
have become subrogated by making payments to any Letter of Credit Issuer
pursuant to Section 2.05(e).

 

“Security Documents” means the Pledge Agreements, the Control Agreements and
each other security agreement, control agreement and related security document
executed and delivered by the Borrowers and any applicable depository bank or
securities intermediary, in form and substance reasonably satisfactory to the
Administrative Agent, that grant to the Administrative Agent, for the benefit of
the Lender Parties, a perfected first priority Lien and security interest in
Eligible Collateral.

 

“Statutory Reserve Adjustment” 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 Federal Reserve Board to which the Administrative Agent is
subject with respect to eurocurrency funding (currently referred to as
“Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board). Such
reserve percentages will include those imposed pursuant to such Regulation D.
Eurodollar Loans will 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
Adjustment will be adjusted automatically on and as of the effective date of any
change in any applicable reserve percentage.

 

 - 26 - 

 

 

“Statutory Statement” means, as to any Insurance Subsidiary, a statement of the
condition and affairs of such Insurance Subsidiary, prepared in accordance with
statutory accounting practices required or permitted by the Applicable Insurance
Regulatory Authority, and filed with the Applicable Insurance Regulatory
Authority.

 

“Statutory Surplus” means, as at any date, with respect to an insurance company
domiciled in the United States, the aggregate amount of surplus as regards
policyholders (determined without duplication in accordance with SAP) of such
insurance company, as set forth on page 3, line 38, of the most recent Statutory
Statement of such insurance company (or equivalent page, line, or statement, to
the extent that any thereof is modified or replaced).

 

“Stonewood Insurance” means Stonewood Insurance Company, a regulated insurance
company domiciled in the State of North Carolina.

 

“Subordinated Debt” means the Debt of a Loan Party evidenced by the Trust
Preferred Securities, Notes and any other Debt of a Loan Party (a) no part of
the principal of which is required to be paid (whether by way of mandatory
sinking fund, mandatory redemption, mandatory prepayment or otherwise) prior to
the date that is twelve months after the Maturity Date and (b) that has been
subordinated to the Loans and other obligations of such Loan Party under the
Loan Documents in right and time of payment upon terms that are satisfactory to
the Administrative Agent, which terms may, in the Administrative Agent’s
determination, include (without limitation) limitations or restrictions on the
right of the holder of such Debt to receive payments and exercise remedies. The
Administrative Agent shall deliver a copy of the agreement or other writing
containing such subordination terms to the Lenders at least five (5) Business
Days prior to the effectiveness thereof.

 

“subsidiary” means, with respect to any Person (the “parent”) at any date, (a)
any corporation, limited liability company, partnership 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 and (b) any other corporation, limited
liability company, partnership or other entity (i) of which securities or other
ownership interests (A) representing more than 50% of the ordinary voting power
or, in the case of a partnership, more than 50% of the general partnership
voting interests or (B) otherwise having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions, are, as of such date, owned, controlled or held, or (ii) that is
otherwise Controlled (pursuant to clause (b) of the definition of “Control”) as
of such date, by the parent and/or one or more of its subsidiaries.

 

 - 27 - 

 

 

“Subsidiary” means any subsidiary of a Loan Party; provided that, unless the
context indicates otherwise, “Subsidiary” means a subsidiary of the Parent.

 

“Subsidiary Debt Amount” means at any time, without duplication, the aggregate
principal amount of Debt incurred by any and all Subsidiaries (other than JRG
Reinsurance) under Section 6.01(a)(viii) that is outstanding at such time.

 

“Surplus Relief Reinsurance” means any transaction in which any Insurance
Subsidiary or any Subsidiary of such Insurance Subsidiary cedes business under a
reinsurance agreement that would be considered a “financing-type” reinsurance
agreement as determined by the independent certified public accountants of such
Insurance Subsidiary in accordance with principles published by the Financial
Accounting Standards Board or the Second Edition of the AICPA Audit Guide for
Stock Life Insurance Companies (pp. 91-92 or equivalent provisions), as the same
may be revised from time to time.

 

“Taxes” means any and all present or future taxes, levies, assessments, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.

 

“Total Capitalization” means, as of any date, the aggregate of, without
duplication, (a) Consolidated Debt of the Parent, of the type described in any
or all of clauses (a), (b) (which, by way of clarification and not limitation,
shall include Hybrid Securities), (c), (d), (e) and (h) of the definition of
“Debt” on such date, plus (b) Consolidated Net Worth of the Parent, on such
date.

 

“Total Outstanding Secured Facility Amount” means, at any date, the aggregate
Secured Facility Exposures of all Lenders at such date.

 

“Total Outstanding Unsecured Facility Amount” means, at any date, the aggregate
Unsecured Facility Exposures of all Lenders at such date.

 

“Total Secured Facility Commitment” means, at any date, the aggregate of the
Secured Facility Commitments of all Lenders at such date.

 

“Total Unsecured Facility Commitment” means, at any date, the aggregate of the
Unsecured Facility Commitments of all Lenders at such date.

 

“Trust Preferred Securities” means mandatorily redeemable preferred securities
issued by one or more Delaware business trusts that are Affiliates of the Parent
or any Subsidiary (including, without limitation, Restatement Effective Date
Trust Preferred Securities), to which trusts the such Subsidiary has issued
Trust Preferred Securities Notes; provided that no such preferred securities
shall be mandatorily redeemable earlier than November 8, 2025.

 

“United States” means the United States of America.

 

“Unsecured Facility” means the unsecured revolving credit facility described and
defined in Section 2.01(b).

 

 - 28 - 

 

 

“Unsecured Facility Commitment” means, with respect to each Lender, the
commitment of such Lender to make unsecured Loans and to acquire participations
in unsecured Letters of Credit hereunder, expressed as an amount representing
the maximum aggregate amount of such Lender’s Unsecured Exposure under the
Unsecured Facility, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08, (b) increased from time to time pursuant to Section
2.11 and (c) reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 9.04. As of the Restatement Effective Date
the initial amount of each Lender’s Unsecured Facility Commitment is set forth
on Schedule 2.01(b). The aggregate amount of the Unsecured Facility Commitments
as of the Restatement Effective Date is $212,500,000.

 

“Unsecured Facility Exposure” means, with respect to any Lender at any time, the
sum of (a) the aggregate outstanding principal amount of such Lender’s Loans at
such time and (b) such Lender’s Unsecured LC Exposure at such time.

 

“Unsecured Facility Letter of Credit” means any letter of credit issued under
the Unsecured Facility pursuant to this Agreement.

 

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

 

“Unsecured Facility LC Reimbursement Obligations” means, at any time, all
obligations of the Borrowers to reimburse the Letter of Credit Issuers for
amounts paid by any of them in respect of drawings under Unsecured Facility
Letters of Credit, including any portion of such obligations to which Lenders
have become subrogated by making payments to any Letter of Credit Issuer
pursuant to Section 2.05(e).

 

“U.S. Person” means any Person that is a “United States person” as defined in
Section 7701(a)(30) of the Internal Revenue Code.

 

“USA PATRIOT Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.

 

“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.

 

“Wholly Owned Subsidiary” means, with respect to any Person, any corporation,
partnership or other entity of which all of the equity securities or other
ownership interests (other than, in the case of a corporation, directors’
qualifying shares) are directly or indirectly owned or controlled 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.

 

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority
from time to time under the Bail-In Legislation for the applicable EEA Member
Country, which write-down and conversion powers are described in the EU Bail-In
Legislation Schedule.

 

 - 29 - 

 

 

Section 1.02        Classification of Loans and Borrowings. For purposes of this
Agreement, Loans and Borrowings may be classified by Interest Type (e.g., a
“Eurodollar Loan” or a “Eurodollar Borrowing”).

 

Section 1.03        Terms Generally. The definitions of terms herein (including
those incorporated by reference to another document) apply equally to the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun includes the corresponding masculine, feminine and neuter
forms. The words “include”, “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”. The word “will” shall be construed
to have the same meaning and effect as the word “shall”. Unless the context
requires otherwise, (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,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) 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, (d) 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 (e) the word
“property” shall be construed to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.

 

Section 1.04        Accounting Terms; Changes in GAAP.

 

(a)           Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Administrative Agent hereunder shall (unless otherwise disclosed to the
Administrative Agent in writing at the time of delivery thereof in the manner
described in subsection (b) below) be prepared, in accordance with GAAP or with
SAP applied on a basis consistent with those used in the preparation of the
latest financial statements furnished to the Administrative Agent hereunder
(which, prior to the delivery of the first financial statements under Section
5.01 hereof, shall mean the audited, or annual statutory, financial statements
as at December 31, 2018 referred to in Section 3.04 hereof). All calculations
made for the purposes of determining compliance with this Agreement shall
(except as otherwise expressly provided herein) be made by application of GAAP
or with SAP applied on a basis consistent with those used in the preparation of
the latest annual or quarterly financial statements furnished to the
Administrative Agent pursuant to Section 5.01 hereof (or, prior to the delivery
of the first financial statements under Section 5.01 hereof, used in the
preparation of the audited, or annual statutory, financial statements as at
December 31, 2018 referred to in Section 3.04 hereof) unless (i) the Parent
shall have objected to determining such compliance on such basis at the time of
delivery of such financial statements or (ii) the Required Lenders (through the
Administrative Agent) shall so object in writing within 30 days after delivery
of such financial statements, in either of which events such calculations shall
be made on a basis consistent with those used in the preparation of the latest
financial statements as to which such objection shall not have been made (which,
if objection is made in respect of the first financial statements delivered
under Section 5.01 hereof, shall mean the audited, or annual statutory,
financial statements referred to in Section 3.04 hereof); provided that, if any
change in GAAP by reason of a change from GAAP to IFRS or, if applicable,
portions thereof (as provided in the definition of “GAAP”) would affect in any
material respect the computation of any ratio or other financial covenant,
basket, calculation or requirement set forth herein or in any other Loan
Document, the Administrative Agent and the Parent shall endeavor to negotiate in
good faith a modification of such ratio, covenant, basket, calculation or
requirement to preserve the original intent thereof in light of such change from
GAAP to IFRS or, if applicable, a portions thereof (subject, however, to the
approval of the Required Lenders); and until, if ever, such modification shall
have been effected by an amendment to such ratio, covenant, basket, calculation
or requirement approved by the Parent and the Required Lenders as provided in
Section 9.02 hereof, (i) such ratio, covenant, basket, calculation or
requirement shall continue to be computed in accordance with GAAP prior to such
change to IFRS (or, if applicable, portions thereof) and (ii) the Parent shall
provide to the Administrative Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio,
covenant, basket, calculation or requirement made before and after giving effect
to such change from GAAP to IFRS (or, if applicable, portions thereof).

 

 - 30 - 

 

 

(b)           The Parent shall deliver to the Administrative Agent at the same
time as the delivery of any annual or quarterly financial statement under
Section 5.01 hereof (i) a description in reasonable detail of any material
variation between the application of accounting principles, or statutory
accounting practices, employed in the preparation of such statement and the
application of accounting principles, or statutory accounting practices,
employed in the preparation of the next preceding annual or quarterly financial
statements as to which no objection has been made in accordance with the last
sentence of subsection (a) above and (ii) reasonable estimates of the difference
between such statements arising as a consequence thereof.

 

(c)           To enable the ready and consistent determination of compliance
with the covenants set forth in Article 6 hereof, the Parent shall not change
the last day of its fiscal year from December 31, or the last days of the first
three fiscal quarters in each of its fiscal years from March 31, June 30 and
September 30 of each year, respectively.

 

Section 1.05        Same Indebtedness; Other References. (a) This Agreement and
the other Loan Documents shall not be deemed to provide for or effect a novation
or repayment and re-advance of any portion of the Existing Revolving Loans or
re-issuance of the Existing Secured Letters of Credit now outstanding, it being
the intention of the Borrower, the Lenders and the Letter of Credit Issuer
hereby that the Debt owing under this Agreement be and hereby is the same Debt
as that owing under the Existing Credit Agreement immediately prior to the
effectiveness hereof; provided that, on the Restatement Effective Date, the
Administrative Agent shall, with the cooperation of the Lenders, cause the
amounts of the commitments under the Existing Credit Agreement and of Existing
Revolving Loans to be, as applicable, re-allocated among the Lenders in
accordance with their respective Unsecured Facility Commitments established
pursuant to this Agreement. Without limiting the generality of the foregoing, to
the extent, if any, not paid prior to the effectiveness of this Agreement, all
accrued interest and fees owing as of the Restatement Effective Date under and
pursuant to the Existing Credit Agreement shall be due and payable in full on
the date on which they would have been due and payable pursuant the Existing
Credit Agreement.

 

 - 31 - 

 

 

(b)           Upon the effectiveness of this Agreement as provided in Article 4
hereof, the Existing Credit Agreement shall be deemed to have been amended and
restated in its entirety and superseded by this Agreement, and any references in
any Security Document or any other Loan Document to the Existing Credit
Agreement shall be deemed to refer to this Agreement; provided that any
references in any Security Document or any other Loan Document to the “Effective
Date” shall be deemed to refer to the Restatement Effective Date.

 

Section 1.06        Divisions. For all purposes under the Loan Documents, in
connection with any division or plan of division under Delaware law (or any
comparable event under a different jurisdiction’s laws): (a) if any asset,
right, obligation or liability of any Person becomes the asset, right,
obligation or liability of a different Person, then it shall be deemed to have
been transferred from the original Person to the subsequent Person, and (b) if
any new Person comes into existence, such new Person shall be deemed to have
been organized and acquired on the first date of its existence by the holders of
its Equity Interests at such time.

 

Article 2

THE CREDITS

 

Section 2.01        Commitments. (a) Subject to the terms and conditions set
forth in this Agreement, each Lender having a Secured Facility Commitment
agrees, from time to time during the Revolving Availability Period, to purchase
participations in Secured Facility Letters of Credit, on a secured basis (the
“Secured Facility”); provided that no Secured Facility Letter of Credit shall at
any time result in (i) such Lender’s Secured Facility Exposure exceeding the
lesser of (A) its Secured Facility Commitment and (B) its Percentage of the
aggregate Collateral Value of the Eligible Collateral then held by the
Administrative Agent, or (ii) the Total Outstanding Secured Facility Amount
exceeding the lesser of (A) the Total Secured Facility Commitment then in effect
and (B) the aggregate Collateral Value of the Eligible Collateral then held by
the Administrative Agent. Within the foregoing limits and subject to the terms
and conditions set forth herein, the Borrowers may request Secured Facility
Letters of Credit. Loans shall not be available under the Secured Facility.

 

(b)           Subject to the terms and conditions set forth in this Agreement,
each Lender having an Unsecured Facility Commitment agrees, from time to time
during the Revolving Availability Period, to make Loans to the Borrowers and
purchase participations in Unsecured Facility Letters of Credit, in each case on
an unsecured basis (the “Unsecured Facility”); provided that no Loan and no
Unsecured Facility Letter of Credit shall at any time result in (i) such
Lender’s Unsecured Facility Exposure exceeding its Unsecured Facility Commitment
or (ii) the Total Outstanding Unsecured Facility Amount exceeding the Total
Unsecured Facility Commitment then in effect. Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrowers may borrow,
prepay and reborrow Loans and request Unsecured Facility Letters of Credit.

 

(c)           [Reserved].

 

 - 32 - 

 

 

(d)           The Commitments of the Lenders under each of the Secured Facility
and the Unsecured Facility are several, i.e., the failure of any Lender to
perform its obligations under either Facility shall not relieve any other Lender
of its obligations thereunder, and no Lender shall be responsible for any other
Lender’s failure to perform its obligations hereunder.

 

Section 2.02        Revolving Loans. (a) Each Loan shall be made as part of a
Borrowing consisting of Loans of the same Interest Type made by the Lenders
ratably in accordance with their respective Unsecured Facility Commitments, as
the Borrower Agent may request (subject to Section 2.14) in accordance herewith.
Each Lender at its option may make any Eurodollar Loan by causing any domestic
or foreign branch or Affiliate of such Lender to make such Loan. Any exercise of
such option shall not affect the Borrowers’ obligation to repay such Loan as
provided herein.

 

(b)           At the beginning of each Interest Period for any Eurodollar
Borrowing, the aggregate amount of such Borrowing shall be an integral multiple
of $500,000 and not less than $2,000,000. When each Base Rate Borrowing is made,
the aggregate amount of such Borrowing shall be an integral multiple of $100,000
and not less than $1,000,000; provided that a Base Rate Borrowing may be in an
aggregate amount that (i) is equal to the entire unused balance of the Unsecured
Facility Commitments or (ii) is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.05(e). Borrowings of more than one
Interest Type may be outstanding at the same time; provided that there shall not
at any time be more than a total of five (5) Eurodollar Borrowings outstanding.

 

(c)           Notwithstanding any other provision hereof, the Borrowers will not
be entitled to request, or to elect to convert or continue, any Eurodollar
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.

 

Section 2.03        Requests to Borrow Loans. To request a Borrowing, the
Borrower Agent shall notify the Administrative Agent of such request by
telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m.,
Prevailing Eastern Time, three Business Days before the date of the proposed
Borrowing or (b) in the case of a Base Rate Borrowing, not later than 11:00
a.m., Prevailing Eastern Time, on the date of the proposed Borrowing. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery, telecopy or e-mail transmission to the Administrative
Agent of a written Borrowing Request in a form approved by the Administrative
Agent and signed by the Borrower Agent. Each such telephonic and written
Borrowing Request shall specify the following information in compliance with
Section 2.02:

 

(i)               the aggregate amount of such Borrowing;

 

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

 

(iii)             whether such Borrowing is to be a Base Rate Borrowing or a
Eurodollar Borrowing;

 

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

 

 - 33 - 

 

 

(v)              the location and number of the Borrowers’ account to which
funds are to be disbursed, which shall comply with the requirements of Section
2.06.

 

If no election as to the Interest Type of a Borrowing is specified, the
requested Borrowing will be a Base Rate Borrowing. If no Interest Period with
respect to a requested Eurodollar Borrowing is specified, the Borrower Agent
will be deemed to have selected an Interest Period of one month’s duration.
Promptly after it receives a Borrowing Request in accordance with this Section,
the Administrative Agent shall advise each Lender as to the details of such
Borrowing Request and the amount of such Lender’s Loan to be made pursuant
thereto.

 

Section 2.04        James River as a Borrower. The Borrower Agent may request
that James River be added as an additional Borrower hereunder by delivering
written notice of such request to the Administrative Agent (the “James River
Request”) not less than forty-five (45) days, nor more than seventy-five (75)
days prior to the effectiveness of such addition of James River, so long as no
Default exists on the date of the James River Request or on the date of such
effectiveness. After the Borrower Agent has delivered the James River Request to
the Administrative Agent, James River, by execution of a Borrower Joinder
Agreement in the form of Exhibit C hereto, and upon acceptance of such Borrower
Joinder Agreement by the Administrative Agent, and the Administrative Agent’s
notice to the Lenders, the Letter of Credit Issuer and the Borrower Agent
confirming the Administrative Agent’s determination, in its sole discretion,
that James River has satisfied all conditions and completed all deliveries
specified in the Borrower Joinder Agreement (which notice shall be accompanied
by a copy of the executed Borrower Joinder Agreement), this Agreement shall be
deemed amended so that James River shall become for all purposes a party to this
Agreement as a Borrower, as if it were an original signatory hereto and shall be
admitted as a Borrower hereunder. This Agreement shall be binding for all
purposes upon James River as if James River was an original signatory hereto.
The Borrower Joinder Agreement shall require, among other things, (i) a
supplement to the Schedules provided by the Loan Parties in connection with this
Agreement to reflect James River as an additional Borrower, (ii) to the extent
acceptable to the Administrative Agent in its sole discretion, an update of
certain previously delivered Schedules to the date of the Borrower Joinder
Agreement to reflect any change in the disclosures therein made, and (iii) the
delivery of new promissory notes executed and delivered by each of the Parent,
JRG Reinsurance, and James River. Upon and subject to the effectiveness of such
addition of James River as a Borrower, James River shall cease to be a Guarantor
hereunder.

 

Section 2.05        Letters of Credit. (a) Upon the effectiveness of this
Agreement, each Existing Secured Letter of Credit shall constitute a “Secured
Facility Letter of Credit” for all purposes of this Agreement, issued, for
purposes of this Section 2.05, on the Restatement Effective Date (provided that
any and all issuance fees accrued to the Restatement Effective Date in respect
thereof pursuant to the Existing Credit Agreement shall have been paid in full
on or before the Restatement Effective Date; and provided further that fees may
be due upon presentment of drafts); all of the risk participation exposures in
respect of the Existing Secured Letters of Credit shall be deemed to be assumed
by the Lenders holding Secured Facility Commitments ratably according to their
respective Secured Facility Commitments; and the Borrowers, the Administrative
Agent and the Letter of Credit Issuer hereby agree that, from and after such
date, the terms of this Agreement shall apply to the Existing Secured Letters of
Credit, superseding any other agreement theretofore applicable to them to the
extent inconsistent with the terms hereof. Subject to the terms and conditions
set forth herein, the Borrowers may, by and through the Borrower Agent, request
the issuance of Letters of Credit for its own account or for the account of a
Subsidiary, in a form reasonably acceptable to the Administrative Agent and the
applicable Letter of Credit Issuer, from time to time during the Revolving
Availability Period. If the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrower Agent to, or otherwise
entered into by the Borrowers with, the applicable Letter of Credit Issuer
relating to any Letter of Credit are not consistent with the terms and
conditions of this Agreement, the terms and conditions of this Agreement shall
control.

 

 - 34 - 

 

 

(b)           To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower Agent
shall hand deliver or telecopy (or transmit by electronic communication, if
arrangements and a distribution list for doing so have been approved by the
applicable Letter of Credit Issuer) to the applicable Letter of Credit Issuer
and the Administrative Agent (reasonably, and in any event not later than three
(3) Business Days, in advance of the requested date of issuance, amendment,
renewal or extension) a notice requesting the issuance of, as the case may be a
Secured Facility Letter of Credit or an Unsecured Facility Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, and
specifying (i) whether such Letter of Credit is requested under the Secured
Facility or the Unsecured Facility, (ii) the requested date of issuance,
amendment, renewal or extension (which shall be a Business Day), (iii) the date
on which such Letter of Credit is to expire (which shall comply with Section
2.05(c)), (iv) the amount of such Letter of Credit, (v) the name and address of
the beneficiary thereof and (vi) such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by such
Letter of Credit Issuer, the Borrower Agent also shall submit a letter of credit
application on such Letter of Credit Issuer’s standard form (with such changes
as are agreed by such Letter of Credit Issuer and the Borrower Agent) in
connection with any request for a Letter of Credit. A Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit the Borrowers shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension, (A) if such Letter of Credit is a Secured Facility Letter
of Credit, the Total Outstanding Secured Facility Amount shall not exceed the
lesser of (1) the Total Secured Facility Commitment then in effect and (2) the
aggregate Collateral Value of the Eligible Collateral then held by the
Administrative Agent, and (B) if such Letter of Credit is an Unsecured Facility
Letter of Credit, the Total Outstanding Unsecured Facility Amount shall not
exceed the Total Unsecured Facility Commitment then in effect.

 

(c)           Each Letter of Credit shall expire at or before the close of
business on the earlier of (i) the date that is one (1) year after such Letter
of Credit is issued (or, in the case of any renewal or extension thereof, not
later than one (1) year after such renewal or extension) and (ii) the date that
is ten (10) Business Days (or such lesser period as the Letter of Credit Issuer
may agree in its sole discretion) before the Maturity Date. If the Borrower
Agent so requests, a Letter of Credit shall have an automatic renewal provision;
provided that any Letter of Credit that has an automatic renewal provision must
permit the Letter of Credit Issuer thereof to prevent any such renewal by giving
prior notice to the beneficiary thereof not later than thirty (30) days prior to
the renewal date of such Letter of Credit, and no such automatic renewal shall
cause the expiry date to be later than the date that is ten (10) Business Days
(or such lesser period as the Letter of Credit Issuer may agree in its sole
discretion) before the Maturity Date. Once any such Letter of Credit that has
automatic renewal provisions has been issued, the Lenders shall be deemed to
have authorized (but may not require) such Letter of Credit Issuer to permit at
any time the renewal of such Letter of Credit to an expiry date not later than
the date that is ten (10) Business Days (or such lesser period as the Letter of
Credit Issuer may agree in its sole discretion) before the Maturity Date.

 

 - 35 - 

 

 

(d)           Effective upon 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 applicable Letter of Credit Issuer or the Lenders,
such Letter of Credit Issuer grants to each Lender, and each Lender acquires
from such Letter of Credit Issuer, a participation in such Letter of Credit
equal to such Lender’s Percentage of the aggregate amount available to be drawn
thereunder. Pursuant to such participations, each Lender agrees to pay to the
Administrative Agent, for the account of such Letter of Credit Issuer, such
Lender’s Percentage of (i) each LC Disbursement made by such Letter of Credit
Issuer and not reimbursed by the Borrowers on the date due as provided in
Section 2.05(e) and (ii) any reimbursement payment required to be refunded to
the Borrowers for any reason. Each Lender’s obligation to acquire participations
and make payments pursuant to this subsection 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 any reduction or termination of the Commitments, and each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.

 

(e)           If any Letter of Credit Issuer makes any LC Disbursement under a
Letter of Credit, the Borrowers shall reimburse such LC Disbursement by paying
an amount equal to such LC Disbursement to the Administrative Agent not later
than 2:00 p.m., Prevailing Eastern Time, on (i) the Business Day that the
Borrower Agent receives written notice of such LC Disbursement, if such notice
is received before 11:00 a.m., Prevailing Eastern Time, on the day of receipt or
(ii) the next Business Day, if such notice is not received before 11:00 a.m. on
the day of receipt; provided that, if such LC Disbursement is at least $100,000,
the Borrower Agent may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.03 that such payment be made with the
proceeds of a Base Rate Loan 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 Base Rate Loan. If the Borrowers fail to make such
payment when due, 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 Percentage thereof. Promptly after it receives such
notice, each Lender shall pay to the Administrative Agent its Percentage of the
payment then due from the Borrowers, in the same manner as is provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06(b)
shall apply, mutatis mutandis, to such payment obligations of the Lenders), and
the Administrative Agent shall promptly pay to such Letter of Credit Issuer the
amounts so received by it from the Lenders. If a Lender makes a payment pursuant
to this subsection to reimburse such Letter of Credit Issuer for any LC
Disbursement (other than by funding Base Rate Loans as contemplated above), (i)
such payment will not constitute a Loan and will not relieve the Borrowers of
their obligation to reimburse such LC Disbursement and (ii) such Lender will be
subrogated to its pro rata share of such Letter of Credit Issuer’s claim against
the Borrowers for such reimbursement. Promptly after the Administrative Agent
receives any payment from the Borrowers pursuant to this subsection, the
Administrative Agent will distribute such payment to such Letter of Credit
Issuer or, if Lenders have made payments pursuant to this subsection to
reimburse such Letter of Credit Issuer, then to such Lenders and such Letter of
Credit Issuer as their interests may appear.

 

 - 36 - 

 

 

(f)            The obligation of the Borrowers to reimburse LC Disbursements as
provided in Section 2.05(e) 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 any Letter of Credit Issuer 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. None of the Administrative
Agent, the Lenders, the Letter of Credit Issuers and their respective 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 Letter of
Credit Issuers. In the absence of gross negligence or willful misconduct on the
part of a Letter of Credit Issuer (as finally determined by a court of competent
jurisdiction), such Letter of Credit Issuer shall be deemed to have exercised
care in each such determination. Without limiting the generality of the
foregoing, 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, a Letter of Credit Issuer may, in its sole discretion, either (A)
accept and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary or (B)
refuse to accept and make payment upon such documents if such documents do not
strictly comply with the terms of such Letter of Credit.

 

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

 

(h)           Unless the Borrowers reimburse an LC Disbursement in full on the
day it is made (if notice is given to the Borrower Agent before 11:00 a.m.,
Prevailing Eastern Time, on the day the LC Disbursement is made or, otherwise,
on the next Business Day), the unpaid amount thereof shall bear interest, for
each day from and including the day on which such LC Disbursement is made to but
excluding the day on which the Borrowers reimburse such LC Disbursement, at the
rate per annum then applicable to Base Rate Loans; provided that, if the
Borrowers fail to reimburse such LC Disbursement when due pursuant to Section
2.05(e), then Sections 2.13(c) and 2.13(d) shall apply. Interest accrued
pursuant to this subsection shall be for the account of the applicable Letter of
Credit Issuer, except that a pro rata share of interest accrued on and after the
day that any Lender reimburses such Letter of Credit Issuer for a portion of
such LC Disbursement pursuant to Section 2.05(e) shall be for the account of
such Lender.

 

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Section 2.06        Funding of Loans. (a) Each Lender making a Loan hereunder
shall wire the principal amount thereof in immediately available funds, by 1:00
p.m., Prevailing Eastern Time, on the proposed date of such Loan, to the account
of the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent shall make such funds available
to the Borrowers by promptly crediting the amounts so received, in like funds,
to an account of the Borrowers maintained with the Administrative Agent in
Cleveland, Ohio and designated by the Borrower Agent in the applicable Borrowing
Request; provided that Base Rate Loans made to finance the reimbursement of an
LC Disbursement as provided in Section 2.05(e) will be remitted by the
Administrative Agent to the applicable Letter of Credit Issuer.

 

(b)          Unless the Administrative Agent receives notice from a Lender
before the proposed date of any Borrowing that such Lender will not make its
share of such Borrowing available to the Administrative Agent, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with Section 2.06(a) and may, in reliance on such
assumption, make a corresponding amount available to the Borrowers. In such
event, if a Lender has not in fact made its share of such Borrowing available to
the Administrative Agent, such Lender and the Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the day 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, the greater of the
Federal Funds Effective Rate and a rate reasonably determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrowers, the interest rate applicable
to Base Rate Loans. If such Lender pays such amount to the Administrative Agent,
such amount shall constitute such Lender’s Loan included in such Borrowing.

 

Section 2.07        Interest Elections. (a) Each Borrowing of Loans initially
shall be of the Interest Type specified in the applicable Borrowing Request and,
in the case of a Eurodollar Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. Thereafter, the Borrowers may, by and
through the Borrower Agent, elect to convert such Borrowing to a different
Interest Type or, in the case of a Eurodollar Borrowing, to continue such
Borrowing for one or more additional Interest Periods, all as provided in this
Section. The Borrower Agent 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 Agent
shall notify the Administrative Agent thereof by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower Agent
were requesting that a Borrowing of the Interest Type resulting from such
election be made on the effective date of such election. Each such telephonic
Interest Election shall be irrevocable and shall be confirmed promptly by hand
delivery, telecopy or e-mail transmission to the Administrative Agent of a
written Interest Election in a form approved by the Administrative Agent and
signed by the Borrower Agent.

 

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

 

 - 38 - 

 

 

(i)               the Borrowing to which such Interest Election 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, which shall be a Business Day;

 

(iii)             whether the resulting Borrowing is to be a Base Rate Borrowing
or a Eurodollar Borrowing; and

 

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

 

If an Interest Election requests a Eurodollar Borrowing but does not specify an
Interest Period, the Borrowers will be deemed to have selected an Interest
Period of one month’s duration.

 

(d)           Promptly after it receives an Interest Election, the
Administrative Agent shall advise each Lender as to the details thereof and such
Lender’s portion of each resulting Borrowing.

 

(e)           If the Borrower Agent fails to deliver a timely Interest Election
with respect to a Eurodollar Borrowing before the end of an Interest Period
applicable thereto, such Borrowing (unless repaid) will be converted to a Base
Rate Borrowing at the end 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 Agent, then, so long as an Event of Default is continuing, (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing
and (ii) each Eurodollar Borrowing (unless repaid) will be converted to a Base
Rate Borrowing at the end of the Interest Period applicable thereto on the date
of such notice.

 

Section 2.08        Termination or Reduction of Commitments. (a) Unless
previously terminated, all of the Commitments will terminate on the Revolving
Availability Termination Date.

 

(b)          The Borrowers may at any time terminate the Secured Facility
Commitments or the Unsecured Facility Commitments (or both) in whole or from
time to time reduce the Secured Facility Commitments or the Unsecured Facility
Commitments (or both) in part; provided that (i) the amount of each reduction
(as distinct from termination in whole) of the Commitments a Facility shall be
an integral multiple of $1,000,000 and not less than $5,000,000, (ii) the
Borrowers shall not terminate or reduce the Secured Facility Commitments if,
after giving effect thereto, the total Secured Facility Exposures would exceed
the Total Secured Facility Commitment, (iii) the Borrowers shall not terminate
or reduce the Unsecured Facility Commitments if, after giving effect thereto and
to any concurrent prepayment of Loans pursuant to Section 2.10, the total
Unsecured Facility Exposures would exceed the Total Unsecured Facility
Commitment, and (iv) the Borrowers shall not reduce (as distinct from terminate
in whole) the Commitments if, after giving effect thereto, the outstanding
Commitments would be less than $50,000,000.

 

 - 39 - 

 

 

(c)           The Borrower Agent shall notify the Administrative Agent of any
election to terminate or reduce any Commitments under Section 2.08(b), at least
five (5) Business Days before the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
after it receives any such notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower Agent
pursuant to this Section will be irrevocable; provided that any such notice
terminating any Commitments may state that it is conditioned on the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower Agent (by notice to the Administrative Agent on or
before the specified effective date) if such condition is not satisfied. Any
termination or reduction of the Secured Facility Commitments will be permanent
and will be made ratably among the Lenders in accordance with their respective
Secured Facility Commitments; and any termination or reduction of the Unsecured
Facility Commitments will be permanent and will be made ratably among the
Lenders in accordance with their respective Unsecured Facility Commitments.

 

Section 2.09        Payment at Maturity; Evidence of Debt. (a) Each Borrower
jointly and severally unconditionally promises to pay to the Administrative
Agent on the Maturity Date, for the account of each Lender, the then unpaid
principal amount of such Lender’s Loans.

 

(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.

 

(c)           The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Interest Type thereof and
each Interest Period (if any) 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 subsections
(b) and (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that any failure by any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not affect the Borrowers’ joint and several obligation 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; provided that a Lender’s obtaining or not obtaining such a
promissory note shall not impair or otherwise affect the provisions of
subsections (b), (c) and (d) of this Section. In such event, the Borrowers shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of 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 order of
the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).

 

 - 40 - 

 

 

Section 2.10        Optional and Mandatory Prepayments. (a) Optional
Prepayments. The Borrowers will have the right at any time to prepay any
Borrowing in whole or in part without premium or penalty, but subject to the
provisions of this Section and Section 2.16 provided that the aggregate amount
of each such prepayment shall be an integral multiple of $50,000 and not less
than $250,000.

 

(b)           Mandatory Increase of Collateral or Prepayments. (i) If at any
date the Total Outstanding Secured Facility Amount exceeds the lesser of (A) the
Total Secured Facility Commitment and (B) the aggregate Collateral Value of the
Eligible Collateral then held by the Administrative Agent, in each case
determined as of such date, then not later than the next succeeding Business
Day, the Borrowers shall be required to deposit with the Administrative Agent
additional Eligible Collateral having a Collateral Value equal to such excess
until the Total Outstanding Secured Facility Amount does not exceed the Total
Secured Facility Commitment; and (ii) if at any date the Total Outstanding
Unsecured Facility Amount exceeds the Total Unsecured Facility Commitment,
determined as of such date, then not later than the next succeeding Business
Day, the Borrowers shall be required to prepay the Loans in an amount equal to
such excess until the Total Outstanding Unsecured Facility Amount does not
exceed the Total Unsecured Facility Commitment.

 

(c)           Allocation of Prepayments. Before any optional or mandatory
prepayment of Borrowings hereunder, the Borrower Agent shall select the
Borrowing or Borrowings to be prepaid and shall specify such selection in the
notice of such prepayment pursuant to Section 2.10(f).

 

(d)           Partial Prepayments. Each partial prepayment of a Borrowing shall
be in an amount such that the remaining unpaid amount of such Borrowing would be
permitted under Section 2.02(b) for a Borrowing of the same Interest Type,
except as needed to apply fully the required amount of a mandatory prepayment.
Each partial prepayment of a Borrowing shall be applied ratably to the Loans
included in such Borrowing.

 

(e)           Accrued Interest. Each prepayment of a Borrowing shall be
accompanied by accrued interest to the extent required by Section 2.13.

 

(f)            Notice of Prepayments. Except with respect to a prepayment under
Section 2.10(b), the Borrower Agent shall notify the Administrative Agent by
telephone (confirmed by telecopy or e-mail transmission) of any prepayment of
any Borrowing hereunder (i) in the case of a Eurodollar Borrowing, not later
than noon, Prevailing Eastern Time, three (3) Business Days before the date of
prepayment and (ii) in the case of a Base Rate Borrowing, not later than noon,
Prevailing Eastern Time, on the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date, the principal amount of each
Borrowing or portion thereof to be prepaid and, in the case of a mandatory
prepayment, a reasonably detailed calculation of the amount of such prepayment;
provided that, if a notice of optional prepayment is given in connection with a
conditional notice of termination of the Commitments as contemplated by Section
2.08(c), then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.08(c). Promptly after it
receives any such notice, the Administrative Agent shall advise the Lenders of
the contents thereof.

 

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Section 2.11        Optional Increase in Commitments. At any time prior to the
date that is thirty (30) days prior to the Revolving Availability Termination
Date, if no Default shall have occurred and be continuing (or would result after
giving effect thereto), the Borrowers, may, if they so elect, increase the
aggregate amount of the Secured Facility Commitments (each such increase to be
in an aggregate amount that is an integral multiple of $10,000,000) or of the
Unsecured Facility Commitments (each such increase to be in an aggregate amount
that is an integral multiple of $10,000,000) or a combination of both (in such
proportion as the Parent shall specify), either by designating a financial
institution not theretofore a Lender to become a Lender (such designation to be
effective only with the prior written consent of the Administrative Agent and
the Letter of Credit Issuer, which consent will not be unreasonably withheld or
delayed, and only if such financial institution accepts a Commitment in an
aggregate amount that is an integral multiple of $10,000,000), or by agreeing
with one or more existing Lenders that such Lenders’ respective, as applicable,
Secured Facility Commitment or Unsecured Facility Commitment shall be increased.
Upon execution and delivery by the Borrowers and such Lender or other financial
institution of an instrument (a “Commitment Acceptance”) in form reasonably
satisfactory to the Administrative Agent, such existing Lender shall have a
Commitment or Commitments as therein set forth or such other financial
institution shall become a Lender with a Commitment or Commitments as therein
set forth and with all the rights and obligations of a Lender with such a
Commitment or Commitments hereunder, and any such other financial institution
shall be deemed to be a Lender for all purposes of this Agreement and the other
Loan Documents without any amendment hereto or thereto and without the consent
of any other party (other than those required above in this Section 2.11);
provided:

 

(a)           that the Borrower Agent shall provide prompt notice of such
increase to the Administrative Agent, who shall promptly notify the Lenders;

 

(b)           that the Borrower Agent shall have delivered to the Administrative
Agent a copy of the Commitment Acceptance;

 

(c)           that the amount of such increase, together with all other
increases in the aggregate amount of the Commitments pursuant to this Section
2.11 since the Restatement Effective Date, does not exceed $100,000,000;

 

(d)           that, before and after giving effect to such increase, the
representations and warranties of the Borrowers contained in Article 3 of this
Agreement shall be true and correct in all material respects; provided that any
representation and warranty that is qualified as to “materiality”, “Material
Adverse Effect” or similar language shall be true and correct (after giving
effect to such qualification therein) in all respects as of such date; and

 

(e)         that the Administrative Agent shall have received such evidence
(including an opinion of Borrowers’ counsel) as it may reasonably request to
confirm the Borrowers’ due authorization of the transactions contemplated by
this Section 2.11 and the validity and enforceability of the obligations of the
Borrowers and the Guarantors resulting therefrom.

 

On the date of any such increase, the Borrowers shall be deemed to have
represented to the Administrative Agent and the Lenders that the conditions set
forth in clauses (a) through (e) above have been satisfied.

 

 - 42 - 

 

 

Upon any increase in the aggregate amount of the Commitments pursuant to this
Section 2.11:

 

(A)         within five (5) Business Days, in the case of any Base Rate
Borrowings then outstanding, and at the end of the then current Interest Period
with respect thereto, in the case of any Eurodollar Borrowings then outstanding,
the Borrowers shall prepay such Borrowing in its entirety and, to the extent the
Borrowers elect to do so and subject to the conditions specified in Article 4,
the Borrowers shall reborrow Loans from the Lenders in proportion to their
respective Unsecured Facility Commitments after giving effect to such increase,
until such time as all outstanding Loans are held by the Lenders in such
proportion; provided that, at the request of the Borrowers, such repayments and
reborrowings shall be effected through deemed repayments and reborrowings, with
the Lenders making adjustments in cash among themselves with respect to the
Loans then being deemed repaid and reborrowed and amounts of principal,
interest, commitment fees and other amounts paid or payable with respect thereto
as shall be necessary, in the opinion of the Administrative Agent, in order to
reallocate among the Lenders the outstanding principal of the Loans and other
outstanding amounts, based on the revised Percentages resulting from such
increase in the aggregate amount of the Unsecured Facility Commitments; and

 

(B)         each existing Lender whose, as applicable, Secured Facility
Commitment or Unsecured Facility Commitment has not increased pursuant to this
Section 2.11 (each, a “Non-increasing Lender”) shall be deemed, without further
action by any party hereto, to have sold to each Lender whose, as applicable,
Secured Facility Commitment or Unsecured Facility Commitment has been assumed or
increased under this Section 2.11 (each, an “Increased Commitment Lender”), and
each Increased Commitment Lender shall be deemed, without further action by any
party hereto, to have purchased from each Non-Increasing Lender, a participation
(on the terms specified in Section 2.04(e) and 2.05(d), respectively) in each,
as applicable, Secured LC Exposure or Unsecured LC Exposure in which such
Non-Increasing Lender has acquired a participation in an amount equal to such
Increased Commitment Lender’s Percentage thereof, until such time as all, as
applicable, Secured LC Exposures or Unsecured LC Exposures are held by the
Lenders in proportion to their respective, as applicable, Secured Facility
Commitments or Unsecured Facility Commitments after giving effect to such
increase.

 

Section 2.12        Fees. (a) The Borrowers shall pay to the Administrative
Agent for the account of each Lender a commitment fee, which shall accrue during
the Revolving Availability Period at the Applicable Rate on each of (i) the
average daily Unused Secured Facility Commitment of such Lender and (ii) the
average daily Unused Unsecured Facility Commitment of such Lender, in each case
during the period from and including the Restatement Effective Date to the date
on which such Commitment terminates. Such commitment fee shall be payable in
arrears on the last Business Day of each calendar quarter in respect of the
quarter then ending and, with respect to the Commitment of a Lender, on the
earlier date on which the Commitment of such Lender shall be terminated or
assigned in whole. As used herein a Lender’s “Unused Secured Facility
Commitment” shall mean, as of any day, an amount equal to (A) such Lender’s
Secured Facility Commitment, minus (B) such Lender’s Secured Facility Exposure;
and a Lender’s “Unused Unsecured Facility Commitment” shall mean, as of any day,
an amount equal to (C) such Lender’s Unsecured Facility Commitment, minus (D)
such Lender’s Unsecured Facility Exposure.

 

 - 43 - 

 

 

(b)          The Borrowers shall pay (i) to the Administrative Agent for the
account of each Lender a participation fee with respect to its participations in
Letters of Credit, which shall accrue for each day, (A) with respect to Secured
Facility Letters of Credit, at the rate of three-hundred seventy-five
thousandths percent (0.375%) per annum and (B) with respect to Unsecured
Facility Letters of Credit, at the Applicable Rate that applies to Eurodollar
Loans as of the date of issuance (or renewal or extension) of each Letter of
Credit, in each case on the amount of such Lender’s LC Exposure in respect of
such Letter of Credit (excluding any portion thereof attributable to
unreimbursed LC Disbursements), during the period from the Restatement Effective
Date to the later of the date on which such Lender’s, as the case may be,
Secured Facility Commitment or Unsecured Facility Commitment terminates and the
date on which such Lender ceases to have any, as the case may be, Secured LC
Exposure or Unsecured LC Exposure in respect of such Letter of Credit and (ii)
to each Letter of Credit Issuer, with respect to Unsecured Facility Letters of
Credit, a fronting fee in the amount of one-eighth percent (0.125%) of the
amount of each Letter of Credit at issuance issued by it, as well as the fees
separately agreed upon by the Borrowers, by and through the Borrower Agent, and
such Letter of Credit Issuer with respect to issuing, amending, renewing or
extending any Letter of Credit or processing drawings thereunder; provided that
upon and during the continuance of an Event of Default, the participation fee
payable under clause (i), above, shall, after as well as before judgment, be
computed at (A) with respect to Secured Facility Letters of Credit, two and
three hundred seventy-five thousandths percent (2.375%) per annum and (B) with
respect to Unsecured Facility Letters of Credit a rate per annum equal to, two
percent (2.000%) plus such Applicable Rate. Accrued participation fees and
fronting fees shall be payable in arrears on the last Business Day of each
calendar quarter in respect of the quarter then ending (commencing on the first
such date to occur after the Restatement Effective Date) and, with respect to a
Lender, on the earlier date on which, as the case may be, the Secured Facility
Commitment or the Unsecured Facility Commitment of such Lender shall be
terminated or assigned in whole; provided that all such fees accrued to the date
on which, as the case may be, the Secured Facility Commitments or the Unsecured
Facility Commitments terminate will be payable on such date, and any such fees
accruing after such date will be payable on demand. Any other fees payable to
the Letter of Credit Issuers pursuant to this subsection will be payable within
10 days after demand. All such participation fees and fronting fees will be
computed on the basis of a year of 360 days and will be payable for the actual
number of days elapsed (including the first day but excluding the last day).

 

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

 

(d)           The Borrowers shall pay to the Administrative Agent (to the extent
applicable, for its own account, for the account of the Arranger and for the
account of each Lender) on the Restatement Effective Date such fees as are
specified in the mandate letter between the Borrowers and the Arranger dated
August 19, 2019.

 

(e)           All fees payable hereunder shall be computed on the basis of a
year of 360 days and will be payable for the actual number of days elapsed and
shall be paid on the dates due, in immediately available funds, to the
Administrative Agent (or to the applicable Letter of Credit Issuer, in the case
of fees payable to it) for distribution, in the case of commitment fees and
utilization fees, to the Lenders entitled thereto. Fees paid shall not be
refundable under any circumstances.

 

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Section 2.13        Interest. (a) The Loans comprising each Base Rate Borrowing
shall bear interest for each day at the Alternate Base Rate, plus the Applicable
Rate.

 

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

 

(c)           [Reserved].

 

(d)           Notwithstanding the foregoing, upon and during the continuance of
an Event of Default, and continuing for so long as an Event of Default exists,
(i) each Loan shall bear interest, after as well as before judgment, at a rate
per annum equal to two percent (2.00%) plus the rate that otherwise would be
applicable to such Loan as provided in the preceding subsections of this
Section, and (ii) any other sum then due and payable hereunder shall bear
interest, after as well as before judgment, at a rate per annum equal to two
percent (2.00%) plus the Alternate Base Rate plus the Applicable Rate for Base
Rate Loans.

 

(e)           Interest accrued on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and upon termination of the Unsecured
Facility Commitments; provided that (i) interest accrued pursuant to Section
2.13(d) shall be payable on demand, (ii) upon any repayment of any Loan (except
a prepayment of a Base Rate Loan before the end of the Revolving Availability
Period), interest accrued on the principal amount repaid shall be payable on the
date of such repayment and (iii) upon any conversion of a Eurodollar Loan before
the end of the current Interest Period therefor, interest accrued on such Loan
shall be payable on the effective date of such conversion.

 

(f)            All interest hereunder will be computed on the basis of a year of
360 days, except that interest computed by reference to clause (a) of the
definition of “Alternate Base Rate” at times when the Alternate Base Rate is
based on the Prime Rate will be computed on the basis of a year of 365 days (or
366 days in a leap year), and in each case will be payable for the actual number
of days elapsed (including the first day but excluding the last day). Each
applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the
Administrative Agent, and its determination thereof will be conclusive absent
demonstrable error.

 

Section 2.14        Alternate Rate of Interest.

 

(a)          If before the beginning of any Interest Period for a Eurodollar
Borrowing:

 

(i)           deposits in dollars in the applicable amounts are not being
offered by banks generally in the London interbank market for such Interest
Period;

 

(ii)          the Administrative Agent or Lenders having 50% or more of the
aggregate principal amount of the Loans to be included in such Borrowing
determine that the Adjusted LIBO Rate for such Interest Period, after giving
effect to Section 2.15, will not adequately and fairly reflect the cost to the
Lenders of making or maintaining such Loans for such Interest Period; or

 

 - 45 - 

 

 

(iii)         the Administrative Agent or Lenders having 50% or more of the
aggregate principal amount of the Loans to be included in such Borrowing
determine that adequate and reasonable means do not exist for determining the
Adjusted LIBO Rate for the requested Interest Period as provided in Section 1.01
or that making or funding of Revolving Loans based on the Adjusted LIBO Rate has
become impracticable,

 

then the Administrative Agent shall give notice thereof to the Borrower Agent
and the Lenders by telephone or telecopy as promptly as practicable thereafter
and, until the Administrative Agent notifies the Borrower Agent and the Lenders
that the circumstances giving rise to such notice no longer exist, (x) any
Interest Election that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing will be ineffective and
(y) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing
will be made as a Base Rate Borrowing.

 

(b)           Notwithstanding the foregoing, in the event that the
Administrative Agent determines (which determination shall be conclusive absent
manifest error) that (i) the circumstances set forth in Section 2.14(a)(iii)
have arisen and such circumstances are unlikely to be temporary, (ii) ICE
Benchmark Administration (or any Person that takes over the administration of
such rate) discontinues its administration and publication of interest
settlement rates for deposits in Dollars, or (iii) the supervisor for the
administrator of the Adjusted LIBO Rate or the United Kingdom’s Financial
Conduct Authority or other Governmental Authority having jurisdiction over the
Administrative Agent has made a public statement identifying a specific date
after which such interest settlement rate shall no longer be used for
determining interest rates for loans, then the Administrative Agent and the
Borrower shall seek to determine, by mutual agreement, an alternate rate of
interest to the LIBO Rate that gives due consideration to the then prevailing
market convention for determining a rate of interest for syndicated loans in the
United States at such time, and the Administrative Agent and the Borrower shall
amend this Agreement to reflect such alternate rate of interest and such other
related changes to this Agreement as may be deemed necessary or appropriate by
the Administrative Agent. Notwithstanding anything to the contrary in Section
9.02 hereof, such amendment shall become effective without any further action or
consent of any other party to this Agreement so long as the Administrative Agent
shall not have received, within five (5) Business Days of the date on which
notice of such alternate rate of interest is provided to the Lenders, a written
notice from the Required Lenders stating that such Required Lenders object to
such amendment. Until an alternate rate of interest shall be determined in
accordance with this Section 2.14(b), (i) any request for the conversion to, or
continuation of any, Eurodollar Loan shall be ineffective, and any such Loan
shall be continued as or converted to, as the case may be, a Base Rate Loan, and
(ii) if any request is made for the advance of a Eurodollar Loan, such Loan
shall be made as a Base Rate Loan. Notwithstanding anything herein or in this
Agreement to the contrary, if the alternate rate of interest determined pursuant
to this Section 2.14(b) shall at any time be less than zero percent (0.0%), such
rate shall be deemed to be zero percent (0.0%) for the purposes of this
Agreement.

 

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Section 2.15         Increased Costs; Capital Adequacy. (a) If any Change in Law
shall:

 

(i)           impose, modify or deem applicable any reserve, special deposit or
similar requirement 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 LIBO Rate) or any Letter of Credit Issuer;

 

(ii)          subject any Lender or any Letter of Credit Issuer to any Tax of
any kind whatsoever with respect to this Agreement, any Letter of Credit or any
Eurodollar Loan made by it, or change the basis of taxation of any payments to
such Lender or such Letter of Credit Issuer in respect thereof (except for
Indemnified Taxes or Other Taxes covered by Section 2.17 and the imposition of,
or any change to, the rate of any Excluded Tax payable by such Lender or such
Letter of Credit Issuer); or

 

(iii)         impose on any Lender or any Letter of Credit Issuer or the London
interbank market any other condition affecting this Agreement or Eurodollar
Loans made by such Lender or any Letter of Credit or participation therein;

 

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

 

(b)          If any Lender or any Letter of Credit Issuer 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 such Letter of Credit
Issuer’s capital or on the capital of such Lender’s or such Letter of Credit
Issuer’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 such Letter of Credit Issuer, to a level below
that which such Lender or such Letter of Credit Issuer or such Lender’s or such
Letter of Credit Issuer’s holding company reasonably could have achieved but for
such Change in Law (taking into consideration such Lender’s or such Letter of
Credit Issuer’s policies and the policies of such Lender’s or such Letter of
Credit Issuer’s holding company with respect to capital adequacy), then from
time to time following receipt of the certificate referred to in subsection (c)
of this Section, the Borrowers shall pay to such Lender or such Letter of Credit
Issuer, as the case may be, such additional amount or amounts as will compensate
it or its holding company for any such reduction suffered.

 

(c)          A certificate of a Lender or a Letter of Credit Issuer setting
forth the amount or amounts necessary to compensate it or its holding company,
as the case may be, as specified in subsection (a) or (b) of this Section shall
be delivered to the Borrower Agent and shall be rebuttably presumed to be
correct. Each such certificate shall contain a representation and warranty on
the part of such Lender or Letter of Credit Issuer to the effect that such
Lender or Letter of Credit Issuer has complied with its obligations pursuant to
Section 2.21 hereof in an effort to eliminate or reduce such amount. The
Borrowers shall pay such Lender or such Letter of Credit Issuer, as the case may
be, the amount shown as due on any such certificate within 10 days after receipt
thereof.

 

 - 47 - 

 

 

(d)          Failure or delay by any Lender or Letter of Credit Issuer to demand
compensation pursuant to this Section will not constitute a waiver of its right
to demand such compensation; provided that the Borrowers will not be required to
compensate a Lender or a Letter of Credit Issuer pursuant to this Section for
any increased cost or reduction incurred more than one year before it notifies
the Borrower Agent of the Change in Law giving rise to such increased cost or
reduction and of its intention to claim compensation therefor. However, if the
Change in Law giving rise to such increased cost or reduction is retroactive,
then the one year period referred to above will be extended to include the
period of retroactive effect thereof.

 

(e)            Within four (4) months following the date such certificate is
furnished claiming compensation by any such Lender (an “Affected Lender”, which
term shall also include a Lender making a demand under Section 2.17), the
Borrowers may replace the Affected Lender pursuant to the provisions of Section
9.15.

 

Section 2.16        Break Funding Payments. If (a) any principal of any
Eurodollar Loan is repaid on a day other than the last day of an Interest Period
applicable thereto (including as a result of an Event of Default), (b) any
Eurodollar Loan is converted on a day other than the last day of an Interest
Period applicable thereto, (c) the Borrowers fail to borrow, convert, continue
or prepay any Loan on the date specified in any notice delivered pursuant hereto
(regardless of whether such notice may be revoked under Section 2.10(f) and is
revoked in accordance therewith), or (d) any Eurodollar Loan is assigned on a
day other than the last day of an Interest Period applicable thereto as a result
of a request by the Borrower Agent pursuant to Section 9.15, then the Borrowers
shall compensate each Lender for its loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost and expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest that would have accrued on the
principal amount of such Loan had such event not occurred, at the Adjusted LIBO
Rate that would have been applicable to such Loan, for the period from the date
of such event to the end of the then current Interest Period therefor (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have begun on the date of such failure), over (ii) the amount of interest
that would accrue on such principal amount for such period at the interest rate
which such Lender would bid were it to bid, at the beginning of such period, for
dollar deposits of a comparable amount and period from other banks in the London
interbank market. A certificate of any Lender setting forth any amount or
amounts that such Lender is entitled to receive pursuant to this Section shall
be delivered to the Borrower Agent and shall be conclusive absent demonstrable
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) All payments by or on account of any obligation
of any Loan Party under the Loan Documents shall be made free and clear of and
without deduction or withholding for any Indemnified Taxes or Other Taxes;
provided that, if a Loan Party shall be required to deduct or withhold any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
will be increased as necessary so that, after all required deductions and
withholdings (including deductions applicable to additional sums payable under
this Section) are made, each relevant Lender Party receives an amount equal to
the sum it would have received had no such deductions or withholdings been made,
(ii) the applicable Loan Party shall make such deductions or withholdings and
(iii) the applicable Loan Party shall pay the full amount deducted or withheld
to the relevant Governmental Authority in accordance with applicable Law.

 

 - 48 - 

 

 

(b)           In addition, the Loan Parties shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable Law.

 

(c)          The Loan Parties shall indemnify each Lender Party, within ten (10)
days after written demand therefor, for the full amount of any Indemnified Taxes
or Other Taxes paid or payable by such Lender Party or required to be withheld
or deducted from a payment to such Lender Party with respect to any payment by
or obligation of the Borrowers under the Loan Documents (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto (unless such penalties, interest or expenses
arise by reason of the gross negligence or willful misconduct of such Lender),
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of any such payment delivered to the Borrower Agent by a Lender Party
on its own behalf, or by the Administrative Agent on behalf of a Lender Party,
shall be conclusive absent demonstrable error. If the Borrowers have indemnified
any Lender Party pursuant to this Section 2.17(c), such Lender Party shall take
such steps as the Borrower Agent shall reasonably request (at the Borrowers’
expense) to assist the Borrowers in recovering the Indemnified Taxes or Other
Taxes and any penalties or interest attributable thereto; provided that no
Lender Party shall be required to take any action pursuant to this Section
2.17(c) unless, in the reasonable judgment of such Lender Party, such action (i)
would not subject such Lender Party to any unreimbursed cost or expense and (ii)
would not otherwise be disadvantageous to such Lender Party.

 

(d)           Each Lender and each Letter of Credit Issuer shall severally
indemnify the Administrative Agent, within ten (10) days after demand therefor,
for (i) any Indemnified Taxes attributable to such Lender Party (but only to the
extent that any Loan Party has not already indemnified the Administrative Agent
for such Indemnified Taxes and without limiting the obligation of the Loan
Parties to do so), (ii) any Taxes attributable to such Lender Party’s failure to
comply with the provisions of Section 9.04(e) relating to the maintenance of a
Participant Register (as defined in said Section) and (iii) any Excluded Taxes
attributable to such Lender Party, in each case, that are payable or paid by the
Administrative Agent in connection with any Loan 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 such Lender Party 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 Party under
any Loan 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 (d).

 

(e)           As soon as practicable after the Borrowers pay any Indemnified
Taxes or Other Taxes to a Governmental Authority, the Borrower Agent 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.

 

 - 49 - 

 

 

(f)            The Administrative Agent and each Lender shall deliver to the
Borrower Agent (with a copy to the Administrative Agent), at the time or times
prescribed by applicable Law, such properly completed and executed documentation
prescribed by applicable Law or reasonably requested by the Borrower Agent or
the Administrative Agent as will permit payments to be made hereunder or under
any other Loan Document without withholding or at a reduced rate of withholding.
Without limiting the generality of the foregoing, each Foreign Lender shall to
the extent requested by the Borrower Agent (i) furnish either (a) two (2)
accurate and complete originally executed U.S. Internal Revenue Service Forms
W-8BEN (or successor form) (b) two (2) accurate and complete originally executed
U.S. Internal Revenue Service Forms W-8ECI (or successor form) or (c) two (2)
accurate and complete originally executed U.S. Internal Revenue Service Forms
W-8IMY and all requisite supporting documentation, certifying, in each case, to
such Foreign Lender’s legal entitlement to an exemption or reduction from U.S.
federal withholding tax with respect to all interest payments hereunder, and
(ii) to the extent it may lawfully do so at such times, upon reasonable request
by the Borrower Agent or the Administrative Agent, provide a new Form W-8BEN (or
successor form), Form W-8ECI (or successor form) or Form W-8IMY (or successor
form) upon the expiration or obsolescence of any previously delivered form to
reconfirm any complete exemption from, or any entitlement to a reduction in,
U.S. federal withholding tax with respect to any interest payment hereunder;
provided that any Foreign Lender that is not a “bank” within the meaning of
Section 881(c)(3)(A) of the Internal Revenue Code and is claiming the “portfolio
interest exemption” under Section 881(c) of the Internal Revenue Code shall also
furnish a “Non-Bank Certificate” in the form from time to time specified by, as
applicable, the Administrative Agent or the Borrower Agent if it is furnishing a
Form W-8BEN. If a payment made to a Lender under any Loan 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 the Borrower Agent and the Administrative Agent, at such
time or times reasonably requested by the Borrower Agent or the Administrative
Agent, such documentation prescribed by applicable Law (including as prescribed
by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional
documentation reasonably requested by the Borrower Agent or the Administrative
Agent as may be necessary for the Borrowers 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 the immediately
preceding sentence, “FATCA” shall include any amendments made to FATCA after the
date of this Agreement.

 

(g)           The Administrative Agent and each Lender that is not a Foreign
Lender shall furnish two accurate and complete originally executed U.S. Internal
Revenue Service Forms W-9 (or successor form) certifying that such Lender is
exempt from U.S. federal backup withholding tax.

 

(h)           The provisions of this Section 2.17 shall survive the termination
of this Agreement and repayment of the Loans.

 

 - 50 - 

 

 

(i)            Within four (4) months following the date the Administrative
Agent or a Lender shall make a written demand for Taxes or Other Taxes pursuant
to this Section 2.17, the Borrowers may replace the Affected Lender pursuant to
the provisions of Section 9.15.

 

Section 2.18        Payments Generally; Pro Rata Treatment; Sharing of Set-Offs.
(a) The Borrowers shall make each payment required to be made by them under the
Loan Documents (whether of principal, interest or fees, reimbursement of LC
Disbursements, or amounts payable under Section 2.15, 2.16 or 2.17(c) or
otherwise) before the time expressly required under the relevant Loan Document
for such payment (or, if no such time is expressly required, before noon,
Prevailing Eastern Time), on the date when due, in immediately available funds,
without set-off or counterclaim. Any amount received after such time on any day
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 127 Public Square, 6th Floor, Cleveland, Ohio 44114 (or such
other address as may from time to time be designated by the Administrative Agent
to the Borrower Agent in writing), except payments to be made directly to a
Letter of Credit Issuer 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 and payments pursuant to other Loan Documents shall be
made to the Persons specified therein. The Administrative Agent shall distribute
any such payment received by it for the account of any other Person to the
appropriate recipient promptly after receipt thereof. Unless otherwise specified
herein, if any payment under any Loan Document shall be due on a day that is not
a Business Day, the date for payment will be extended to the next succeeding
Business Day and, if such payment accrues interest, interest thereon will be
payable for the period of such extension. All payments under each Loan Document
shall be made in dollars.

 

(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, to pay 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, to pay 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 any of its 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 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 subsection
shall not apply to (A) any payment made by the Borrowers pursuant to and in
accordance with the express terms of this Agreement (including the application
of funds arising from the existence of a Defaulting Lender) or (B) any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans and 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 subsection shall apply). Each Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable Law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against such Borrower rights of 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.

 

 - 51 - 

 

 

(d)          Unless, before the date on which any payment is due to the
Administrative Agent for the account of one or more Lender Parties hereunder,
the Administrative Agent receives from the Borrower Agent notice 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 on such assumption, distribute to each relevant Lender Party
the amount due to it. In such event, if the Borrowers have not in fact made such
payment, each Lender Party severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender Party with interest
thereon, for each day from and including the day such amount is distributed to
it to but excluding the day it repays the Administrative Agent, at the greater
of the Federal Funds Effective Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation.

 

(e)          If any Lender fails to make any payment required to be made by it
pursuant to Section 2.04(e), 2.06(b), 2.18(d) or 9.03(d), the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender’s obligations under such Sections
until all such unsatisfied obligations are fully paid.

 

Section 2.19        Defaulting Lenders. (a) Notwithstanding anything to the
contrary contained in this Agreement, if any Lender becomes a Defaulting Lender,
then, until such time as such Lender is no longer a Defaulting Lender, to the
extent permitted by applicable Law:

 

(i)          Such Defaulting Lender’s right to approve or disapprove any
amendment, waiver or consent with respect to this Agreement shall be restricted
as set forth in the definition of Required Lenders.

 

(ii)         Any payment of principal, interest, fees or other amounts received
by the Administrative Agent for the account of such Defaulting Lender (whether
voluntary or mandatory, at maturity, pursuant to Article 7 or otherwise) or
received by the Administrative Agent from a Defaulting Lender pursuant to
Section 2.18 or Section 9.09 shall be applied at such time or times as may be
determined by the Administrative Agent as follows: first, to the payment on a
pro rata basis of any amounts owing by such Defaulting Lender to the
Administrative Agent hereunder; second, to the payment on a pro rata basis of
any amounts owing by such Defaulting Lender to any Letter of Credit Issuer
hereunder; third, to Cash Collateralize the Letter of Credit Issuers’ Fronting
Exposure with respect to such Defaulting Lender in accordance with Section 2.20;
fourth, as the Borrower Agent may request (so long as no Default exists), to the
funding of any Loan in respect of which such Defaulting Lender has failed to
fund its portion thereof as required by this Agreement, as determined by the
Administrative Agent; fifth, if so determined by the Administrative Agent and
the Borrower Agent, to be held in a deposit account and released pro rata in
order to (A) satisfy such Defaulting Lender’s potential future funding
obligations with respect to Loans under this Agreement and (B) Cash
Collateralize the Letter of Credit Issuers’ future Fronting Exposure with
respect to such Defaulting Lender with respect to future Letters of Credit
issued under this Agreement, in accordance with Section 2.20; sixth, to the
payment of any amounts owing to the Lenders, the Letter of Credit Issuers as a
result of any judgment of a court of competent jurisdiction obtained by any
Lender or Letter of Credit Issuer against such Defaulting Lender as a result of
such Defaulting Lender’s breach of its obligations under this Agreement;
seventh, so long as no Default exists, to the payment of any amounts owing to
the Borrowers as a result of any judgment of a court of competent jurisdiction
obtained by the Borrowers against such Defaulting Lender as a result of such
Defaulting Lender’s breach of its obligations under this Agreement; and eighth,
to such Defaulting Lender or as otherwise directed by a court of competent
jurisdiction; provided that if (1) such payment is a payment of the principal
amount of any Loans or LC Disbursements in respect of which such Defaulting
Lender has not fully funded its appropriate share, and (2) such Loans were made
or the related Letters of Credit were issued at a time when the conditions set
forth in Article 4 were satisfied or waived, such payment shall be applied
solely to pay the Loans of, and LC Disbursements owed to, all Non-Defaulting
Lenders on a pro rata basis prior to being applied to the payment of any Loans
of, and LC Disbursements owed to, such Defaulting Lender until such time as all
Loans and funded and unfunded participations in LC Exposure are held by the
Lenders pro rata in accordance with their Percentages without giving effect to
Section 2.19(a)(iv), below. Any payments, prepayments or other amounts paid or
payable to a Defaulting Lender that are applied (or held) to pay amounts owed by
a Defaulting Lender or to post Cash Collateral pursuant to this Section
2.19(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender,
and each Lender irrevocably consents hereto.

 

 - 52 - 

 

 

(iii)         (A)No Defaulting Lender shall be entitled to receive any
commitment fee under Section 2.12(a) for any period during which that Lender is
a Defaulting Lender (and the Borrowers shall not be required to pay any such fee
that otherwise would have been required to have been paid to that Defaulting
Lender).

 

(B)          Each Defaulting Lender shall be entitled to receive Letter of
Credit participation fees under Section 2.12(b) for any period during which that
Lender is a Defaulting Lender only to the extent allocable to its Percentage of
the stated amount of Letters of Credit for which it has provided Cash Collateral
pursuant to Section 2.20.

 

(C)         With respect to any commitment fee under Section 2.12(a) or any
Letter of Credit participation fee under Section 2.12(b) not required to be paid
to any Defaulting Lender pursuant to clause (A) or (B) above the Borrowers shall
(1) pay to each Non-Defaulting Lender that portion of any such fee otherwise
payable to such Defaulting Lender with respect to such Defaulting Lender’s
participation in LC Exposure that has been reallocated to such Non-Defaulting
Lender pursuant to clause (iv) below, (2) pay to each Letter of Credit Issuer
the amount of any such fee otherwise payable to such Defaulting Lender to the
extent allocable to such Letter of Credit Issuer’s Fronting Exposure to such
Defaulting Lender, and (3) not be required to pay the remaining amount of any
such fee.

 

 - 53 - 

 

 

(iv)         All or any part of such Defaulting Lender’s participation in LC
Exposure shall be reallocated among the Non-Defaulting Lenders having, as
applicable, Secured Facility Commitments and Unsecured Facility Commitments in
accordance with their respective Percentages (calculated without regard to such
Defaulting Lender’s Commitment) but only to the extent that (A) the conditions
set forth in Section 4.02 are satisfied at the time of such reallocation (and,
unless the Borrower Agent shall have otherwise notified the Administrative Agent
at such time, the Borrowers shall be deemed to have represented and warranted
that such conditions are satisfied at such time), and (B) such reallocation does
not cause the Secured Facility Exposure or the Unsecured Facility Exposure of
any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s, respectively,
Secured Facility Commitment or Unsecured Facility Commitment. Subject to Section
9.18, no reallocation hereunder shall constitute a waiver or release of any
claim of any party hereunder against a Defaulting Lender arising from that
Lender having become a Defaulting Lender, including any claim of a
Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased
exposure following such reallocation.

 

(v)          If the reallocation described in clause (iv) above cannot, or can
only partially, be effected, the Borrowers shall, without prejudice to any right
or remedy available to them hereunder or under Law, Cash Collateralize the
Letter of Credit Issuers’ Fronting Exposure in accordance with the procedures
set forth in Section 2.20.

 

(b)        If the Borrowers, the Administrative Agent and each Letter of Credit
Issuer agree in writing that a Lender is no longer a Defaulting Lender, the
Administrative Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice, and subject to any conditions set forth
therein (which may include arrangements with respect to any Cash Collateral),
that Lender will, to the extent applicable, purchase at par that portion of
outstanding Loans of the other Lenders or take such other actions as the
Administrative Agent may determine to be necessary to cause the Loans and funded
and unfunded participations in Letters of Credit to be held pro rata by the
Lenders in accordance with their Percentages (without giving effect to Section
2.19(a) above), whereupon such Lender will cease to be a Defaulting Lender;
provided that no adjustments will be made retroactively with respect to fees
accrued or payments made by or on behalf of the Borrowers while that Lender was
a Defaulting Lender; and provided, further, that except to the extent otherwise
expressly agreed by the affected parties, no change hereunder from Defaulting
Lender to Lender will constitute a waiver or release of any claim of any party
hereunder arising from that Lender’s having been a Defaulting Lender.

 

(c)          So long as any Lender is a Defaulting Lender, no Letter of Credit
Issuer shall be required to issue, amend, extend, renew or increase any Letter
of Credit unless it is satisfied that it will have no Fronting Exposure after
giving effect thereto.

 

Section 2.20        Cash Collateral. (a)At any time that there shall exist a
Defaulting Lender, within one (1) Business Day following the written request of
the Administrative Agent or any Letter of Credit Issuer (with a copy to the
Administrative Agent) the Borrowers shall Cash Collateralize the Letter of
Credit Issuers’ Fronting Exposure with respect to such Defaulting Lender
(determined after giving effect to Section 2.19(a)(iv) and any Cash Collateral
provided by such Defaulting Lender) in an amount not less than the Minimum
Collateral Amount.

 

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(b)         Each Borrower, and to the extent provided by any Defaulting Lender,
such Defaulting Lender, hereby grants to the Administrative Agent, for the
benefit of the Letter of Credit Issuers, and agrees to maintain, a first
priority security interest in all such Cash Collateral as security for the
Defaulting Lenders’ obligation to fund participations in respect of LC Exposure,
to be applied pursuant to clause (c) below. If at any time the Administrative
Agent determines that Cash Collateral is subject to any right or claim of any
Person other than the Administrative Agent and the Letter of Credit Issuers as
herein provided, or that the total amount of such Cash Collateral is less than
the Minimum Collateral Amount, the Borrowers will, promptly upon demand by the
Administrative Agent, pay or provide to the Administrative Agent additional Cash
Collateral in an amount sufficient to eliminate such deficiency (after giving
effect to any Cash Collateral provided by the Defaulting Lender).

 

(c)           Notwithstanding anything to the contrary contained in this
Agreement, Cash Collateral provided under this Section 2.20 or Section 2.19 in
respect of Letters of Credit shall be applied to the satisfaction of the
Defaulting Lender’s obligation to fund participations in respect of LC Exposure
(including, as to Cash Collateral provided by a Defaulting Lender, any interest
accrued on such obligation) for which the Cash Collateral was so provided, prior
to any other application of such property as may otherwise be provided for
herein.

 

(d)           Cash Collateral (or the appropriate portion thereof) provided to
reduce any Letter of Credit Issuer’s Fronting Exposure shall no longer be
required to be held as Cash Collateral pursuant to this Section 2.20 following
(i) the elimination of the applicable Fronting Exposure (including by the
termination of Defaulting Lender status of the applicable Lender), or (ii) the
determination by the Administrative Agent and each Letter of Credit Issuer that
there exists excess Cash Collateral; provided that, subject to Section 2.19, the
Person providing Cash Collateral and each Letter of Credit Issuer may agree that
Cash Collateral shall be held to support future anticipated Fronting Exposure or
other obligations.

 

Section 2.21        Lender’s Obligation to Mitigate. If any Lender requests
compensation under Section 2.15, or if the Borrowers are required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.17, then such Lender shall use all commercially
reasonable efforts to mitigate or eliminate the amount of such compensation or
additional amount, including without limitation, by designating a different
lending office for funding or booking its Loans hereunder or by assigning its
rights and obligations hereunder to another of its offices, branches or
affiliates; provided that no Lender shall be required to take any action
pursuant to this Section 2.21 unless, in the reasonable judgment of such Lender,
such designation or assignment or other action (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the
future, (ii) would not subject such Lender to any unreimbursed cost or expense
and (iii) would not otherwise be disadvantageous to such Lender in any material
respect. The Borrowers shall pay all reasonable costs and expenses incurred by
any Lender in connection with any such designation or assignment.

 

Section 2.22        Illegality. If any Lender determines that any Law has made
it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable lending office to make, maintain or
fund Eurodollar Borrowings, or to determine or charge interest rates based upon
the Adjusted LIBO Rate, or any Governmental Authority has imposed material
restrictions on the authority of any Lender to purchase or sell, or to take
deposits of, dollars in the London interbank market, then, on notice thereof by
such Lender to the Borrower Agent through the Administrative Agent, any
obligation of such Lender to make or continue Eurodollar Borrowings or to
convert Base Rate Borrowings to Eurodollar Borrowings shall be suspended until
such Lender notifies the Administrative Agent and the Borrower Agent that the
circumstances giving rise to such determination no longer exist, which notice
such Lender agrees to give promptly following such determination. Upon receipt
of such notice, the Borrowers shall, upon demand from such Lender (with a copy
to the Administrative Agent), prepay or, if applicable, convert all Eurodollar
Borrowings from such Lender to Base Rate Borrowings, either on the last day of
the Interest Period therefor, if such Lender may lawfully continue to maintain
such Eurodollar Borrowings to such day, or immediately, if such Lender may not
lawfully continue to maintain such Eurodollar Borrowings. Upon any such
prepayment or conversion, the Borrowers shall also pay accrued interest on the
amount so prepaid or converted.

 

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Article 3

REPRESENTATIONS AND WARRANTIES

 

Each Borrower jointly and severally represents and warrants to the Lender
Parties that:

 

Section 3.01        Organization; Powers. Each Loan Party and each of its
Subsidiaries is duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where failures
to do so, 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 Financing Transactions to
be entered into by each Loan Party are within its corporate, limited liability
company or similar company powers and have been duly authorized by all necessary
corporate, limited liability company (or similar) action and, if required,
stockholder or other equity holder action. This Agreement has been duly executed
and delivered by the Borrowers and constitutes, and each other Loan Document to
which a Loan Party is to be a party, when executed and delivered by, as the case
may be, a Borrower or such other Loan Party, will constitute, a legal, valid and
binding obligation of, as the case may be, such Borrower or such other Loan
Party, in each case enforceable in accordance with its terms, subject to
applicable Debtor Relief Laws 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 Financing
Transactions and the use of the proceeds thereof (a) do not require any consent
or approval of, registration or filing with, or other action by, any
Governmental Authority or any exchange under which a Borrower’s Equity Interests
are traded, except such as have been obtained or made and are in full force and
effect, (b) will not violate any applicable Law or the charter, by-laws, limited
liability company agreement or other organizational documents of the Borrower or
any order of any Governmental Authority, (c) will not violate or result in a
default under any indenture, agreement or other instrument binding upon the
Borrower or any of its properties, or give rise to a right thereunder to require
the Borrower to make any payment, where such default or payment reasonably can
be expected to have a Material Adverse Effect, and (d) will not result in the
creation or imposition of any Lien on any property of any Loan Party (except for
Liens created pursuant to the Loan Documents).

 

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Section 3.04        Financial Statements; No Material Adverse Change. (a) The
Parent has heretofore furnished to the Lenders (i) the audited Consolidated
balance sheet of the Parent and its Subsidiaries as of December 31, 2018 and the
related Consolidated statements of income and cash flows for the Fiscal Year
then ended, reported on by Ernst & Young LLP, independent public accountants,
and (ii) the unaudited Consolidated balance sheet of the Parent and its
Subsidiaries as of September 30, 2019 and the related Consolidated statements of
income and cash flows for the Fiscal Quarter then ended and for the portion of
the Fiscal Year then ended, all certified by the Parent’s chief financial
officer. Such financial statements present fairly, in all material respects, the
Consolidated financial position of the Parent and its Subsidiaries as of such
dates and its Consolidated results of operations and cash flows for such periods
in accordance with GAAP, subject to normal year-end adjustments and the absence
of footnotes in the case of the statements referred to in clause (ii) above and
show all material Indebtedness and other liabilities, direct or contingent, of
the Parent and its Subsidiaries as of the date thereof. None of the Parent or
any of its Subsidiaries has on the date hereof any material contingent
liabilities, material liabilities for taxes, material unusual forward or
long-term commitments or material unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided for in
said balance sheets as at said dates.

 

(b)           Since December 31, 2018 there has been no material adverse change
in the business, operations, properties, assets, financial condition, contingent
liabilities or material agreements of the Parent and its Subsidiaries, taken as
a whole.

 

(c)           The Parent has heretofore furnished to each of the Lenders the
annual Statutory Statement of each Insurance Subsidiary for the fiscal year
thereof ended December 31, 2018, and the quarterly Statutory Statement of each
Insurance Subsidiary for the fiscal quarter ended June 30, 2019, in each case as
filed with the Applicable Insurance Regulatory Authority. All such Statutory
Statements present fairly in all material respects the financial condition of
each Insurance Subsidiary as at, and the results of operations for, the fiscal
year ended December 31, 2018, and fiscal quarter ended June 30, 2019, in
accordance with statutory accounting practices prescribed or permitted by the
Applicable Insurance Regulatory Authority. As of the date hereof and as of the
Restatement Effective Date, since December 31, 2018, there has been no material
adverse change in the financial condition, operations or business of any
Material Insurance Subsidiary from that set forth in its respective Statutory
Statement as at December 31, 2018.

 

Section 3.05        Insurance Licenses. Schedule T to the most recent annual
Statutory Statement of each Domestic Insurance Subsidiary lists all of the
jurisdictions in which such Domestic Insurance Subsidiary holds active licenses
(including, without limitation, licenses or certificates of authority from
Applicable Insurance Regulatory Authorities), permits or authorizations to
transact insurance and reinsurance business or to act as an insurance agent or
broker (collectively, the “Licenses”), and Schedule 3.05 hereto lists all of the
jurisdictions in which each of JRG Reinsurance and Carolina Re holds active
Licenses (including, without limitation, Licenses from Applicable Insurance
Regulatory Authorities). Each Insurance Subsidiary is in compliance in all
material respects with each License held by it. No License (to the extent
material) is the subject of a proceeding for suspension or revocation or any
similar proceedings, there is no sustainable basis for such a suspension or
revocation, and to the knowledge of each Borrower no such suspension or
revocation has been threatened by any Applicable Insurance Regulatory Authority
except in any such case where such proceedings would not have a Material Adverse
Effect.

 

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Section 3.06         Parent Subsidiaries.

 

(a)           As of the Restatement Effective Date, the Parent has no
Subsidiaries, other than those set forth on Part A of Schedule 3.06. Part A of
Schedule 3.06 accurately identifies as of the Restatement Effective Date the
jurisdiction under the Laws of which each such Subsidiary is formed. The last
sentence of the definition of “Material Subsidiary” identifies all of the
Parent’s Subsidiaries that are Material Subsidiaries as of the Restatement
Effective Date.

 

(b)            Set forth on Part B of Schedule 3.06 is a complete and correct
list of all Investments (other than (i) Investments disclosed in Part A of said
Schedule 3.06 and any other Investments existing as of the date hereof permitted
under Section 6.04 and (ii) Guarantees of Debt the aggregate principal or face
amount of which Debt is less than $5,000,000) held by the Parent or any of its
Subsidiaries in any Person on the date hereof and, for each such Investment, (A)
the identity of the Person or Persons holding such Investment and (B) the nature
of such Investment. Except as disclosed in Part B of Schedule 3.11, each of each
Borrower and its Subsidiaries owns, free and clear of all Liens, all such
Investments.

 

Section 3.07        Litigation. There is no action, suit, arbitration proceeding
or other proceeding, inquiry or investigation, at Law or in equity, before or by
any arbitrator or Governmental Authority pending against any Loan Party or any
Subsidiary or of which any Loan Party or any Subsidiary has otherwise received
notice or which, to the knowledge of a Loan Party, is threatened against any
Loan Party or any Subsidiary (i) as to which, but after giving effect to any
applicable insurance claim reserve, there is a reasonable possibility of an
unfavorable decision, ruling or finding which would reasonably be expected to
result in a Material Adverse Effect or (ii) that involves any of the Loan
Documents or the Financing Transactions or the use of the proceeds thereof.

 

Section 3.08       Compliance with Laws and Agreements; Anti-Terrorism Laws. (a)
Each Loan Party is in compliance with all Laws of any Governmental Authority
applicable to it or its property (including (i) all Environmental Laws, (ii)
ERISA, (iii) applicable Laws dealing with intellectual property, and (iv) the
Fair Labor Standards Act and other applicable Law dealing with such matters) and
all indentures, agreements and other instruments binding on it or its property,
except where failures to do so, in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.

 

(b)           Without limiting the generality of paragraph (a), above, each
Insurance Subsidiary is in compliance, in all material respects, with its
Applicable Insurance Code and the other requirements applicable to it of its
Applicable Insurance Regulatory Authority.

 

(c)           None of any Loan Party or any Subsidiary is in violation in any
material respect of any Anti-Terrorism Law or engages in or conspires to engage
in any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law.

 

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(d)           None of any Loan Party or any Affiliate thereof or their
respective agents acting or benefiting in any capacity in connection with the
Loans or other transactions hereunder, is any of the following (each a “Blocked
Person”):

 

(i)           a Person that is listed in the annex to the Executive Order No.
13224;

 

(ii)          a Person owned or controlled by, or acting for or on behalf of,
any Person that is listed in the annex to the Executive Order No. 13224;

 

(iii)         a Person with which any Lender or any Letter of Credit Issuer is
prohibited from dealing or otherwise engaging in any transaction by any
Anti-Terrorism Law;

 

(iv)         a Person that commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order No. 13224;

 

(v)          a Person that is named as a “specially designated national” on the
most current list published by the U.S. Treasury Department Office of Foreign
Asset Control at its official website or any replacement website or other
replacement official publication of such list;

 

(vi)         a Person that is, or is owned or controlled by Persons that are (1)
the subject of any sanctions administered or enforced by the U.S. Department of
the Treasury’s Office of Foreign Assets Control, the U.S. Department of State,
the government of Canada, the United Nations Security Council, the European
Union, Her Majesty’s Treasury, or other relevant sanctions authority
(collectively, “Sanctions”), or (2) located, organized or resident in a country
or territory that is the subject of Sanctions, including Crimea, Cuba, Iran,
North Korea, and Syria; or

 

(vii)        a Person that is affiliated or associated with a Person listed
above.

 

(e)         None of any Loan Party, any Subsidiary or any of their agents acting
or benefiting in any capacity in connection with the Loans or other transactions
hereunder, (i) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any Blocked
Person or (ii) deals in, or otherwise engages in any transaction relating to,
any property or interests in property blocked pursuant to the Executive Order
No. 13224.

 

(f)          Each Loan Party, any Subsidiary and any of their agents acting or
benefiting in any capacity in connection with the Loans or other transactions
hereunder are in compliance with all applicable Sanctions in all material
respects.  Each Loan Party and its Subsidiaries have instituted and maintain
policies and procedures designed to ensure compliance with applicable Sanctions.

 

Section 3.09        Investment Company Status. No Borrower is an “investment
company” or a company “controlled” by an “investment company” within the meaning
of the Investment Company Act of 1940, as amended.

 

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Section 3.10        Taxes. The Parent’s Domestic Subsidiaries and Carolina Re
are members of an affiliated group of entities filing consolidated returns for
Federal income tax purposes, of which James River is the “common parent” (within
the meaning of Section 1504 of the Code) of such group. The Parent and its
Subsidiaries have filed all United States income tax returns, Bermuda income tax
returns and all other material tax returns that are required to be filed by them
and have paid all taxes due pursuant to such returns or pursuant to any
assessment received by the Parent or any of its Subsidiaries. The charges,
accruals and reserves on the books of the Parent and its Subsidiaries in respect
of taxes and other governmental charges are, in the opinion of the Parent,
adequate. No Loan Party has given or been requested to give a waiver of the
statute of limitations relating to the payment of any Federal, state, local and
foreign taxes or other impositions.

 

Section 3.11        Material Debt Agreements and Liens.

 

(a)           Part A of Schedule 3.11 is a complete and correct list of each
credit agreement, loan agreement, indenture, purchase agreement, guarantee,
letter of credit or other arrangement providing for or otherwise relating to any
Debt or any extension of credit (or commitment for any extension of credit) to,
or Guarantee by, a Loan Party or any of its Subsidiaries, outstanding on the
date hereof the aggregate principal or face amount of which equals or exceeds
(or may equal or exceed) $5,000,000 (other than (i) Debt in respect of the
Existing Revolving Loans and (ii) Debt in respect of the Existing Secured
Letters of Credit), and the aggregate principal or face amount outstanding or
that may become outstanding under each such arrangement is correctly described
in Part A of said Schedule 3.11. The Debt and other obligations of the Loan
Parties hereunder and under the other Loan Documents constitute “Senior
Indebtedness” (or equivalent term otherwise named) under, and defined in, the
documents relating to the Restatement Effective Date Trust Preferred Securities
and any other of such Debt that is subordinated Debt of a Loan Party.

 

(b)          Part B of Schedule 3.11 is a complete and correct list of each Lien
securing Debt of any Person outstanding on the date hereof and on the
Restatement Effective Date the aggregate principal or face amount of which
equals or exceeds (or may equal or exceed) $5,000,000 and covering any property
of a Loan Party or any of its Subsidiaries, and the aggregate Debt secured (or
that may be secured) by each such Lien and the property covered by each such
Lien is correctly described in Part B of said Schedule 3.11.

 

Section 3.12        Environmental Matters. Each of the Loan Parties and its
Subsidiaries has obtained all environmental, health and safety permits, licenses
and other authorizations required under all Environmental Laws to carry on its
business as now being or as proposed to be conducted, except to the extent
failure to have any such permit, license or authorization would not (either
individually or in the aggregate) have a Material Adverse Effect. Each of such
permits, licenses and authorizations is in full force and effect and each of the
Loan Parties and its Subsidiaries is in compliance with the terms and conditions
thereof, and is also in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any applicable Environmental Law or in any plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply
therewith would not (either individually or in the aggregate) have a Material
Adverse Effect.

 

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Section 3.13       Equity Obligations. Except as set forth on Schedule 3.13,
there are no outstanding obligations of the Parent or any of its Subsidiaries to
repurchase, redeem, or otherwise acquire any Equity Interests of the Parent.

 

Section 3.14       No Reliance. Each Loan Party has made, independently and
without reliance upon the Administrative Agent or any Lender, and based on such
documents and information as it has deemed appropriate, its own decision to
enter into this Agreement and has made (and will continue to make),
independently and without reliance upon the Administrative Agent or any Lender,
and based on such documents and information as it has deemed appropriate (or
shall deem appropriate at the time), its own legal, credit and tax analysis of
the transactions contemplated hereby.

 

Section 3.15       ERISA. Compliance by the Loan Parties and their Subsidiaries
with the provisions hereof and Loans and Letters of Credit contemplated hereby
will not involve any Prohibited Transaction within the meaning of ERISA or
section 4975 of the Code or any breach of any other comparable foreign Law. Each
Loan Party and each of its Subsidiaries, (i) has fulfilled all obligations under
minimum funding standards of ERISA and the Code with respect to each Plan that
is not a Multiemployer Plan or a Multiple Employer Plan, (ii) has satisfied all
respective contribution obligations in respect of each Multiemployer Plan and
each Multiple Employer Plan, (iii) is in compliance in all respects with all
other applicable provisions of ERISA and the Code with respect to each Plan,
each Multiemployer Plan and each Multiple Employer Plan, and (iv) has not
incurred any liability under the Title IV of ERISA to the PBGC with respect to
any Plan, any Multiemployer Plan, any Multiple Employer Plan, or any trust
established thereunder, except (with respect to any matter specified in any of
the above clauses), for such matters as, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect. No Plan or trust
created thereunder has been terminated, and there have been no ERISA Events,
with respect to any Plan or trust created thereunder or with respect to any
Multiemployer Plan or Multiple Employer Plan, which termination or ERISA Event
has or reasonably could result in the termination of such Plan, Multiemployer
Plan or Multiple Employer Plan and give rise to a liability of a Loan Party or
any ERISA Affiliate in respect thereof which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect. Except as set
forth on Schedule 3.15 hereto, neither a Loan Party nor any ERISA Affiliate is
at the date hereof, or has been at any time within the five years preceding the
date hereof, an employer required to contribute to any Multiemployer Plan or
Multiple Employer Plan, or a “contributing sponsor” (as such term is defined in
section 4001 of ERISA) in any Multiemployer Plan or Multiple Employer Plan. Each
Plan that is intended to be so qualified under section 401(a) of the Code in
fact is so qualified, except for any failure of qualification which individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect. Neither any Loan Party nor any ERISA Affiliate has any contingent
liability with respect to any post-retirement “welfare benefit plan” (as such
term is defined in ERISA) except as has been disclosed prior to the date hereof
to the Lenders in writing or on any financial statements of the Parent and its
Subsidiaries or any ERISA Affiliate provided to the Administrative Agent and the
Lenders or except for such contingent liabilities that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.

 

Section 3.16         Regulation U. Neither the Parent nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U), or extending credit for the
purpose of purchasing or carrying any such margin stock. No proceeds of any Loan
or drawings under any Letter of Credit will be used directly or indirectly to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any such margin stock.

 

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Section 3.17         Disclosure. Each Loan Party has disclosed to the Lenders
all agreements, instruments and corporate or other restrictions to which it is
subject, and all other matters known to it, that, individually or in the
aggregate, would reasonably be expected to result in a Material Adverse Effect.
All of the reports, financial statements, certificates and other written
information (other than projected financial information) that have been made
available by or on behalf of any Loan Party to the Arranger, the Administrative
Agent or any Lender in connection with the negotiation of this Agreement or any
other Loan Document or delivered hereunder or thereunder, are complete and
correct in all material respects and do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained therein not materially misleading in light of the
circumstances under which such statements are made; provided that, with respect
to projected financial information, the Borrowers represent only that such
information was prepared in good faith based on assumptions believed to be
reasonable at the time. As of the Restatement Effective Date, the information
included in the Beneficial Ownership Certification is true and correct in all
material respects.

 

Section 3.18         Solvency. Immediately after the Financing Transactions to
occur on the Restatement Effective Date are consummated and after giving effect
to the application of the proceeds of each Loan made on the Restatement
Effective Date and after giving effect to the application of the proceeds of
each Loan made on any other date, (a) the fair value of the assets of each Loan
Party, at a fair valuation, will exceed its debts and liabilities, subordinated,
contingent or otherwise; (b) each Loan Party will be able to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (c) no Loan Party will have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and proposed to be conducted after the
Restatement Effective Date.

 

Article 4

CONDITIONS

 

Section 4.01         Restatement Effective Date. The amendment and restatement
of the Existing Credit Agreement and the obligations of the Lenders to make
Loans and of the Letter of Credit Issuers to issue Letters of Credit hereunder
shall not become effective until the date on which each of the following
conditions is satisfied or waived by each Lender:

 

(a)           The Administrative Agent shall have received counterparts hereof
signed by the Parent and each of the Lenders listed on the signature pages
hereof (or, in the case of any party as to which an executed counterpart shall
not have been received, receipt by the Administrative Agent in form satisfactory
to it of facsimile or other written confirmation from such party that it has
executed a counterpart hereof).

 

 - 62 - 

 

 

(b)        The Administrative Agent shall have received favorable written
opinion letter addressed to the Administrative Agent and the Lenders and dated
the Restatement Effective Date of Bryan Cave Leighton Paisner LLP, counsel for
the Loan Parties, and Conyers, Dill & Pearman Limited, Bermuda counsel to the
Parent and JRG Reinsurance, which opinion letters shall cover such matters
relating to the Loan Parties, the Loan Documents or the Financing Transactions
as the Administrative Agent or the Required Lenders shall reasonably request and
otherwise shall be in form and content reasonably satisfactory to the
Administrative Agent. The Parent requests such counsel to deliver such opinion
letter.

 

(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 each Loan Party and
its Material Subsidiaries, the authorization for and validity of the Financing
Transactions and any other legal matters relating to each Loan Party, its
Material Subsidiaries, the Loan Documents or the Financing Transactions, all in
form and substance satisfactory to the Administrative Agent and its counsel.

 

(d)           The Administrative Agent shall have received a certificate, dated
the Restatement 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 clauses (b), (c) and (d) of Section 4.02.

 

(e)           The Required Lenders shall not have notified the Administrative
Agent of their determination that, since December 31, 2018, any event,
development or circumstance has occurred that has had or would reasonably be
expected to have a Material Adverse Effect.

 

(f)            Neither of the Arranger nor the Administrative Agent shall have
become aware of any information or other matter affecting the Loan Parties or
the Financing Transactions which was in existence prior to the date of this
Agreement and is inconsistent in a material and adverse manner with any such
information or other matter disclosed to them prior to the date of this
Agreement.

 

(g)           Each Guarantor shall have executed and delivered to the
Administrative Agent a confirmation of its Payment Guaranty in form and
substance satisfactory to the Administrative Agent.

 

(h)           The Parent shall have paid all fees and other amounts due and
payable to the Lender Parties on or before the Restatement Effective Date,
including, to the extent invoiced, all out-of-pocket expenses (including fees,
charges and disbursements of counsel) required to be reimbursed or paid by the
Borrowers under the Loan Documents, including the fees payable pursuant to
Section 2.12(d).

 

(i)            All consents and approvals required to be obtained from any
Applicable Insurance Regulatory Authority or other Governmental Authority or
other Person in connection with the Financing Transactions shall have been
obtained and be in full force and effect, except where failure to obtain such
approval or consent would not have a Material Adverse Effect.

 

(j)            The Borrowers shall have deposited with the Administrative Agent,
for the ratable payment to the Lenders, an amount in immediately available funds
equal to all accrued and unpaid interest (together with any applicable breakage
compensation), commitment fees, Letter of Credit participation fees and fronting
fees under the Existing Credit Agreement to but not including the Restatement
Effective Date.

 

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(k)           At least five (5) days prior to the Restatement Effective Date,
the Borrowers shall deliver to the Administrative Agent and each Lender a
Beneficial Ownership Certification in relation to JRG Reinsurance.

 

(l)          The Administrative Agent shall have received from JRG Reinsurance
evidence reasonably satisfactory to the Administrative Agent that no approval of
any Applicable Insurance Regulatory Authority is required for any Borrowings by
JRG Reinsurance or issuances of Letters of Credit with respect to which JRG
Reinsurance is obligated under either of the Secured Facility or the Unsecured
Facility and its pledge of Eligible Collateral under the Secured Facility, with
such Debt and other obligations of JRG Reinsurance hereunder in each case
ranking at least equally with claims of other creditors (including policy
holders) of JRG Reinsurance, or, if such approval is required, that JRG
Reinsurance has obtained such approval (the “Regulatory Condition
Satisfaction”).

 

(m)          Each Borrower shall have executed and delivered to the
Administrative Agent a confirmation of its respective Pledge Agreement; and JRG
Reinsurance shall have executed and delivered to the Administrative Agent a
confirmation of its Control Agreement, in each case, in form and substance
satisfactory to the Administrative Agent.

 

(n)           The Administrative Agent and the Lenders shall have received from
the Loan Parties such other certificates and other documents as the
Administrative Agent or any Lender may reasonably have requested, including the
promissory note complying with Section 2.09(e) of any Lender requesting such
promissory note.

 

Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Letter of Credit Issuers to issue Letters of Credit shall not become
effective unless each of the foregoing conditions is satisfied (or waived by
each Lender) before 5:00 p.m., Prevailing Eastern Time, on or before November 8,
2019 (and, if any such condition is not so satisfied or waived, the Commitments
shall terminate at such time).

 

Section 4.02        Conditions to Initial Utilization and Each Subsequent
Utilization. The obligation of each Lender to make a Loan on the occasion of any
Borrowing (including the initial Borrowing), and the obligation of any Letter of
Credit Issuer to issue, amend, renew or extend any Letter of Credit (including
the initial Letters of Credit, if such initial Letters of Credit are issued
prior to the occasion of the initial Borrowing), is each subject to receipt of
the Borrower Agent’s request therefor in accordance herewith and to the
satisfaction of the following conditions:

 

(a)           The Restatement Effective Date shall have occurred.

 

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

 

(c)           The representations and warranties of the Borrowers set forth in
the Loan Documents shall be true and correct in all material 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; provided that any
representation and warranty that is qualified as to “materiality”, “Material
Adverse Effect” or similar language shall be true and correct (after giving
effect to such qualification therein) in all respects as of such date.

 

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(d)           Immediately before and after such Borrowing is made, or a Letter
of Credit is issued, amended, renewed or extended, as applicable, the Total
Outstanding Secured Facility Amount will not exceed the Total Secured Facility
Commitment and the Total Outstanding Unsecured Facility Amount will not exceed
the Total Unsecured Facility Commitment.

 

(e)           In the case of the issuance of a Secured Facility Letter of
Credit, the Borrowers shall have pledged with the Administrative Agent pursuant
to the Security Documents Eligible Collateral having a Collateral Value of not
less than the amount of such Letter of Credit.

 

(f)          In the case of a Borrowing by JRG Reinsurance or the issuance of a
Letter of Credit for the account of JRG Reinsurance, a Financial Officer of JRG
Reinsurance shall have executed and delivered to the Administrative Agent a
certificate in form and substance reasonably satisfactory to the Administrative
Agent that the Regulatory Condition Satisfaction remains effective.

 

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 clauses (b), (c)
and (d) of this Section.

 

Article 5

AFFIRMATIVE COVENANTS

 

Until all the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees and other amounts payable hereunder have been
paid in full and in cash, all Letters of Credit have expired or been cancelled,
all LC Disbursements have been reimbursed in cash, and all other obligations
hereunder and under the other Loan Documents (other than unasserted claims for
indemnity) have been paid and satisfied in full and in cash, each Borrower
jointly and severally covenants and agrees with the Lenders that:

 

Section 5.01         Financial Statements and Other Information. The Borrowers
shall furnish to the Administrative Agent (for delivery to each Lender):

 

(i)           as soon as available and in any event within 120 days after the
end of each Fiscal Year, the Parent’s audited Consolidated balance sheet as of
the end of such Fiscal Year and the related statements of income and cash flows
for such Fiscal Year, setting forth in each case in comparative form the figures
for the previous Fiscal Year, all reported on by Ernst & Young LLP or other
independent public accountants of recognized national standing (without
qualification or exception and without any qualification or exception as to the
scope of such audit and in accordance with generally accepted auditing
standards) as presenting fairly in all material respects the financial position,
results of operations and cash flows of the Parent and its Subsidiaries on a
Consolidated basis in accordance with GAAP;

 

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(ii)          as soon as available and in any event within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year (and within 60
days after the end of each fourth Fiscal Quarter of each Fiscal Year), its
Consolidated balance sheet as of the end of such Fiscal Quarter and the related
statements of income and cash flows for such Fiscal Quarter and for the then
elapsed portion of such Fiscal Year, setting 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, all certified by
a Financial Officer as (A) reflecting all adjustments (which adjustments are
normal and recurring unless otherwise disclosed) necessary for a fair
presentation of the results for the period covered and (B) if the Parent is an
SEC reporting company (or equivalent under foreign Law), having been prepared in
accordance with the applicable rules of the SEC (or foreign equivalent) or,
otherwise, having been prepared in accordance with GAAP;

 

(iii)         concurrently with each delivery of financial statements under
clause (i) or (ii) above, a certificate of a Financial Officer of the Parent (A)
certifying as to whether a Default has occurred and is continuing and, if a
Default has occurred and is continuing, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (B) setting forth
reasonably detailed calculations demonstrating compliance with Section 6.11 and
Section 6.12, (C) certifying that all representations and warranties of the
Credit Parties under Article 3 are true and correct in all material respects as
of the date of such certificate, (D) certifying the Leverage Ratio (with
accompanying computation thereof in reasonable detail) as of the end of such
Fiscal Quarter or Fiscal Year, as the case may be, (E) certifying the Best
Rating of each Insurance Subsidiary as of the end of such Fiscal Quarter or
Fiscal Year, as the case may be, and (F) identifying any change(s) in GAAP or in
the application thereof that have become effective since the date of, and have
had an effect in any material respect on, the Parent’s most recent audited
financial statements referred to in Section 3.04 or delivered pursuant to this
Section (and, if any such change has become effective, specifying the effect of
such change on the financial statements accompanying such certificate), unless
such change(s) are expressly identified in such financial statements
accompanying such certificate;

 

(iv)         concurrently with each delivery of financial statements under
clause (i) above, (A) a certificate of the accounting firm that reported on such
financial statements stating whether during the course of their examination of
such financial statements they obtained knowledge of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines) and (B) a certificate of a Financial Officer identifying any
Subsidiary that has been formed or acquired during the Fiscal Year covered by
such financial statements;

 

(v)          for so long as the Parent is an SEC reporting company (or
equivalent under foreign Law), promptly after the same become publicly
available, copies of all periodic and other material reports and proxy
statements filed by the Parent or any Subsidiary with the SEC, or any
Governmental Authority succeeding to any or all of the functions of the SEC (or
foreign equivalent thereof);

 

(vi)         promptly upon the effectiveness of any material amendment or
modification of, or any waiver of the rights of a Loan Party or any Material
Subsidiary under, the certificate of formation, limited liability company
agreement, certificate of incorporation, by-laws or other organizational
documents of a Loan Party or any Material Subsidiary;

 

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(vii)        as soon as available and in any event within twenty-five (25) days
after the end of each calendar month, a certificate executed by a Financial
Officer of the Parent as of the last day of such calendar month setting forth
(A) the undrawn amount of each Secured Facility Letter of Credit outstanding on
such date, (B) an itemization of the Eligible Collateral securing each such
Letter of Credit, and (C) the Collateral Value thereof on such date,

 

(viii)       any change in the information provided in the Beneficial Ownership
Certification that would result in a change to the list of beneficial owners
identified in parts (c) or (d) of such certification as soon as possible and in
no event later than five (5) Business Days after the Borrowers have knowledge of
any such change in such information, and

 

(ix)         promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of a Loan
Party and its Subsidiaries, or compliance with the terms of any Loan Document,
as the Administrative Agent or any Lender may reasonably request;

 

provided that for so long as the Parent is an SEC reporting company (or
equivalent under foreign Law), any information or document that is required to
be furnished by any of clauses (i), (ii), (vi), and (vii) of this Section 5.01
and that is filed with the SEC via the EDGAR filing system shall be deemed to be
furnished so long as the Parent provides to the Administrative Agent and the
Lenders electronic or written notice of the posting of such information or
document.

 

Section 5.02         Insurance Subsidiary Reporting. The Borrowers shall furnish
to the Administrative Agent and each Lender copies of the following:

 

(i)           promptly after filing with the Applicable Insurance Regulatory
Authority and in any event within 45 days after the end of each of the first
three quarterly fiscal periods of each fiscal year of each Insurance Subsidiary
(and within 60 days after the end of each fourth fiscal period of each fiscal
year of each Insurance Subsidiary), its quarterly Statutory Statement for such
quarterly fiscal period, together with the opinion thereon of a senior financial
officer of such Insurance Subsidiary stating that such Statutory Statement
presents the financial condition of such Insurance Subsidiary for such quarterly
fiscal period in accordance with statutory accounting practices required or
permitted by the Applicable Insurance Regulatory Authority;

 

(ii)          promptly after filing with the Applicable Insurance Regulatory
Authority and in any event within 180 days after the end of each fiscal year of
each Insurance Subsidiary, the annual Statutory Statement of such Insurance
Subsidiary for such year, together with (a) the opinion thereon of a senior
financial officer of such Insurance Subsidiary stating that said annual
Statutory Statement presents the financial condition of such Insurance
Subsidiary for such fiscal year in accordance with statutory accounting
practices required or permitted by the Applicable Insurance Regulatory
Authority, (b) a certificate of a valuation actuary affirming the adequacy of
reserves taken by such Insurance Subsidiary in respect of future policyholder
benefits as at the end of such fiscal year (as shown on such Statutory
Statement) and (c) for each Material Insurance Subsidiary, the report of Ernst &
Young LLP (or other independent certified public accountants of recognized
national standing) on the annual Statutory Statements delivered pursuant to this
clause (ii);

 

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(iii)         within 120 days after the close of each fiscal year of each
Insurance Subsidiary, a copy of the “Statement of Actuarial Opinion” for such
Insurance Subsidiary which is provided to the Applicable Insurance Regulatory
Authority (or equivalent information should such Applicable Insurance Regulatory
Authority no longer require such a statement), which statement shall be in the
format prescribed by the Applicable Insurance Code of such Insurance Subsidiary;

 

(iv)         promptly after any Insurance Subsidiary receives the results of a
triennial examination by the NAIC of the financial condition and operations of
such Insurance Subsidiary or any of its Subsidiaries (or results of an
equivalent examination by a similar foreign body), a copy thereof;

 

(v)          promptly following the delivery or receipt by a Loan Party or any
of its Insurance Subsidiaries of any correspondence, notice or report to or from
any Applicable Insurance Regulatory Authority that relates, to any material
extent, to the financial viability of any of its Subsidiaries, a copy thereof;

 

(vi)         within five Business Days after receipt, notice from any Applicable
Insurance Regulatory Authority of any threatened or actual proceeding for
suspension or revocation of any License or any similar proceeding with respect
to any such License; and

 

(vii)        promptly, notice of any denial of coverage, litigation, or
arbitration arising out of any Reinsurance Agreements to which any Insurance
Subsidiary is a party which denial, litigation or arbitration involves
$10,000,000 or more.

 

The Parent shall cause a Best Rating to be in effect with respect to each of its
Insurance Subsidiaries at all times.

 

Section 5.03         Notice of Material Events. The Borrowers shall furnish to
the Administrative Agent and each Lender prompt written notice of the following:

 

(i)           the occurrence of any Default;

 

(ii)          the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority or Applicable Insurance
Regulatory Authority against or affecting a Loan Party or any Material
Subsidiary that, if adversely determined, could reasonably be expected to result
in a Material Adverse Effect or the filing any other legal or arbitral
proceedings, and any material development in respect of such legal or other
proceedings, affecting a Loan Party or any of its Subsidiaries, except
proceedings that, if adversely determined, would not (either individually or in
the aggregate) have a Material Adverse Effect;

 

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(iii)         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
liabilities of a Loan Party and its Subsidiaries in an aggregate amount
exceeding $10,000,000;

 

(iv)         the occurrence of any change in the Best Rating of an Insurance
Subsidiary;

 

(v)          on or prior to the effectiveness of any amendment to the terms of
any Material Debt (other than Debt owed to an Applicable FHLB), or the
effectiveness of any agreement governing any Debt in replacement or exchange
thereof, a copy of such amendment or agreement (other than Debt owed to an
Applicable FHLB); provided that promptly upon the request of the Administrative
Agent or a Lender from time to time, the Borrower shall provide to the
Administrative Agent and the Lenders copies of agreements and other documents
evidencing, securing or otherwise governing Debt owed by any Domestic Insurance
Subsidiary to its Applicable FHLB;

 

(vi)         any change in any Applicable Insurance Code that could reasonably
be expected to have a Material Adverse Effect, promptly upon a Financial
Officer’s (a) becoming aware of such change and (b) reaching the belief that
such change could reasonably be expected to have a Material Adverse Effect;

 

(vii)        any change in the published financial strength rating by Best of
any Person to which any Insurance Subsidiary has ceded risk (that is not secured
by such Person’s delivery to such Insurance Subsidiary of a letter of credit or
a pledge of cash collateral) in excess of $5,000,000 pursuant to a Reinsurance
Agreement if such change causes such published rating to be “B++” or lower; and

 

(viii)       any other development that results in, or would 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 the Borrower 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 5.04         Existence; Conduct of Business. (a) Except as otherwise
permitted by the provisions of Section 6.03, each Loan Party shall, and shall
cause each of its Material Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its business.

 

(b)          Without limiting the generality of paragraph (a), above, the
Borrowers shall cause each Insurance Subsidiary at all times to comply, in all
material respects, with its Applicable Insurance Code and the other requirements
applicable to it of its Applicable Insurance Regulatory Authority.

 

Section 5.05         Payment of Obligations. Each Loan Party shall, and shall
cause each of its Material Subsidiaries to, pay all of its Material Debt and
other material obligations, including Tax liabilities, 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 Loan Party
or such Material Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP, (c) such contest effectively suspends
collection of the contested obligation and the enforcement of any Lien securing
such obligation and (d) the failure to make payment pending such contest would
not reasonably be expected to result in a Material Adverse Effect.

 

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Section 5.06         Insurance. Each Loan Party shall keep itself and all of its
insurable properties, and shall cause each Material Subsidiary to keep itself
and all of its insurable properties, insured at all times to such extent, by
such insurers, and against such hazards and liabilities as is customarily
carried by prudent businesses of like size and enterprise; and promptly upon the
Administrative Agent’s written request upon and during the continuance of an
Event of Default, each Loan Party shall furnish to the Administrative Agent such
information about any such insurance as the Administrative Agent may from time
to time reasonably request; provided that, nothing in this Section 5.06 shall be
deemed to require any of the Parent’s Material Subsidiaries to enter into any
Reinsurance Agreement and provided, further, that the Loan Parties and their
Material Subsidiaries may self-insure against such hazards and risks, and in
such amounts as is customary for corporations of a similar size and in similar
lines of business.

 

Section 5.07         NAIC Ratio. In the event that the NAIC or any Applicable
Insurance Regulatory Authority shall at any time promulgate any risk-based
capital ratio requirements or guidelines, the Borrowers shall cause each
Domestic Insurance Subsidiary that is a Material Insurance Subsidiary to comply
with the minimum requirements or guidelines applicable to it as established by
the NAIC or such Applicable Insurance Regulatory Authority.

 

Section 5.08         Proper Records; Rights to Inspect. Each Loan Party shall,
and shall cause each of its Material Subsidiaries to, keep proper books of
record and account in which complete and correct entries are made of all
transactions relating to its business and activities. The Loan Parties shall,
and shall cause each of their Material Subsidiaries 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, directors and employees, all at such reasonable
times and as often as reasonably requested, but, other than in exigent
circumstances, taking into account periodic accounting and regulatory compliance
demands on the Loan Parties and their Subsidiaries.

 

Section 5.09         Compliance with Laws.

 

(a)         Each Loan Party shall, and shall cause each of its Material
Subsidiaries to, comply with all Laws of any Governmental Authority (including
all Environmental Laws and ERISA and the respective rules and regulations
thereunder) applicable to it or its property, other than such Laws, rules or
regulations (i) the validity or applicability of which a Loan Party or any
Subsidiary is contesting in good faith by appropriate proceedings or (ii) the
failure to comply with which cannot reasonably be expected to result in a
Material Adverse Effect.

 

(b)         Without limiting the generality of the foregoing, each Loan Party
and its Affiliates and agents shall not (i) conduct any business or engage in
any transaction or dealing with any Blocked Person, including the making or
receiving of any contribution of funds, goods or services to or for the benefit
of any Blocked Person, (ii) deal in, or otherwise engage in any transaction
relating to, any property or interests in property blocked pursuant to the
Executive Order No. 13224; or (iii) engage in or conspire to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in the Executive Order
No. 13224, the USA PATRIOT Act or any other Anti-Terrorism Law. The Loan Parties
shall deliver to the Lenders and the Letter of Credit Issuers any certification
or other evidence reasonably requested from time to time by any Lender or any
Letter of Credit Issuer in its reasonable discretion, confirming their
compliance with this Section 5.09. Each Loan Party will maintain in effect
policies and procedures designed to ensure compliance by such Loan Party, its
Subsidiaries, and any of their agents acting or benefiting in any capacity in
connection with the Loans or other transactions hereunder with applicable
Sanctions.

 

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Section 5.10         Use of Proceeds and Letters of Credit. The proceeds of the
Loans will be used only to finance the general corporate purposes of the
Borrowers (including, without limitation, liquidity, acquisitions (except to the
extent restricted pursuant to this Agreement), the satisfaction of Debt required
by Section 4.01(j) and working capital needs of the Borrowers and their
Subsidiaries). No part of the proceeds of any Loan will be used, directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Federal Reserve Board, including Regulations U and X. Letters of Credit
will be requested and used only to finance the general corporate purposes
(including working capital needs) of the Borrowers and their Subsidiaries, and
will not be used, whether directly or indirectly, for any purpose that entails a
violation of any of the Regulations of the Federal Reserve Board, including
Regulations U and X. Each Loan Party will not, directly or indirectly, use the
proceeds of any Loan, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other Person, (i) to fund
any activities or business of or with any Person, or in any country or
territory, that, at the time of such funding, is the subject of Sanctions, or
(ii) in any other manner that would result in a violation of Sanctions by any
Person.

 

Article 6

NEGATIVE COVENANTS

 

Until all the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees and other amounts payable hereunder have been
paid in full and in cash, all Letters of Credit have expired or been cancelled,
all LC Disbursements have been reimbursed in cash, and all other obligations
hereunder and under the other Loan Documents (other than unasserted claims for
indemnity) have been paid and satisfied in full and in cash, each Borrower
jointly and severally covenants and agrees with the Lenders that:

 

Section 6.01         Debt; Certain Equity Securities; Prepayments. (a) No Loan
Party shall, nor shall it permit any of its Material Subsidiaries to, create,
incur, assume or permit to exist any Debt, except:

 

(i)           Debt created under the Loan Documents;

 

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(ii)          Debt in connection with (a) the Restatement Effective Date Trust
Preferred Securities and (b) unsecured debentures issued by James River, due
April 29, 2034 in the amount of $15,000,000;

 

(iii)         (A) Debt of the Parent to Material Subsidiaries, and (B) Debt of
Material Subsidiaries to the Parent or to other Material Subsidiaries;

 

(iv)         Debt of the Loan Parties and their Material Subsidiaries,
including, without limitation, Capital Lease Obligations, secured by Liens
permitted under Section 6.02(iv) hereof;

 

(v)          Debt (but only of Domestic Insurance Subsidiaries) to Applicable
FHLBs;

 

(vi)         Guarantees permitted under Section 6.04(a), Subordinated Debt and
Hybrid Securities;

 

(vii)        Debt consisting of letters of credit obtained from Comerica Bank by
JRG Reinsurance in the ordinary course of business so long as that aggregate
Debt thereunder does not at any time exceed $125,000,000; and

 

(viii)       additional Debt not to exceed $200,000,000 in aggregate principal
amount at any time outstanding as to the Parent and its Subsidiaries on a
Consolidated basis; provided, however, that the Subsidiary Debt Amount shall not
at any time exceed an amount equal to $10,000,000, minus the Guarantor
Guaranteed Amount at such time;

 

provided that if any of the foregoing Debt is Debt of a Borrower owing to a
Subsidiary, such Debt shall be subordinated to the Debt and other obligations of
the Loan Parties hereunder and under the other Loan Documents on terms
reasonably satisfactory to the Administrative Agent.

 

(b)          No Loan Party shall issue Current Redeemable Equity.

 

(c)          The Parent shall not, and shall not permit any of its Subsidiaries
to, make or offer to make (or give any notice in respect thereof) any voluntary
or optional payment or prepayment on or redemption, retirement, defeasance, or
acquisition for value of any Debt, other than the Debt and other obligations
hereunder and under the other Loan Documents.

 

Section 6.02         Liens. No Loan Party shall, nor shall it permit any of its
Material Subsidiaries to, create or permit to exist any Lien on any property 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:

 

(i)           Permitted Liens and Liens created pursuant to the Loan Documents;

 

(ii)          any Lien on any property of a Loan Party or any Material
Subsidiary existing on the date hereof and listed in Schedule 6.02; provided
that (A) such Lien shall not apply to any other property of such Loan Party or
any Material Subsidiary and (B) such Lien shall secure only those obligations
that it secures on the date hereof and extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof;

 

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(iii)         any Lien existing on any fixed or capital asset before the
acquisition thereof by a Loan Party or any Material Subsidiary or existing on
any fixed or capital asset of any Person that first becomes a Material
Subsidiary after the date hereof before the time such Person becomes a Material
Subsidiary; provided that (A) such Lien is not created in contemplation of or in
connection with such acquisition or such Person becoming a Material Subsidiary,
(B) such Lien will not apply to any other property or asset of a Loan Party or
any Material Subsidiary, (C) such Lien will secure only those obligations which
it secures on the date of such acquisition or the date such Person first becomes
a Material Subsidiary, as the case may be, and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof, (D) the principal amount of Debt secured by any such Lien shall at no
time exceed 80% of the fair market value (as determined in good faith by a
Financial Officer of a Loan Party) of such fixed or capital asset at the time it
was acquired (by purchase, construction or otherwise) and (E) the aggregate
principal amount of Debt secured by any and all such Liens permitted under this
clause (iii) shall not at any time exceed $10,000,000;

 

(iv)         Liens on fixed or capital assets acquired, constructed or improved
by a Loan Party or any Material Subsidiary; provided that (A) such Liens and the
Debt secured thereby are incurred before or within 90 days after such
acquisition or the completion of such construction or improvement, (B) the Debt
secured thereby does not exceed the cost of acquiring, constructing or improving
such fixed or capital assets, (C) such Liens will not apply to any other
property of a Loan Party or any Material Subsidiary and (D) the aggregate
principal amount of Debt secured by any and all such Liens permitted under this
clause (iv) shall not at any time exceed $10,000,000;

 

(v)          Liens to secure a Debt owing to a Borrower or a Guarantor;

 

(vi)         Liens on the assets of a Domestic Insurance Subsidiary to secure
Debt owing by such Domestic Insurance Subsidiary to its Applicable FHLB;

 

(vii)        Cash and investment property (other than Equity Interests in any
Subsidiary) deposited as collateral to secure letter of credit and other Debt
permitted under clause (vii) and clause (viii) of Section 6.01(a), but only so
long as the sum of (A) the aggregate undrawn amount of letters of credit secured
thereby, plus (B) the aggregate amount of unreimbursed letter of credit drawings
secured thereby, plus (C) the aggregate unpaid balance of loan principal or
other Debt secured thereby, in each case under both such clauses (vii) and
(viii) taken together, does not at any time exceed $200,000,000; and

 

(viii)       any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by a Lien permitted by any of clauses (ii), (iii),
(iv), (v), (vi) or (vii) of this Section; provided that such Debt under any of
clauses (ii), (iii), (iv) and (vi) is not increased (except by the amount of
fees, expenses and premiums required to be paid in connection with such
refinancing, extension, renewal or refunding) and is not secured by any
additional assets.

 

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Section 6.03         Fundamental Changes.

 

(a)          No Loan Party shall, nor shall it permit any of its Material
Subsidiaries to, enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), unless it is a Permitted Acquisition; provided that
James River UK may dissolve or merge with the Parent so long as each and all of
the following is satisfied: (i) the Parent shall have delivered to the
Administrative Agent written notice of such merger or dissolution and the
intended date of consummation thereof at least twenty (20) Business Days in
advance of such intended date of consummation, (ii) such notice is accompanied
with copies of the definitive documentation that will effect such merger or
dissolution, (iii) no Default exists on the date of such notice and on the date
of such consummation, (iv) after giving effect to such merger or dissolution,
the Parent shall own 100% of all of the issued and outstanding Equity Interests
of each of James River and any other Person that is then a Subsidiary of James
River UK, (v) in the case of a merger, the Parent is the surviving Person, (vi)
the Parent shall have caused to be delivered to the Administrative Agent and the
Lenders such opinions of counsel as the Administrative Agent may reasonably
request, and (vii) the Administrative Agent shall not have received from the
Required Lenders on or before three (3) Business Days prior to such intended
date of consummation written notice that such Required Lenders have determined
in their good faith judgment that such merger or dissolution impairs or
otherwise adversely affects any right or interest of the Lenders hereunder or
under any other Loan Document.

 

(b)          No Loan Party shall, nor shall it permit any of its Subsidiaries
to, make any Acquisition or otherwise acquire any business or property from, or
capital stock of, or be a party to any acquisition of, any Person except for (i)
purchases of inventory and other property to be sold or used in the ordinary
course of business, (ii) Assumed Reinsurance in the ordinary course of business,
(iii) Investments permitted under Section 6.04, (iv) capital expenditures in the
ordinary course of business, and (v) Permitted Acquisitions.

 

(c)          No Loan Party shall, nor shall it permit any of its Subsidiaries
to, convey, sell, lease, transfer or otherwise dispose of, in one transaction or
a series of transactions, all or a substantial part of its business or Property,
whether now owned or hereafter acquired.

 

(d)          Notwithstanding the foregoing provisions of this Section 6.03:

 

(i)           any Subsidiary may be merged or consolidated with or into: (A) a
Loan Party if such Loan Party shall be the continuing or surviving company or
(B) any other Subsidiary; provided that if any such transaction shall be between
a Subsidiary and a Wholly Owned Subsidiary, the Wholly Owned Subsidiary shall be
the continuing or surviving company;

 

(ii)          any Material Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its property (upon voluntary liquidation or otherwise)
to a Loan Party or a Wholly Owned Subsidiary of a Loan Party; and

 

(iii)         any Material Subsidiary may merge or consolidate with or acquire
the business, property or Equity Interests and Equity Rights of another Person
if (A) both immediately prior to and after giving effect to such merger,
consolidation or acquisition, no Default exists, (B) after giving pro forma
effect (pursuant to accounting procedures satisfactory to the Administrative
Agent) to such merger, consolidation or acquisition, the Leverage Ratio as of
the Fiscal Quarter most recently ended shall not be greater than 0.35 to 1, (C)
in the case of an acquisition of Equity Interests and Equity Rights, such
Material Subsidiary acquires 100% of the issued and outstanding Equity Interests
and Equity Rights of such Person and (D) in the case of a merger or
consolidation, the surviving entity is a Wholly Owned Subsidiary of a Loan
Party.

 

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Section 6.04         Investments, Loans, Advances, Guarantees and Acquisitions.

 

(a)          No Loan Party shall, nor shall it permit any of its Material
Subsidiaries to, make or permit to remain outstanding any Investments except (i)
Investments outstanding on the date hereof and identified in Part B of Schedule
3.06, (ii) operating deposit accounts with banks, (iii) Permitted Investments,
(iv) (A) the Payment Guaranties, (B) Investments by a Loan Party and its
Material Subsidiaries in their respective Subsidiaries; provided that the Loan
Parties’ Investments in Foreign Subsidiaries acquired or formed after the
Restatement Effective Date that are not organized under the Laws of Bermuda
(exclusive of the Parent’s Investment in James River UK upon and subject to the
terms and conditions of this Agreement) shall not exceed $10,000,000 in the
aggregate as to all Loan Parties in any Fiscal Year, (C) Guarantees by one or
more of the Guarantors of the Debt of a Borrower permitted under clause (viii)
of Section 6.01(a), provided that the Guarantor Guaranteed Amount shall not at
any time exceed an amount equal to $10,000,000, minus the Subsidiary Debt Amount
at such time, (D) Guarantees by JRG Reinsurance of any Debt of the Parent
permitted under clause (i) or cause (viii) of Section 6.01(a), and (E)
Investments by Material Subsidiaries in the Parent permitted under Section
6.01(a)(iii)(A), (v) Hedging Agreements in the ordinary course of a Loan Party’s
or such Subsidiary’s business, (vi) so long as no Default exists or would exist
after giving effect thereto, the prepayment or acquisition by a Loan Party or
any other Subsidiary of its or a Subsidiary’s Trust Preferred Securities notes
(and the related Trust Preferred Securities) so long as the aggregate principal
amount of all such Trust Preferred Securities notes (and the related Trust
Preferred Securities) prepaid or acquired from and after the Restatement
Effective Date does not exceed $10,000,000, (vii) Permitted Acquisitions, and
(viii) so long as no Default exists or would exist after giving effect thereto,
and subject to the requirements of Section 6.09, Investments in Persons
Controlled by D.E. Shaw & Co., L.P., a Delaware limited partnership; provided,
however, that none of the foregoing Investments shall consist of a general
partnership interest of any partnership, whether general or limited (or
equivalent Equity Interest otherwise named).

 

(b)          The Parent shall not permit any Insurance Subsidiary to make any
Investment if, on the date of which such Investment is made and after giving
effect thereto, the aggregate value of Investments (other than equity
Investments and bank loan participations) held by such Insurance Subsidiary that
are rated lower than “2” by the NAIC or are not rated by the NAIC would exceed
5% of the value of total invested assets. As used in this Section 6.04, the
“value” of an Investment refers to the value of such Investment that would be
shown on the most recent Statutory Statement of the relevant Insurance
Subsidiary prepared in accordance with SAP.

 

Section 6.05         Asset Sales. No Loan Party shall, nor shall it permit any
of its Material Subsidiaries to, sell, transfer, lease or otherwise dispose of
any property, including any Equity Interest owned by it, nor will (i) the Parent
issue any additional Equity Interest in the Parent if such issuance would cause
a Change in Control or (ii) any Material Subsidiary issue any additional Equity
Interest in such Subsidiary, except:

 

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(a)          sales of used or surplus equipment and Permitted Investments in the
ordinary course of business; and

 

(b)          Sale-Leaseback Transactions permitted pursuant to Section 6.07.

 

Section 6.06          Ceded Reinsurance. No Loan Party shall, nor shall it
permit any Insurance Subsidiary to:

 

(a)           enter into any Reinsurance Agreement in respect of ceded risk in
excess of $5,000,000 with any Person other than (i) another Insurance
Subsidiary, (ii) any Person for which the most recently published financial
strength rating by Best is “B+” or higher or, if such Person is not rated by
Best, which has a Statutory Surplus (or the equivalent thereof with respect to a
Person not domiciled in the United States) of not less than $100,000,000, (iii)
any Person that posts security under such Reinsurance Agreement in an amount
equal to the total liabilities assumed by such Person, through a letter of
credit issued by an “authorized bank” (as such term is defined by the Applicable
Insurance Regulatory Authority) or cash collateral deposit or (iv) any other
reinsurers acceptable to the Administrative Agent, provided however, that for
purposes of the foregoing clause (ii), any “NA” designation shall not be
considered a rating of Best;

 

(b)          enter into any Reinsurance Agreement or Reinsurance Agreements with
Lloyd’s of London if the aggregate amount of reinsurance ceded thereby would
exceed thirty-five percent (35.0%) of the aggregate premium volume of
reinsurance ceded by the Insurance Subsidiaries; or

 

(c)          enter into any Surplus Relief Reinsurance except with another
Insurance Subsidiary; provided that the Insurance Subsidiaries identified on
Schedule 6.06 may continue to maintain (and from time to time replace so long as
the amount thereof does not increase) the Surplus Relief Reinsurance in effect
on the date hereof and described on Schedule 6.06.

 

Section 6.07         Sale and Leaseback Transactions. No Loan Party shall, nor
shall it permit any of its Material Subsidiaries to, enter into any arrangement
with any Person (other than a Loan Party or any of its Material Subsidiaries)
providing for the leasing to such Loan Party or any of its Material Subsidiaries
for a period of more than five years of any property which has been or is to be
sold or transferred by such Loan Party or such Material Subsidiary to such
Person or to any other Person (other than a Loan Party or any of its Material
Subsidiaries), to which funds have been or are to be advanced by such Person on
the security of the property subject to such lease (a “Sale-Leaseback
Transaction”) if, after giving effect thereto, the Value (as defined below) of
all Sale/Leaseback Transactions at such time would exceed 10% of the
Consolidated Net Worth of the Parent at such time. For purposes of this Section
6.07, “Value” shall mean, with respect to any Sale-Leaseback Transaction as at
any time, the amount equal to the greater of (a) the net proceeds of the sale or
transfer of the property subject to such Sale-Leaseback Transaction and (b) the
fair value, in the opinion of the board of directors of the applicable Loan
Party of such property at the time of entering into such Sale-Leaseback
Transaction, in either case divided first by the number of full years of the
term of the lease and then multiplied by the number of full years of such term
remaining at the time of determination, without regard to any renewal or
extension options contained in such lease; provided that all obligations under
such sale-leaseback agreements shall constitute Debt for purposes of calculating
compliance with the covenants set forth in this Article 6.

 

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Section 6.08        Restricted Payments. No Loan Party shall declare or make, or
agree to pay or make, directly or indirectly, any Restricted Payment, or incur
any obligation (contingent or otherwise) to do so unless, both immediately
before and after giving pro forma effect to such Restricted Payment, no Default
exists or would result therefrom; provided that nothing in this Section shall be
construed to restrict payments by a Subsidiary to its immediate parent entity.

 

Section 6.09        Transactions with Affiliates. Except as expressly permitted
by this Agreement, and except for other transactions between or among the Parent
and its Wholly Owned Subsidiaries and transactions among its Wholly Owned
Subsidiaries, the Loan Parties shall not, nor shall it permit any of their
Material Subsidiaries to, directly or indirectly: (a) make any Investment in an
Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any
property to an Affiliate; (c) merge into or consolidate with or purchase or
acquire property from an Affiliate; or (d) enter into any other transaction
directly or indirectly with or for the benefit of an Affiliate (including,
without limitation, Guarantees and assumptions of obligations of an Affiliate);
provided that (i) any Affiliate who is an individual may serve as a director,
officer or employee of a Loan Party or any of its Material Subsidiaries and
receive reasonable compensation for his or her services in such capacity; (ii) a
Loan Party and its Material Subsidiaries may enter into transactions (other than
extensions of credit by such Loan Party or any of its Material Subsidiaries to
an Affiliate) providing for the leasing of property, the rendering or receipt of
services or the purchase or sale of inventory and other property in the ordinary
course of business if the monetary or business consideration arising therefrom
would be substantially as advantageous to such Loan Party and its Material
Subsidiaries as the monetary or business consideration that would obtain in a
comparable transaction with a Person not an Affiliate (or in the case of any
management agreement or investment advisory agreement among or between the
Parent and its Insurance Subsidiaries, that is approved by the Applicable
Insurance Regulatory Authorities); (iii) nothing in this Section 6.09 shall be
deemed to prohibit or restrict the making of Restricted Payments by a Subsidiary
to, as the case may be, the Parent or the Subsidiary that is its immediate
parent entity and (iv) a Loan Party and its Material Subsidiaries may make
investments in any Person Controlled by D.E. Shaw & Co., L.P., a Delaware
limited partnership, so long as the monetary and other terms of such investment
are as advantageous to such Loan Party or Material Subsidiary as would obtain in
a comparable investment in a Person not an Affiliate.

 

Section 6.10        Restrictive Agreements. No Loan Party shall, nor shall it
permit any of its Material Subsidiaries to, directly or indirectly, enter into
or permit to exist any agreement or other arrangement that prohibits, restricts
or imposes any condition on:

 

(a)          the ability of such Loan Party or any Material Subsidiary to create
or permit to exist any Lien on any of its property or

 

(b)          the ability of any Material Subsidiary to:

 

(1)pay dividends or other distributions with respect to any shares of its
capital stock,

 

(2)make or repay loans or advances to such Loan Party or any other Material
Subsidiary, or

 

(3)Guarantee Debt of a Loan Party or any other Material Subsidiary;

 

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provided, however, that:

 

(i)           the foregoing shall not apply to prohibitions, restrictions or
conditions at any time and from time to time imposed by law or by any Loan
Document,

 

(ii)          the foregoing shall not apply to customary prohibitions,
restrictions or conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided that such prohibitions, restrictions or
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder,

 

(iii)         clause (a) of this Section shall not apply to prohibitions,
restrictions or conditions imposed by any agreement relating to secured Debt
permitted by this Agreement if such prohibitions, restrictions or conditions
apply only to the property securing such Debt,

 

(iv)         clause (a) of this Section shall not apply to customary provisions
in leases and other contracts restricting the assignment thereof,

 

(v)          clause (a) of this Section shall not apply to prohibitions,
restrictions or conditions imposed by any agreement relating to Debt permitted
by this Agreement that expressly excludes from such prohibitions, restrictions
or conditions Liens that secure any or all of the Debt and other obligations of
the Loan Parties at any time and from time to time under the Loan Documents,

 

(vi)         clause (b)(2) of this Section shall not apply to prohibitions,
restrictions or conditions imposed by any agreement relating to Debt permitted
by this Agreement that expressly excludes from such prohibitions, restrictions
or conditions any and all loans or advances required or permitted to be made or
repaid to a Loan Party or a Material Subsidiary pursuant to this Agreement or
any other Loan Document, and

 

(vii)        clause (b)(3) of this Section shall not apply to prohibitions,
restrictions or conditions imposed by any agreement relating to Debt permitted
by this Agreement that expressly excludes from such prohibitions, restrictions
or conditions any Guarantee of any or all of the Debt and other obligations of
the Loan Parties at any time and from time to time under the Loan Documents.

 

Section 6.11         Leverage Ratio. The Borrowers shall not permit the Leverage
Ratio as of the end of any Fiscal Quarter ending December 31, 2019 and
thereafter to be greater than 0.35 to 1.

 

Section 6.12        Consolidated Net Worth. The Borrowers shall not permit
Consolidated Net Worth (a) as of the end of the Fiscal Quarter ending September
30, 2019, to be less than $335,028,000 and (b) as of the end of any Fiscal
Quarter thereafter, to be less than an amount equal to (i) the Minimum Net Worth
for the immediately preceding Fiscal Quarter, plus (ii) the Fiscal Quarter
Increase for such immediately preceding Fiscal Quarter.

 

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Section 6.13         [Reserved].

 

Section 6.14         [Reserved].

 

Section 6.15         Minimum Best Ratings. The Borrowers shall not permit the
Best Rating of any Insurance Subsidiary at any time to be lower than “A-”.

 

Section 6.16         Amendment of Material Documents. (a) No Loan Party shall,
nor shall it permit any of its Material Subsidiaries to, amend, modify,
supplement or waive any of its rights under its certificate of formation,
limited liability company agreement, certificate of incorporation, by-laws or
other organizational documents, in each case in any manner that would reasonably
be expected to have a Material Adverse Effect.

 

(b)          No Loan Party shall, nor shall it permit any of its Material
Subsidiaries to, enter into any amendment, waiver or other modification of any
of the Trust Preferred Securities Notes or other Hybrid Securities or any
indenture or other agreement governing the Trust Preferred Securities Notes or
other Hybrid Securities, or of any document evidencing or otherwise governing
any Material Debt (i) if the effect of such amendment, waiver or other
modification is to increase the interest rate on such Debt, increase the amount
of principal due on any date, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any event of default
or condition to an event of default with respect thereto (other than to
eliminate or make less onerous any such event or default or increase any grace
period related thereto), change the redemption, prepayment or defeasance
provisions thereof, or change any collateral therefor (other than to release
such collateral) or (ii) if the effect of such amendment or change, together
with all other amendments or changes made, is to increase in any material
respect the obligations of the obligor thereunder or to confer any additional
rights on the holders of such Debt (or a trustee or other representative on
their behalf).

 

(c)          No Loan Party shall, nor shall it permit any of its Material
Subsidiaries to, make or agree to pay or make, directly or indirectly, any
payment or other distribution (whether in cash, securities or other property) of
or in respect of principal of or interest on any Subordinated Debt, except:

 

(i)           payments (other than optional or voluntary prepayments) as and
when due in respect of such Subordinated Debt but only to the extent, if any,
permitted by the subordination terms, subordination agreement or intercreditor
agreement (or equivalent agreement otherwise named) applicable to such
Subordinated Debt; and

 

(ii)          refinancings of such Subordinated Debt with the proceeds of other
Subordinated Debt.

 

Section 6.17         Lines of Business. No Loan Party shall, nor shall it permit
any of its Material Subsidiaries to, engage in any line or lines of business
activity if doing so would cause less than 80% of a Borrower’s or a Guarantor’s
Consolidated respective gross income to be derived from the business of owning
and operating property and casualty, specialty and workers’ compensation
insurance companies and insurance agencies, as conducted on the date hereof and
businesses related or incidental thereto, which shall be deemed to include,
without limitation, property and casualty reinsurance businesses and property
and casualty premium finance businesses.

 

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Article 7

EVENTS OF DEFAULT

 

Section 7.01          Events of Default. If any of the following events (each an
“Event of Default”) shall occur:

 

(a)          the Borrowers shall fail to pay any principal of any Loan when the
same shall become due, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;

 

(b)          the Borrowers shall fail to pay when due any interest on any Loan
or any fee or other amount (except an amount referred to in clause (a) above)
payable under any Loan Document, and such failure shall continue unremedied for
a period of five (5) Business Days;

 

(c)          any representation, warranty or certification made or deemed made
by or on behalf of a Loan Party or any Material Subsidiary in or in connection
with any Loan Document or any amendment or modification thereof or waiver
thereunder, or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with any Loan Document or any amendment
or modification thereof or waiver thereunder, shall prove to have been incorrect
in any material respect when made or deemed made;

 

(d)          (i) a Loan Party shall fail to observe or perform any covenant or
agreement contained in Section 2.10(b)(i), Section 5.01(i), Section 5.01(ii),
Section 5.01(iii), Section 5.01(iv), Section 5.02, Section 5.03, Section 5.04,
Section 5.08, or Section 5.10 or in Article 6, or (ii) an “Event of Default” (as
defined in any Security Document) shall occur;

 

(e)          a Loan Party shall fail to observe or perform any provision of any
Loan Document (other than those failures covered by clauses (a), (b), (c) and
(d) of this Article 7) and such failure shall continue for 15 days after the
earlier of notice of such failure to the Borrower Agent from the Administrative
Agent or knowledge of such failure by an officer of a Loan Party;

 

(f)           a Loan Party or any of its Material Subsidiaries shall fail to
make a payment or payments (whether of principal or interest and regardless of
amount) in respect of any Material Debt when the same shall become due, whether
at the due date thereof or at a date fixed for prepayment thereof or otherwise;

 

(g)          any event or condition occurs that (i) results in any Material Debt
becoming due before its scheduled maturity, (ii) enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of Material Debt or any trustee or agent on its or their behalf to cause any
Material Debt to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, before its scheduled maturity or (iii) results
in the termination of or enables one or more banks or financial institutions to
terminate commitments to provide in excess of $5,000,000 aggregate principal
amount of credit to a Loan Party or its Material Subsidiaries; provided that, in
the case of any event described in clauses (ii) or (iii) that would permit
Material Debt to be accelerated or would permit termination of such commitments,
as applicable, only after the lapse of a cure period, so long as a Loan Party
has notified the Administrative Agent immediately upon occurrence of such event,
such event shall give rise to an Event of Default hereunder upon expiration of
such cure period; and provided, further, that a mandatory prepayment of Material
Debt required to be made by reason of the sale or other disposition (including,
without limitation, condemnation or insured casualty) of assets securing such
Material Debt shall not be deemed to be an event or condition described in any
of clauses (i), (ii) and (iii), above; provided, further, that no event
described in clause (iii) shall constitute an Event of Default if, as the case
may be, such Loan Party or Material Subsidiary obtains a replacement commitment
on substantially similar economic terms within ten (10) Business Days after such
termination or event or condition enabling termination;

 

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(h)          an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of a Loan Party or any of its Material Subsidiaries or its respective
debts, or of a substantial part of its assets, under any Debtor Relief Law now
or hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for a Loan Party or any
of its Material Subsidiaries or for a substantial part of its respective assets,
and, in any such case, such proceeding or petition shall continue undismissed
for 30 days or an order or decree approving or ordering any of the foregoing
shall be entered;

 

(i)           a Loan Party or any of its Material Subsidiaries shall (i)
voluntarily commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Debtor Relief 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) above,
(iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for a Loan Party or any of its
Material Subsidiaries or for a substantial part of its respective 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)           a Loan Party or any of its Material Subsidiaries 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 exceeding $50,000,000, after giving effect to any insurance covering such
judgment, shall be rendered against a Loan Party or any of its Material
Subsidiaries and shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed (whether by means of
appeal, agreement or other lawful process), or any action shall be legally taken
by a judgment creditor to attach or levy upon any asset of a Loan Party or any
of its Material Subsidiaries to enforce any such judgment;

 

(l)           an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, would reasonably be expected to result in a Material Adverse Effect;

 

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(m)         a Change in Control occurs;

 

(n)          any provision of any Loan Document after delivery thereof shall for
any reason cease to be valid and binding on or enforceable against a Loan Party,
or a Loan Party shall so state in writing; or

 

(o)          there shall occur or be issued an action or order of any Applicable
Insurance Regulatory Authority (i) citing or otherwise referencing the failure
by JRG Reinsurance or any other Material Insurance Subsidiary to meet or
maintain minimum levels of capital or surplus required by its Applicable
Insurance Code, (ii) prohibiting or materially restricting JRG Reinsurance or
any other Material Insurance Subsidiary from writing, underwriting, assuming, or
reinsuring further business, or (iii) otherwise prohibiting or materially
restricting any of the core business activities of JRG Reinsurance or any other
Material Insurance Subsidiary.

 

(p)          a Bermuda Law Event shall occur,

 

then, and in every such event (except an event with respect to a Loan Party
described in clause (h) or (i) above), 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 Agent, take any one or
more or all of the following actions, at the same or different times: (A)
terminate the Commitments, and thereupon the Commitments shall terminate
immediately, (B) 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 Borrowers and the
Guarantors accrued hereunder and under the other Loan Documents, shall become
due and payable immediately, without presentment, demand, protest or other
notice of any kind, all of which are waived by each Borrower and each Guarantor;
and in the case of any event with respect to a Loan Party described in clause
(h) or (i) above, 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 and the Guarantors accrued
hereunder and under the other Loan Documents, shall automatically become due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are waived by each Borrower and each Guarantor and (C) exercise such
rights and remedies under the Loan Documents (including the Security Documents),
at Law or in equity as the Administrative Agent may, and at the request of the
Required Lenders shall deem appropriate. In addition, immediately upon the
termination of Commitments or the acceleration of maturity of the Loans (or
both) pursuant to the immediately preceding sentence, the Borrowers shall pay to
the Administrative Agent an amount in immediately available funds (which funds
shall be held as collateral pursuant to arrangements satisfactory to the
Administrative Agent) equal to the aggregate LC Exposure at such time.

 

Section 7.02         Application of Proceeds. All monies received by the
Administrative Agent or any Lender from the exercise of remedies hereunder or
under the other Loan Documents or under any other documents relating to this
Agreement upon and during the continuance of an Event of Default shall, unless
otherwise required by the terms of the other Loan Documents or by applicable
Law, be applied as follows:

 

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first, to the payment of all reasonable expenses (to the extent not paid by the
Borrowers) incurred by the Administrative Agent and the Lenders in connection
with the exercise of such remedies, including, without limitation, all
reasonable costs and expenses of collection, attorneys’ fees, court costs and
any foreclosure expenses;

 

second, to the payment pro rata of interest then accrued on the outstanding
Loans;

 

third, to the payment pro rata of any fees then accrued and payable to the
Administrative Agent or any Lender under this Agreement;

 

fourth, to the payment pro rata of the principal balance then owing on the
outstanding Loans and the LC Reimbursement Obligations;

 

fifth, to the payment pro rata of all other amounts owed by the Borrowers to the
Administrative Agent or any Lender under this Agreement or any other Loan
Document (including, without limitation, a deposit with each applicable Letter
of Credit Issuer in the aggregate amount of 105% of the aggregate undrawn amount
of all such Letter of Credit Issuer’s Letters of Credit outstanding at such
time); and

 

finally, any remaining surplus after all of the remaining Debt and other
obligations hereunder and under the other Loan Documents have been paid in full,
to the Borrowers or to whosoever shall be lawfully entitled thereto;

 

provided that, notwithstanding anything to the contrary contained in the
foregoing, collateral, including Eligible Collateral, pledged as security for
Debt and other obligations under the Secured Facility shall be applied first to
the payment of such Debt and obligations under the Secured Facility and shall be
applied to the remaining Debt and other obligations hereunder and under the
other Loan Documents only after and subject to the satisfaction in full of all
such Debt and obligations under the Secured Facility.

 

Article 8

THE ADMINISTRATIVE AGENT

 

Section 8.01        Appointment and Authorization. Each Lender Party irrevocably
appoints the Administrative Agent as its agent and authorizes the Administrative
Agent to take such actions as agent on its behalf and to exercise such powers as
are delegated to the Administrative Agent by the terms of the Loan Documents,
together with such actions and powers as are reasonably incidental thereto.

 

Section 8.02        Rights and Powers as a Lender. The Administrative Agent
shall, in its capacity as a Lender, have the same rights and powers as any other
Lender and may exercise or refrain from exercising the same as though it were
not the Administrative Agent. The Administrative Agent and its Affiliates may
accept deposits from, lend money to and generally engage in any kind of business
with the Parent or any Subsidiary or Affiliate of the Parent as if it were not
the Administrative Agent hereunder.

 

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Section 8.03        Limited Duties and Responsibilities. (a) The Administrative
Agent shall not have any duties or obligations except those expressly set forth
in the Loan Documents. Without limiting the generality of the foregoing, (i) the
Administrative Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing, (ii) 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 by the Loan Documents that the Administrative Agent is
required in writing to exercise 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 (iii) except as expressly set forth in the Loan
Documents, the Administrative Agent shall not have any duty to disclose, or be
liable for any failure to disclose, any information relating to the Parent or
any of its Subsidiaries that is communicated to or obtained by the
Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
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 Agent or a Lender, and the Administrative
Agent shall not be responsible for or have any duty to ascertain or inquire into
(A) any statement, warranty or representation made in or in connection with any
Loan Document, (B) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (C) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document, (D) the validity, enforceability, effectiveness or
genuineness of any Loan Document or any other agreement, instrument or document,
or (E) the satisfaction of any condition set forth in Article 4 or elsewhere in
any Loan Document, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.

 

(b)               To the extent that a Borrower is authorized to withdraw or
otherwise obtain the release of collateral upon and subject to the terms and
conditions of Section 4.1 of its Pledge Agreement or an equivalent provision of
any other Security Document, the Administrative Agent is authorized to release
such collateral without the consent or approval of any Lender.

 

Section 8.04        Authority to Rely on Certain Writings, Statements and
Advice. The Administrative Agent shall be entitled to rely on, and shall not
incur any liability for relying on, 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 on 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 Loan Parties), 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.

 

Section 8.05        Sub-Agents and Related Parties. The Administrative Agent may
perform any and all its duties and exercise its rights and powers by or through
one or more sub-agents appointed by it. 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 Sections of this Article shall apply to any such sub-agent and to the
Related Parties of the Administrative Agent and any such sub-agent, and shall
apply to activities in connection with the syndication of the credit facilities
provided for herein as well as activities as the Administrative Agent hereunder.

 

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Section 8.06        Resignation; Successor Agent. (a) Subject to the appointment
and acceptance of a successor Administrative Agent as provided in this Section,
the Administrative Agent may resign at any time (and, upon the request of the
Required Lenders, will so resign) by notifying the Lenders, the Letter of Credit
Issuers and the Borrower Agent. Upon any such resignation, the Required Lenders
shall have the right, with the consent of the Parent (which shall not be
withheld or delayed unreasonably), to appoint a successor Administrative Agent;
provided that the consent the Parent shall not be required if a Default shall
have occurred and be continuing. If no successor Administrative Agent 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 (the “Resignation Effective Date”), then the retiring
Administrative Agent may, on behalf of the Lenders and the Letter of Credit
Issuers, appoint a successor Administrative Agent which shall be a bank or
financial institution, or an Affiliate of any such bank or financial
institution.

 

(b)           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 Agent and such Person, remove such Person as the Administrative Agent
and, in consultation with the Borrower Agent, appoint a successor to the
Administrative Agent. 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.

 

(c)           With effect from the Resignation Effective Date or the Removal
Effective Date (as applicable) (i) the retiring or removed Administrative Agent
shall be discharged from its duties and obligations hereunder and under the
other Loan Documents (except that in the case of any collateral security held by
the Administrative Agent on behalf of the Lenders or the Letter of Credit
Issuers hereunder, the retiring or removed Administrative Agent shall continue
to hold such collateral security until such time as a successor Administrative
Agent is appointed) and (ii) all payments, communications and determinations
provided to be made by, to or through the Administrative Agent shall instead be
made by or to each Lender and Letter of Credit Issuer directly, until such time,
if any, as the Required Lenders appoint a successor Administrative Agent as
provided for above. Upon acceptance of its appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent 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, and without duplication, unless otherwise
agreed by the Borrowers and such successor Administrative Agent. After any
retiring Administrative Agent’s resignation or removal hereunder as
Administrative Agent, 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 the retiring Administrative Agent
was acting as an Administrative Agent hereunder.

 

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Section 8.07        Credit Decisions by Lenders. Each Lender acknowledges that
it has, independently and without reliance on the Administrative Agent or any
other Lender Party and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance on the Administrative Agent or any other Lender Party and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
on this Agreement, any other Loan Document or related agreement or any document
furnished hereunder or thereunder.

 

Section 8.08        Agent’s Fees. The Borrowers shall pay to the Administrative
Agent for its own account fees in the amounts and at the times previously agreed
upon by the Parent and the Administrative Agent.

 

Section 8.09        Arranger, Syndication Agent, Etc.. None of the Joint Lead
Arrangers, the Joint Book Runners, or the Co-Syndication Agents in their
capacities as such shall have any duties or responsibilities or incur any
liability under this Agreement or any of the Loan Documents.

 

Section 8.10        No Reliance on Administrative Agent’s Customer
Identification Program. Each of the Lenders and Letter of Credit Issuers
acknowledges and agrees that neither such Lender or Letter of Credit Issuer nor
any of its Affiliates, participants or assignees, may rely on the Administrative
Agent to carry out such Lender’s, Letter of Credit Issuer’s, Affiliate’s,
participant’s or assignee’s customer identification program, or other
obligations required or imposed under or pursuant to the USA PATRIOT Act or the
regulations thereunder, including the regulations contained in 31 CFR 103.121
(as hereafter amended or replaced, the “CIP Regulations”), or any other
anti-terrorism Law, including any programs involving any of the following items
relating to or in connection with any of the Loan Parties, its Affiliates or its
agents, this Agreement, the other Loan Documents or the transactions hereunder
or contemplated hereby: (1) any identity verification procedures, (2) any record
keeping, (3) comparisons with government lists, (4) customer notices or (5)
other procedures required under the CIP Regulations or such other Laws.

 

Article 9

MISCELLANEOUS

 

Section 9.01        Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, 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:

 

(a)           if to a Loan Party, to it at Wellesley House, 2nd Floor, 90 Pitts
Bay Road, Pembroke, Bermuda, HM 08, Attention of Sarah Doran, Chief Financial
Officer (Facsimile No. (441) 278-4588);

 

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(b)           if to the Administrative Agent, to KeyBank National Association,
Agency Services, 127 Public Square, Cleveland, Ohio 44114, Attention of John
Bowden, Service Officer (Telecopy No. (216) 370-5733);

 

(c)           if to the initial Letter of Credit Issuer, to it at KeyBank
National Association, 127 Public Square, Cleveland, Ohio 44114, Attention of
John Bowden, Service Officer (Telecopy No. (216) 370-5733); and

 

(d)           if to any other Lender, to it at its address (or facsimile number)
set forth in its Administrative Questionnaire.

 

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

 

Section 9.02        Waivers; Amendments. (a) No failure or delay by any Lender
Party in exercising any right or power hereunder or under any other Loan
Document 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 Lender Parties under the Loan Documents are cumulative and are not exclusive
of any rights or remedies that they would otherwise have. No waiver of any
provision of any Loan Document or consent to any departure by a Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
subsection (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, neither the making of a Loan
nor the issuance, amendment, renewal or extension of a Letter of Credit shall be
construed as a waiver of any Default, regardless of whether any Lender Party had
notice or knowledge of such Default at the time.

 

(b)           No Loan Document or provision thereof may be waived, amended or
modified except, in the case of this Agreement, by an agreement or agreements in
writing entered into by the Borrowers and the Required Lenders or, in the case
of any other Loan Document, by an agreement or agreements in writing entered
into by the parties thereto with the consent of the Required Lenders; provided
that no such agreement shall:

 

(i)                 increase any Commitment of any Lender without its written
consent;

 

(ii)               reduce the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce any fee payable hereunder,
without the written consent of each Lender Party directly affected thereby;

 

(iii)              postpone the maturity of any Loan, or the required date of
any mandatory payment of principal (including without limitation pursuant to
Section 2.10(b)), or the required date of reimbursement of any LC Disbursement,
or any date for the payment of any interest or fee 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
Party directly affected thereby;

 

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(iv)             change the definition of “Percentage” or change Section 2.18(b)
or 2.18(c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender directly affected
thereby;

 

(v)               change any provision of this Section or the percentage set
forth in the definition of “Required Lenders” or any other provision of any Loan
Document specifying the number or percentage of Lenders required to take any
action thereunder, without the written consent of each Lender;

 

(vi)              release a Guarantor from its obligations under its Payment
Guaranty (other than James River if it becomes a Borrower pursuant to Section
2.04) without the written consent of each Lender;

 

(vii)             except for releases permitted under Section 8.03(b), release
any material collateral under any Security Document without the written consent
of each Lender;

 

(viii)            except for an increase pursuant to Section 2.11 (which, as
more fully provided below, is not an amendment, waiver or modification for
purposes of this Section 9.02), increase the Unsecured Facility Commitment
without the written consent of each Lender; or

 

(ix)               impose any additional restriction on the ability of a Lender
to assign any of its Loans, LC Exposure, Commitments and other rights or
obligations hereunder without the written consent of such Lender; and

 

provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent or any Letter of Credit Issuer
without its respective prior written consent or the issuance, amendment, renewal
or extension of a Letter of Credit without the Letter of Credit Issuer’s prior
written consent; and provided further that neither a reduction or termination of
Commitments pursuant to Section 2.08, nor an increase in Commitments pursuant to
Section 2.11, constitutes an amendment, waiver or modification for purposes of
this Section 9.02.

 

(c)           The Administrative Agent may, but shall have no obligation to,
from time to time promulgate revised, replacement Schedule 2.01(a) and Schedule
2.01(b) (which, upon such promulgation, absent manifest error, shall become,
respectively, Schedule 2.01(a) and Schedule 2.01(b) hereto), and the
Administrative Agent may, but shall have no obligation to, from time to time
promulgate revisions or supplements to other Loan Documents to reflect changes
in the parties constituting the Lenders and their respective Commitments
pursuant to Assignments, revised, replacement Section 2.08 and revised,
replacement Section 2.11, in each instance without the necessity of the
agreement of the Borrowers and the Required Lenders.

 

(d)           Notwithstanding the foregoing, if any Lender does not consent to a
proposed amendment, waiver, consent or release with respect to any Loan Document
that requires the consent of such Lender and that has been approved by the
Required Lenders, the Borrowers may replace such non-consenting Lender in
accordance with Section 9.15; provided that such amendment, waiver, consent or
release can be effected as a result of the assignment contemplated by such
Section (together with all other such assignments required by the Borrowers to
be made pursuant to this paragraph).

 

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Section 9.03        Expenses; Indemnity; Damage Waiver. (a) The Loan Parties,
jointly and severally, shall pay (i) all reasonable and documented out-of-pocket
expenses incurred by the Administrative Agent and its Affiliates, including,
without limitation, the reasonable fees, charges and disbursements of Squire
Sanders (US) LLP, special counsel for the Administrative Agent, in connection
with the preparation and administration of the Loan Documents and any
amendments, modifications or waivers of the provisions thereof (whether or not
the transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable and documented out-of-pocket expenses incurred by the Letter of
Credit Issuer in connection with the issuance, amendment, renewal or extension
of any Letter of Credit or any demand for payment thereunder and (iii) all
reasonable out-of-pocket expenses incurred by any Lender Party, including the
fees, charges and disbursements of any counsel for any Lender Party, in
connection with the replacement of any Lender pursuant to Section 9.15, and,
upon the occurrence and during the continuance of an Event of Default, the
enforcement or protection of its rights in connection with the Loan Documents
(including its rights under this Section) or the Loans and the Letters of
Credit, including all such reasonable out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of the Loans and the Letters
of Credit.

 

(b)           The Loan Parties, jointly and severally, shall indemnify each of
the Lender Parties and their respective Related Parties (each such Person being
called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and
all losses, claims, damages, liabilities and related expenses, including the
fees, charges and disbursements of 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 any Loan Document or any other
agreement or instrument contemplated hereby, the performance by the parties to
the Loan Documents of their respective obligations thereunder or the
consummation of the Financing 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 Letter of Credit Issuer to
honor a demand for payment under a Letter of Credit if the documents presented
in connection with such demand do not 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 currently or formerly owned or operated by a Loan Party
or any Subsidiary, 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 and regardless of whether any Indemnitee is a
party thereto; provided that (i) such indemnity shall not be available to any
Indemnitee to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from such Indemnitee’s gross
negligence or willful misconduct; (ii) such indemnity shall not be available to
any Indemnitee for losses, claims, damages, liabilities or related expenses
arising out of a proceeding in which such Indemnitee and a Loan Party are
adverse parties with respect to a claim brought by a Loan Party against an
Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or
under any other Loan Document, to the extent that a Loan Party prevails on the
merits, as determined by a court of competent jurisdiction (it being understood
that nothing in this Agreement shall preclude a claim or suit by a Loan Party
against any Indemnitee for such Indemnitee’s failure to perform any of its
obligations to the Borrower under the Loan Documents); (iii) a Loan Party shall
not, in connection with any such proceeding or related proceedings in the same
jurisdiction and in the absence of conflicts of interest, be liable for the fees
and expenses of more than one law firm at any one time for the Indemnitees
(which law firm shall be selected (A) by mutual agreement of the Administrative
Agent and a Loan Party or (B) if no such agreement has been reached following
the Administrative Agent’s good faith consultation with a Loan Party with
respect thereto, by the Administrative Agent in its sole discretion); (iv) each
Indemnitee shall give the Borrower Agent (A) prompt notice of any such action
brought against such Indemnitee in connection with a claim for which it is
entitled to indemnity under this Section and (B) an opportunity to consult from
time to time with such Indemnitee regarding defensive measures and potential
settlement; and (v) the Loan Parties shall not be obligated to pay the amount of
any settlement entered into without its written consent (which consent shall not
be unreasonably withheld).

 

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(c)           [Reserved].

 

(d)           To the extent that a Loan Party fails to pay any amount required
to be paid by it to the Administrative Agent or the Letter of Credit Issuer
under subsection (a) or (b) of this Section, each Lender severally agrees to pay
to the Administrative Agent or the Letter of Credit Issuer, such Lender’s pro
rata share (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent or the Letter of Credit Issuer in its capacity as such. For
purposes hereof, a Lender’s “pro rata share” shall be determined based on its
share of the sum of, as applicable, the total Secured Facility Exposures and
unused Secured Facility Commitments at the time or the total Unsecured Facility
Exposures and unused Unsecured Facility Commitments at the time.

 

(e)           To the extent permitted by applicable Law, no Loan Party shall
assert, and each Loan Party hereby waives, 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 Financing Transactions, any Loan or Letter of Credit or
the use of the proceeds thereof.

 

(f)            All amounts due under this Section shall be payable within five
Business Days after written demand therefor.

 

Section 9.04        Successors and Assigns. (a) The provisions of this Agreement
shall be binding on and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that no Loan Party
may assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by a Loan Party without such consent shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (except the parties hereto, their respective successors and
assigns permitted hereby and, to the extent expressly provided herein, the
Related Parties of the Lender Parties) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

 

(b)               Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of any Commitment it has at the time and any Loans at the time owing to
it); provided that:

 

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(i)                 except in the case of an assignment to a Lender or a Lender
Affiliate, each of the Parent and the Administrative Agent (and, in the case of
an assignment of all or a portion of a Commitment or any Lender’s obligations in
respect of its LC Exposure, and the Letter of Credit Issuers) must give their
prior written consent to such assignment (which consents shall not be
unreasonably withheld); provided that the Parent shall be deemed to have
consented to any such assignment unless it shall object thereto by written
notice to the Administrative Agent within five (5) Business Days after having
received notice thereof;

 

(ii)               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;

 

(iii)              unless each of the Parent and the Administrative Agent
otherwise consent, the amount of, as the case may be, the Secured Facility
Commitment or the Unsecured Facility Commitment or Loans of the assigning Lender
subject to each such assignment (determined as of the date on which the relevant
Assignment is delivered to the Administrative Agent) shall not be less than
$2,000,000, and the remaining, as the case may be, Secured Facility Commitment
or Unsecured Facility Commitment or Loans, if any, of the assigning Lender shall
not be less than $2,000,000; provided that this clause (iii) shall not apply to
an assignment to a Lender or a Lender Affiliate or an assignment of the entire
remaining amount of the assigning Lender’s Secured Facility Commitment or
Unsecured Facility Commitment or Loans;

 

(iv)              the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment, together with a processing and
recordation fee of $3,500; provided that only one such fee shall be due in
respect of a simultaneous assignment to more than one Lender Affiliate; and

 

(v)               the assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent a completed Administrative Questionnaire.

 

And provided further that any consent of the Parent otherwise required under
this subsection shall not be required if an Event of Default has occurred and is
continuing. Subject to acceptance and recording thereof pursuant to subsection
(d) of this Section, from and after the effective date specified in each
Assignment the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment, 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, be released from its
obligations under this Agreement (and, in the case of an Assignment 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 subsection shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
subsection (e) of this Section.

 

(c)           The Administrative Agent, acting for this purpose as an agent of
the Borrowers, shall maintain at one of its offices in Cleveland, Ohio a copy of
each Assignment delivered to it and a register for the recordation of the names
and addresses of the Lenders, their respective Commitments and the principal
amounts (and stated interest) 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 (absent manifest error), and the
parties hereto may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by any party hereto at any reasonable time and from time to time upon
reasonable prior notice.

 

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(d)           Upon its receipt of a duly completed Assignment executed by an
assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), any
processing and recordation fee referred to in, and payable pursuant to,
subsection (b) of this Section and any written consent to such assignment
required by subsection (b) of this Section, the Administrative Agent shall
accept such Assignment and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this subsection.

 

(e)           Any Lender may, without the consent of the Parent or any other
Lender Party, sell participations to one or more banks or other entities
(“Participants”) in all or a portion of such Lender’s rights and obligations
under this Agreement (including all or a portion of its Commitments and the
Loans owing to it); provided that (i) such Lender’s obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Loan Parties and the other Lender Parties 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 the Loan Documents and to approve any amendment,
modification or waiver of any provision of the Loan Documents; 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 clause (i), (ii), (iii) or (iv) of the first proviso to Section
9.02(b) that affects such Participant. Subject to subsection (f) of this
Section, each Participant shall be entitled to the benefits of Sections 2.15,
2.16 and 2.17 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to subsection (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 9.09 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 an 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 this Agreement
(the “Participant Register”). 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.

 

(f)            A Participant shall not be entitled to receive any greater
payment under Section 2.15 or 2.17 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Parent’s prior written consent. A Participant that would be a Foreign Lender if
it were a Lender shall not be entitled to the benefits of Section 2.17 unless
the Borrower Agent is notified of the participation sold to such Participant and
such Participant agrees, for the benefit of the Loan Parties, to comply with
Section 2.17(e) as though it were a Lender.

 

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(g)           Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, 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.

 

(h)           Notwithstanding anything to the contrary contained in the
foregoing, (i) no such assignment shall be made to (A) the Parent or any of the
Parent’s Affiliates or Subsidiaries or any agent or representative thereof, (B)
any Defaulting Lender or any of its Subsidiaries, or any Person who, upon
becoming a Lender hereunder, would constitute any of the foregoing Persons
described in this clause (B), or (C) a natural Person; and (ii) no such
assignment shall be made, or participation sold, by a Lender except in
accordance with this Section 9.04.

 

(i)            In connection with any assignment of rights and obligations of
any Defaulting Lender hereunder, no such assignment shall be effective unless
and until, in addition to the other conditions thereto set forth herein, the
parties to the assignment shall make such additional payments to the
Administrative Agent in an aggregate amount sufficient, upon distribution
thereof as appropriate (which may be outright payment, purchases by the assignee
of participations or subparticipations, or other compensating actions, including
funding, with the consent of the Parent and the Administrative Agent, the
applicable pro rata share of Loans previously requested but not funded by the
Defaulting Lender, to each of which the applicable assignee and assignor hereby
irrevocably consent), to (i) pay and satisfy in full all payment liabilities
then owed by such Defaulting Lender to the Administrative Agent, each Letter of
Credit Issuer and each other Lender hereunder (and interest accrued thereon),
and (y) acquire (and fund as appropriate) its full pro rata share of all Loans
and participations in Letters of Credit in accordance with its Percentage.
Notwithstanding the foregoing, in the event that any assignment of rights and
obligations of any Defaulting Lender hereunder shall become effective under
applicable Law without compliance with the provisions of this paragraph, then
the assignee of such interest shall be deemed to be a Defaulting Lender for all
purposes of this Agreement until such compliance occurs.

 

Section 9.05        USA PATRIOT Act. (a) Each Lender and Letter of Credit Issuer
and the Administrative Agent (for itself and not on behalf of any Lender) hereby
notifies the Loan Parties that pursuant to the requirements of the USA PATRIOT
Act, it is required to obtain, verify and record information that identifies
each Loan Party, which information includes the name and address of each Loan
Party and other information that will allow such Lender or the Administrative
Agent, as applicable, to identify each Loan Party in accordance with the USA
PATRIOT Act.

 

(b)           Each Lender, each Letter of Credit Issuer or assignee or
participant of a Lender that is not incorporated under the laws of the United
States of America or a state thereof (and is not excepted from the certification
requirement contained in Section 313 of the USA PATRIOT Act and the applicable
regulations because it is both (i) an affiliate of a depository institution or
foreign bank that maintains a physical presence in the United States or foreign
country, and (ii) subject to supervision by a banking authority regulating such
affiliated depository institution or foreign bank) shall deliver to the
Administrative Agent the certification, or, if applicable, recertification,
certifying that such Lender or such Letter of Credit Issuer is not a “shell” and
certifying to other matters as required by Section 313 of the USA PATRIOT Act
and the applicable regulations: (1) within ten (10) days after the Restatement
Effective Date, and (2) as such other times as are required under the USA
PATRIOT Act.

 

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Section 9.06        Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in certificates or
other instruments delivered in connection with or pursuant to the Loan Documents
shall be considered to have been relied upon by the other parties hereto and
shall survive the execution and delivery of the Loan Documents 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 any
Lender Party 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 any principal of or accrued
interest on any Loan or any fee or other amount payable hereunder is outstanding
and unpaid or any Letter of Credit is outstanding or any Commitment has not
expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and
Article 8 shall survive and remain in full force and effect regardless of the
consummation of the Financing Transactions, the repayment of the Loans, the
expiration or termination of the Letters of Credit, the expiration or
termination of the Commitments or the termination of this Agreement or any
provision hereof.

 

Section 9.07        Counterparts; Integration; Effectiveness. 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, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement (i) will become
effective when the Administrative Agent shall have signed this Agreement and
received counterparts hereof that, when taken together, bear the signatures of
each of the other parties hereto and (ii) thereafter will 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 will be effective as delivery of a manually executed
counterpart of this Agreement.

 

Section 9.08        Severability. If any provision of any Loan Document is
invalid, illegal or unenforceable in any jurisdiction then, to the fullest
extent permitted by law, (i) such provision shall, as to such jurisdiction, be
ineffective to the extent (but only to the extent) of such invalidity,
illegality or unenforceability, (ii) the other provisions of the Loan Documents
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in favor of the Lender Parties in order to carry out the
intentions of the parties thereto as nearly as may be possible and (iii) the
invalidity, illegality or unenforceability of any such provision in any
jurisdiction shall not affect the validity, legality or enforceability of such
provision in any other jurisdiction.

 

Section 9.09        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 applicable
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final, in whatever currency) at any time held, and other
obligations (in whatever currency) at any time owing, by such Lender or any such
Affiliate, to or for the credit or the account of a Loan Party against any and
all of the obligations of such Loan Party now or hereafter existing under this
Agreement or any other Loan Document to such Lender or its Affiliates,
irrespective of whether or not such Lender or Affiliate shall have made any
demand under this Agreement or any other Loan Document and although such
obligations of such Loan Party may be contingent or unmatured or are owed to a
branch, office or Affiliate of such Lender different from the branch, office or
Affiliate holding such deposit or obligated on such indebtedness; provided that
in the event that any Defaulting Lender shall exercise any such right of setoff,
(i) all amounts so set off shall be paid over immediately to the Administrative
Agent for further application in accordance with the provisions of Section 2.19
and, pending such payment, shall be segregated by such Defaulting Lender from
its other funds and deemed held in trust for the benefit of the Administrative
Agent and the Lenders, and (ii) the Defaulting Lender shall provide promptly to
the Administrative Agent a statement describing in reasonable detail the Debt
and other obligations hereunder owing to such Defaulting Lender as to which it
exercised such right of setoff. The rights of each Lender and its Affiliates
under this Section are in addition to other rights and remedies (including other
rights of setoff) that such Lender or Affiliates may have. Each Lender shall
notify the Borrower Agent and the Administrative Agent promptly after any such
setoff and application; provided that the failure to give such notice shall not
affect the validity of such setoff and application.

 

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Section 9.10        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 Loan Party irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the courts of the
State of Ohio sitting in Cuyahoga County and of the United States District Court
of the Northern District of Ohio, and any relevant appellate court, in any
action or proceeding arising out of or relating to any Loan Document, or for
recognition or enforcement of any judgment, and each party hereto irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such Ohio state court or, to the
extent permitted by law, in any such Federal court. Each party 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 any Loan Document shall affect any right that
any Lender Party may otherwise have to bring any action or proceeding relating
to any Loan Document against such Loan Party or its properties in the courts of
any jurisdiction.

 

(c)           Each Loan Party irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to any Loan Document in any court referred to in
subsection (b) of this Section. Each party hereto irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of any such suit, action or proceeding in any such court.

 

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

 

(e)           Each of the Parent and JRG Reinsurance hereby irrevocably
designates, appoints and empowers CT Corporation System, with offices on the
Restatement Effective Date at 111 Eighth Avenue, New York, New York 10011, as
its designee, appointee and agent to receive, accept and acknowledge for and on
its behalf, and in respect of its property, service of any and all legal
process, summon, notices and documents which may be served in any such action or
proceeding. If for any reason such designee, appointee and agent shall cease to
be available to act as such, each Loan Party agrees to designate a new designee,
appoint and agent in New York City on the terms and for the purposes of this
provision reasonably satisfactory to the Administrative Agent.

 

Section 9.11        WAIVER OF JURY TRIAL. EACH PARTY HERETO 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 ANY LOAN DOCUMENT OR ANY TRANSACTION CONTEMPLATED THEREBY (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 9.12        Headings. Article and Section headings and the Table of
Contents 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 9.13        Confidentiality. Each Lender Party 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 of any Governmental
Authority or any stock exchange or similar self-regulated entity or by any
subpoena or similar legal process, (d) to any other party to this Agreement, (e)
in connection with the exercise of any remedy hereunder or any suit, action or
proceeding relating to any Loan Document or the enforcement of any right
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any actual or prospective assignee of or
Participant in any of its rights or obligations under this Agreement or (ii) any
actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Loan Parties and their obligations, (g) with the
consent of the Borrower Agent or (h) to the extent such Information either (i)
becomes publicly available other than as a result of a breach of this Section or
(ii) becomes available to any Lender Party on a nonconfidential basis from a
source other than the Loan Parties. For the purposes of this Section,
“Information” means all information received from a Loan Party relating to such
Loan Party or its business, other than any such information that is available to
any Lender Party on a nonconfidential basis before disclosure by such Loan
Party; provided that, in the case of information received from a Loan Party
after the date hereof, such information is clearly identified at the time of
delivery as confidential.

 

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Notwithstanding the foregoing, effective from the date of commencement of
discussions concerning the transactions contemplated hereby, the parties hereto
and each of their employees, representatives or other agents may disclose to any
and all Persons, without limitation of any kind, the tax treatment and tax
structure of the transactions contemplated hereby and all materials of any kind
(including opinions or other tax analyses) that have been provided to them
relating to such tax treatment and tax structure.

 

Section 9.14        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 that are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) that may be contracted for, charged or
otherwise received 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 Lender shall have received
such cumulated amount, together with interest thereon at the Federal Funds
Effective Rate to the date of payment.

 

Section 9.15        Replacement of Lenders. If any Lender requests compensation
under Section 2.15, or if the Borrowers are 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 is a Defaulting Lender, or if any
circumstance exists under Section 9.02 that gives the Borrowers the right to
replace a non-consenting Lender as a party hereto, then the Borrowers may, at
their sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in, and consents
required by, Section 9.04), all of its interests, rights and obligations under
this Agreement and the related Loan Documents to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that:

 

(a)           the Borrowers shall have paid to the Administrative Agent the
assignment fee specified in Section 9.04(b)(iv);

 

(b)           such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 2.12(a) and any LC Disbursements funded by
such Lender pursuant to Section 2.04 hereof) 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);

 

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(c)           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 thereafter; and

 

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

 

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrowers to require such assignment and delegation
cease to apply.

 

Section 9.16        Bermuda Law Event. To the extent that the making by any Loan
Party of any covenant set forth in either of Articles 5 and 6 or in any of the
Loan Documents is for such Loan Party not permitted by, or is unlawful under or
is in violation of, any Bermuda Law pertaining to fetters on statutory powers,
then such covenant shall be deemed not made by nor applicable to such Loan
Party; but if such Loan Party shall take or fail to take any action which would
have breached such covenant had the same been applicable to such Loan Party,
such action or failure to take action shall (after giving effect to such notice
and cure period, if any, that would have applied to a breach of such covenant
under Section 7.01 hereof or other equivalent provision of another applicable
Loan Document) constitute a “Bermuda Law Event.”

 

Section 9.17        Borrower Agent. (a) Each Borrower hereby irrevocably
designates the Borrower Agent to be its attorney and agent and in such capacity
to borrow, sign and endorse notes, and execute and deliver all instruments,
documents, writings and further assurances now or hereafter required hereunder
on behalf of such Borrower, and hereby authorizes the Administrative Agent to
pay over or credit proceeds of all Loans hereunder in accordance with the
request of the Borrower Agent. The Borrower Agent hereby acknowledges such
designation and authorization, and accepts such appointment. Each Borrower
hereby irrevocably authorizes and directs the Borrower Agent to take such action
on its behalf under the respective provisions of this Agreement and the other
Loan 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 Agent by the respective terms and provisions hereof and thereof, and
such other powers as are reasonably incidental thereto, including, without
limitation, to submit on behalf of each Borrower Loan Requests, and notices of
conversion or continuation of Loans to the Administrative Agent in accordance
with the provisions of this Agreement. The Borrower Agent 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 the preceding
sentences of this paragraph and to perform such other duties hereunder and under
the other Loan Documents, and deliver such documents as delegated to or required
of the Borrower Agent by the terms hereof or thereof. The Administrative Agent
and each Lender may regard any notice or other communication pursuant to any
Loan Documents from the Borrower Agent as a notice or communication from all
Borrowers, and may give any notice or communication required or permitted to be
given to any Borrower hereunder to the Borrower Agent on behalf of such
Borrower. Each Borrower agrees that each notice, election, representation and
warranty, covenant, agreement and undertaking made on its behalf by the Borrower
Agent 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.

 

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(b)           The administration of this Agreement as a co-borrowing facility
with the Borrower Agent in the manner set forth in this Agreement is solely as
an accommodation to the Borrowers and at their request. Neither the
Administrative Agent nor any Lender shall incur liability to the Borrowers as a
result thereof. To induce the Administrative Agent and the Lenders to do so and
in consideration thereof, each Borrower hereby indemnifies the Administrative
Agent and each Lender and holds the Administrative Agent and each Lender
harmless from and against any and all liabilities, expenses, losses, damages and
claims of damage or injury asserted against the Administrative Agent or any
Lender by any Person arising from or incurred by reason of the administration of
this Agreement as provided herein, reliance by the Administrative Agent or any
Lender on any request or instruction from the Borrower Agent or any other action
taken by the Administrative Agent or any Lender with respect to this Section
except due to willful misconduct or gross negligence by the indemnified party
(as determined by a court of competent jurisdiction in a final and
non-appealable judgment).

 

Section 9.18        Acknowledgement and Consent to Bail-In of EEA Financial
Institutions. Notwithstanding anything to the contrary in any Loan Document or
in any other agreement, arrangement or understanding among any such parties,
each party hereto acknowledges that any liability of any EEA Financial
Institution arising under any Loan Document, to the extent such liability is
unsecured, may be subject to the write-down and conversion powers of an EEA
Resolution Authority and agrees and consents to, and acknowledges and agrees to
be bound by:

 

(a)           the application of any Write-Down and Conversion Powers by an EEA
Resolution Authority to any such liabilities arising hereunder which may be
payable to it by any party hereto that is an EEA Financial Institution; and

 

(b)           the effects of any Bail-in Action on any such liability,
including, if applicable:

 

(i)                  a reduction in full or in part or cancellation of any such
liability;

 

(ii)               a conversion of all, or a portion of, such liability into
shares or other instruments of ownership in such EEA Financial Institution, its
parent undertaking, or a bridge institution that may be issued to it or
otherwise conferred on it, and that such shares or other instruments of
ownership will be accepted by it in lieu of any rights with respect to any such
liability under this Agreement or any other Loan Document; or

 

(iii)              the variation of the terms of such liability in connection
with the exercise of the write-down and conversion powers of any EEA Resolution
Authority.

 

Section 9.19        Certain ERISA Matters.

 

(a)           Each Lender (1) represents and warrants, as of the date such
Person became a Lender party hereto, to, and (2) covenants, from the date such
Person became a Lender party hereto to the date such Person ceases being a
Lender party hereto, for the benefit of, the Administrative Agent, the Arranger
and their respective Affiliates, and not, for the avoidance of doubt, to or for
the benefit of the Borrowers or any other Loan Party, that at least one of the
following is and will be true:

 

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(i)                 such Lender is not using “plan assets” (within the meaning
of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with
respect to such Lender’s entrance into, participation in, administration of and
performance of the Loans, the Letters of Credit, the Commitments or this
Agreement,

 

(ii)               the transaction exemption set forth in one or more PTEs, such
as PTE 84-14 (a class exemption for certain transactions determined by
independent qualified professional asset managers), PTE 95-60 (a class exemption
for certain transactions involving insurance company general accounts), PTE 90-1
(a class exemption for certain transactions involving insurance company pooled
separate accounts), PTE 91-38 (a class exemption for certain transactions
involving bank collective investment funds) or PTE 96-23 (a class exemption for
certain transactions determined by in-house asset managers), is applicable with
respect to such Lender’s entrance into, participation in, administration of and
performance of the Loans, the Letters of Credit, the Commitments and this
Agreement,

 

(iii)              (A) such Lender is an investment fund managed by a “Qualified
Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B)
such Qualified Professional Asset Manager made the investment decision on behalf
of such Lender to enter into, participate in, administer and perform the Loans,
the Letters of Credit, the Commitments and this Agreement, (C) the entrance
into, participation in, administration of and performance of the Loans, the
Letters of Credit, the Commitments and this Agreement satisfies the requirements
of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best
knowledge of such Lender, the requirements of subsection (a) of Part I of PTE
84-14 are satisfied with respect to such Lender’s entrance into, participation
in, administration of and performance of the Loans, the Letters of Credit, the
Commitments and this Agreement, or

 

(iv)              such other representation, warranty and covenant as may be
agreed in writing between the Administrative Agent, in its sole discretion, and
such Lender.

 

(b)           In addition, unless either (1) sub-clause (i) in the immediately
preceding clause (a) is true with respect to a Lender or (2) a Lender has
provided another representation, warranty and covenant as provided in sub-clause
(iv) in the immediately preceding clause (a), such Lender further (x) represents
and warrants, as of the date such Person became a Lender party hereto, to, and
(y) covenants, from the date such Person became a Lender party hereto to the
date such Person ceases being a Lender party hereto, for the benefit of, the
Administrative Agent and the Arranger and their respective Affiliates, and not,
for the avoidance of doubt, to or for the benefit of the Borrowers or any other
Loan Party, that none of the Administrative Agent or the Arranger or any of
their respective Affiliates is a fiduciary with respect to the assets of such
Lender involved in such Lender’s entrance into, participation in, administration
of and performance of the Loans, the Letters of Credit, the Commitments and this
Agreement (including in connection with the reservation or exercise of any
rights by the Administrative Agent under this Agreement, any Loan Document or
any documents related to hereto or thereto).

 

(c)           The Administrative Agent and the Arranger hereby inform the
Lenders that each such Person is not undertaking to provide impartial investment
advice, or to give advice in a fiduciary capacity, in connection with the
transactions contemplated hereby, and that each such Person has a financial
interest in the transactions contemplated hereby in that such Person or an
Affiliate thereof (i) may receive interest or other payments with respect to the
Loans, the Letters of Credit, the Commitments, this Agreement and any other Loan
Documents, (ii) may recognize a gain if it extended the Loans, the Letters of
Credit or the Commitments for an amount less than the amount being paid for an
interest in the Loans, the Letters of Credit or the Commitments by such Lender
or (iii) may receive fees or other payments in connection with the transactions
contemplated hereby, the Loan Documents or otherwise, including structuring
fees, commitment fees, arrangement fees, facility fees, upfront fees,
underwriting fees, ticking fees, agency fees, administrative agent or collateral
agent fees, utilization fees, minimum usage fees, letter of credit fees,
fronting fees, deal-away or alternate transaction fees, amendment fees,
processing fees, term out premiums, banker’s acceptance fees, breakage or other
early termination fees or fees similar to the foregoing.

 

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For purposes of this Section 9.19 only, the following defined terms have the
following meanings:

 

“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA)
that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of
the Code or (c) any Person whose assets include (for purposes of ERISA Section
3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code)
the assets of any such “employee benefit plan” or “plan”.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder.

 

“PTE” means a prohibited transaction class exemption issued by the U.S.
Department of Labor, as any such exemption may be amended from time to time.

 

Article 10

JOINT AND SEVERAL OBLIGATIONS OF BORROWERS

 

Section 10.01    Joint and Several Obligations. By signing this Agreement, each
Borrower agrees that it is liable, jointly and severally with the other
Borrowers, for the payment of the notes and all Debt and other obligations of
the Borrowers under this Agreement and the other Loan Documents, and that the
Administrative Agent and any Lender can enforce such Debt and obligations
against any Borrower, in such Agent’s or such Lender’s sole and unlimited
discretion.

 

Section 10.02    Lenders Parties’ Rights to Administer Credit. The
Administrative Agent and the Lenders, either directly or through the
Administrative Agent, and each Borrower may at any time and from time to time,
without the consent of, or notice to, the other Borrowers, without incurring
responsibility to the other Borrowers, and without affecting, impairing or
releasing any of the Debt and other obligations of the other Borrowers
hereunder:

 

(a)            alter, change, modify, extend, release, renew, cancel, supplement
or amend in any manner the Loan Documents, and the Borrowers’ joint and several
liability shall continue to apply after giving effect to any such alteration,
change, modification, extension, release, renewal, cancellation, supplement or
amendment;

 

 - 101 - 

 

 

(b)           sell, exchange, surrender, realize upon, release (with or without
consideration) or otherwise deal with in any manner and in any order any
property of any Person mortgaged to the Administrative Agent or the Lenders or
otherwise securing the Borrowers’ joint and several liability, or otherwise
providing recourse to the Administrative Agent or the Lenders with respect
thereto;

 

(c)           exercise or refrain from exercising any rights against a Borrower
or others with respect to the Borrowers’ joint and several liability, or
otherwise act or refrain from acting;

 

(d)           settle or compromise any Borrower’s joint and several liability,
any security therefor or other recourse with respect thereto, or subordinate the
payment or performance of all or any part thereof to the payment of any
liability (whether due or not) of any Borrower to any creditor of any Borrower,
including without limitation, the Administrative Agent, any Lender and any
Borrower;

 

(e)           apply any sums received by the Administrative Agent or by any
Lender from any source in respect of any liabilities of any Borrower to the
Administrative Agent or any Lender to any of such liabilities, regardless of
whether the promissory notes remain unpaid;

 

(f)            fail to set off or release, in whole or in part, any balance of
any account or any credit on its books in favor of any Borrower, or of any other
Person, and extend credit in any manner whatsoever to any Borrower, and
generally deal with any Borrower and any security for the Borrowers’ joint and
several liability or any recourse with respect thereto as the Administrative
Agent or any Lender may see fit; and

 

(g)           consent to or waive any breach of, or any act, omission or default
under, this Agreement or any other Loan Document, including, without limitation,
any agreement providing Collateral for the payment of the Borrowers’ joint and
several liability or any other indebtedness of the Borrowers to the Lenders.

 

Section 10.03    Primary Obligation. No invalidity, irregularity or
unenforceability of all or any part of the Borrowers’ joint and several
liability or of any security therefor or other recourse with respect thereto
shall affect, impair or be a defense to the other Borrowers’ joint and several
liability, and all Debt and other obligations under this Agreement and the Loan
Documents are primary Debt and obligations of each Borrower.

 

Section 10.04    Payments Recovered From Lender. If any payment received by the
Administrative Agent or any Lender and applied to the Debt and other obligations
hereunder and under the other Loan Documents is subsequently set aside,
recovered, rescinded or required to be returned for any reason (including,
without limitation, the bankruptcy, insolvency or reorganization of a Borrower
or any other obligor), the Debt and other obligations hereunder and under the
other Loan Documents to which such payment was applied shall be deemed to have
continued in existence, notwithstanding such application, and each Borrower
shall be jointly and severally liable for such Debt and other obligations as
fully as if such application had never been made. References in this Agreement
to amounts “paid” or to “paid in full” (or terms of like import) refer to
payments that cannot be set aside, recovered, rescinded or required to be
returned for any reason.

 

 - 102 - 

 

 

Section 10.05    No Release. Until the promissory notes and all other Debt and
other obligations under the Loan Documents have been paid in full and each and
every one of the covenants and agreements of this Agreement are fully performed,
the Debt and other obligations of each Borrower hereunder shall not be released,
in whole or in part, by any action or thing (other than irrevocable payment in
full) which might, but for this provision of this Agreement, be deemed a legal
or equitable discharge of a surety or guarantor, or by reason of any waiver,
extension, modification, forbearance or delay or other act or omission of the
Administrative Agent or any Lender or its failure to proceed promptly or
otherwise, or by reason of any action taken or omitted by the Administrative
Agent or any Lender whether or not such action or failure to act varies or
increases the risk of, or affects the rights or remedies of, any Borrower, nor
shall any modification of any of the promissory notes or other Loan Documents or
release of any security therefor by operation of Law or by the action of any
third party affect in any way the Debt and other obligations of any Borrower
hereunder, and each Borrower hereby expressly waives and surrenders any defense
to its liability hereunder based upon any of the foregoing acts, omissions,
things, agreements or waivers of any of them. No Borrower shall be exonerated
with respect to its liabilities under this Agreement by any act or thing except
irrevocable payment and performance of the Debt and other obligations hereunder,
it being the purpose and intent of this Agreement that such Debt and other
obligations constitute the direct and primary Debt and obligations of each
Borrower and that the covenants, agreements and all Debt and other obligations
of each Borrower hereunder be absolute, unconditional and irrevocable.

 

Section 10.06    Actions Not Required. Each Borrower hereby waives any and all
right to cause a marshalling of the other Borrowers’ assets or any other action
by any court or other governmental body with respect thereto insofar as the
rights of the Administrative Agent and the Lenders hereunder are concerned or to
cause the Administrative Agent or the Lenders to proceed against any security
for the Borrowers’ joint and several liability or any other recourse which the
Administrative Agent or the Lenders may have with respect thereto, and further
waives any and all requirements that the Administrative Agent or the Lenders
institute any action or proceeding at Law or in equity against the other
Borrowers or any other Person, or with respect to this Agreement, the Loan
Documents, or any Collateral for the Borrowers’ joint and several liability, as
a condition precedent to making demand on, or bringing an action or obtaining
and/or enforcing a judgment against, each Borrower. Each Borrower further waives
any requirement that the Administrative Agent or the Lenders seek performance by
the other Borrowers or any other Person, of any Debt or other obligation under
this Agreement, the Loan Documents or any Collateral for the Borrowers’ joint
and several liability as a condition precedent to making a demand on, or
bringing any action or obtaining and/or enforcing a judgment against, any
Borrower. No Borrower shall have any right of setoff against the Administrative
Agent or any Lender with respect to any of its Debt and other obligations
hereunder. Any remedy or right hereby granted which shall be found to be
unenforceable as to any Person or under any circumstance, for any reason, shall
in no way limit or prevent the enforcement of such remedy or right as to any
other Person or circumstance, nor shall such unenforceability limit or prevent
enforcement of any other remedy or right hereby granted.

 

Section 10.07    Deficiencies. Each Borrower specifically agrees that in the
event of a foreclosure or other exercise of remedies under a Security Document
held by the Administrative Agent or any Lender that secures any part or all of
the Borrowers’ joint and several liability, and in the event of a deficiency
resulting therefrom, each Borrower shall be, and hereby is expressly made,
liable to the Administrative Agent and the Lenders for the full amount of such
deficiency notwithstanding any other provision of this Agreement or provision of
such agreement, any document or documents evidencing the indebtedness secured by
such agreement or any other document or any provision of applicable Law which
might otherwise prevent the Administrative Agent or any Lender from enforcing
and/or collecting such deficiency. Each Borrower hereby waives any right to
notice of a foreclosure under any Security Document, for the benefit of the
Secured Creditors, by the other Borrowers which secures any part or all of the
Borrowers’ joint and several liability.

 

 - 103 - 

 

 

Section 10.08    Borrower Bankruptcy. Each Borrower expressly agrees that its
liability and Debt under the promissory notes, this Agreement and the other Loan
Documents shall not in any way be affected by the institution by or against the
other Borrowers or any other Person or entity of any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or any other similar
proceedings for relief under any Debtor Relief Law, or any action taken or not
taken by the Administrative Agent or the Lenders in connection therewith, and
that any discharge of any Borrower’s joint and several liability pursuant to any
such Debtor Relief Law shall not discharge or otherwise affect in any way the
Debt and other obligations of the other Borrowers under the promissory notes,
this Agreement and any other Loan Document, and that upon or at any time after
the institution of any of the above actions, at the Administrative Agent’s or
the Lenders’ sole discretion, the Borrowers’ joint and several Debt and
obligations hereunder and under the other Loan Documents shall be enforceable
against any Borrower that is not itself the subject of such proceedings. Each
Borrower expressly waives any right to argue that the Administrative Agent’s or
the Lenders’ enforcement of any remedies against that Borrower is stayed by
reason of the pendency of any such proceedings against the other Borrowers.

 

Section 10.09    Limited Subrogation. Notwithstanding any payment or payments
made by any Borrower hereunder or any setoff or application of funds of any
Borrower by the Administrative Agent or any Lender, until 731 days after the
Debt and other obligations hereunder and under the other Loan Documents have
been irrevocably paid in full, such Borrower shall not be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the other Borrowers or any Guarantor or any Collateral or Guarantee or
right of offset held by the Administrative Agent or any Lender for the payment
of the Debt and other obligations hereunder and under the other Loan Documents,
nor shall such Borrower seek or be entitled to seek any contribution or
reimbursement from the other Borrowers or any Guarantor in respect of payments
made by such Borrower hereunder. If any amount shall be paid to a Borrower on
account of such subrogation rights at any time when all of the Debt and other
obligations hereunder and under the other Loan Documents shall not have been
irrevocably paid in full, such amount shall be held by such Borrower in trust
for the Administrative Agent and the Lenders, segregated from other funds of
such Borrower and shall, forthwith upon receipt by such Borrower, be turned over
to the Administrative Agent in the exact form received by such Borrower (duly
indorsed by such Borrower to the Administrative Agent, if required), to be
applied against the Debt and other obligations hereunder and under the other
Loan Documents s, whether matured or unmatured, in such order as the
Administrative Agent and the Lenders may determine.

 

Section 10.10    Borrowers’ Financial Condition. Each Borrower is familiar with
the financial condition of the other Borrowers, and each Borrower has executed
and delivered this Agreement and the other Loan Documents based on that
Borrower’s own judgment and not in reliance upon any statement or representation
of the Administrative Agent or any Lender. Neither the Administrative Agent nor
the Lenders shall have any obligation to provide any Borrower with any advice
whatsoever or to inform any Borrower at any time of the Administrative Agent’s
or the Lenders’ actions, evaluations or conclusions on the financial condition
or any other matter concerning any Borrower.

 

 - 104 - 

 

 

Section 10.11    Relationship of Borrowers. Each Borrower represents that such
Borrower and its business operations receive mutual support and other benefits
from the other Borrowers, and it expects to derive benefits from the extension
of credit accommodations to each other Borrower by the Lenders and finds it
advantageous, desirable and in its best interests to execute and deliver this
Agreement and the promissory notes to the Lenders.

 

Section 10.12    Limitation. (a) If the Debt and other obligations of a Borrower
hereunder would be held or determined by a court or tribunal having competent
jurisdiction to be void, invalid or unenforceable on account of the amount of
its aggregate liability under this Agreement, the promissory notes or the other
Loan Documents, then, notwithstanding any other provision of this Agreement, the
promissory notes or the other Loan Documents to the contrary, the aggregate
amount of the liability of such Loan Party under this Agreement, the promissory
notes and the other Loan Documents shall, without any further action by such
Borrower, the Lenders, the Administrative Agent, the Letter of Credit Issuer or
any other Person, be automatically limited and reduced to an amount which is
valid and enforceable.

 

(b)           Without limiting the generality of paragraph (a), above, each
Borrower and the Administrative Agent, each Letter of Credit Issuer and each
Lender, hereby confirms that it is the intention of all such parties that none
of this Agreement, the promissory notes or any other Loan Document constitute a
fraudulent transfer or conveyance under the federal Bankruptcy Code, the Uniform
Fraudulent Conveyances Act, the Uniform Fraudulent Transfer Act or similar state
statute applicable to this Agreement and the other Loan Documents. Therefore,
such parties agree that the Debt and other obligations of a Borrower hereunder
and under the other Loan Documents shall be limited to such maximum amount as
will, after giving effect to such maximum amount and other contingent and fixed
liabilities of such Borrower that are relevant under such Laws, and after giving
effect to any collections from, rights to receive contribution from or payments
made by or on behalf of the other Borrowers and any other obligor, result in
such Debt and obligations not constituting a fraudulent transfer or conveyance.

 

[No additional provisions are on this page; the page next following is a
signature page.]

 

 - 105 - 

 

 

 

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.

 

  BORROWERS       JAMES RIVER GROUP HOLDINGS, LTD.           By: /s/ Sarah C.
Doran     Sarah C. Doran, Chief Financial Officer           JRG REINSURANCE
COMPANY LTD.           By: /s/ Helen Gillis   Helen Gillis, Chief Financial
Officer

 

 

  AGENTS, ARRANGERS AND LETTER OF CREDIT ISSUER       KEYBANK NATIONAL
ASSOCIATION, as Administrative Agent, Joint Lead Arranger, Joint Book Runner and
Letter of Credit Issuer           By: /s/ James Cribbet   James Cribbet, Senior
Vice President       SUNTRUST ROBINSON HUMPHREY, INC., as Joint Lead Arranger
and Joint Book Runner           By: /s/ Andrew Johnson   Andrew Johnson,
Managing Director       BMO CAPITAL MARKETS CORP., as Joint Lead Arranger      
    By: /s/ Geoff Bond   Geoff Bond, Managing Director       BANK OF MONTREAL,
as Co-Syndication Agent           By: /s/ Benjamin Mlot   Benjamin Mlot,
Director       SUNTRUST BANK, as Co-Syndication Agent       By: /s/ Andrew
Johnson   Andrew Johnson, Managing Director

 

- 2 - 

 

  LENDERS       KEYBANK NATIONAL ASSOCIATION, as Lender           By: /s/ James
Cribbet   James Cribbet, Senior Vice President           SUNTRUST BANK, as
Lender           By: /s/ Andrew Johnson   Name: Andrew Johnson     Title:
Managing Director           BANK OF MONTREAL, as Lender           By: /s/
Benjamin Mlot   Name: Benjamin Mlot     Title: Director           THE BANK OF
N.T. BUTTERFIELD & SON LIMITED, as Lender           By: /s/ Jordache Rawson  
Name: Jordache Rawson     Title: Vice President       By: /s/ Mark A. DaSilva  
Name: Mark A. DaSilva     Title: VP, Bermuda Chief Credit Officer

 

- 3 - 

 

  FIRST HORIZON BANK, as Lender           By: /s/ Michael Privette   Name:
Michael Privette     Title: Vice President           FIRST NATIONAL BANK OF
PENNSYLVANIA, as Lender           By: /s/ Walter Ricks   Name: Walter Ricks  
Title: SVP

 

- 4 - 

 

 

Amended and Restated Pricing Schedule

 

PRICING SCHEDULE

 

Leverage Ratio Pricing Level Eurodollar
Margin Base Rate
Margin Commitment
Fee Rate           < 0.10 to 1 Level I 1.250% 0. 250% 0.150% > 0.10 to 1 and <
0.175 to 1 Level II 1.375% 0. 375% 0.200% > 0.175 to 1 and < 0.275 to 1 Level
III 1. 500% 0. 500% 0.250% > 0.275 to 1 Level IV 1. 625% 0. 625% 0.300%

 

The Eurodollar Margin, Base Rate Margin and Commitment Fee Rate will be
determined by reference to the Leverage Ratio.

 

For purposes of this Schedule, “Pricing Level” means for any day, the Pricing
Level (I, II, III or IV) indicated on the table above that corresponds to the
Leverage Ratio as of the end of the most recent Fiscal Quarter or Fiscal Year,
as the case may be, for which the Parent delivered financial statements pursuant
to the Loan Documents, effective on the business day immediately following the
date on which such financial statements are delivered to the Administrative
Agent; provided, however, that, at any and all times during which (a) the Parent
is in default of the timely delivery of (1) the financial statements required by
the Loan Documents for any period or (2) the accompanying compliance certificate
required by the Loan Documents, the Eurodollar Margin, Base Rate Margin and
Commitment Fee Rate shall be determined under Pricing Level IV or (b) an Event
of Default has occurred and is continuing, the Eurodollar Margin, Base Rate
Margin and Commitment Fee Rate shall be determined under Pricing Level IV.

 

Pricing Level II shall apply commencing on the Restatement Effective Date until
adjusted pursuant to the immediately preceding paragraph.

 

By way of clarification and not limitation, the Loans under the Unsecured
Facility shall commence to accrue interest, the Letters of Credit under the
Unsecured Facility shall commence to accrue participation fees, and commitment
fees under the Unsecured Facility shall commence to accrue in each case at rates
per annum reflecting the decreased Applicable Rates as of the Restatement
Effective Date (defined below) and (together with the interest, participation
fees and commitment fees accrued and unpaid prior to the Restatement Effective
Date) shall be payable on the applicable Interest Payment Date next following
the Restatement Effective Date.

 

 

 

EXHIBIT A

 

ASSIGNMENT AND ACCEPTANCE

 

AGREEMENT dated as of ___________________, ___________ among [NAME OF ASSIGNOR]
(the “Assignor” and [NAME OF ASSIGNEE] (the “Assignee”).

 

WHEREAS, this Assignment and Acceptance (the “Agreement”) relates to the Amended
and Restated Credit Agreement dated as of November -8, 2019 among James River
Group Holdings, Ltd. (as a “Borrower”), the Assignor and the other Lenders party
thereto, KeyBank National Association, as Administrative Agent (the
“Administrative Agent”), Lead Arranger, Sole Book Runner and Letter of Credit
Issuer (as amended from time to time, the “Credit Agreement”).

 

WHEREAS, as provided under the Credit Agreement, the Assignor has a Secured
Facility Commitment to participate in Letters of Credit in an aggregate
principal amount at any time outstanding not to exceed $____________;

 

WHEREAS, Secured Facility Letters of Credit in the aggregate undrawn amount of
$______________ are outstanding at the date hereof; and

 

WHEREAS, as provided under the Credit Agreement, the Assignor has an Unsecured
Facility Commitment to make Loans to the Borrowers and participate in Letters of
Credit in an aggregate principal amount at any time outstanding not to exceed
$____________;

 

WHEREAS, Loans made to the Borrowers by the Assignor under the Credit Agreement
in the aggregate principal amount of $______________ are outstanding at the date
hereof;

 

WHEREAS, Unsecured Facility Letters of Credit in the aggregate undrawn amount of
$______________ are outstanding at the date hereof;

 

WHEREAS, the Assignor proposes to assign to the Assignee all of the rights of
the Assignor under the Credit Agreement in respect of a portion of its Secured
Facility Commitment thereunder in an amount equal to $_____________ (the
“Assigned Secured Facility Amount”), together with a corresponding portion of
its Secured LC Exposure, and the Assignee proposes to accept such assignment and
assume the corresponding obligations of the Assignor under the Credit Agreement;
and

 

WHEREAS, the Assignor proposes to assign to the Assignee all of the rights of
the Assignor under the Credit Agreement in respect of a portion of its Unsecured
Facility Commitment thereunder in an amount equal to $_____________ (the
“Assigned Unsecured Facility Amount”), together with a corresponding portion of
each of its outstanding Loans and its Unsecured LC Exposure, and the Assignee
proposes to accept such assignment and assume the corresponding obligations of
the Assignor under the Credit Agreement; and

 

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

 

SECTION 1. Definitions. All capitalized terms not otherwise defined herein have
the respective meanings set forth in the Credit Agreement.

 

 

 

 

SECTION 2. Assignment. The Assignor hereby assigns and sells to the Assignee all
of the rights of the Assignor under the Credit Agreement to the extent of the
Assigned Amount and a corresponding portion of each of its outstanding Loans and
its LC Exposure, and the Assignee hereby accepts such assignment from the
Assignor and assumes all of the obligations of the Assignor under the Credit
Agreement to the extent of the Assigned Amount and the corresponding portion of
each of its outstanding Loans and its LC Exposure. Upon the execution and
delivery hereof by the Assignor and the Assignee [and by the Parent, the
Administrative Agent and the Letter of Credit Issuers]1 and the payment of the
amounts specified in Section 3 required to be paid on the date hereof (i) the
Assignee shall, as of the date hereof, succeed to the rights and be obligated to
perform the obligations of a Lender under the Credit Agreement with a Secured
Facility Commitment in an amount equal to the Assigned Secured Facility Amount
and shall acquire the rights of the Assignor with respect to a corresponding
portion of its Secured LC Exposure; (ii) the Secured Facility Commitment of the
Assignor shall, as of the date hereof, be reduced by the Assigned Secured
Facility Amount, and the Assignor shall be released from its Secured Facility
obligations under the Credit Agreement to the extent such obligations have been
assumed by the Assignee; (iii) the Assignee shall, as of the date hereof,
succeed to the rights and be obligated to perform the obligations of a Lender
under the Credit Agreement with an Unsecured Facility Commitment in an amount
equal to the Assigned Unsecured Facility Amount and shall acquire the rights of
the Assignor with respect to a corresponding portion of each of its outstanding
Loans and its Unsecured LC Exposure; and (iv) the Unsecured Facility Commitment
of the Assignor shall, as of the date hereof, be reduced by the Assigned
Unsecured Facility Amount, and the Assignor shall be released from its Unsecured
Facility obligations under the Credit Agreement to the extent such obligations
have been assumed by the Assignee. The assignment provided for herein shall be
without recourse to the Assignor.

 

SECTION 3. Payments. As consideration for the assignment and sale contemplated
in Section 2 hereof, the Assignee shall pay to the Assignor on the date hereof
in Federal funds the amount heretofore agreed between them.2 Commitment fees
accrued before the date hereof are for the account of the Assignor and such fees
accruing on and after the date hereof with respect to the Assigned Amount are
for the account of the Assignee. Each of the Assignor and the Assignee agrees
that if it receives any amount under the Credit Agreement which is for the
account of the other party hereto, it shall receive the same for the account of
such other party to the extent of such other party’s interest therein and
promptly pay the same to such other party.

 

[SECTION 4.Consent of the Parent, the Administrative Agent, and the Letter of
Credit Issuers. This Agreement is conditioned upon the consent of the Parent,
the Administrative Agent and the Letter of Credit Issuers pursuant to Section
9.04(b) of the Credit Agreement. The execution of the Agreement by the Parent,
the Administrative Agent and the Letter of Credit Issuers is evidence of this
consent.]3

 

 

1Delete if consent is not required.

2Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee, net of any portion of any
upfront fee to be paid by the Assignor to the Assignee. It may be preferable in
an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.

3Delete if consent is not required.

 

- 2 -

 

 

SECTION 5. Non-Reliance on Assignor. The Assignor makes no representation or
warranty in connection with, and shall have no responsibility with respect to,
the solvency, financial condition, or statements of the Loan Parties or the
validity and enforceability of the Loan Parties’ obligations under the Credit
Agreement, any note issued thereunder or any Loan Document. The Assignee
acknowledges that it has, independently and without reliance on the Assignor,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter its own independent appraisal of
the business, affairs and financial condition of the Loan Parties.

 

SECTION 6. Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of New York.

 

SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

 

- 3 -

 

 

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

 

  [NAME OF ASSIGNOR]           By:       Name:     Title:           [NAME OF
ASSIGNEE]           By:       Name:     Title:

 

The undersigned consent to the foregoing assignment.

 

  [JAMES RIVER GROUP HOLDINGS, LTD.           By:       Name:     Title:]4      
    [KEYBANK NATIONAL ASSOCIATION, as Administrative Agent and Letter of Credit
Issuer           By:       Name:     Title:]5

 

 

4Delete if Borrower’s consent is not required.

5Delete (or modify as appropriate) if consent of Administrative Agent, and/or
Letter of Credit Issuer is not required.

 

- 4 -

 

 

EXHIBIT B

 

COLLATERAL CATEGORIES AND AVAILABILITY RATES

 

“Eligible Collateral” shall mean investment property owned by a Borrower (a) in
which the Administrative Agent holds a duly perfected, first priority security
interest and over which the Administrative Agent shall have sole dominion (other
than interest earned prior to default), (b) that is subject to no other Lien or
adverse claim, and (c) that consists of investment property of a type that is in
one of the “Categories of Eligible Investments” set forth below.

 

Categories of Eligible Investments: Availability Rate Non-convertible corporate
bonds rated BBB and Baa2 or better 80% (1) (2) (3)*

U.S. Treasury securities and U.S. agency or instrumentality securities that are
guaranteed or insured by the full faith and credit of the United States:

 

Maturing not more than 10 years after acquisition

 

Maturing more than 10 years after acquisition

95% (1)

 

85% (1)

(i) Single-class mortgage participation certificates backed by single-family
residential mortgage loans guaranteed by Federal Home Loan Mortgage Corporation,
(ii) single-class mortgage pass-through certificates guaranteed by Federal
National Mortgage Association, and (iii) single-class fully modified
pass-through certificates guaranteed by Government National Mortgage
Association:

 

Maturing not more than 10 years after acquisition

 

Maturing more than 10 years after acquisition

95% (1) (5)

 

85% (1) (5)

State and municipal bonds maturing within 5 years after acquisition and rated
AA- and Aa3 or better 75% (1) (3) (4) Money market accounts of a depository
having a rating of A- and A3 or better and Money Market Mutual Funds 90% (4)
Cash in dollars 100%

 

*Numbers in parentheses mean that investments in that category are subject to
the numerically corresponding additional qualifications and limitations set
forth below. Credit ratings set forth herein are of Standard & Poor’s Financial
Services LLC and Moody’s Investors Service, Inc. in that order.

 

Additional Qualifications and Limitations:

 

(1)Specified Value is the lower of market or par.

 

(2)Traded bonds are only those listed on the New York, American or NASDAQ Stock
Exchanges and eligible to be settled by the Depository Trust Company.

 

(3)Corporate, state and municipal securities and will be subject to a 10%
concentration limitation with respect to each issuer (and its affiliates)
thereof.

 

 

 

EXHIBIT B (Continued)

 

(4)Only issuers or depositories organized under the Laws of the United States or
a state thereof and domiciled in the United States.

 

(5)In book-entry form and excluding REMIC and other multi-class pass-through
certificates, pass-through certificates backed by adjustable rate mortgages,
collateralized mortgage obligations, securities paying interest or principal
only, and similar derivative securities.

 

- 2 -

 

 

EXHIBIT C

 

BORROWER JOINDER AGREEMENT

 

THIS BORROWER JOINDER AGREEMENT (this “Joinder Agreement”) is made and entered
into as of this ___ day of ___________, 20__, by and among:

 

(i)JAMES RIVER GROUP HOLDINGS, LTD., a Bermuda company, and its successors and
permitted assigns (“Parent”);

 

(ii)JRG REINSURANCE COMPANY LTD., a regulated insurance company domiciled in
Bermuda, and its successors and permitted assigns (“JRG Reinsurance”);

 

(iii)JAMES RIVER GROUP, INC., a Delaware corporation, and its successors and
permitted assigns (“James River”);

 

(iv)the LENDERS party hereto; and

 

(v)KEYBANK NATIONAL ASSOCIATION, a national banking association, in its capacity
as Administrative Agent and Letter of Credit Issuer.

 

Recitals:

 

A.            The Parent and JRG Reinsurance, as Borrowers (as defined in the
Credit Agreement, defined below), have entered into that certain Amended and
Restated Credit Agreement dated as of November 8, 2019 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), by and among the Borrowers, the Administrative Agent and the banks,
financial institutions and other entities from time to time party thereto in the
capacity of lenders (the “Lenders”). Capitalized terms used but not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.

 

B.            Under Section 2.04 of the Credit Agreement, the Borrower Agent may
request that James River be added as an additional Borrower, and once notice of
such request is delivered, James River must execute this Joinder Agreement by
which it assumes all of the rights and obligations as a Borrower under and
pursuant to the Credit Agreement and each and every other Loan Document.

 

Agreements:

 

NOW THEREFORE, in consideration of the foregoing Recitals, of the agreements
hereinafter set forth, and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties to this Joinder
Agreement hereby agree as follows:

 

1.             Incorporation by Reference. James River represents and warrants
to each of the Lender Parties the accuracy in all material respects of the
statements made in all of the foregoing Recitals, which are hereby incorporated
by reference into this Joinder Agreement as if fully restated herein.

 

 

 

EXHIBIT C (Continued)

 

2.             Assumption of Credit Agreement Obligations. As of the date
hereof, James River hereby accepts, joins in and assumes and agrees to pay and
perform, all of the Debt, covenants, representations, warranties and other
obligations as a Borrower under and pursuant to the Credit Agreement.

 

3.             Conforming Amendments to the Loan Documents. Each of Parent, JRG
Reinsurance, James River, and the Lender Parties agrees that as of the date
hereof, this Joinder Agreement shall be deemed to be a Loan Document.

 

4.             Release. Each of the Lender Parties agrees that on the date
hereof, and only following the effectiveness of the assumptions by James River
contemplated by Paragraph 2, above:

 

(a)            James River shall be released as a Guarantor under and pursuant
to the Credit Agreement; and

 

(b)           the Continuing Guaranty of Payment dated June 5, 2013 made by
James River for the benefit of the Lender Parties (as the same may thereafter
have been confirmed, amended or otherwise modified from time to time pursuant
and subject to the applicable provisions of the Credit Agreement) shall be
terminated, cancelled and released, and shall be of no further force or effect.

 

5.             Representations and Warranties. In connection with such
acceptance, joinder, assumption, and release:

 

(a)            each of Parent, JRG Reinsurance, and James River hereby jointly
and severally confirms and reaffirms to each of the Lender Parties in all
material respects each and all of the representations and warranties contained
in Article 3 of the Credit Agreement as of the date hereof and after giving
effect to the acceptance, joinder, assumption, and release by James River and
the conforming amendments to the Credit Agreement contemplated by Paragraph 3 of
this Joinder Agreement; provided that any representation and warranty that is
qualified as to “materiality”, “Material Adverse Effect” or similar language is
confirmed and reaffirmed (after giving effect to such qualification therein) in
all respects as the date hereof (except to the extent any such representation or
warranty speaks only as of an earlier date, in which case such representation or
warranty is confirmed and reaffirmed only as of such earlier date);

 

(b)           each of Parent, JRG Reinsurance, and James River hereby jointly
and severally represents and warrants to each of the Lender Parties that each of
the components of this transaction, without limitation, the acceptance, joinder,
assumption, and release contemplated hereby, will occur in compliance in all
material respects with all applicable Laws, including without limitation
applicable securities Laws and Applicable Insurance Codes; and

 

(c)            each of Parent, JRG Reinsurance, and James River hereby jointly
and severally represents and warrants to each of the Lender Parties that all
consents and approvals that are necessary for each of the components of this
transaction, including, without limitation, the acceptance, joinder, assumption,
and release contemplated hereby, have been obtained.

 

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EXHIBIT C (Continued)

 

6.             Covenants. In connection with such acceptance, joinder,
assumption, and release and concurrently with the effectiveness of this Joinder
Agreement:

 

(i)            James River shall deliver to the Administrative Agent (i) a
supplement to the previously delivered Schedules to the Credit Agreement to
reflect James River as an additional Borrower and (ii) to the extent acceptable
to the Administrative Agent in its sole discretion, an update of certain
previously delivered Schedules to the Credit Agreement to reflect any change in
the disclosures made therein;

 

(ii)           James River shall enter into a Pledge Agreement;

 

(iii)          James River shall enter into a Control Agreement; and

 

(iv)          Parent, JRG Reinsurance, and James River shall execute and deliver
to the Administrative Agent, for the benefit of each of the Lenders a promissory
note, in favor of each of such Lender, in the principal amount of such Lender’s
Commitment.

 

7.             Other Loan Documents; Delivery of Notes. Any reference in the
other Loan Documents to the Credit Agreement shall, from and after the date
hereof, be deemed to refer to the Credit Agreement, as assumed and modified by
this Joinder Agreement; and any reference in the Loan Documents to the notes
issued pursuant to Section 2.09(e) of the Credit Agreement shall, from and after
the date hereof, be deemed to include the notes executed by James River and
Parent (or any subsequent replacements thereof).

 

8.             Confirmation of Debt; Absence of Claims. Each of Parent, JRG
Reinsurance, and James River hereby affirms as of the date hereof, (i) all of
its respective Debt and other obligations to each of the Lender Parties under
and pursuant to the Credit Agreement and each of the other Loan Documents and
that such Debt and other obligations are owed to each of the Lender Parties
according to their respective terms and (ii) there are no claims or defenses to
the enforcement by the Lender Parties of the Debt and other obligations of, as
the case may be.

 

9.             No Other Modifications; Same Indebtedness. Except as expressly
provided in this Joinder Agreement, all of the terms and conditions of the
Credit Agreement and the other Loan Documents remain unchanged and in full force
and effect. The acceptance, joinder, assumption, and release effected by this
Joinder Agreement and by the other documents contemplated hereby shall not be
deemed to provide for or effect a repayment and re-advance of any of the Loans
now outstanding, it being the intention of all of Parent, JRG Reinsurance, James
River, and the Lender Parties hereby that the Debt owing under the Credit
Agreement, as assumed and amended by this Joinder Agreement, and the notes be
and hereby is the same Debt as that owing under the Credit Agreement and the
notes immediately prior to the effectiveness hereof.

 

10.           Governing Law; Binding Effect. This Joinder Agreement shall be
governed by and construed in accordance with the laws of the State of New York
and shall be binding upon and inure to the benefit of the PARENT, JRG
REINSURANCE, JAMES RIVER, the Lenders, the Administrative Agent and the Letter
of Credit Issuer and their respective successors and assigns.

 

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EXHIBIT C (Continued)

 

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

 

12.           Waiver of Jury Trial. EACH PARTY HERETO 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
JOINDER AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER 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 JOINDER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

 

[No additional provisions are on this page; the page next following is the
signature.]

 

- 4 -

 

 

IN WITNESS WHEREOF, Parent, JRG Reinsurance, James River, the Lenders, the
Administrative Agent, and the Letter of Credit Issuer have hereunto set their
hands as of the date first above written.

 

BORROWER PARTIES:  AGENT AND LETTER OF CREDIT ISSUER: JAMES RIVER GROUP
HOLDINGS, LTD.  as Administrative Agent and Letter of Credit Issuer,          
By:               By:           _____________________,  ______________________ 
  _____________________,  ______________________           JRG REINSURANCE
COMPANY LTD.  [OTHER LENDERS]      By:    By:              
_____________________,  ______________________    _____________________,
 ______________________      JAMES RIVER GROUP, INC.         By:       
_____________________,  ______________________   

 

- 5 -

 

 

Schedule 1.01 – Existing Secured Letters of Credit

 

KeyBank LOC’s Outstanding

 

[Omitted pursuant to Regulation S-K Item 601(a)(5)]

 

 

Schedule 2.01(a) – Secured Facility Commitment Schedule

 

[Omitted pursuant to Regulation S-K Item 601(a)(5)]

 

 

Schedule 2.01(b) – Unsecured Facility Commitment Schedule

 

[Omitted pursuant to Regulation S-K Item 601(a)(5)]

 

 

Schedule 3.05 - Insurance Licenses

 

[Omitted pursuant to Regulation S-K Item 601(a)(5)]

 

 

Schedule 3.06A - Subsidiaries

 

[Omitted pursuant to Regulation S-K Item 601(a)(5)]

 

 

Schedule 3.06B – Investments

 

[Omitted pursuant to Regulation S-K Item 601(a)(5)]

 

 

Schedule 3.11A – Material Debt Agreements

 

[Omitted pursuant to Regulation S-K Item 601(a)(5)]

 

 

Schedule 3.11B – Liens

 

[Omitted pursuant to Regulation S-K Item 601(a)(5)]

 

- 6 -

 

 

Schedule 3.13 – Outstanding Obligations to Repurchase, Redeem or Otherwise
Acquire
Any Equity Interests of the Parent

 

[Omitted pursuant to Regulation S-K Item 601(a)(5)]

 

 

Schedule 3.15 – ERISA

 

[Omitted pursuant to Regulation S-K Item 601(a)(5)]

 

 

Schedule 6.02 – Liens

 

[Omitted pursuant to Regulation S-K Item 601(a)(5)]

 

 

Schedule 6.06 – Surplus Relief Reinsurance

 

[Omitted pursuant to Regulation S-K Item 601(a)(5)]

 

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