Execution Version
CUSIP Number: Deal # 02607LAE6
Revolving Loans CUSIP # 02607LAF3

CREDIT AGREEMENT

among

AMERICAN FINANCIAL GROUP, INC.,
as Borrower,

THE LENDERS NAMED HEREIN,

WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent,

$120,000,000 Senior Unsecured Revolving Credit Facility

WACHOVIA CAPITAL MARKETS, LLC
Sole Lead Arranger and Sole Book Runner

Dated as of July 21, 2008

 
 
 

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TABLE OF CONTENTS
 
Page
 
 
ARTICLE I
 
DEFINITIONS
 
1.1
Defined Terms 
1

1.2
Accounting Terms 
20

1.3
Other Terms; Construction. 
20

 
ARTICLE II
 
AMOUNT AND TERMS OF THE LOANS
 
2.1
Commitments 
21

2.2
Borrowings. 
21

2.3
Disbursements; Funding Reliance; Domicile of Loans. 
22

2.4
Evidence of Debt; Notes. 
23

2.5
Termination and Reduction of Commitments. 
24

2.6
Mandatory Payments and Prepayments. 
24

2.7
Voluntary Prepayments. 
25

2.8
Interest. 
25

2.9
Fees 
27

2.10
Interest Periods 
27

2.11
Conversions and Continuations. 
28

2.12
Method of Payments; Computations; Apportionment of Payments. 
29

2.13
Recovery of Payments. 
31

2.14
Pro Rata Treatment. 
31

2.15
Increased Costs; Change in Circumstances; Illegality. 
32

2.16
Taxes. 
34

2.17
Compensation 
36

2.18
Replacement of Lenders; Mitigation of Costs. 
37

 
ARTICLE III
 
CONDITIONS OF BORROWING
 
3.1
Conditions of Initial Borrowing 
38

3.2
Conditions of All Borrowings 
39

 
ARTICLE IV
 
REPRESENTATIONS AND WARRANTIES
 
4.1
Existence, Qualification and Power 
40

 
 
 

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4.2
Authorization; No Contravention 
40

4.3
Governmental Authorization; Other Consents 
40

4.4
Binding Effect 
41

4.5
Financial Statements; No Material Adverse Effect. 
41

4.6
Litigation 
41

4.7
No Default 
42

4.8
Ownership of Property; Liens 
42

4.9
Environmental Compliance 
42

4.10
Insurance 
42

4.11
Taxes 
42

4.12
ERISA Compliance. 
43

4.13
Subsidiaries; Equity Interests 
43

4.14
Margin Regulations; Investment Company Act. 
44

4.15
Disclosure 
44

4.16
Compliance with Laws 
44

4.17
Taxpayer Identification Number 
44

4.18
Intellectual Property; Licenses, Etc. 
44

4.19
OFAC; Anti-Terrorism Laws. 
45

 
ARTICLE V
 
AFFIRMATIVE COVENANTS
 
5.1
Financial Statements 
45

5.2
Certificates; Other Information 
46

5.3
Notices 
48

5.4
Payment of Obligations 
49

5.5
Preservation of Existence, Etc. 
49

5.6
Maintenance of Properties 
49

5.7
Maintenance of Insurance 
49

5.8
Compliance with Laws 
49

5.9
Books and Records 
50

5.10
Inspection Rights 
50

5.11
Use of Proceeds 
50

5.12
Maintenance of Insurance Licenses 
50

5.13
OFAC, PATRIOT Act Compliance 
50

 
ARTICLE VI
 
NEGATIVE COVENANTS
 
6.1
Liens 
51

6.2
Investments 
51

6.3
Indebtedness 
52

6.4
Fundamental Changes 
52

6.5
Restricted Payments; Stock Redemptions 
53

6.6
Change in Nature of Business 
53

 
 
 

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6.7
Transactions with Affiliates 
53

6.8
Burdensome Agreements 
54

6.9
Use of Proceeds 
54

6.10
Financial Covenants. 
54

6.11
Additional Debt Subordination 
55

6.12
Tax Sharing Agreements 
56

6.13
Equity Issuances by Subsidiaries 
56

 
ARTICLE VII
 
EVENTS OF DEFAULT
 
7.1
Events of Default 
56

7.2
Remedies:  Termination of Commitments, Acceleration, etc. 
58

7.3
Remedies:  Set-Off 
59

 
ARTICLE VIII
 
THE ADMINISTRATIVE AGENT
 
8.1
Appointment and Authority 
59

8.2
Rights as a Lender 
60

8.3
Exculpatory Provisions 
60

8.4
Reliance by Administrative Agent 
61

8.5
Delegation of Duties 
61

8.6
Resignation of Administrative Agent 
61

8.7
Non-Reliance on Administrative Agent and Other Lenders 
62

8.8
No Other Duties, Etc 
62

 
ARTICLE IX
 
MISCELLANEOUS
 
9.1
Expenses; Indemnity; Damage Waiver. 
63

9.2
GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS. 
64

9.3
WAIVER OF JURY TRIAL 
65

9.4
Notices; Effectiveness; Electronic Communication. 
65

9.5
Amendments, Waivers, etc 
66

9.6
Successors and Assigns. 
67

9.7
No Waiver 
71

9.8
Survival 
71

9.9
Severability 
71

9.10
Construction 
71

9.11
Confidentiality 
71

9.12
Counterparts; Integration; Effectiveness 
72

9.13
Disclosure of Information 
73

9.14
No Advisory or Fiduciary Responsibility 
73

9.15
USA Patriot Act Notice 
74

 
 
 
 

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EXHIBITS
 

Exhibit A
Note
Exhibit B-1
Form of Notice of Borrowing
Exhibit B-2
Form of Notice of Conversion/Continuation
Exhibit C
Form of Compliance Certificate
Exhibit D
Form of Assignment and Assumption
Exhibit E
Form of Subordination Agreement

SCHEDULES

Schedule 1.1(a)
Commitments and Notice Addresses
Schedule 1.1(b)
CDO Variable Interest Entities
Schedule 4.13
Subsidiaries; Other Equity Investments

 

 
 
 
 

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT, dated as of the 21st day of July, 2008, is made among
AMERICAN FINANCIAL GROUP, INC., an Ohio corporation (the “Borrower”), the
Lenders (as hereinafter defined), and WACHOVIA BANK, NATIONAL ASSOCIATION, as
Administrative Agent for the Lenders.
 
BACKGROUND STATEMENT
 
The Borrower has requested that the Lenders provide a revolving credit facility,
and the Lenders are willing to do so on the terms and conditions set forth
herein.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of the mutual provisions, covenants and
agreements herein contained, the parties hereto hereby agree as follows:
 
ARTICLE I
 
DEFINITIONS
 
1.1           Defined Terms.
 
For purposes of this Agreement, in addition to the terms defined elsewhere
herein, the following terms have the meanings set forth below (such meanings to
be equally applicable to the singular and plural forms thereof):
 
“AAG” means AAG Holding Company, Inc., an Ohio corporation.
 
 “AAG Capital Trust Securities” means capital stock issued by AAG Trust or any
other trust or similar entity, the proceeds of which are invested by such Person
in an equivalent amount of Subordinated Debentures.
 
“AAG Trust” means collectively American Annuity Group Capital Trust II, a
statutory trust formed under the laws of the State of Delaware and Great
American Financial Statutory Trust IV, a Connecticut statutory trust.
 
“Account Designation Letter” means a letter from the Borrower to the
Administrative Agent, duly completed and signed by an Authorized Officer of the
Borrower and in form and substance reasonably satisfactory to the Administrative
Agent, listing any one or more accounts to which the Borrower may from time to
time request the Administrative Agent to forward the proceeds of any Loans made
hereunder.
 

 
 
 

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“Adjusted Base Rate” means, at any time with respect to any Base Rate Loan, a
rate per annum equal to the Base Rate as in effect at such time plus the
Applicable Percentage for Base Rate Loans as in effect at such time.
 
“Adjusted LIBOR Rate” means, at any time with respect to any LIBOR Loan, a rate
per annum equal to the LIBOR Rate as in effect at such time plus the Applicable
Percentage for LIBOR Loans as in effect at such time.
 
“Administrative Agent” means Wachovia, in its capacity as Administrative Agent
appointed under Section 8.1, and its successors and permitted assigns in such
capacity.
 
“AFG Capital Trust Securities” means capital stock issued by American Financial
Capital Trust I or any other trust or similar entity, the proceeds of which are
invested by such Person in an equivalent amount of Subordinated Debentures.
 
“AFG Consolidated Net Worth” means, on any date, the amount reported by the
Borrower, determined in accordance with GAAP on a consolidated basis, as “Total
Shareholders’ Equity” on its Form 10−K or Form 10−Q, but excluding (a) all
amounts in respect of unrealized gains or losses recorded pursuant to FAS 115
and (b) any mandatorily redeemable capital stock (or redeemable shares of other
beneficial interest), in each case as determined in accordance with GAAP and
Section 6.10.
 
“AFG Consolidated Total Financing Debt” means, on any date, on a consolidated
basis determined in accordance with GAAP and Section 6.10 for the Borrower and
its Subsidiaries (a) the sum of (i) indebtedness for borrowed money, or
indebtedness evidenced by notes, debentures, Capitalized Leases, guarantees
(excluding guarantees of indebtedness already included as Indebtedness) or
similar instruments, (ii) indebtedness for the deferred purchase price of assets
(other than the normal trade accounts payable), and (iii) indebtedness in
respect of mandatory redemption or dividend rights related to an Equity
Interest, but (b) excluding (i) any collateralized debt obligation fund managed
by the Borrower which is listed on Schedule 1.1(b) and which Indebtedness in
this clause (b) is carried as "Long Term Debt − Variable Interest Entities" on
the Borrower’s balance sheet from time to time in accordance with GAAP, and (ii)
Non−Recourse Real Estate Indebtedness of the Borrower and its Subsidiaries.
 
“AFG Total Capitalization” means, on any date, the sum of (a) AFG Consolidated
Total Financing Debt, plus (b) AFG Consolidated Net Worth, plus (c) all amounts
appearing on a consolidated balance sheet of the Borrower and its Subsidiaries
in the line item “Minority Interest”, all determined in accordance with GAAP.
 
“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, (i) Controls or is
Controlled by or is under common Control with the Person specified or
(ii) beneficially owns, is owned by or is under common ownership with respect to
securities or other ownership interests of such Person having 10% or more of the
combined voting power of the then outstanding securities or other ownership
interests of such Person ordinarily (and apart from rights accruing under
special circumstances) having the right to vote in the election of directors or
other governing body of such Person.
 

2
 
 

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Notwithstanding the foregoing, neither the Administrative Agent nor any Lender
shall be deemed an “Affiliate” of the Borrower.
 
“Agreement” means this Credit Agreement, as amended, modified, restated or
supplemented from time to time in accordance with its terms.
 
“Applicable Percentage” means, at any time from and after the Closing Date, the
applicable percentage (i) to be added to the Base Rate for purposes of
determining the Adjusted Base Rate, (ii) to be added to the LIBOR Rate for
purposes of determining the Adjusted LIBOR Rate and (iii) to be used in
calculating the commitment fee payable pursuant to Section 2.9(b), in each case
as determined under the following matrix with reference to the Debt Rating as
set forth below:
 
Pricing
Level
Debt Rating
S&P/Moody’s
LIBOR
Loan
Base Rate
Loan
Commitment
Fee
I
≥ BBB+/Baal
2.00%
1.00%
0.55%
 
II
BBB/Baa2
2.25%
1.25%
0.60%
 
III
≤ BBB-/Baa3
2.75%
1.75%
0.70%

 
“Debt Rating” means, as of any date of determination, the rating as determined
by either S&P or Moody’s (collectively, the “Debt Ratings”) of the Borrower’s
non-credit-enhanced, senior unsecured long-term debt; provided that (a) if the
respective Debt Ratings issued by the foregoing rating agencies differ by one
level, then the Pricing Level for the higher of such Debt Ratings shall apply
(with the Debt Rating for Pricing Level I being the highest and the Debt Rating
for Pricing Level III being the lowest); (b) if there is a split in Debt Ratings
of more than one level, then the Pricing Level that is one level higher than the
Pricing Level of the lower Debt Rating shall apply; (c) if the Borrower has only
one Debt Rating, the Pricing Level of such Debt Rating shall apply; and (d) if
the Borrower does not have a Debt Rating, Pricing Level III shall apply.
 
Initially, the Applicable Percentage shall be determined based upon the Debt
Rating specified in the certificate delivered pursuant to Section
3.1(a)(vii).  Thereafter, each change in the Applicable Percentage resulting
from a publicly announced change in the Debt Rating shall be effective, in the
case of an upgrade, during the period commencing on the date of delivery by the
Borrower to the Administrative Agent of notice thereof pursuant to Section
5.3(e) and ending on the date immediately preceding the effective date of the
next such change and, in the case of a downgrade, during the period commencing
on the date of the public announcement thereof and ending on the date
immediately preceding the effective date of the next such change.
 
“Approved Fund” means any Fund that is administered or managed by (i) a Lender,
(ii) an Affiliate of a Lender, or (iii) a Person (or an Affiliate of a Person)
that administers or manages a Lender.
 

 
3
 
 

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“APU Holding” means APU Holding Company, an Ohio corporation.
 
“Arranger” means Wachovia Capital Markets, LLC and its successors.
 
“Assignment and Assumption” means an Assignment and Assumption entered into by a
Lender and an assignee (with the consent of any Person whose consent is required
by Section 9.6(b)), and accepted by the Administrative Agent, in substantially
the form of Exhibit D or any other form approved by the Administrative Agent.
 
“Attributable Indebtedness” means, on any date, (a) in respect of any
Capitalized Lease of any Person, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease payments under the relevant lease that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP if such lease were accounted for as a Capitalized Lease.
 
“Audited Financial Statements” means the audited consolidated balance sheet of
the Borrower and its Subsidiaries for the fiscal year ended December 31, 2007
and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year of the Borrower and its Subsidiaries,
including the notes thereto.
 
“Bankruptcy Code” means 11 U.S.C. §§ 101 et seq., as amended from time to time,
and any successor statute, and all regulations from time to time promulgated
thereunder.
 
“Bankruptcy Event” means the occurrence of an Event of Default pursuant to
Section 7.1(f) or Section 7.1(g).
 
“Base Rate” means the higher of (i) the per annum interest rate publicly
announced from time to time by Wachovia in Charlotte, North Carolina, to be its
prime rate (which may not necessarily be its lowest or best lending rate), as
adjusted to conform to changes as of the opening of business on the date of any
such change in such prime rate, and (ii) the Federal Funds Rate plus 0.5% per
annum, as adjusted to conform to changes as of the opening of business on the
date of any such change in the Federal Funds Rate.
 
“Base Rate Loan” means, at any time, any Loan that bears interest at such time
at the applicable Adjusted Base Rate.
 
“Borrower” has the meaning given to such term in the introductory paragraph
hereof.
 
“Borrower’s Materials” has the meaning specified in Section 5.2.
 
“Borrowing” means the incurrence by the Borrower (including as a result of
conversions and continuations of outstanding Loans pursuant to Section 2.11) on
a single date of a group of Loans of a single Type and, in the case of LIBOR
Loans, as to which a single Interest Period is in effect.
 
“Brothers Property Corporation”  mean Brothers Property Corporation, an Ohio
corporation.
 

 
4
 
 

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“Business Day” means (i) any day other than a Saturday or Sunday, a legal
holiday or a day on which commercial banks in Charlotte, North Carolina or New
York, New York are authorized or required by law to be closed and (ii) in
respect of any determination relevant to a LIBOR Loan, any such day that is also
a day on which trading in Dollar deposits is conducted by banks in London,
England in the London interbank Eurodollar market.
 
“Capital Trust Securities” means either AAG Capital Trust Securities or AFG
Capital Trust Securities, as applicable.
 
“Capitalized Lease” means any lease which is required to be capitalized on the
balance sheet of the lessee in accordance with GAAP and Statement No. 13 of the
Financial Accounting Standards Board.
 
“Capitalized Lease Obligations” means the amount of the liability reflecting the
aggregate discounted amount of future payments under all Capitalized Leases
calculated in accordance with GAAP and Statement No. 13 of the Financial
Accounting Standards Board.
 
“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following:  (i) the adoption or taking effect of any law, rule,
regulation or treaty, (ii) any change in any law, rule, regulation or treaty or
in the administration, interpretation or application thereof by any Governmental
Authority or (iii) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.
 
“Change of Control” means an event or series of events by which (a) Lindner
Family Members shall collectively cease to own beneficially (i) at least 15% of
the outstanding voting common stock of the Borrower and (ii) a sufficient number
of shares of such voting common stock of the Borrower so that Lindner Family
Members in the aggregate own more shares of such voting common stock than any
other Person or group of Persons, (b) fewer than 10% of the members of the board
of directors of the Borrower shall be Lindner Family Members or representatives
thereof, (c) the Borrower shall cease to own directly, or indirectly through a
direct non−regulated subsidiary holding company (which does not (i) have any
material Indebtedness, (ii) transact any material business and (iii) own any
material assets other than Equity Interests of GAIC and other Insurance
Subsidiaries) in which the Borrower owns 100% of the Equity Interests, 100% of
the voting common stock of GAIC, (d) GAFRI, AAG, or any of their respective
Subsidiaries (or any combination thereof) shall cease to own, directly or
indirectly through a direct non−regulated holding company (which does not (i)
have any material Indebtedness, (ii) transact any material business, and (iii)
own any material assets other than Equity Interests of GALIC and other Insurance
Subsidiaries) in which GAFRI, AAG or one of their respective Subsidiaries (or
any combination thereof) owns 100% of the Equity Interests, 100% of the voting
common stock of GALIC, or (e) any Change of Control (howsoever defined) shall
occur with respect to any other Indebtedness of the Borrower or any of its
Subsidiaries.
 
“Closing Date” means the date upon which the initial extensions of credit are
made pursuant to this Agreement, which shall be the date upon which each of the
conditions set forth in Sections 3.1 and 3.2 shall have been satisfied or waived
in accordance with the terms of this Agreement.
 

 
5
 
 

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“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and any successor statute, and all rules and regulations from time to time
promulgated thereunder.
 
“Commitment” means, with respect to any Lender at any time, the commitment of
such Lender to make Loans in an aggregate principal amount at any time
outstanding up to the amount set forth opposite such Lender’s name on
Schedule 1.1(a) under the caption “Commitment” or, if such Lender has entered
into one or more Assignment and Assumptions, the amount set forth for such
Lender at such time in the Register maintained by the Administrative Agent
pursuant to Section 9.6(c) as such Lender’s “Commitment,” in either case, as
such amount may be reduced at or prior to such time pursuant to the terms
hereof.
 
“Compliance Certificate” means a fully completed and duly executed certificate
in the form of Exhibit C, together with a Covenant Compliance Worksheet.
 
“Consolidated Net Income” means, for any period, the net income (or loss) of the
Borrower and its Subsidiaries, determined in accordance with GAAP on a
consolidated basis, and as reported by the Borrower on its Form 10−K or Form
10−Q.
 
“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.
 
“Control” means, with respect to any Person, the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms “Controlled” and “Controlling” have correlative
meanings.
 
“Credit Documents” means this Agreement, the Notes, the Engagement Letter, and
all other agreements, instruments, documents and certificates now or hereafter
executed and delivered to the Administrative Agent or any Lender by or on behalf
of the Borrower with respect to this Agreement, in each case as amended,
modified, supplemented or restated from time to time.
 
“Debt Issuance” means the issuance, sale or incurrence by the Borrower or any of
its Subsidiaries after the Closing Date of any debt securities or other
Indebtedness, whether in a public offering or otherwise, except for (i)
Indebtedness under this Agreement; (ii) Indebtedness under the Existing Credit
Agreement, (iii) Indebtedness under letters of credit, (iv) Indebtedness of
Brothers Property Corporation, and (v) Indebtedness of National Interstate.
 
“Debt Rating” has the meaning specified in the definition of “Applicable
Percentage.”
 
“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws of the United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.
 

 
6
 
 

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“Default” means any event or condition that, with the passage of time or giving
of notice, or both, would constitute an Event of Default.
 
“Defaulting Lender” means any Lender that (i) has refused to fund, or otherwise
defaulted in the funding of, its ratable share of any Borrowing requested and
permitted to be made hereunder, (ii) has failed to pay to the Administrative
Agent or any Lender when due an amount owed by such Lender pursuant to the terms
of this Agreement, unless such amount is subject to a good faith dispute, or
(iii) has been deemed insolvent or has become subject to a bankruptcy or
insolvency proceeding or to a receiver, trustee or similar official, and such
refusal has not been withdrawn or such default has not been cured within three
Business Days.
 
“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.
 
“Dollars” or “$” means dollars of the United States of America.
 
“Engagement Letter” means the letter from the Administrative Agent and the
Arranger to the Borrower, dated July 1, 2008, relating to certain fees payable
by the Borrower in respect of the transactions contemplated by this Agreement,
as amended, modified, restated or supplemented from time to time.
 
“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.
 
“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any of its Subsidiaries directly
or indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
 
“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.
 

 
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“Equity Issuance” means the issuance, sale or other disposition by the Borrower
or any of its Subsidiaries after the Closing Date of their respective Equity
Interests; provided, however, that the term Equity Issuance shall not include
the issuance, sale or other disposition of (i) any Equity Interest by any
Subsidiary of the Borrower to the Borrower or any other Subsidiary of the
Borrower; (ii) any Equity Interest of the Borrower, and rights or options for
any Equity Interest of the Borrower, and the underlying shares issued upon
exercise thereof, in each case issued, sold or granted to directors and
employees of the Borrower and its Subsidiaries pursuant to employee benefit
plans, deferred compensation plans, employment agreements or other employment
arrangements approved by the Board of Directors of the Borrower or (iii) any
Equity Interests of the Borrower or National Interstate pursuant to any dividend
reinvestment plan.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any successor statute, and all rules and regulations from
time to time promulgated thereunder.
 
“ERISA Affiliate” means any Person (including any trade or business, whether or
not incorporated) deemed to be under “common control” with, or a member of the
same “controlled group” as, the Borrower or any of its Subsidiaries, within the
meaning of Sections 414(b), (c), (m) or (o) of the Code or Section 4001 of
ERISA.
 
“ERISA Event” means any of the following with respect to a Plan or Multiemployer
Plan, as applicable:  (i) a Reportable Event, (ii) a complete or partial
withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan that
results in liability under Section 4201 or 4204 of ERISA, or the receipt by the
Borrower or any ERISA Affiliate of notice from a Multiemployer Plan that it is
in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or
that it intends to terminate or has terminated under Section 4041A of ERISA,
(iii) the distribution by the Borrower or any ERISA Affiliate under Section 4041
or 4041A of ERISA of a notice of intent to terminate any Plan or the taking of
any action to terminate any Plan, (iv) the commencement of proceedings by the
PBGC under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Borrower or any ERISA
Affiliate of a notice from any Multiemployer Plan that such action has been
taken by the PBGC with respect to such Multiemployer Plan, (v) the institution
of a proceeding by any fiduciary of any Multiemployer Plan against the Borrower
or any ERISA Affiliate to enforce Section 515 of ERISA, which is not dismissed
within 30 days, (vi) the imposition upon the Borrower or any ERISA Affiliate of
any liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, or the imposition or threatened
imposition of any Lien upon any assets of the Borrower or any ERISA Affiliate as
a result of any alleged failure to comply with the Code or ERISA in respect of
any Plan, (vii) the engaging in or otherwise becoming liable for a nonexempt
Prohibited Transaction by the Borrower or any ERISA Affiliate, or a violation of
the applicable requirements of Section 404 or 405 of ERISA or the exclusive
benefit rule under Section 401(a) of the Code by any fiduciary of any Plan for
which the Borrower or any of its ERISA Affiliates may be directly or indirectly
liable, (viii) the failure of any Plan to satisfy the minimum funding standard
of Section 302 of ERISA and Section 412 of the Code, whether or not waived, (ix)
with respect to plan years
 

 
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beginning prior to January 1, 2008, the adoption of an amendment to any Plan
that, pursuant to Section 307 of ERISA, would require the provision of security
to such Plan by the Borrower or an ERISA Affiliate, or (x) with respect to plan
years beginning on or after the PPA 2006 Effective Date, the incurrence of an
obligation to provide a notice under Section 101(j) of ERISA, the adoption of an
amendment which may not take effect due to the application of Section 436(c)(1)
of the Code or Section 206(g)(2)(A) of ERISA, or the payment of a contribution
in order to satisfy the requirements of Section 436(c)(2) of the Code or Section
206(g)(2)(B) of ERISA.
 
“Event of Default” has the meaning given to such term in Section 7.1.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and any successor statute, and all rules and regulations from time to
time promulgated thereunder.
 
“Excluded Taxes” means, with respect to the Administrative Agent, any Lender, or
any other recipient of any payment to be made by or on account of any obligation
of the Borrower hereunder, (i) taxes imposed on or measured by its overall net
income (however denominated), and franchise taxes imposed on it (in lieu of net
income taxes), by the jurisdiction (or any political subdivision thereof) under
the laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable Lending Office
is located, (ii) any branch profits taxes imposed by the United States or any
similar tax imposed by any other jurisdiction in which the Borrower is located
and (iii) in the case of a Foreign Lender (other than an assignee pursuant to a
request by the Borrower under Section 2.18(a)), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party hereto (or designates a new Lending Office) or is
attributable to such Foreign Lender’s failure or inability (other than as a
result of a Change in Law) to comply with Section 2.16(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new Lending Office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to
Section 2.16(a).
 
“Existing Credit Agreement” means that certain Credit Agreement, dated as of
March 29, 2006 among the Borrower, AAG, the lenders from time to time party
thereto, and Bank Of America, N.A., as administrative agent, as amended by the
First Amendment to Credit Agreement, dated as of January 18, 2008.
 
“Federal Funds Rate” means, for any period, a fluctuating per annum interest
rate (rounded upwards, if necessary, to the nearest 1/100 of one percentage
point) equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the immediately preceding Business Day)
by the Federal Reserve Bank of New York, or if such rate is not so published for
any day that is a Business Day, the average of the quotations for such day on
such transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by the Administrative Agent.
 
“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System or any successor thereto.
 

9
 
 

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“fiscal quarter” or “FQ” means a fiscal quarter of the Borrower and its
Subsidiaries.
 
“fiscal year” or “FY” means a fiscal year of the Borrower and its Subsidiaries.
 
“Foreign Lender” means, with respect to the Borrower, any Lender that is
organized under the laws of a jurisdiction other than that in which the Borrower
is resident for tax purposes.  For purposes of this definition, the United
States, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.
 
“Foreign Subsidiary” means a Subsidiary of the Borrower that is a “controlled
foreign corporation,” as such term is defined in Section 957 of the Code.
 
“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
 
“GAAP” means generally accepted accounting principles in the United States of
America, as set forth in the statements, opinions and pronouncements of the
Accounting Principles Board, the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board, consistently applied
and maintained, as in effect from time to time (subject to the provisions of
Section 1.2).
 
“GAFRI” means Great American Financial Resources, Inc., a Delaware corporation.
 
“GAIC” means Great American Insurance Company, an Ohio insurance company.
 
“GALIC” means Great American Life Insurance Company, an Ohio insurance company.
 
“Governmental Authority” means the government of the United States of America or
any other nation, or of any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or
the European Central Bank).
 
“Guaranty Obligation” means, with respect to any Person, any direct or indirect
liability of such Person with respect to any Indebtedness, liability or other
obligation (the “primary obligation”) of another Person (the “primary obligor”),
whether or not contingent, (i) to purchase, repurchase or otherwise acquire such
primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or provide funds (x) for the payment or discharge of
any such primary obligation or (y) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor (including, without limitation,, keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements), (iii) to
lease or purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor in respect thereof to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss or failure or inability to perform
 

 
10
 
 

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in respect thereof; provided, however, that, with respect to the Borrower and
its Subsidiaries, the term Guaranty Obligation shall not include endorsements
for collection or deposit in the ordinary course of business.  The amount of any
Guaranty Obligation of any guaranteeing Person hereunder shall be deemed to be
the lower of (a) an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guaranty Obligation is made and
(b) the maximum amount for which such guaranteeing Person may be liable pursuant
to the terms of the instrument embodying such Guaranty Obligation, unless such
primary obligation and the maximum amount for which such guaranteeing Person may
be liable are not stated or determinable, in which case the amount of such
Guaranty Obligation shall be such guaranteeing Person’s maximum reasonably
anticipated liability in respect thereof as determined by such guaranteeing
Person in good faith.
 
“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos−containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
 
“Hybrid Securities” has the meaning specified in the last paragraph of Section
6.10.
 
“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:
 
(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;
 
(b) all direct or contingent obligations of such Person arising under letters of
credit (including standby and commercial), bankers’acceptances, bank guaranties,
surety bonds and similar instruments other than under insurance policies issued
by an Insurance Subsidiary;
 
(c) net obligations of such Person under any Swap Contract;
 
(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business);
 
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;
 
(f) Capitalized Leases and Synthetic Lease Obligations;
 
(g) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Equity Interest in such Person or
any other Person, valued, in the case of a redeemable preferred interest, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; and
 
(h) all Guaranty Obligations of such Person in respect of any of the foregoing.
 

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For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non−recourse to such Person.  The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. The amount of any Capitalized Lease or Synthetic Lease
Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date.
 
“Indemnified Taxes” means Taxes other than Excluded Taxes.
 
“Insurance Authorities” means collectively, in relation to any particular
jurisdiction, the insurance regulatory authorities, commissions, agencies,
departments, boards or other authorities of or in that jurisdiction.
 
“Insurance Subsidiary” means each Significant Subsidiary of the Borrower engaged
primarily in the insurance business and licensed as an insurance company in one
or more states or Puerto Rico.
 
“Interest and Dividend Charges” means, for any period, with respect to the
Borrower, the sum (without duplication) of (a) the aggregate amount of interest,
including commitment fees, charges in the nature of interest under Capitalized
Leases and net amounts due under Swap Contracts, accrued directly by the
Borrower (whether such interest is reflected as an item of expense or
capitalized but excluding interest on intercompany debt) in accordance with
GAAP, plus (b) actual cash dividends (including liquidating distributions and
dividends paid on AFG Capital Trust Securities) paid by the Borrower (other than
regular cash dividends paid on the Borrower’s common stock in amounts consistent
with past practice and other than dividends paid to any holding company that is
a Subsidiary of the Borrower) with respect to Equity Interests.
 
“Interest Period” has the meaning given to such term in Section 2.10.
 
“Internal Control Event” means a material weakness in, or fraud that involves
management or other employees who have a significant role in, the Borrower’s
internal controls over financial reporting, in each case as described in the
Securities Laws.
 
“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) any loan, advance or
extension of credit (including Guaranty Obligations), (b) any capital
contribution or purchase of Equity Interests, and (c) any acquisition of
property other than upon full payment in cash at fair market value; provided,
however that the term “Investment” shall not include (i) investments and
reinvestments in portfolio securities in the ordinary course of business, (ii)
sales or other transfers of portfolio assets among the Borrower and its
Subsidiaries in the ordinary course of business, (iii) trade and customer
accounts receivable for property leased, goods furnished or services rendered in
the ordinary course of business and payable on a current basis in accordance
with customary trade terms, (iv) deposits, advances or prepayments to suppliers
for property leased or licensed, goods furnished and services rendered in the
ordinary course of business, (v) advances to employees for relocation and travel
expenses, drawing accounts and similar expenditures, (vi) stock or other
 

12
 
 

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securities acquired in connection with the satisfaction or enforcement of
Indebtedness or claims due to any Person or as security for any such
Indebtedness or claims or (vii) demand deposits in banks or similar financial
institutions.  For purposes of covenant compliance, the amount of any Investment
shall be the amount actually invested, without adjustment for subsequent
increases or decreases in value of such Investment.
 
“IP Rights” has the meaning specified in Section 4.18.
 
“IRS” means the United States Internal Revenue Service.
 
“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.
 
“Lender” means each Person signatory hereto as a “Lender” and each other Person
that becomes a “Lender” hereunder pursuant to Section 9.6, and their respective
successors and assigns.
 
“Lending Office” means, with respect to any Lender, the office of such Lender
designated as such in such Lender’s Administrative Questionnaire or in
connection with an Assignment and Assumption, or such other office as may be
otherwise designated in writing from time to time by such Lender to the Borrower
and the Administrative Agent.  A Lender may designate separate Lending Offices
as provided in the foregoing sentence for the purposes of making or maintaining
different Types of Loans, and, with respect to LIBOR Loans, such office may be a
domestic or foreign branch or Affiliate of such Lender.
 
“LIBOR Loan” means, at any time, any Loan that bears interest at such time at
the Adjusted LIBOR Rate.
 
“LIBOR Rate” means, for any Interest Period with respect to a LIBOR Loan, the
rate per annum obtained by dividing (i) (y) the British Bankers Association
LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially
available source providing quotations of BBA LIBOR as designated by the
Administrative Agent from time to time) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, for
Dollar deposits (for delivery on the first day of such Interest Period) with a
term equivalent to such Interest Period or (z) if such rate is not available at
such time for any reason, then the LIBOR Rate for such Interest Period shall be
the rate per annum determined by the Administrative Agent to be the rate at
which deposits in Dollars for delivery on the first day of such Interest Period
in same day funds in the approximate amount of the LIBOR Loan being made,
continued or converted by Wachovia and with a term equivalent to such Interest
Period would be offered by Wachovia’s London Branch to major banks in the London
interbank eurodollar market at their request at approximately 11:00 a.m. (London
time) two Business Days prior to the commencement of such Interest Period by
(ii) the amount equal to 1.00 minus the Reserve Requirement (expressed as a
decimal) for such Interest Period.
 

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“Lien” means any mortgage, pledge, hypothecation, assignment, security interest,
lien (statutory or otherwise), charge or other encumbrance of any nature,
whether voluntary or involuntary, including, without limitation, the interest of
any vendor or lessor under any conditional sale agreement, title retention
agreement, Capital Lease or any other lease or arrangement having substantially
the same effect as any of the foregoing.
 
“Lindner Family Members” means Carl H. Lindner, his wife and all lineal
descendents and their wives, as well as trusts established by or for the benefit
of such persons.
 
“Loans” has the meaning given to such term in Section 2.1.
 
“Margin Stock” has the meaning given to such term in Regulation U.
 
“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent), condition (financial or otherwise) or prospects of the Borrower,
individually, or the Borrower and its Subsidiaries taken as a whole; (b) a
material impairment of the ability of the Borrower to perform its obligations
under any Credit Document; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against the Borrower of any Credit
Document.
 
“Maturity Date” means July 20, 2009.
 
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
 
“Multiemployer Plan” means any “multiemployer plan” within the meaning of
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate makes,
is making or is obligated to make contributions or has made or been obligated to
make contributions.
 
“NAIC” means the National Association of Insurance Commissioners.
 
“National Interstate” means National Interstate Corporation, an Ohio
corporation.
 
“Net Cash Proceeds” means, in the case of any Equity Issuance or Debt Issuance,
the aggregate cash proceeds received by the Borrower or any of its Subsidiaries
in respect thereof, less reasonable fees and out-of-pocket expenses payable by
the Borrower or any of its Subsidiaries in connection therewith.
 
“Non−Recourse Real Estate Indebtedness” means, with respect to any Person, any
Indebtedness of such Person for which the owner of such Indebtedness has no
recourse, directly or indirectly, to such Person for the principal of, premium,
if any, and interest on such Indebtedness, and for which such Person is not
directly or indirectly obligated or otherwise liable for the principal of,
premium, if any, and interest on such Indebtedness, except with respect to real
property of such Person pursuant to mortgages, deeds of trust or other security
interests to which such Indebtedness relates, provided that recourse obligations
or liabilities solely for fraud, environmental matters and other customary
“non−recourse carve−outs” in respect of any Indebtedness will not prevent
Indebtedness from being classified as Non−Recourse Real Estate Indebtedness.
 

 
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“Note” means, with respect to any Lender requesting the same, the promissory
note of the Borrower in favor of such Lender evidencing the Loans made by such
Lender pursuant to Section 2.1(a), in substantially the form of Exhibit A,
together with any amendments, modifications and supplements thereto,
substitutions therefor and restatements thereof.
 
“Notice of Borrowing” has the meaning given to such term in Section 2.2(b).
 
“Notice of Conversion/Continuation” has the meaning given to such term in
Section 2.11(b).
 
“Obligations” means all principal of and interest (including interest accruing
after the filing of a petition or commencement of a case by or with respect to
the Borrower seeking relief under any applicable federal and state laws
pertaining to bankruptcy, reorganization, arrangement, moratorium, readjustment
of debts, dissolution, liquidation or other debtor relief, specifically
including, without limitation, the Debtor Relief Laws, whether or not the claim
for such interest is allowed in such proceeding) on the Loans and all fees,
expenses, indemnities and other obligations owing, due or payable at any time by
the Borrower to the Administrative Agent, any Lender or any other Person
entitled thereto, under this Agreement or any of the other Credit Documents, in
each case whether direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, and
whether existing by contract, operation of law or otherwise.
 
“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets
Control, and any successor thereto.
 
“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non−U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.
 
“Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Credit Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Credit Document.
 
“Participant” has the meaning given to such term in Section 9.6(d).
 
“PATRIOT Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act)
of 2001, as amended from time to time, and any successor statute, and all rules
and regulations from time to time promulgated thereunder.
 

 
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“Payment Office” means the office of the Administrative Agent designated on
Schedule 1.1(a) under the heading “Instructions for wire transfers to the
Administrative Agent,” or such other office as the Administrative Agent may
designate to the Lenders and the Borrower for such purpose from time to time.
 
“PBGC” means the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA, and any successor thereto.
 
“PCAOB” means the Public Company Accounting Oversight Board.
 
“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by either Borrower
or any ERISA Affiliate thereof or to which either Borrower or any ERISA
Affiliate thereof contributes or has an obligation to contribute, or in the case
of a multiple employer or other plan described in Section 4064(a) of ERISA, has
made contributions at any time during the immediately preceding five plan years.
 
“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
 
“Plan” means any “employee pension benefit plan” within the meaning of
Section 3(2) of ERISA that is subject to the provisions of Title IV of ERISA
(other than a Multiemployer Plan) and to which the Borrower or any ERISA
Affiliate may have any liability.
 
“Platform” has the meaning specified in Section 5.2.
 
“Public Lender” has the meaning specified in Section 5.2.
 
“Register” has the meaning given to such term in Section 9.6(c).
 
“Registered Public Accounting Firm” has the meaning specified in the Securities
Laws and shall be independent of the Borrower as provided by the Securities
Laws.
 
“Regulations D, T, U and X” means Regulations D, T, U and X, respectively, of
the Federal Reserve Board, and any successor regulations.
 
“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents and advisors of such
Person and of such Person’s Affiliates.
 
“Reportable Event” means, with respect to any Plan, (i) any “reportable event”
within the meaning of Section 4043(c) of ERISA for which the 30-day notice under
Section 4043(a) of ERISA has not been waived by the PBGC (including, without
limitation, any failure to meet the minimum funding standard of, or timely make
any required installment under, Section 412 of the Code or Section 302 of ERISA,
regardless of the issuance of any waivers in accordance with
 

 
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Section 412 of the Code), (ii) any such “reportable event” subject to advance
notice to the PBGC under Section 4043(b)(3) of ERISA, (iii) any application for
a funding waiver or an extension of any amortization period pursuant to Section
412 of the Code, and (iv) a cessation of operations described in Section 4062(e)
of ERISA.
 
“Required Lenders” means, at any time, the Lenders holding outstanding Loans and
unutilized Commitments (or, after the termination of the Commitments,
outstanding Loans) representing more than 50% of the aggregate, at such time, of
all outstanding Loans and unutilized Commitments (or, after the termination of
the Commitments, the aggregate at such time of all outstanding Loans).
 
“Requirement of Law” means, with respect to any Person, the charter, articles or
certificate of organization or incorporation and bylaws or other organizational
or governing documents of such Person, and any statute, law, treaty, rule,
regulation, order, decree, writ, injunction or determination of any arbitrator
or court or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject or otherwise pertaining to any or all of the transactions
contemplated by this Agreement and the other Credit Documents.
 
“Reserve Requirement” means, with respect to any Interest Period, the reserve
percentage (expressed as a decimal and rounded upwards, if necessary, to the
next higher 1/100th of 1%) in effect from time to time during such Interest
Period, as provided by the Federal Reserve Board, applied for determining the
maximum reserve requirements (including, without limitation, basic,
supplemental, marginal and emergency reserves) applicable to Wachovia under
Regulation D with respect to “Eurocurrency liabilities” within the meaning of
Regulation D, or under any similar or successor regulation with respect to
Eurocurrency liabilities or Eurocurrency funding.
 
“Responsible Officer” means, means a chief executive officer, president,
executive vice president, senior vice president, chief financial officer,
general counsel, treasurer or assistant treasurer of the Borrower. Any document
delivered hereunder that is signed by a Responsible Officer of the Borrower
shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of the Borrower and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
the Borrower.
 
“Restricted Payment” means (a) the declaration or payment of any dividend on any
Equity Interest of the Borrower or any Subsidiary, other than dividends payable
solely in shares of common stock, (b) the purchase or other retirement of any
class of Equity Interest of the Borrower or any Subsidiary, (c) any other
distribution on or in respect of any class of Equity Interest of the Borrower or
any Subsidiary, and (d) any payment of principal or interest or premium on, or
any purchase or other retirement of, any Indebtedness required to be
subordinated to the Obligations under this Agreement and the other Credit
Documents, including (i) the Subordinated Debentures, and (ii) intercompany debt
obligations of the Borrower owing to any of its Subsidiaries or Affiliates.
 
“RICA” means Republic Indemnity Company of America, a California insurance
company.
 

 
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“Sanctioned Country” means a country subject to a sanctions program identified
on the list maintained by OFAC and available at
http://www.treas.gov/offices/enforcement/ofac/programs/, or as otherwise
published from time to time.
 
“Sanctioned Person” means (i) a Person named on the list of Specially Designated
Nationals or Blocked Persons maintained by OFAC available at
http://www.treas.gov/-
offices/enforcement/ofac/sdn/index.shtml, or as otherwise published from time to
time, or (ii) (A) an agency of the government of a Sanctioned Country, (B) an
organization controlled by a Sanctioned Country, or (C) a Person resident in a
Sanctioned Country, to the extent subject to a sanctions program administered by
OFAC.
 
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw−Hill
Companies, Inc. and any successor thereto.
 
“Sarbanes−Oxley” means the Sarbanes−Oxley Act of 2002.
 
“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
 
“Securities Laws” means the Securities Act of 1933, the Securities Exchange Act
of 1934, Sarbanes−Oxley and the applicable accounting and auditing principles,
rules, standards and practices promulgated, approved or incorporated by the SEC
or the PCAOB.
 
“Significant Subsidiary” means any Subsidiary of the Borrower which has five
percent (5%) or more of the total assets of the Borrower and its Subsidiaries
(determined as of the last day of the most recent fiscal quarter), and shall in
any event include (i) GAIC, (ii) GALIC, (iii) RICA, (iv) GAFRI, (v) Great
American Holding, Inc., (vi) APU Holding, (vii) AAG and (viii) the successors
and assigns of any of the foregoing permitted under this Agreement.
 
“Statutory Accounting Methods” means the statutory reporting practices
prescribed by the applicable Insurance Authorities with respect to the Insurance
Subsidiaries.
 
“Subordinated Debentures” means any subordinated debentures (which debentures
shall be subordinated to the Obligations on terms satisfactory to the
Administrative Agent) issued by the Borrower or any of its Subsidiaries on or
prior to the Closing Date (or, in the case only of the Borrower or GAFRI, after
the Closing Date as contemplated by Section 6.13(c)(ii)) to AAG Trust, American
Financial Capital Trust I or any other trust or similar entity controlled by the
Borrower or any of its Subsidiaries.
 
“Subordination Agreement” means the Subordination Agreement substantially in the
form of Exhibit E pursuant to which the Borrower’s Subsidiaries and Affiliates
to which the Borrower has any Indebtedness shall unconditionally subordinate any
Indebtedness owed to it by the Borrower to the prior payment in full of the
Obligations.
 
“Subsidiary” means any person of which the Borrower (or other specified Person)
shall at the time, directly or indirectly through one or more of its
Subsidiaries, (i) own more than 50% of the outstanding Equity Interests entitled
to vote generally, (ii) hold more than 50% of the
 

 
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Equity Interests or (iii) be a general partner or joint venture. Unless
otherwise specified, all references to a “Subsidiary” or to “Subsidiaries” shall
refer to a Subsidiary or Subsidiaries of the Borrower.
 
“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross−currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.
 
“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (i) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (ii) for any date prior to
the date referenced in clause (i), the amount(s) determined as the
mark−to−market value(s) for such Swap Contracts, as determined based upon one or
more mid−market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).
 
“Synthetic Lease Obligation” means the monetary obligation of a Person under (i)
a so−called synthetic, off−balance sheet or tax retention lease, or (ii) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).
 
“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.
 
“Termination Date” means the Maturity Date or such earlier date of termination
of the Commitments pursuant to Section 2.5 or Section 7.2.
 
“Type” has the meaning given to such term in Section 2.2(a).
 
“Unfunded Pension Liability” means, with respect to any Plan, the excess of its
benefit liabilities under Section 4001(a)(16) of ERISA over the current value of
its assets, determined in accordance with the applicable assumptions used for
funding under Section 412 of the Code for the applicable plan year.
 

 
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“Unutilized Commitment” means, with respect to any Lender at any time, such
Lender’s Commitment at such time less the sum of the aggregate principal amount
of all Loans made by such Lender that are outstanding at such time.
 
“Wachovia” means Wachovia Bank, National Association, and its successors and
assigns.
 
“Wholly Owned” means, with respect to any Subsidiary of any Person, that 100% of
the outstanding Capital Stock of such Subsidiary (excluding any directors’
qualifying shares and shares required to be held by foreign nationals, in the
case of a Foreign Subsidiary) is owned, directly or indirectly, by such Person.
 
1.2           Accounting Terms. 
 
.  Unless otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with, GAAP applied on a basis consistent with the most recent audited
consolidated financial statements of the Borrower delivered to the Lenders prior
to the Closing Date; provided that if the Borrower notifies the Administrative
Agent that it wishes to amend any financial covenant in Section 6.10 to
eliminate the effect of any change in GAAP on the operation of such covenant (or
if the Administrative Agent notifies the Borrower that the Required Lenders wish
to amend Section 6.10 for such purpose), then the Borrower’s compliance with
such covenant shall be determined on the basis of GAAP as in effect immediately
before the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Borrower
and the Required Lenders.
 
1.3           Other Terms; Construction.
 
(a)           The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words “include,” “includes” and “including” shall be deemed
to be followed by the phrase “without limitation.”  The word “will” shall be
construed to have the same meaning and effect as the word “shall.”  Unless the
context requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented,
restated or otherwise modified (subject to any restrictions on such amendments,
supplements, restatements or modifications set forth herein or in any other
Credit Document), (ii) any reference herein to any Person shall be construed to
include such Person’s successors and assigns permitted hereunder, (iii) the
words “herein,” “hereof” and “hereunder,” and words of similar import when used
in any Credit Document, shall be construed to refer to such Credit Document in
its entirety and not to any particular provision thereof, (iv) all references in
a Credit Document to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
 

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the Credit Document in which such references appear, (v) any reference to any
law or regulation herein shall, unless otherwise specified, refer to such law or
regulation as amended, modified or supplemented from time to time, and (vi) the
words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.

(b)           For purposes of Section 7.1(b), a breach of a financial covenant
contained in Section 6.10 shall be deemed to have occurred as of any date of
determination thereof by the Administrative Agent or as of the last day of any
specified measuring period, regardless of when the financial statements
reflecting such breach are delivered to the Administrative Agent and the
Lenders.
 
 
ARTICLE II
 
AMOUNT AND TERMS OF THE LOANS
 
2.1           Commitments.
 
Each Lender severally agrees, subject to and on the terms and conditions of this
Agreement, to make loans (each, a “Loan,” and collectively, the “Loans”) to the
Borrower, from time to time on any Business Day during the period from and
including the Closing Date to but not including the Termination Date, in an
aggregate principal amount at any time outstanding not exceeding its Commitment,
provided that no Borrowing of Loans shall be made if, immediately after giving
effect thereto, (y) the aggregate principal amount of Loans made by any Lender
would exceed its Commitment at such time or (z) the aggregate principal amount
of all outstanding Loans would exceed the aggregate Commitments at such
time.  Subject to and on the terms and conditions of this Agreement, the
Borrower may borrow, repay and reborrow Loans.
 
2.2           Borrowings.
 
(a)           The Loans shall, at the option of the Borrower and subject to the
terms and conditions of this Agreement, be either Base Rate Loans or LIBOR Loans
(each, a “Type” of Loan), provided that (i) all Loans comprising the same
Borrowing shall, unless otherwise specifically provided herein, be of the same
Type, and (ii) no LIBOR Loans may be borrowed at any time prior to the third
Business Day after the Closing Date.
 
(b)           In order to make a Borrowing (other than Borrowings involving
continuations or conversions of outstanding Loans, which shall be made pursuant
to Section 2.11), the Borrower will give the Administrative Agent written notice
not later than 11:00 a.m., Charlotte time, three Business Days prior to each
Borrowing to be comprised of LIBOR Loans and one Business Day prior to each
Borrowing to be comprised of Base Rate Loans; provided, however, that requests
for the Borrowing of the Loans to be made on the Closing Date may, at the
discretion of the Administrative Agent, be given with less advance notice than
as specified hereinabove.  Each such notice (each, a “Notice of Borrowing”)
shall be irrevocable, shall be given in the form of Exhibit B-1 and shall
specify (1) the aggregate principal amount and initial Type of the Loans to be
made pursuant to such Borrowing, (2) in the case of a Borrowing of LIBOR Loans,
the initial Interest Period to be applicable thereto, and (3) the requested date
of Borrowing, which shall be a
 

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Business Day.  Upon its receipt of a Notice of Borrowing, the Administrative
Agent will promptly notify each applicable Lender of the proposed
Borrowing.  Notwithstanding anything to the contrary contained herein:

(i)           the aggregate principal amount of each Borrowing comprised of Base
Rate Loans shall not be less than $3,000,000 or, if greater, an integral
multiple of $1,000,000 in excess thereof (or, if less, in the amount of the
aggregate Unutilized Commitments), and the aggregate principal amount of each
Borrowing comprised of LIBOR Loans shall not be less than $5,000,000 or, if
greater, an integral multiple of $1,000,000 in excess thereof;
 
(ii)           if the Borrower shall have failed to designate the Type of Loans
comprising a Borrowing, the Borrower shall be deemed to have requested a
Borrowing comprised of Base Rate Loans; and
 
(iii)           if the Borrower shall have failed to select the duration of the
Interest Period to be applicable to any Borrowing of LIBOR Loans, then the
Borrower shall be deemed to have selected an Interest Period with a duration of
one month.
 
(c)           Not later than 1:00 p.m., Charlotte time, on the requested date of
Borrowing, each Lender will make available to the Administrative Agent at the
Payment Office an amount, in Dollars and in immediately available funds, equal
to the amount of the Loan or Loans to be made by such Lender.  To the extent
such Lenders have made such amounts available to the Administrative Agent as
provided hereinabove, the Administrative Agent will make the aggregate of such
amounts available to the Borrower in accordance with Section 2.3(a) and in like
funds as received by the Administrative Agent.
 
2.3          Disbursements; Funding Reliance; Domicile of Loans.
 
(a)           The Borrower hereby authorizes the Administrative Agent to
disburse the proceeds of each Borrowing in accordance with the terms of any
written instructions from any Authorized Officer of the Borrower, provided that
the Administrative Agent shall not be obligated under any circumstances to
forward amounts to any account not listed in an Account Designation Letter.  The
Borrower may at any time deliver to the Administrative Agent an Account
Designation Letter listing any additional accounts or deleting any accounts
listed in a previous Account Designation Letter.
 
(b)           Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender’s share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with Section 2.2 and may, in reliance
upon such assumption, make available to the Borrower a corresponding amount.  In
such event, if a Lender has not in fact made its share of the applicable
Borrowing available to the Administrative Agent, then the applicable Lender and
the Borrower severally agree to pay to the Administrative Agent forthwith on
demand such corresponding amount with interest thereon, for each day from and
including the date such amount is made available to the Borrower to but
excluding the date of payment to the Administrative Agent, at
 

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(i) in the case of a payment to be made by such Lender, the greater of the
Federal Funds Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation and (ii) in the
case of a payment to be made by the Borrower, the Adjusted Base Rate.  If the
Borrower and such Lender shall pay such interest to the Administrative Agent for
the same or an overlapping period, the Administrative Agent shall promptly remit
to the Borrower the amount of such interest paid by the Borrower for such
period.  If such Lender pays its share of the applicable Borrowing to the
Administrative Agent, then the amount so paid shall constitute such Lender’s
Loan included in such Borrowing.  Any payment by the Borrower shall be without
prejudice to any claim the Borrower may have against a Lender that shall have
failed to make such payment to the Administrative Agent.
 
        (c)           The obligations of the Lenders hereunder to make Loans and
to make payments pursuant to Section 9.1(c) are several and not joint.  The
failure of any Lender to make any Loan or to make any such payment on any date
shall not relieve any other Lender of its corresponding obligation, if any,
hereunder to do so on such date, but no Lender shall be responsible for the
failure of any other Lender to so make its Loan or to make any such payment
required hereunder.
 
(d)           Each Lender may, at its option, make and maintain any Loan at, to
or for the account of any of its Lending Offices, provided that any exercise of
such option shall not affect the obligation of the Borrower to repay such Loan
to or for the account of such Lender in accordance with the terms of this
Agreement.
 
2.4           Evidence of Debt; Notes.
 
(a)           Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to the
applicable Lending Office of such Lender resulting from each Loan made by such
Lending Office of such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lending Office of such Lender
from time to time under this Agreement.
 
(b)           The Administrative Agent shall maintain the Register pursuant to
Section 9.6(c), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount of each such Loan
and Type of each such Loan and the Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable
from the Borrower to each Lender hereunder in respect of each such Loan and
(iii) the amount of any sum received by the Administrative Agent hereunder from
the Borrower in respect of each such Loan and each Lender’s share thereof.
 
(c)           The entries made in the accounts, Register and subaccounts
maintained pursuant to Section 2.4(b) (and, if consistent with the entries of
the Administrative Agent, Section 2.4(a)) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain such account, such
Register or such subaccount, as applicable, or any error therein, shall not in
any manner affect the obligation of the Borrower to repay (with applicable
interest) the Loans made to the Borrower by such Lender in accordance with the
terms of this Agreement.
 

 
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(d)           The Loans made by each Lender shall, if requested by the
applicable Lender (which request shall be made to the Administrative Agent), be
evidenced by a Note appropriately completed in substantially the form of
Exhibit A executed by the Borrower and payable to the order of such
Lender.  Each Note shall be entitled to all of the benefits of this Agreement
and the other Credit Documents and shall be subject to the provisions hereof and
thereof.
 
2.5           Termination and Reduction of Commitments.
 
(a)           The Commitments shall be automatically and permanently terminated
on the Termination Date, unless sooner terminated pursuant to any other
provision of this Section 2.5 or Section 7.2.
 
(b)           At any time and from time to time after the date hereof, upon not
less than five Business Days’ prior written notice to the Administrative Agent,
the Borrower may terminate in whole or reduce in part the aggregate Unutilized
Commitments, provided that any such partial reduction shall be in an aggregate
amount of not less than $5,000,000 or, if greater, an integral multiple of
$1,000,000 in excess thereof.  The amount of any termination or reduction made
under this Section 2.5(b) may not thereafter be reinstated.  Each reduction of
the Commitments pursuant to this Section shall be applied ratably among the
Lenders according to their respective Commitments.
 
2.6           Mandatory Payments and Prepayments.
 
(a)           Except to the extent due or paid sooner pursuant to the provisions
of this Agreement, the aggregate outstanding principal of the Loans shall be due
and payable in full on the Maturity Date.
 
(b)           In the event that, at any time, the aggregate principal amount of
outstanding Loans shall exceed the aggregate Commitments at such time (after
giving effect to any concurrent termination or reduction thereof), the Borrower
will immediately prepay the outstanding principal amount of the Loans in the
amount of such excess.
 
(c)           Promptly upon (and in any event not later than one Business Day
after) receipt thereof by the Borrower or any of its Subsidiaries, the Borrower
will prepay the outstanding principal amount of the Loans in an amount equal to
100% of the Net Cash Proceeds from any Equity Issuance, 100% of the Net Cash
Proceeds from any Debt Issuance and 100% of the Net Cash Proceeds from the
issuance of any Hybrid Securities, and will deliver to the Administrative Agent,
concurrently with such prepayment, a certificate signed by a Responsible Officer
of the Borrower in form and substance satisfactory to the Administrative Agent
and setting forth the calculation of such Net Cash Proceeds.
 
(d)           Each prepayment of the Loans made pursuant to Sections 2.6(c)
shall be applied to reduce the outstanding principal amount of the Loans (with a
corresponding permanent reduction of the Commitments).  Such prepayments shall
be applied first to prepay all Base Rate Loans, and then to prepay LIBOR Loans
in direct order of Interest Period maturities.  Each payment or prepayment
pursuant to the provisions of this Section 2.6 shall be applied ratably among
the Lenders holding the Loans being prepaid, in proportion to the principal
amount held by each.  Each payment or prepayment of a LIBOR Loan made pursuant
to the provisions of this
 

 
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Section on a day other than the last day of the Interest Period applicable
thereto shall be made together with all amounts required under Section 2.17 to
be paid as a consequence thereof.
 
(e)           In the event the Administrative Agent receives a notice of
prepayment with respect to Sections 2.6(c), the Administrative Agent will give
prompt notice thereof to the Lenders; provided that if such notice has also been
furnished to the Lenders, the Administrative Agent shall have no obligation to
notify the Lenders with respect thereto.
 
2.7           Voluntary Prepayments.
 
(a)           At any time and from time to time, the Borrower shall have the
right to prepay the Loans, in whole or in part, without premium or penalty
(except as provided in clause (iii) below), upon written notice given to the
Administrative Agent not later than 11:00 a.m., Charlotte time, three Business
Days prior to each intended prepayment of LIBOR Loans and one Business Day prior
to each intended prepayment of Base Rate Loans, provided that (i) each partial
prepayment of LIBOR Loans shall be in an aggregate principal amount of not less
than $5,000,000 or, if greater, an integral multiple of $1,000,000 in excess
thereof, and each partial prepayment of Base Rate Loans shall be in an aggregate
principal amount of not less than $3,000,000 or, if greater, an integral
multiple of $1,000,000 in excess thereof, (ii) no partial prepayment of LIBOR
Loans made pursuant to any single Borrowing shall reduce the aggregate
outstanding principal amount of the remaining LIBOR Loans under such Borrowing
to less than $5,000,000 or to any greater amount not an integral multiple of
$1,000,000 in excess thereof, and (iii) unless made together with all amounts
required under Section 2.17 to be paid as a consequence of such prepayment, a
prepayment of a LIBOR Loan may be made only on the last day of the Interest
Period applicable thereto.  Each such notice shall specify the proposed date of
such prepayment and the aggregate principal amount and Type of the Loans to be
prepaid (and, in the case of LIBOR Loans, the Interest Period of the Borrowing
pursuant to which made), and shall be irrevocable and shall bind the Borrower to
make such prepayment on the terms specified therein.  Loans prepaid pursuant to
this Section 2.7(a) may be reborrowed, subject to the terms and conditions of
this Agreement.  In the event the Administrative Agent receives a notice of
prepayment under this Section, the Administrative Agent will give prompt notice
thereof to the Lenders; provided that if such notice has also been furnished to
the Lenders, the Administrative Agent shall have no obligation to notify the
Lenders with respect thereto.
 
(b)           Each prepayment of the Loans made pursuant to Section 2.7(a) shall
be applied ratably among the Lenders holding the Loans being prepaid, in
proportion to the principal amount held by each.
 
2.8           Interest.
 
(a)           The Borrower will pay interest in respect of the unpaid principal
amount of each Loan, from the date of Borrowing thereof until such principal
amount shall be paid in full, (i) at the Adjusted Base Rate, as in effect from
time to time during such periods as such Loan is a Base Rate Loan, and (ii) at
the Adjusted LIBOR Rate, as in effect from time to time during such periods as
such Loan is a LIBOR Loan.
 

 
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(b)           Upon the occurrence and during the continuance of any Event of
Default under Section 7.1(a)(i), and (at the election of the Required Lenders)
upon the occurrence and during the continuance of any other Event of Default,
all outstanding principal amounts of the Loans and, to the greatest extent
permitted by law, all interest accrued on the Loans and all other accrued and
outstanding fees and other amounts hereunder, shall bear interest at a rate per
annum equal to the interest rate applicable from time to time thereafter to such
Loans (whether the Adjusted Base Rate or the Adjusted LIBOR Rate) plus 2% (or,
in the case of interest, fees and other amounts for which no rate is provided
hereunder, at the Adjusted Base Rate applicable to Loans plus 2%), and, in each
case, such default interest shall be payable on demand.  To the greatest extent
permitted by law, interest shall continue to accrue after the filing by or
against the Borrower of any petition seeking any relief in bankruptcy or under
any law pertaining to insolvency or debtor relief.
 
(c)           Accrued (and theretofore unpaid) interest shall be payable as
follows:
 
(i)           in respect of each Base Rate Loan (including any Base Rate Loan or
portion thereof paid or prepaid pursuant to the provisions of Section 2.6,
except as provided hereinbelow), in arrears on the last Business Day of each
calendar quarter, beginning with the first such day to occur after the Closing
Date; provided, that in the event the Loans are repaid or prepaid in full and
the Commitments have been terminated, then accrued interest in respect of all
Base Rate Loans shall be payable together with such repayment or prepayment on
the date thereof;
 
(ii)           in respect of each LIBOR Loan (including any LIBOR Loan or
portion thereof paid or prepaid pursuant to the provisions of Section 2.6,
except as provided herein below), in arrears (y) on the last Business Day of the
Interest Period applicable thereto (subject to the provisions of
Section 2.10(iv)) and (z) in addition, in the case of a LIBOR Loan with an
Interest Period having a duration of six months, on each date on which interest
would have been payable under clause (y) above had successive Interest Periods
of three months’ duration been applicable to such LIBOR Loan; provided, that in
the event all LIBOR Loans made pursuant to a single Borrowing are repaid or
prepaid in full, then accrued interest in respect of such LIBOR Loans shall be
payable together with such repayment or prepayment on the date thereof; and
 
(iii)           in respect of any Loan, at maturity (whether pursuant to
acceleration or otherwise) and, after maturity, on demand.
 
(d)           Nothing contained in this Agreement or in any other Credit
Document shall be deemed to establish or require the payment of interest to any
Lender at a rate in excess of the maximum rate permitted by applicable law.  If
the amount of interest payable for the account of any Lender on any interest
payment date would exceed the maximum amount permitted by applicable law to be
charged by such Lender, the amount of interest payable for its account on such
interest payment date shall be automatically reduced to such maximum permissible
amount.  In the event of any such reduction affecting any Lender, if from time
to time thereafter the amount of interest payable for the account of such Lender
on any interest payment date would be less than the maximum amount permitted by
applicable law to be charged by such Lender, then the amount of interest payable
for its account on such subsequent interest payment date shall be
 

 
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automatically increased to such maximum permissible amount, provided that at no
time shall the aggregate amount by which interest paid for the account of any
Lender has been increased pursuant to this sentence exceed the aggregate amount
by which interest paid for its account has theretofore been reduced pursuant to
the previous sentence.

(e)           The Administrative Agent shall promptly notify the Borrower and
the Lenders upon determining the interest rate for each Borrowing of LIBOR Loans
after its receipt of the relevant Notice of Borrowing or Notice of
Conversion/Continuation, and upon each change in the Base Rate; provided,
however, that the failure of the Administrative Agent to provide the Borrower or
the Lenders with any such notice shall neither affect any obligations of the
Borrower or the Lenders hereunder nor result in any liability on the part of the
Administrative Agent to the Borrower or any Lender.  Each such determination
(including each determination of the Reserve Requirement) shall, absent manifest
error, be conclusive and binding on all parties hereto.
 
2.9           Fees.
 
The Borrower agrees to pay:
 
(a)           To the Arranger and Wachovia, for their own respective accounts,
on the Closing Date, the fees required under the Engagement Letter to be paid to
them on the Closing Date, in the amounts due and payable on the Closing Date as
required by the terms thereof;
 
(b)           To the Administrative Agent, for the account of each Lender, a
commitment fee for each calendar quarter (or portion thereof) for the period
from the date of this Agreement to the Termination Date, at a per annum rate
equal to the Applicable Percentage in effect for such fee from time to time
during such quarter on such Lender’s ratable share (based on the proportion that
its Commitment bears to the aggregate Commitments) of the average daily
aggregate Unutilized Commitments, payable in arrears (i) on the last Business
Day of each calendar quarter, beginning with the first such day to occur after
the Closing Date, and (ii) on the Termination Date; and
 
(c)           To the Administrative Agent, for its own account, the annual
administrative fee described in the Engagement Letter, on the terms, in the
amount and at the times set forth therein.
 
2.10           Interest Periods.
 
Concurrently with the giving of a Notice of Borrowing or Notice of
Conversion/Continuation in respect of any Borrowing comprised of Base Rate Loans
to be converted into, or LIBOR Loans to be continued as, LIBOR Loans, the
Borrower shall have the right to elect, pursuant to such notice, the interest
period (each, an “Interest Period”) to be applicable to such LIBOR Loans, which
Interest Period shall, at the option of the Borrower, be a one, two, three or
six-month period; provided, however, that:
 
(i)           all LIBOR Loans comprising a single Borrowing shall at all times
have the same Interest Period;
 

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(ii)           the initial Interest Period for any LIBOR Loan shall commence on
the date of the Borrowing of such LIBOR Loan (including the date of any
continuation of, or conversion into, such LIBOR Loan), and each successive
Interest Period applicable to such LIBOR Loan shall commence on the day on which
the next preceding Interest Period applicable thereto expires;
 
(iii)           LIBOR Loans may not be outstanding under more than four separate
Interest Periods at any one time (for which purpose Interest Periods shall be
deemed to be separate even if they are coterminous);
 
(iv)           if any Interest Period otherwise would expire on a day that is
not a Business Day, such Interest Period shall expire on the next succeeding
Business Day unless such next succeeding Business Day falls in another calendar
month, in which case such Interest Period shall expire on the next preceding
Business Day;
 
(v)           the Borrower may not select any Interest Period that expires after
the Maturity Date, with respect to Loans that are to be maintained as LIBOR
Loans;
 
(vi)           if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month during which such Interest
Period would otherwise expire, such Interest Period shall expire on the last
Business Day of such calendar month; and
 
(vii)           the Borrower may not select any Interest Period (and
consequently, no LIBOR Loans shall be made) if a Default or Event of Default
shall have occurred and be continuing at the time of such Notice of Borrowing or
Notice of Conversion/Continuation with respect to any Borrowing.
 
2.11           Conversions and Continuations.
 
(a)           The Borrower shall have the right, on any Business Day occurring
on or after the Closing Date, to elect (i) to convert all or a portion of the
outstanding principal amount of any Base Rate Loans into LIBOR Loans, or to
convert any LIBOR Loans the Interest Periods for which end on the same day into
Base Rate Loans, or (ii) upon the expiration of any Interest Period, to continue
all or a portion of the outstanding principal amount of any LIBOR Loans the
Interest Periods for which end on the same day for an additional Interest
Period, provided that (w) any such conversion of LIBOR Loans into Base Rate
Loans shall involve an aggregate principal amount of not less than $3,000,000
or, if greater, an integral multiple of $1,000,000 in excess thereof; any such
conversion of Base Rate Loans into, or continuation of, LIBOR Loans shall
involve an aggregate principal amount of not less than $5,000,000 or, if
greater, an integral multiple of $1,000,000 in excess thereof; and no partial
conversion of LIBOR Loans made pursuant to a single Borrowing shall reduce the
outstanding principal amount of such LIBOR Loans to less than $5,000,000 or to
any greater amount not an integral multiple of $1,000,000 in excess thereof,
(y) except as otherwise provided in Section 2.15(f), LIBOR Loans may be
converted into Base Rate Loans only on the last day of the Interest Period
applicable thereto (and, in any event, if a LIBOR Loan is converted into a Base
Rate Loan on any day other than the last day of the Interest Period applicable
thereto, the Borrower will pay, upon such conversion, all amounts required under
Section 2.17 to be paid as a consequence thereof), and (z) no conversion of Base
Rate Loans into LIBOR Loans or continuation of LIBOR Loans shall be permitted
during the continuance of a Default or Event of Default.
 

 
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(b)           The Borrower shall make each such election by giving the
Administrative Agent written notice not later than 11:00 a.m., Charlotte time,
three Business Days prior to the intended effective date of any conversion of
Base Rate Loans into, or continuation of, LIBOR Loans and one Business Day prior
to the intended effective date of any conversion of LIBOR Loans into Base Rate
Loans.  Each such notice (each, a “Notice of Conversion/Continuation”) shall be
irrevocable, shall be given in the form of Exhibit B-2 and shall specify (x) the
date of such conversion or continuation (which shall be a Business Day), (y) in
the case of a conversion into, or a continuation of, LIBOR Loans, the Interest
Period to be applicable thereto, and (z) the aggregate amount and Type of the
Loans being converted or continued.  Upon the receipt of a Notice of
Conversion/Continuation, the Administrative Agent will promptly notify each
Lender of the proposed conversion or continuation.  In the event that the
Borrower shall fail to deliver a Notice of Conversion/Continuation as provided
herein with respect to any outstanding LIBOR Loans, such LIBOR Loans shall
automatically be converted to Base Rate Loans upon the expiration of the then
current Interest Period applicable thereto (unless repaid pursuant to the terms
hereof).  In the event the Borrower shall have failed to select in a Notice of
Conversion/Continuation the duration of the Interest Period to be applicable to
any conversion into, or continuation of, LIBOR Loans, then the Borrower shall be
deemed to have selected an Interest Period with a duration of one month.
 
2.12           Method of Payments; Computations; Apportionment of Payments.
 
(a)           All payments by the Borrower hereunder shall be made without
setoff, counterclaim or other defense, in Dollars and in immediately available
funds to the Administrative Agent, for the account of the Lenders entitled to
such payment (except as otherwise expressly provided herein as to payments
required to be made directly to the Lenders) at the Payment Office prior to
12:00 noon, Charlotte time, on the date payment is due.  Any payment made as
required hereinabove, but after 12:00 noon, Charlotte time, shall be deemed to
have been made on the next succeeding Business Day.  If any payment falls due on
a day that is not a Business Day, then such due date shall be extended to the
next succeeding Business Day (except that in the case of LIBOR Loans to which
the provisions of Section 2.10(iv) are applicable, such due date shall be the
next preceding Business Day), and such extension of time shall then be included
in the computation of payment of interest, fees or other applicable amounts.
 
(b)           The Administrative Agent will distribute to the Lenders like
amounts relating to payments made to the Administrative Agent for the account of
the Lenders as follows:  (i) if the payment is received by 12:00 noon, Charlotte
time, in immediately available funds, the Administrative Agent will make
available to each Lender on the same date, by wire transfer of immediately
available funds, such Lender’s ratable share of such payment (based on the
percentage that the amount of the relevant payment owing to such Lender bears to
the total amount of such payment owing to all of the relevant Lenders), and
(ii) if such payment is received after 12:00 noon, Charlotte time, or in other
than immediately available funds, the Administrative Agent will make available
to each Lender its ratable share of such payment by
 

 
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wire transfer of immediately available funds on the next succeeding Business Day
(or in the case of uncollected funds, as soon as practicable after
collected).  If the Administrative Agent shall not have made a required
distribution to the Lenders as required hereinabove after receiving a payment
for the account of such Lenders, the Administrative Agent will pay to each such
Lender, on demand, its ratable share of such payment with interest thereon at
the Federal Funds Rate for each day from the date such amount was required to be
disbursed by the Administrative Agent until the date repaid to such Lender.
 
(c)           Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders hereunder that the Borrower will not make
such payment, the Administrative Agent may assume that the Borrower has made
such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders the amount due.  In such event, if the
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender, with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
 
(d)           All computations of interest and fees hereunder (including
computations of the Reserve Requirement) shall be made on the basis of a year
consisting of (i) in the case of interest on Base Rate Loans to the extent based
on Wachovia’s prime rate, 365/366 days, as the case may be, or (ii) in all other
instances, 360 days; and in each case under (i) and (ii) above, with regard to
the actual number of days (including the first day, but excluding the last day)
elapsed.
 
(e)           Notwithstanding any other provision of this Agreement or any other
Credit Document to the contrary, all amounts collected or received by the
Administrative Agent or any Lender after acceleration of the Loans pursuant to
Section 7.2 shall be applied by the Administrative Agent as follows:
 
(i)           first, to the payment of all reasonable out-of-pocket costs and
expenses (including, without limitation, reasonable attorneys’ and consultants’
fees irrespective of whether such fees are allowed as a claim after the
occurrence of a Bankruptcy Event) of the Administrative Agent in connection with
enforcing the rights of the Lenders under the Credit Documents;
 
(ii)           second, to the payment of any fees owed to the Administrative
Agent hereunder or under any other Credit Document;
 
(iii)           third, to the payment of all reasonable and documented
out-of-pocket costs and expenses (including, without limitation, reasonable
attorneys’ and consultants’ fees irrespective of whether such fees are allowed
as a claim after the occurrence of a Bankruptcy Event) of each of the Lenders in
connection with enforcing its rights under the Credit Documents or otherwise
with respect to the Obligations owing to such Lender;
 

 
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(iv)           fourth, to the payment of all of the Obligations consisting of
accrued fees and interest (including, without limitation, fees incurred and
interest accruing at the then applicable rate after the occurrence of a
Bankruptcy Event irrespective of whether a claim for such fees incurred and
interest accruing is allowed in such proceeding);
 
(v)           fifth, to the payment of the outstanding principal amount of the
Obligations;
 
(vi)           sixth, to the payment of all other Obligations and other
obligations that shall have become due and payable under the Credit Documents or
otherwise and not repaid; and
 
(vii)           seventh, to the payment of the surplus (if any) to whomever may
be lawfully entitled to receive such surplus.
 
In carrying out the foregoing, (y) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category and (z) all amounts shall be apportioned ratably among the
Lenders or in proportion to the amounts of such principal, interest, fees or
other Obligations owed to them respectively pursuant to clauses (iii) through
(vii) above.
 
2.13           Recovery of Payments.
 
(a)           The Borrower agrees that to the extent the Borrower makes a
payment or payments to or for the account of the Administrative Agent or any
Lender, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy,
insolvency or similar state or federal law, common law or equitable cause
(whether as a result of any demand, settlement, litigation or otherwise), then,
to the extent of such payment or repayment, the Obligation intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been received.
 
(b)           If any amounts distributed by the Administrative Agent to any
Lender are subsequently returned or repaid by the Administrative Agent to the
Borrower, its representative or successor in interest, or any other Person,
whether by court order, by settlement approved by the Lender in question, or
pursuant to applicable Requirements of Law, such Lender will, promptly upon
receipt of notice thereof from the Administrative Agent, pay the Administrative
Agent such amount.  If any such amounts are recovered by the Administrative
Agent from the Borrower, its representative or successor in interest or such
other Person, the Administrative Agent will redistribute such amounts to the
Lenders on the same basis as such amounts were originally distributed.
 
2.14           Pro Rata Treatment.
 
(a)           All fundings, continuations and conversions of Loans shall be made
by the Lenders pro rata on the basis of their respective Commitments to provide
Loans (in the case of the funding of Loans pursuant to Section 2.2) or on the
basis of their respective outstanding Loans (in the case of continuations and
conversions of Loans pursuant to Section 2.11, and
 

 
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additionally in all cases in the event the Commitments for Loans have expired or
have been terminated), as the case may be from time to time.  All payments on
account of principal of or interest on any Loans, fees or any other Obligations
owing to or for the account of any one or more Lenders shall be apportioned
ratably among such Lenders in proportion to the amounts of such principal,
interest, fees or other Obligations owed to them respectively.

(b)           If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans or other Obligations hereunder resulting in such
Lender’s receiving payment of a proportion of the aggregate amount of its Loans
and accrued interest thereon or other such Obligations greater than its pro rata
share thereof as provided herein, then the Lender receiving such greater
proportion shall (a) notify the Administrative Agent of such fact, and
(b) purchase (for cash at face value) participations in the Loans and such other
Obligations of the other Lenders, or make such other adjustments as shall be
equitable, so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and other amounts owing them,
provided that (i) if any such participations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such
recovery, without interest, and (ii) the provisions of this Section shall not be
construed to apply to (x) any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or (y) any payment obtained
by a Lender as consideration for the assignment of or sale of a participation in
any of its Loans to any assignee or Participant, other than to the Borrower or
any Subsidiary thereof (as to which the provisions of this Section 2.14(b) shall
apply).  The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of setoff and counterclaim with respect to such participation as
fully as if such Lender were a direct creditor of the Borrower in the amount of
such participation.  If under any applicable Debtor Relief Law, any Lender
receives a secured claim in lieu of a setoff to which this Section 2.14(b)
applies, such Lender shall, to the extent practicable, exercise its rights in
respect of such secured claim in a manner consistent with the rights of the
Lenders entitled under this Section 2.14(b) to share in the benefits of any
recovery on such secured claim.
 
2.15           Increased Costs; Change in Circumstances; Illegality.
 
(a)           If any Change in Law shall:
 
(i)           impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except the Reserve Requirement reflected in the LIBOR Rate);
 
(ii)           subject any Lender to any tax of any kind whatsoever with respect
to this Agreement or any LIBOR Loan made by it, or change the basis of taxation
of payments to such Lender in respect thereof (except for Indemnified Taxes or
Other Taxes covered by Section 2.16 and the imposition of, or any change in the
rate of, any Excluded Tax payable by such Lender); or
 

 
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(iii)           impose on any Lender or the London interbank market any other
condition, cost or expense affecting this Agreement or LIBOR Loans made by such
Lender;
 
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBOR Loan (or of maintaining its obligation
to make any such Loan), or to reduce the amount of any sum received or
receivable by such Lender hereunder (whether of principal, interest or any other
amount), then, upon request of such Lender, the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.
 
(b)           If any Lender determines that any Change in Law affecting such
Lender or any Lending Office of such Lender or such Lender’s holding company, if
any, regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender’s capital or on the capital of such Lender’s
holding company, if any, as a consequence of this Agreement, the Commitment of
such Lender or the Loans made by such Lender, to a level below that which such
Lender or such Lender’s holding company could have achieved but for such Change
in Law (taking into consideration such Lender’s policies and the policies of
such Lender’s holding company with respect to capital adequacy), then from time
to time the Borrower will pay to such Lender such additional amount or amounts
as will compensate such Lender or such Lender’s holding company for any such
reduction suffered.
 
(c)           A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as the case may be,
as specified in Section 2.15(a) or Section 2.15(b) and delivered to the Borrower
shall be conclusive absent manifest error.  The Borrower shall pay such Lender
the amount shown as due on any such certificate within ten days after receipt
thereof.
 
(d)           Failure or delay on the part of any Lender to demand compensation
pursuant to the foregoing provisions of this Section shall not constitute a
waiver of such Lender’s right to demand such compensation, provided that the
Borrower shall not be required to compensate a Lender pursuant to the foregoing
provisions of this Section for any increased costs incurred or reductions
suffered more than nine months prior to the date that such Lender notifies the
Borrower of the Change in Law giving rise to such increased costs or reductions
and of such Lender’s intention to claim compensation therefor (except that, if
the Change in Law giving rise to such increased costs or reductions is
retroactive, then the nine-month period referred to above shall be extended to
include the period of retroactive effect thereof).
 
(e)           If, on or prior to the first day of any Interest Period, (y) the
Administrative Agent shall have determined that adequate and reasonable means do
not exist for ascertaining the applicable LIBOR Rate for such Interest Period or
(z) the Administrative Agent shall have received written notice from the
Required Lenders of their determination that the rate of interest referred to in
the definition of “LIBOR Rate” upon the basis of which the Adjusted LIBOR Rate
for LIBOR Loans for such Interest Period is to be determined will not adequately
and fairly reflect the cost to such Lenders of making or maintaining LIBOR Loans
during such Interest Period, the Administrative Agent will forthwith so notify
the Borrower and the Lenders.  Upon such notice, (i) all then outstanding LIBOR
Loans shall automatically, on the expiration date of
 

 
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the respective Interest Periods applicable thereto (unless then repaid in full),
be converted into Base Rate Loans, (ii) the obligation of the Lenders to make,
to convert Base Rate Loans into, or to continue, LIBOR Loans shall be suspended
(including pursuant to the Borrowing to which such Interest Period applies), and
(iii) any Notice of Borrowing or Notice of Conversion/Continuation given at any
time thereafter with respect to LIBOR Loans shall be deemed to be a request for
Base Rate Loans, in each case until the Administrative Agent or the Required
Lenders, as the case may be, shall have determined that the circumstances giving
rise to such suspension no longer exist (and the Required Lenders, if making
such determination, shall have so notified the Administrative Agent), and the
Administrative Agent shall have so notified the Borrower and the Lenders.

(f)           Notwithstanding any other provision in this Agreement, if, at any
time after the date hereof and from time to time, any Lender shall have
determined in good faith that the introduction of or any change in any
applicable law, rule or regulation or in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance with any guideline or request from any
such Governmental Authority (whether or not having the force of law), has or
would have the effect of making it unlawful for such Lender to make or to
continue to make or maintain LIBOR Loans, such Lender will forthwith so notify
the Administrative Agent and the Borrower.  Upon such notice, (i) each of such
Lender’s then outstanding LIBOR Loans shall automatically, on the expiration
date of the respective Interest Period applicable thereto (or, to the extent any
such LIBOR Loan may not lawfully be maintained as a LIBOR Loan until such
expiration date, upon such notice) and to the extent not sooner prepaid, be
converted into a Base Rate Loan, (ii) the obligation of such Lender to make, to
convert Base Rate Loans into, or to continue, LIBOR Loans shall be suspended
(including pursuant to any Borrowing for which the Administrative Agent has
received a Notice of Borrowing but for which the date of Borrowing has not
arrived), and (iii) any Notice of Borrowing or Notice of Conversion/Continuation
given at any time thereafter with respect to LIBOR Loans shall, as to such
Lender, be deemed to be a request for a Base Rate Loan, in each case until such
Lender shall have determined that the circumstances giving rise to such
suspension no longer exist and shall have so notified the Administrative Agent,
and the Administrative Agent shall have so notified the Borrower.
 
2.16           Taxes.
 
(a)           Any and all payments by or on account of any obligation of the
Borrower hereunder or under any other Credit Document shall be made free and
clear of and without reduction or withholding for any Indemnified Taxes or Other
Taxes, provided that if the Borrower shall be required by applicable law to
deduct any Indemnified Taxes (including any Other Taxes) from such payments,
then (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section) the Administrative Agent or Lender, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall timely pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
 
(b)           Without limiting the provisions of Section 2.16(a), the Borrower
shall timely pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.
 

 
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(c)           The Borrower shall indemnify the Administrative Agent and each
Lender, within ten days after demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
paid by the Administrative Agent or such Lender, as the case may be, and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority.  A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender (with a copy to the Administrative Agent), or by the
Administrative Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.
 
(d)           As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
 
(e)           Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is resident for tax purposes, or any treaty to which such jurisdiction
is a party, with respect to payments hereunder or under any other Credit
Document shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law or reasonably
requested by the Borrower or the Administrative Agent, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate of withholding.  In
addition, any Lender, if requested by the Borrower or the Administrative Agent,
shall deliver such other documentation prescribed by applicable law or
reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent to determine whether or not such Lender
is subject to backup withholding or information reporting requirements.
 
Without limiting the generality of the foregoing, in the event that the Borrower
is resident for tax purposes in the United States, any Foreign Lender shall
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Borrower or the Administrative Agent, but
only if such Foreign Lender is legally entitled to do so), whichever of the
following is applicable:
 
(i)           duly completed copies of Internal Revenue Service Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the United
States is a party,
 
(ii)           duly completed copies of Internal Revenue Service Form W-8ECI,
 
(iii)           in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under Section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a “bank” within
the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder”
of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a
“controlled foreign corporation” described in Section 881(c)(3)(C) of the Code
and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or
 

 
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(iv)           any other form prescribed by applicable law as a basis for
claiming exemption from or a reduction in United States Federal withholding tax
duly completed together with such supplementary documentation as may be
prescribed by applicable law to permit the Borrower to determine the withholding
or deduction required to be made.
 
(f)           If the Administrative Agent or any Lender determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section, it shall pay to
the Borrower an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section
with respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender, as the case
may be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that the Borrower,
upon the request of the Administrative Agent or such Lender, agrees to repay the
amount paid over to the Borrower (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to the Administrative Agent or
such Lender in the event the Administrative Agent or such Lender is required to
repay such refund to such Governmental Authority.  This Section 2.16(f) shall
not be construed to require the Administrative Agent or any Lender to make
available its tax returns (or any other information relating to its taxes that
it deems confidential) to the Borrower or any other Person.
 
2.17           Compensation.
 
The Borrower will compensate each Lender upon demand for all losses, expenses
and liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Lender to fund or maintain LIBOR Loans) that such Lender may
incur or sustain (i) if for any reason (other than a default by such Lender) a
Borrowing or continuation of, or conversion into, a LIBOR Loan does not occur on
a date specified therefor in a Notice of Borrowing or Notice of
Conversion/Continuation, (ii) if any repayment, prepayment or conversion of any
LIBOR Loan occurs on a date other than the last day of an Interest Period
applicable thereto (including as a consequence of any assignment made pursuant
to Section 2.18(a) or any acceleration of the maturity of the Loans pursuant to
Section 7.2), (iii) if any assignment of any LIBOR Loan made pursuant to Section
2.18(a) occurs on a date other than the last day of any Interest Period
applicable thereto, (iv) if any prepayment of any LIBOR Loan is not made on any
date specified in a notice of prepayment given by the Borrower or (v) as a
consequence of any other failure by the Borrower to make any payments with
respect to any LIBOR Loan when due hereunder.  Calculation of all amounts
payable to a Lender under this Section 2.17 shall be made as though such Lender
had actually funded its relevant LIBOR Loan through the purchase of a Eurodollar
deposit bearing interest at the LIBOR Rate in an amount equal to the amount of
such LIBOR Loan, having a maturity comparable to the relevant Interest Period;
provided, however, that each Lender may fund its LIBOR Loans in any manner it
sees fit and the foregoing assumption shall be utilized only for the calculation
of amounts payable under this Section 2.17.  A certificate
 

 
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(which shall be in reasonable detail) showing the bases for the determinations
set forth in this Section 2.17 by any Lender as to any additional amounts
payable pursuant to this Section 2.17 shall be submitted by such Lender to the
Borrower either directly or through the Administrative Agent.  Determinations
set forth in any such certificate made in good faith for purposes of this
Section 2.17 of any such losses, expenses or liabilities shall be conclusive
absent manifest error.
 
2.18           Replacement of Lenders; Mitigation of Costs.
 
(a)           The Borrower may, at any time at its sole expense and effort,
require any Lender (i) that has requested compensation from the Borrower under
Sections 2.15(a) or 2.15(b) or payments from the Borrower under Section 2.16, or
(ii) the obligation of which to make or maintain LIBOR Loans has been suspended
under Section 2.15(f) or (iii) that is a Defaulting Lender, in any case upon
notice to such Lender and the Administrative Agent, to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in, and consents required by, Section 9.6), all of its interests, rights and
obligations under this Agreement and the related Credit Documents to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that:
 
(i)           the Borrower shall have paid to the Administrative Agent the
assignment fee specified in Section 9.6(b)(iv);
 
(ii)           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 Credit Documents
(including any amounts under Section 2.17) from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts);
 
(iii)           in the case of any such assignment resulting from a request for
compensation under Sections 2.15(a) or 2.15(b) or payments required to be made
pursuant to Section 2.16, such assignment will result in a reduction in such
compensation or payments thereafter; and
 
(iv)           such assignment does not conflict with applicable Requirements of
Law.
 
A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
 
(b)           If any Lender requests compensation under Sections 2.15(a) or
2.15(b), or the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to
Section 2.16, or if any Lender gives a notice pursuant to Section 2.15(f), then
such Lender shall use reasonable efforts to designate a different Lending Office
for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Sections 2.15(a), 2.15(b) or 2.16, as the
case may be, in the future, or eliminate the need for the
 

 
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notice pursuant to Section 2.15(f), as applicable, and (ii) in each case, would
not subject such Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay
all reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.
 
ARTICLE III
 
CONDITIONS OF BORROWING
 
3.1           Conditions of Initial Borrowing.
 
The obligation of each Lender to make Loans in connection with the initial
Borrowing hereunder, is subject to the satisfaction of the following conditions
precedent:
 
(a)           The Administrative Agent’s receipt of the following, each of which
shall be originals or telecopies (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
Borrower, each dated the Closing Date (or, in the case of certificates of
governmental officials, a recent date before the Closing Date) and each in form
and substance satisfactory to the Administrative Agent and each of the Lenders:
 
(i)           executed counterparts of this Agreement, sufficient in number for
distribution to the Administrative Agent, each Lender and the Borrower;
 
(ii)           a Note executed by the Borrower in favor of each Lender
requesting a Note;
 
(iii)           such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of the Borrower
as the Administrative Agent may require evidencing the identity, authority and
capacity of each Responsible Officer thereof authorized to act as a Responsible
Officer in connection with this Agreement and the other Credit Documents;
 
(iv)           such documents and certifications as the Administrative Agent may
reasonably require to evidence that the Borrower is duly organized or formed,
and that the Borrower is validly existing, in good standing and qualified to
engage in business in each jurisdiction where its ownership, lease or operation
of properties or the conduct of its business requires such qualification, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect;
 
(v)           a favorable opinion of Keating, Muething & Klekamp, counsel to the
Borrower, addressed to the Administrative Agent and each Lender, as to the
matters concerning the Borrower and its Subsidiaries and the Credit Documents as
the Required Lenders may reasonably request;
 
(vi)           a certificate of a Responsible Officer of the Borrower either (A)
attaching copies of all consents, licenses and approvals required in connection
with the execution, delivery and performance by the Borrower and the validity
against the Borrower of the Credit Documents, and such consents, licenses and
approvals shall be in full force and effect, or (B) stating that no such
consents, licenses or approvals are so required;
 

 
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(vii)         a certificate signed by a Responsible Officer of the Borrower
certifying (A) that the conditions specified in Sections 3.2(a) and (b) have
been satisfied, and (B) that there has been no event or circumstance since the
date of the Audited Financial Statements that has had or could be reasonably
expected to have, either individually or in the aggregate, a Material Adverse
Effect; and (C) the current Debt Ratings;
 
(viii)        a duly completed Compliance Certificate for the period ending
March 31, 2008, signed by a Responsible Officer of the Borrower; provided that
the delivery of a Compliance Certificate (as defined in the Existing Credit
Agreement) for such period shall be deemed to satisfy the requirements of this
Section 3.1(a)(viii);
 
(ix)           executed Subordination Agreement by each of the Borrower’s
Subsidiaries and Affiliates to which the Borrower has any Indebtedness; and
 
(x)           such other assurances, certificates, documents, consents or
opinions as the Administrative Agent or the Required Lenders reasonably may
require.
 
(b)           Any fees related to this Agreement required to be paid on or
before the Closing Date shall have been paid.
 
(c)           Unless waived by the Administrative Agent, the Borrower shall have
paid all fees, charges and disbursements of counsel to the Administrative Agent
(directly to such counsel if requested by the Administrative Agent) to the
extent invoiced prior to or on the Closing Date, plus such additional amounts of
such fees, charges and disbursements as shall constitute its reasonable estimate
of such fees, charges and disbursements incurred or to be incurred by it through
the closing proceedings (provided that such estimate shall not thereafter
preclude a final settling of accounts between the Borrower and the
Administrative Agent).
 
Without limiting the generality of the provisions of Section 8.4, for purposes
of determining compliance with the conditions specified in this Section 3.1,
each Lender that has signed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, (i) this Agreement and the
Schedules and Exhibits attached hereto and each other document to which it is a
party or which it has reviewed or (ii) any other matter required thereunder to
be consented to or approved by or acceptable or satisfactory to a Lender unless
the Administrative Agent shall have received notice from such Lender prior to
the proposed Closing Date specifying its objection thereto.
 
3.2          Conditions of All Borrowings.
 
The obligation of each Lender to make any Loans hereunder, including the initial
Loans, is subject to the satisfaction of the following conditions precedent on
the relevant date of Borrowing:
 
(a)           The representations and warranties of the Borrower contained in
Article IV or any other Credit Document, or which are contained in any document
furnished at any time under
 

 
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or in connection herewith or therewith, shall be true and correct on and as of
the date of such Borrowing, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct as of such earlier date, and except that for purposes of this
Section 3.2, the representations and warranties contained in subsections (a),
(b) and (c) of Section 4.5 shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a), (b) and (c), respectively, of
Section 5.1;
 
(b)           No Default of Event of Default shall exist, or would result from
such proposed Borrowing or from the application of the proceeds thereof; and
 
(c)           The Administrative Agent shall have received a Notice of Borrowing
in accordance with the requirements hereof.
 
Each Notice of Borrowing submitted by the Borrower shall be deemed to be a
representation and warranty that the conditions specified in Sections 3.2(a) and
(b) have been satisfied on and as of the date of the applicable Borrowing.
 
 
ARTICLE IV
 
REPRESENTATIONS AND WARRANTIES
 
To induce the Administrative Agent and the Lenders to enter into this Agreement
and to induce the Lenders to extend the credit contemplated hereby, the Borrower
represents and warrants to the Administrative Agent and the Lenders as follows:
 
4.1           Existence, Qualification and Power.
 
The Borrower and each of its Subsidiaries (a) is duly organized or formed,
validly existing and, as applicable, in good standing under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and authority and all requisite governmental licenses, insurance licenses,
authorizations, consents and approvals to (i) own its assets and carry on its
business and (ii) execute, deliver and perform its obligations under the Credit
Documents to which it is a party, and (c) is duly qualified and is licensed and
in good standing under the Laws of each jurisdiction where its ownership, lease
or operation of properties or the conduct of its business requires such
qualification or license, except in each case referred to in clause (b)(i) or
(c), to the extent that failure to do so could not, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
 
4.2           Authorization; No Contravention.
 
The execution, delivery and performance by the Borrower of each Credit Document
has been duly authorized by all necessary corporate action, and does not and
will not (a) contravene the terms of any of the Borrower’s Organization
Documents; (b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, or require any payment to be made under (i) any
Contractual Obligation to which the Borrower is a party or affecting the
Borrower or the properties of the Borrower or any of its Subsidiaries or (ii)
any order, injunction, writ or decree of any Governmental Authority or any
arbitral award to which the Borrower or its property is subject; or (c) violate
any Law.
 

 
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4.3           Governmental Authorization; Other Consents.
 
No approval, consent, exemption, authorization, or other action by, or notice
to, or filing with, any Governmental Authority or any other Person is necessary
or required in connection with the execution, delivery or performance by, or
enforcement against, the Borrower of this Agreement or any other Credit
Document.
 
4.4           Binding Effect.
 
This Agreement has been, and each other Credit Document, when delivered
hereunder, will have been, duly executed and delivered by the Borrower.  This
Agreement constitutes, and each other Credit Document when so delivered will
constitute, a legal, valid and binding obligation of the Borrower, enforceable
against the Borrower in accordance with its terms, subject to Debtor Relief
Laws.
 
4.5           Financial Statements; No Material Adverse Effect.
 
(a)           The Audited Financial Statements (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present the financial condition
of the Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of the Borrower and its Subsidiaries as of the date
thereof, including liabilities for taxes, material commitments and Indebtedness.
 
(b)           The Borrower’s Form 10−K for the fiscal year ended December 31,
2007 (including all of the financial statements and schedules included therein)
contains all information which is required to be stated therein in accordance
with the Exchange Act and conforms in all material respects to the requirements
thereof; and the Borrower’s Form 10−K for the fiscal year ended December 31,
2007 did not when filed include any untrue statement of a material fact or omit
to state a material fact which was required to be stated therein or was
necessary to make the statements therein not misleading in the light of the
circumstances in which they were made.  The Borrower’s 10−K for the fiscal year
ended December 31, 2007 sets forth all material indebtedness and other
liabilities, direct or contingent, of the Borrower and its consolidated
Subsidiaries as of the date of such financial statements, including liabilities
for taxes, material commitments and Indebtedness.
 
(c)           The December 31, 2007 annual financial statements of GAIC, GALIC
and RICA in the form filed with the Superintendent of Insurance of the State of
Ohio and California, respectively, were prepared in accordance with applicable
statutory accounting principles and fairly present in accordance with applicable
statutory regulations and guidelines, the financial condition of GAIC, GALIC and
RICA at the dates thereof and the results of its operation for the periods
covered thereby.
 

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(d)           Since the date of the Audited Financial Statements, there has been
no event or circumstance, either individually or in the aggregate, that has had
or could reasonably be expected to have a Material Adverse Effect.
 
4.6           Litigation.
 
There is no litigation, at law or in equity, or any proceeding before any
federal, state, provincial or municipal court, board or other Governmental
Authority or administrative agency or any arbitrator pending or to the knowledge
of the Borrower threatened which may involve any material risk of any final
judgment or liability not adequately covered by insurance or which may
otherwise, individually or in the aggregate, result in a Material Adverse
Effect, or which questions the validity or enforceability of this Agreement or
any other Credit Document.  No judgment, decree, or order of any federal, state,
provincial or municipal court, board or other governmental or administrative
agency or arbitrator has been issued against the Borrower or any of its
Subsidiaries which has resulted, or poses a material risk of resulting in,
individually or in the aggregate, a Material Adverse Effect.
 
4.7           No Default.
 
Neither the Borrower nor any of its Subsidiaries is in default under or with
respect to any Contractual Obligation that could, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  No Default
or Event of Default has occurred and is continuing or would result from the
consummation of the transactions contemplated by this Agreement or any other
Credit Document.
 
4.8           Ownership of Property; Liens.
 
The Borrower and each of its Subsidiaries has good record and marketable title
in fee simple to, or valid leasehold interests in, all real property necessary
or used in the ordinary conduct of its business, except for such defects in
title as could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.  The property of the Borrower and its
Subsidiaries is subject to no Liens, other than Liens permitted by Section 6.1.
 
4.9           Environmental Compliance.
 
The Borrower and its Subsidiaries conduct in the ordinary course of business a
review of the effect of existing Environmental Laws and claims alleging
potential liability or responsibility for violation of any Environmental Law on
their respective businesses, operations and properties, and as a result thereof
the Borrower has reasonably concluded that such Environmental Laws and claims
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
 
4.10           Insurance.
 
The properties of the Borrower and its Subsidiaries are insured with financially
sound and reputable insurance companies not a direct or indirect Subsidiary of
the Borrower, in such amounts (after giving effect to any self−insurance
compatible with the following standards), with such deductibles and covering
such risks as are customarily carried by companies engaged in similar businesses
and owning similar properties in localities where the Borrower or the applicable
Subsidiary operates.
 
 

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4.11           Taxes.
 
The Borrower and its Subsidiaries have filed all Federal, state and other
material tax returns and reports required to be filed, and have paid all
Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed tax
assessment against the Borrower or any of its Subsidiaries that would, either
individually or in the aggregate, if made, have a Material Adverse
Effect.  Neither the Borrower nor any of its Subsidiaries is party to any tax
sharing agreement, other than the tax sharing agreements delivered to the
Administrative Agent pursuant to Section 6.12.
 
4.12           ERISA Compliance.
 
(a)           Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state Laws.  Each
Plan that is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification.  The Borrower and each ERISA Affiliate have
made all required contributions to each Plan subject to Section 412 of the Code,
and no application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect to any
Plan.
 
(b)           There are no pending or, to the best knowledge of the Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.
 
(c)           (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v)
neither the Borrower nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
 
4.13           Subsidiaries; Equity Interests.
 
As of the Closing Date, the Borrower has no Subsidiaries other than those
specifically disclosed in Part (a) of Schedule 4.13, and all of the outstanding
Equity Interests in such
 

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Subsidiaries have been validly issued, are fully paid and nonassessable and are
directly or indirectly owned by the Borrower or a Subsidiary in the amounts
specified on Part (a) of Schedule 4.13 free and clear of all Liens.  The
Borrower has no equity investments in excess of 10% of the equity capital in any
other non−public corporation or non−public entity other than those specifically
disclosed in Part (b) of Schedule 4.13.  All of the outstanding Equity Interests
of the Borrower have been validly issued, and are fully paid and nonassessable.
 
4.14           Margin Regulations; Investment Company Act.
 
(a)           The Borrower is not engaged and will not engage, principally or as
one of its important activities, in the business of purchasing or carrying
Margin Stock, or extending credit for the purpose of purchasing or carrying
Margin Stock.
 
(b)           None of the Borrower, any Person Controlling the Borrower, or any
Subsidiary is or is required to be registered as an “investment company” under
the Investment Company Act of 1940.
 
4.15           Disclosure.
 
The Borrower has disclosed to the Administrative Agent and the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.  No report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on behalf of the
Borrower to the Administrative Agent or any Lender in connection with the
transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Credit Document (in each case, as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
 
4.16           Compliance with Laws.
 
The Borrower and each of its Subsidiaries is in compliance in all material
respects with all Requirements of Law applicable to it or to its properties,
except in such instances in which (a) such Requirement of Law is being contested
in good faith by appropriate proceedings diligently conducted or (b) the failure
to comply therewith, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
 
4.17           Taxpayer Identification Number.
 
The Borrower’s true and correct U.S. taxpayer identification numbers are set
forth on Schedule 1.1(a).
 
 
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4.18           Intellectual Property; Licenses, Etc.
 
The Borrower and each of its Subsidiaries own, or possess the right to use, all
of the trademarks, service marks, trade names, copyrights, patents, patent
rights, franchises, licenses and other intellectual property rights
(collectively, “IP Rights”) that are reasonably necessary for the operation of
their respective businesses, without conflict with the rights of any other
Person. To the best knowledge of the Borrower, no slogan or other advertising
device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by the Borrower or any Subsidiary
infringes upon any rights held by any other Person.
 
4.19           OFAC; Anti-Terrorism Laws.
 
(a)           Neither the Borrower or any Affiliate of the Borrower (i) is a
Sanctioned Person, (ii) has more than 10% of its assets in Sanctioned Countries,
or (iii) derives more than 10% of its operating income from investments in, or
transactions with, Sanctioned Persons or Sanctioned Countries.  No part of the
proceeds of any Loan hereunder will be used directly or indirectly to fund any
operations in, finance any investments or activities in or make any payments to,
a Sanctioned Person or a Sanctioned Country.
 
(b)           Neither the making of the Loans hereunder nor the use of the
proceeds thereof will violate the PATRIOT Act, the Trading with the Enemy Act,
as amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any
enabling legislation or executive order relating thereto.  The Borrower is in
compliance in all material respects with the PATRIOT Act.
 
 
ARTICLE V
 
AFFIRMATIVE COVENANTS
 
So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, the Borrower shall, and
shall (except in the case of the covenants set forth in Sections 5.1, 5.2, and
5.3) cause each of its Subsidiaries to:
 
5.1           Financial Statements.
 
Deliver to the Administrative Agent and each Lender, in form and detail
satisfactory to the Administrative Agent and the Required Lenders:
 
(a)           as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower (commencing with the fiscal year ended
December 31, 2008), the Annual Report on Form 10−K of the Borrower for the
fiscal year then ended, a consolidated balance sheet of the Borrower and its
Subsidiaries, as at the end of such fiscal year, and the related consolidated
statements of income or operations, shareholders' equity and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and prepared in accordance with
GAAP, such consolidated statements of the Borrower to be audited and accompanied
by (i) a report and opinion of a Registered Public Accounting Firm of nationally
recognized standing reasonably acceptable to the Required Lenders, which report
and opinion shall be prepared in accordance with generally accepted auditing
standards and applicable Securities Law and shall not be subject to any "going
concern"
 

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or like qualification or exception or any qualification or exception as to the
scope of such audit and (ii) an opinion of such Registered Public Accounting
Firm independently assessing the Borrower’s internal controls over financial
reporting in accordance with Item 308 of SEC Regulation S−K, PCAOB Auditing
Standard No. 2 and Section 404 of Sarbanes−Oxley;
 
(b)           as soon as available, but in any event within 60 days after the
end of each of the first three fiscal quarters of each fiscal year of the
Borrower (commencing with the fiscal quarter ended June 30, 2008) the quarterly
report of the Borrower as required by the Exchange Act on Form 10−Q, a
consolidated balance sheet of the Borrower and its Subsidiaries, as at the end
of such fiscal quarter, and the related consolidated statements of income or
operations, shareholders' equity and cash flows for such fiscal quarter and for
the portion of the Borrower and its Subsidiaries' fiscal year then ended,
setting forth in each case in comparative form the figures for the corresponding
fiscal quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail, such consolidated statements to
be certified by a Responsible Officer of the Borrower as fairly presenting the
financial condition, results of operations, shareholders' equity and cash flows
of the Borrower and its Subsidiaries, in accordance with GAAP, subject only to
normal year−end audit adjustments and the absence of footnotes; and
 
(c)           as soon as available, all quarterly and annual statutory financial
statements, including all exhibits and schedules thereto, of the Insurance
Subsidiaries, in the form required by the respective Insurance Authorities.
 
As to any information contained in materials furnished pursuant to Section
5.2(d), the Borrower shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing shall not be in
derogation of the obligation of the Borrower to furnish the information and
materials described in clauses (a) or (b) above at the times specified therein.
 
5.2           Certificates; Other Information.
 
.  Deliver to the Administrative Agent and each Lender, in form and detail
satisfactory to the Administrative Agent and the Required Lenders:
 
(a)           concurrently with the delivery of the financial statements
referred to in Section 5.1(a), a certificate of the Registered Public Accounting
Firm certifying such financial statements and stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default under the financial covenants set forth herein or, if any such
Default or Event of Default shall exist, stating the nature and status of such
event;
 
(b)           concurrently with the delivery of the financial statements
referred to in Sections 5.1(a) and (b) (commencing with the delivery of the
financial statements for the fiscal quarter ended June 30, 2008), a duly
completed Compliance Certificate signed by a Responsible Officer of the
Borrower;
 
(c)           promptly after any request by the Administrative Agent or any
Lender, copies of any detailed audit reports, management letters or
recommendations submitted to the board of directors (or the audit committee of
the board of directors) of the Borrower by independent accountants in connection
with the accounts or books of the Borrower or any Subsidiary, or any audit of
any of them;

 
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(d)           promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of the Borrower, and copies of all annual, regular, periodic
and special reports and registration statements which the Borrower may file or
be required to file with the SEC under Section 13 or 15(d) of the Securities
Exchange Act of 1934, and not otherwise required to be delivered to the
Administrative Agent pursuant hereto;
 
(e)           promptly after the furnishing thereof, copies of any statement or
report furnished to any holder of debt securities of the Borrower or any of its
Subsidiaries pursuant to the terms of any indenture, loan or credit or similar
agreement and not otherwise required to be furnished to the Lenders pursuant to
Section 5.1 or any other clause of this Section 6.2;
 
(f)           promptly, and in any event within five Business Days after receipt
thereof by the Borrower or any of its Subsidiaries, copies of each notice or
other correspondence received from the SEC (or comparable agency in any
applicable non−U.S. jurisdiction) concerning any investigation or possible
investigation or other inquiry by such agency regarding financial or other
operational results of the Borrower or any of its Subsidiaries; and
 
(g)           promptly, such additional information regarding the business,
financial or corporate affairs of the Borrower or any Subsidiary, or compliance
with the terms of the Credit Documents, as the Administrative Agent or any
Lender may from time to time reasonably request.
 
Documents required to be delivered pursuant to Section 5.1(a), (b), or (c) or
Section 5. 2(d) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower posts such documents, or provides a link thereto on the Borrower's
website on the Internet at the website address listed on Schedule 1.1(a); or
(ii) on which such documents are posted on the Borrower’s behalf on an Internet
or intranet website, if any, to which each Lender and the Administrative Agent
have access (whether a commercial, third−party website or whether sponsored by
the Administrative Agent); provided that: (i) the Borrower shall deliver paper
copies of such documents to the Administrative Agent or any Lender that requests
the Borrower to deliver such paper copies until a written request to cease
delivering paper copies is given by the Administrative Agent or such Lender,
(ii) the Borrower shall notify the Administrative Agent and each Lender (by
telecopier or electronic mail) of the posting of any such documents and provide
to the Administrative Agent by electronic mail electronic versions (i.e., soft
copies) of such documents and (iii) so long as the Existing Credit Agreement is
in full force and effect and the financial covenants included in Section 7.10 of
the Existing Credit Agreement have not been amended, delivery of a Compliance
Certificate (as defined in the Existing Credit Agreement) shall be deemed to
satisfy the requirement of delivery of the Compliance Certificate to the Lenders
hereunder.  Notwithstanding anything contained herein, in every instance the
Borrower shall be required to provide paper copies of the Compliance
Certificates required by Section 5.2(b) to the Administrative Agent and each
Lender.  Except for such Compliance Certificates, the Administrative Agent shall
have no
 

 
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obligation to request the delivery or to maintain copies of the documents
referred to above, and in any event shall have no responsibility to monitor
compliance by the Borrower with any such request for delivery, and each Lender
shall be solely responsible for requesting delivery to it or maintaining its
copies of such documents.
 
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the
Arranger will make available to the Lenders materials and/or information
provided by the Borrower hereunder (or provided on its behalf with specific
authorization from the Borrower to make such information and materials available
to the Lenders) (collectively, “Borrower’s Materials”) by posting the Borrower’s
Materials on SyndTrak or another similar electronic system (the “Platform”) and
(b) certain of the Lenders may be “public−side” Lenders (i.e., Lenders that do
not wish to receive material non−public information with respect to the Borrower
or its securities) (each, a “Public Lender”).  The Borrower hereby agrees that
(w) all Borrower’s Materials that are to be made available to Public Lenders
shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall
mean that the word “PUBLIC” shall appear prominently on the first page thereof;
(x) by marking Borrower’s Materials “PUBLIC,” the Borrower shall be deemed to
have authorized the Administrative Agent, the Arranger, and the Lenders to treat
such Borrower’s Materials as either publicly available information or not
material information (although it may be sensitive and proprietary) with respect
to the Borrower or its securities for purposes of United States Federal and
state securities laws; (y) all Borrower’s Materials marked “PUBLIC” are
permitted to be made available through a portion of the Platform designated
“Public Investor;” and (z) the Administrative Agent and the Arranger shall be
entitled to treat any Borrower’s Materials that are not marked “PUBLIC” as being
suitable only for posting on a portion of the Platform not designated “Public
Investor.”
 
5.3           Notices.
 
Promptly notify the Administrative Agent and each Lender:
 
(a)           of the occurrence of any Default or Event of Default;
 
(b)           of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect, including (i) breach or non−performance of,
or any default under, a Contractual Obligation of the Borrower or any
Subsidiary; (ii) any dispute, litigation, investigation, proceeding or
suspension between the Borrower or any Subsidiary and any Governmental
Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Borrower or any Subsidiary, including
pursuant to any applicable Environmental Laws;
 
(c)           of the occurrence of any ERISA Event;
 
(d)           of any material change in accounting policies or financial
reporting practices by the Borrower or any Subsidiary;
 
(e)           of any announcement by Moody’s or S&P of any change in a Debt
Rating; and
 
(f)           of the determination by the Registered Public Accounting Firm
providing the opinion required under Section 5.1(a)(ii) or 5.2(a) (in connection
with its preparation of either such opinion) or a Borrower’s determination at
any time of the occurrence or the existence of any Internal Control Event.
 

 
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Each notice pursuant to this Section (other than Section 5.3(e)) shall be
accompanied by a statement of a Responsible Officer of the Borrower setting
forth details of the occurrence referred to therein and stating what action the
Borrower has taken and proposes to take with respect thereto.  Each notice
pursuant to Section 5.3(a) shall describe with particularity any and all
provisions of this Agreement and any other Credit Document that have been
breached.
 
5.4           Payment of Obligations.
 
Pay and discharge as the same shall become due and payable, all its obligations
and liabilities, including (a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings diligently conducted and
adequate reserves in accordance with GAAP are being maintained by the Borrower
or any Subsidiary; (b) all lawful claims which, if unpaid, would by law become a
Lien upon its property; and (c) all Indebtedness, as and when due and payable,
but subject to any subordination provisions contained in any instrument or
agreement evidencing such Indebtedness.
 
5.5           Preservation of Existence, Etc.
 
(a) Preserve, renew and maintain in full force and effect its legal existence
and good standing under the Laws of the jurisdiction of its organization except
in a transaction permitted by Section 6.4 or 6.5; (b) take all reasonable action
to maintain all rights, privileges, permits, licenses and franchises necessary
or desirable in the normal conduct of its business, except to the extent that
failure to do so could not, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect; and (c) preserve or renew all of
its registered patents, trademarks, trade names and service marks, the
non−preservation of which could, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
 
5.6           Maintenance of Properties.
 
(a) Maintain, preserve and protect all of its material properties and equipment
necessary in the operation of its business in good working order and condition,
ordinary wear and tear excepted; and (b) make all necessary repairs thereto and
renewals and replacements thereof except where the failure to do so could not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and (c) use the standard of care typical in the
industry in the operation and maintenance of its facilities.
 
5.7           Maintenance of Insurance.
 
.  Maintain with financially sound and reputable insurance companies not
Affiliates of the Borrower, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts (after giving effect to any self−insurance compatible with the following
standards) as are customarily carried under similar circumstances by such other
 

 
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Persons and providing for not less than 30 days’ prior notice to the
Administrative Agent of termination, lapse or cancellation of such insurance.
 
5.8           Compliance with Laws.
 
Comply in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its business or
property, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted; or (b) the failure to comply
therewith could not, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
 
5.9           Books and Records.
 
(a)          Maintain proper books of record and account, in which full, true
and correct entries in conformity with GAAP consistently applied shall be made
of all financial transactions and matters involving the assets and business of
the Borrower and each Subsidiary; and (b) maintain such books of record and
account in material conformity with all applicable requirements of any
Governmental Authority having regulatory jurisdiction over the Borrower and each
Subsidiary.
 
5.10           Inspection Rights.
 
Permit representatives and independent contractors of the Administrative Agent
and each Lender to visit and inspect any of its properties, to examine its
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss its affairs, finances and accounts with its directors,
officers, and independent public accountants, all at the expense of the Borrower
and at such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Borrower; provided,
however, that when an Event of Default exists the Administrative Agent or any
Lender (or any of their respective representatives or independent contractors)
may do any of the foregoing at the expense of the Borrower at any time during
normal business hours and without advance notice.
 
5.11           Use of Proceeds.
 
Use the proceeds of the Loans for working capital and other general corporate
purposes (except for share repurchases) and not in contravention of any Law or
of any Credit Document.
 
5.12           Maintenance of Insurance Licenses.
 
Maintain all insurance licenses in good standing under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such license to conduct such business.
 
5.13           OFAC, PATRIOT Act Compliance.
 
(a)             refrain from doing business in a Sanctioned Country or with a
Sanctioned Person in violation of the economic sanctions of the United States
administered by OFAC, and (b) provide, to the extent commercially reasonable,
such information and take such actions as are

 
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reasonably requested by the Administrative Agent or any Lender in order to
assist the Administrative Agent and the Lenders in maintaining compliance with
the PATRIOT Act.
 
ARTICLE VI
 
NEGATIVE COVENANTS
 
So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied:
 
6.1           Liens.
 
The Borrower shall not, nor shall it permit any of its Subsidiaries to, directly
or indirectly, create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, other
than the following:
 
(a)           [INTENTIONALLY OMITTED]
 
(b)           Investments on deposit with Insurance Authorities that are
required by statute or regulation;
 
(c)           Liens on the assets of the Borrower and its Subsidiaries (other
than the Equity Interest of GAIC, GALIC or any other Insurance Subsidiary that
is a Significant Subsidiary) so long as no Default or Event of Default exists
either before or immediately after giving effect to the creation of such Liens;
provided, however, that the aggregate amount of Indebtedness of the Borrower and
its Subsidiaries at any time outstanding which is secured by Liens permitted
under this Section 6.1(c) and Section 6.1(e) shall not exceed $100,000,000;
 
(d)           Liens securing Indebtedness of any of the Subsidiaries owing to
the Borrower;
 
(e)           Purchase money Liens (including mortgages, conditional sales,
Capitalized Leases and any other title retention or deferred purchase devices)
in property of the Borrower or any of its Subsidiaries existing or created at
the time of acquisition thereof, and the extension and refunding of any such
Lien in an amount not exceeding the amount thereof remaining unpaid immediately
prior to such extension or refunding; provided, however, that (a) the principal
amount of Indebtedness (including Indebtedness in respect of Capitalized Lease
Obligations) secured by each such Lien shall not exceed the fair market value
(including all such Indebtedness secured thereby, whether or not assumed) of the
property subject thereto and (b) the aggregate amount of Indebtedness of the
Borrower and its Subsidiaries at any time outstanding which is secured by Liens
permitted under this Section 6.1(e) and Section 6.1(c) shall not exceed
$100,000,000; and
 
(f)           Liens to secure Non−Recourse Real Estate Indebtedness of the
Borrower and its Subsidiaries, provided such Liens are and will remain confined
to the property or assets subject to it at the time of its creation (and to
fixed improvements thereafter) erected on such property or assets.
 
 
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6.2           Investments.
 
The Borrower shall not, nor shall it permit any of its Subsidiaries to, directly
or indirectly, make any Investments, unless no Default or Event of Default
exists both before and immediately after giving effect to such
Investment.  Notwithstanding the foregoing, if a Default or Event of Default
shall exist, (a) any Subsidiary of the Borrower may make Investments in any
other Subsidiary or in the Borrower and (b) the Borrower may make Investments in
any of its Subsidiaries, provided that such Subsidiary shall not then have
outstanding any Indebtedness other than in respect of this Agreement.
 
6.3           Indebtedness.
 
The Borrower shall not, nor shall it permit any of its Subsidiaries to, directly
or indirectly, create, incur, assume or suffer to exist any Indebtedness,
except:
 
(a)           Indebtedness under the Credit Documents;
 
(b)           Indebtedness in respect of Capitalized Leases and purchase money
obligations for fixed or capital assets within the limitations set forth in
Section 6.1(e); and
 
(c)           other Indebtedness at any time outstanding; provided, (i) that at
the time of incurrence of such Indebtedness and immediately after giving effect
thereto, no Default or Event of Default exists or could result therefrom, and
(ii) no Indebtedness shall have covenants more restrictive than the covenants
set forth in this Agreement.
 
6.4           Fundamental Changes.
 
.  The Borrower shall not, nor shall it permit any of its Subsidiaries to,
directly or indirectly, merge, dissolve, liquidate, consolidate with or into
another Person, or Dispose of any assets (whether now owned or hereafter
acquired) to or in favor of any Person, except that, so long as no Default or
Event of Default exists or would result therefrom:
 
(a)           the Borrower may become party to any merger or consolidation of
which the Borrower is the surviving entity so long as (i) the Borrower continues
directly, or indirectly through a direct non−regulated subsidiary holding
company in which the Borrower owns 100% of the Equity Interests, to own 100% of
the voting common stock of GAIC, and (ii) immediately after giving effect to
such transaction no Default or Event of Default shall occur or be continuing and
the Borrower can demonstrate pro forma compliance with the financial covenants
contained in Section 6.10 of this Agreement immediately after giving effect to
such transaction;
 
(b)           GAFRI may become party to any merger or consolidation of which
GAFRI is the surviving entity or the surviving entity is an Affiliate of the
Borrower so long as (i) GAFRI continues directly, or indirectly through a direct
non−regulated subsidiary holding company in which GAFRI owns 100% of the Equity
Interests, to own 100% of the common stock of AAG, (ii) the Borrower, GAFRI, AAG
or any of their respective Subsidiaries continues directly to own 100% of the
voting common stock of GALIC, and (iii) immediately after giving effect to such
transaction no Default or Event of Default shall occur or be continuing and the
Borrower can demonstrate pro forma compliance with the financial covenants
contained in Section 6.10 immediately after giving effect to such transaction;
 

 
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(c)           subject to clauses (a) and (b) above, any Subsidiary of the
Borrower may be merged into or consolidated with, or may sell, lease or
otherwise Dispose of any of its assets to, the Borrower or any other Subsidiary
of the Borrower, so long as in the case of a merger or consolidation involving
the Borrower, the Borrower shall be the surviving or resulting Person.  Any
Insurance Subsidiary may merge into or be consolidated with another Insurance
Subsidiary so long as in the case of a merger or consolidation involving (i)
GAIC, the surviving entity shall be GAIC or (ii) GALIC, the surviving entity
shall be GALIC;
 
(d)           the Borrower and its Subsidiaries may Dispose of assets in the
ordinary course of business that are no longer used or useful in such business
or with respect to any business that is discontinued; and
 
(e)           the Borrower and its Subsidiaries may from time to time sell or
Dispose of assets (other than stock of GAIC and GALIC) on arm’s length terms;
provided, however, that:
 
(i)           the net book value, determined in accordance with GAAP, of the
assets sold pursuant to this Section 6.4(e) shall not exceed on a cumulative
basis 25% of the net book value of all assets of the Borrower and its
Subsidiaries as of December 31, 2005 provided that, for purposes of this clause
(i), the net book value of assets sold shall not include (A) sales and
dispositions of assets among the Borrower and its Subsidiaries, (B) sales and
dispositions of portfolio assets among the Borrower and its Subsidiaries, and
(C) sales and dispositions of portfolio assets of the Borrower and its
Subsidiaries in the ordinary course of business and
 
(ii)           the assets sold pursuant to this Section 6.4(e) shall not have
contributed revenue, determined in accordance with GAAP, over the period of four
fiscal quarters prior to the respective sales exceeding 25% of the revenue of
the Borrower and its Subsidiaries for the four fiscal quarters ended December
31, 2005.
 
6.5           Restricted Payments; Stock Redemptions.
 
The Borrower shall not, nor shall it permit any of its Subsidiaries to, directly
or indirectly, declare or make, directly or indirectly any Restricted Payment,
or incur any obligation (contingent or otherwise) to do so, except that the
Borrower and its Subsidiaries (a) may declare and pay dividends in respect of
any Capital Trust Securities if, at the time of and after giving effect to such
dividend, no Default or Event of Default under Section 7.1(a), 7.1(e)(i)(A) or
7.1(f) shall have occurred and be continuing and (b) the Borrower and its
Subsidiaries may make other Restricted Payments if, at the time of and after
giving effect to such Restricted Payment, no Default or Event of Default has
occurred and is continuing; provided, that, if there is a Default or Event of
Default, any Subsidiary of the Borrower may make a Restricted Payment to any
other Subsidiary or to the Borrower.
 
6.6           Change in Nature of Business.
 
The Borrower shall not, nor shall it permit any of its Subsidiaries to, directly
or indirectly, engage in any material line of business other than those lines of
business conducted by the Borrower and its Subsidiaries described in the
Borrower’s 2007 Form 10−K and in businesses reasonably related thereto.
 

 
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6.7           Transactions with Affiliates.
 
The Borrower shall not, nor shall it permit any of its Subsidiaries to, directly
or indirectly, enter into any transaction of any kind with any of its Affiliates
(other than the Borrower or any of its Subsidiaries) on a basis less favorable
to the Borrower or any such Subsidiary than if the transaction had been effected
with a non−Affiliate other than transactions involving less than $10,000,000 per
year in the aggregate.
 
6.8           Burdensome Agreements.
 
The Borrower shall not, nor shall it permit any of its Subsidiaries to, directly
or indirectly, subject to limitations imposed by Laws, enter into any
Contractual Obligation (other than this Agreement or any other Loan Document)
that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to
the Borrower or to otherwise transfer property or make extensions of credit to
the Borrower or (ii) of the Borrower or any Subsidiary to create, incur, assume
or suffer to exist Liens on property of such Person; provided, however, that
this clause (ii) shall not prohibit any negative pledge incurred or provided in
favor of any holder of Indebtedness permitted under Section 6.3(b) solely to the
extent any such negative pledge relates to the property financed by or the
subject of such Indebtedness; or (b) requires the grant of a Lien to secure an
obligation of such Person if a Lien is granted to secure another obligation of
such Person.
 
6.9           Use of Proceeds.
 
The Borrower shall not, nor shall it permit any of its Subsidiaries to, directly
or indirectly, use the proceeds of any Loan, whether directly or indirectly, and
whether immediately, incidentally or ultimately, to purchase or carry Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
Margin Stock or to refund indebtedness originally incurred for such purpose.
 
6.10           Financial Covenants.
 
(a)           AFG Consolidated Net Worth.  The Borrower shall not permit AFG
Consolidated Net Worth on the last day of any fiscal quarter after March, 31,
2008 to be less than $2,071,524,000; provided, however, that such required
minimum amount of AFG Consolidated Net Worth shall be increased for each fiscal
quarter of the Borrower after March 31, 2008, by an amount equal to the excess,
if any, of (i) 50% of Consolidated Net Income of the Borrower for each such
fiscal quarter minus (ii) cash dividends paid by the Borrower during each such
fiscal quarter.
 
(b)           AFG Consolidated Total Financing Debt to AFG Total Capitalization.
The Borrower shall not permit the ratio of AFG Consolidated Total Financing Debt
to AFG Total Capitalization to exceed 0.375 to 1.00 on the last day of any
fiscal quarter during the term of this Agreement.
 
(c)           Dividends to Interest and Dividend Charges. The Borrower shall not
permit, for any period of four consecutive fiscal quarters of the Borrower, the
greatest of:
 
 
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(i)           10% of “surplus as regards policyholders” (currently (i) line 55,
page 4 in the NAIC form of statutory annual financial statement for life
insurance subsidiaries and (ii) line 39, page 4 in the NAIC form of statutory
annual financial statement for property and casualty insurance subsidiaries) (as
computed by the applicable Insurance Authorities) of the Insurance Subsidiaries
owned directly (or indirectly through a holding company in which all of the
Equity Interest thereof is owned directly by the Borrower) by the Borrower as of
the end of the then most recently completed fiscal year of the Borrower,
 
(ii)           100% of the “statutory net income” (currently (i) line 35, page 4
in the NAIC form of statutory annual financial statement for life insurance
subsidiaries and (ii) line 21, page 4 in the NAIC form of statutory annual
financial statement for property and casualty insurance subsidiaries) (as
computed by the applicable Insurance Authorities) of the Insurance Subsidiaries
owned directly (or indirectly through a holding company in which all of the
Equity Interest thereof is owned directly by the Borrower) by the Borrower for
the then most recently completed fiscal year of the Borrower, or
 
(iii)           the amount of cash dividends (or marketable securities paid in
lieu of cash dividends) actually paid by the Insurance Subsidiaries and other
Subsidiaries and received by the Borrower during such period of four consecutive
fiscal quarters,
 
to be less than 200% of Interest and Dividend Charges for such period of four
consecutive fiscal quarters.
 
(d)           Risk Based Capital Ratio of GAIC. The Borrower shall not permit
GAIC’s Risk Based Capital Ratio (as defined by the NAIC) at any time to be less
than 275%.
 
(e)           [INTENTIONALLY OMITTED]
 
(f)           Minimum Risk Based Capital Ratio of GALIC. GALIC’s Risk Based
Capital Ratio (as defined by the NAIC) shall not at any time be less than 450%.
 
Notwithstanding anything in this Agreement to the contrary, any required
increases in the minimum requirements set forth in the financial covenants set
forth in this Section 6.10 shall exclude realized gains on stock already
reflected in AFG Consolidated Net Worth.  For purposes of calculating AFG
Consolidated Net Worth and AFG Consolidated Total Financing Debt as of any date,
Capital Trust Securities permitted under Section 6.13 and the Indebtedness under
Subordinated Debentures issued in connection therewith (the “Hybrid Securities”)
will be accorded the same capital treatment as given to such Hybrid Securities
by S&P on such date; provided, however, that the maximum amount of Hybrid
Securities which may be included in AFG Consolidated Net Worth and excluded from
AFG Consolidated Total Financing Debt at any time shall not exceed 15% of “Total
Shareholders' Equity” on its Form 10−K or Form 10−Q.
 
6.11           Additional Debt Subordination.
 
The Borrower shall not, nor shall it permit any of its Subsidiaries to, create,
incur, suffer or permit to exist any Indebtedness to any Affiliate of the
Borrower except (a) Indebtedness which is subordinated on terms substantially
similar to the manner in which the Borrower’s Indebtedness to its Affiliates is
subordinated under the Subordination Agreement, (b) public Indebtedness held
from time to time by an Affiliate and (c) Indebtedness evidenced by the
Subordinated Debentures.
 
 
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6.12           Tax Sharing Agreements.
 
The Borrower shall not, nor shall it permit any Subsidiary to, enter into any
tax sharing agreements, including any amendments thereto, with any non−Affiliate
unless such agreement or amendment shall be satisfactory in form and substance
to the Administrative Agent in its sole discretion.
 
6.13           Equity Issuances by Subsidiaries.
 
The Subsidiaries of the Borrower shall not issue or sell any of their Equity
Interests other than (a) shares issued to the Borrower or any Wholly Owned
Subsidiary of the Borrower; (b) shares issued by GAFRI or National Interstate
for fair value in compliance with applicable securities laws so long as the
issuer in question remains a Subsidiary following such issuance; (c) Capital
Trust Securities (i) issued to refinance Capital Trust Securities outstanding as
of the Closing Date or (ii) issued by American Financial Capital Trust I, AAG
Trust or any other trust or similar entity, the proceeds of which are invested
by such Person in an equivalent amount of Subordinated Debentures issued by
GAFRI or the Borrower and (d) shares issued to employees in connection with
employee stock option plans.
 
 
ARTICLE VII
 
EVENTS OF DEFAULT
 
7.1           Events of Default.
 
The occurrence of any one or more of the following events shall constitute an
“Event of Default”:
 
(a)           Non−Payment. The Borrower fails to pay (i) when and as required to
be paid herein, any amount of principal of any Loan, or (ii) within three days
after the same becomes due, any interest on any Loan, or any fee due hereunder,
or (iii) within five days after the same becomes due, any other amount payable
hereunder or under any other Credit Document; or
 
(b)           Specific Covenants. The Borrower fails to perform or observe any
term, covenant or agreement contained in any of Section 5.3(a), (b), (c) or (d),
5.5, 5.10, or 5.11 or Article VI; or
 
(c)           Other Defaults. The Borrower fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained
in any Credit Document on its part to be performed or observed and such failure
continues for 30 days; or
 
(d)           Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of the
Borrower herein, in any other Credit Document, or in any document delivered in
connection herewith or therewith shall be materially incorrect or misleading
when made or deemed made; or
 
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(e)           Cross−Default. (i) The Borrower or any or its Subsidiaries (A)
fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness
or Guaranty Obligation (other than Indebtedness hereunder and Indebtedness under
Swap Contracts) having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $20,000,000,
or (B) fails to observe or perform any other agreement or condition relating to
any such Indebtedness or Guaranty Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event occurs,
the effect of which default or other event is to cause, or to permit the holder
or holders of such Indebtedness or the beneficiary or beneficiaries of such
Guaranty Obligation (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice if
required, such Indebtedness to be demanded or to become due or to be
repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an
offer to repurchase, prepay, defease or redeem such Indebtedness to be made,
prior to its stated maturity, or such Guaranty Obligation to become payable or
cash collateral in respect thereof to be demanded; or (ii) there occurs under
any Swap Contract an Early Termination Date (as defined in such Swap Contract)
resulting from (A) any event of default under such Swap Contract as to which the
Borrower or any of its Subsidiaries is the Defaulting Party (as defined in such
Swap Contract) or (B) any Termination Event (as so defined) under such Swap
Contract as to which the Borrower or any of its Subsidiaries is an Affected
Party (as so defined) and, in either event, the Swap Termination Value owed by
the Borrower or such Subsidiary as a result thereof is greater than $20,000,000;
or
 
(f)           Insolvency Proceedings, Etc. The Borrower or any of its
Significant Subsidiaries institutes or consents to the institution of any
proceeding under any Debtor Relief Law, or makes an assignment for the benefit
of creditors; or applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer
for it or for all or any material part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer is
appointed without the application or consent of such Person and the appointment
continues undischarged or unstayed for 60 calendar days; or any proceeding under
any Debtor Relief Law relating to any such Person or to all or any material part
of its property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or
 
(g)           Inability to Pay Debts; Attachment. (i) The Borrower or any of its
Significant Subsidiaries becomes unable or admits in writing its inability or
fails generally to pay its debts as they become due, or (ii) any writ or warrant
of attachment or execution or similar process is issued or levied against all or
any material part of the property of any such Person and is not released,
vacated or fully bonded within 30 days after its issue or levy; or
 
(h)           Judgments. There is entered against the Borrower or any of its
Significant Subsidiaries (i) one or more final judgments or orders for the
payment of money in an aggregate amount (as to all such judgments or orders)
exceeding $20,000,000 (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage), or (ii) any
 
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one or more non-monetary final judgments that have, or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
and, in either case, (A) enforcement proceedings are commenced by any creditor
upon such judgment or order, or (B) there is a period of 10 consecutive days
during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect; or
 
(i)           ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $20,000,000,
or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $20,000,000; or
 
(j)           Invalidity of Credit Documents. Any provision of any Credit
Document, at any time after its execution and delivery and for any reason other
than as expressly permitted hereunder or thereunder or satisfaction in full of
all the Obligations, ceases to be in full force and effect; or the Borrower or
any of its Affiliates contests in any manner the validity or enforceability of
any provision of any Credit Document; or the Borrower, or a Person on the
Borrower’s behalf, denies that the Borrower has any or further liability or
obligation under any Credit Document, or purports to revoke, terminate or
rescind any provision of any Credit Document; or
 
(k)           Change of Control. There occurs any Change of Control; or
 
(l)           Business Prohibitions. GAIC, GALIC or any other Insurance
Subsidiary shall be prohibited by law from engaging in the business of effecting
and carrying out of contracts of insurance, and such prohibition would have a
Material Adverse Effect; or
 
(m)           Governmental and Insurance Authority Decrees. Any Governmental
Authority or Insurance Authority shall issue an order or decree which would
require GAIC, GALIC or any other Insurance Subsidiary to reduce or terminate any
substantial part of its insurance business, and such event would have a Material
Adverse Effect; or
 
(n)           Internal Control Event. An Internal Control Event shall occur that
could reasonably be expected to have a Material Adverse Effect.
 
7.2           Remedies:  Termination of Commitments, Acceleration, etc.
 
  Upon and at any time after the occurrence and during the continuance of any
Event of Default, the Administrative Agent shall at the direction, or may with
the consent, of the Required Lenders, take any or all of the following actions
at the same or different times:
 
(a)           Declare the Commitments to be terminated, whereupon the same shall
terminate; provided that, upon the occurrence of a Bankruptcy Event, the
Commitments shall automatically be terminated;
 
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(b)           Declare all or any part of the outstanding principal amount of the
Loans to be immediately due and payable, whereupon the principal amount so
declared to be immediately due and payable, together with all interest accrued
thereon and all other amounts payable under this Agreement and the other Credit
Documents, shall become immediately due and payable without presentment, demand,
protest, notice of intent to accelerate or other notice or legal process of any
kind, all of which are hereby knowingly and expressly waived by the Borrower;
provided that, upon the occurrence of a Bankruptcy Event, all of the outstanding
principal amount of the Loans and all other amounts described in this
Section 7.2(b) shall automatically become immediately due and payable without
presentment, demand, protest, notice of intent to accelerate or other notice or
legal process of any kind, all of which are hereby knowingly and expressly
waived by the Borrower; and
 
(c)           Exercise all rights and remedies available to it under this
Agreement, the other Credit Documents and applicable law.
 
7.3           Remedies:  Set-Off.
 
Upon and at any time after the occurrence and during the continuance of any
Event of Default, each Lender and each of their respective Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
applicable law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final, in whatever currency) at any time held and
other obligations (in whatever currency) at any time owing by such Lender or any
such Affiliate to or for the credit or the account of the Borrower against any
and all of the obligations of the Borrower now or hereafter existing under this
Agreement or any other Credit Document to such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement or any other
Credit Document and although such obligations of the Borrower may be contingent
or unmatured or are owed to a branch or office of such Lender different from the
branch or office holding such deposit or obligated on such indebtedness.  The
rights of each Lender and their respective Affiliates under this Section are in
addition to other rights and remedies (including other rights of setoff) that
such Lender or their respective Affiliates may have.  Each Lender agrees to
notify the Borrower and the Administrative Agent promptly after any such setoff
and application; provided that the failure to give such notice shall not affect
the validity of such setoff and application.
 
 
ARTICLE VIII
 
THE ADMINISTRATIVE AGENT
 
8.1           Appointment and Authority.
 
Each of the Lenders hereby irrevocably appoints Wachovia to act on its behalf as
the Administrative Agent hereunder and under the other Credit Documents and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
hereof or thereof, together with such actions and powers as are reasonably
incidental thereto.  Except as set forth in Section 8.6, the provisions of this
Article are solely for the benefit of the Administrative Agent and the Lenders,
and neither the Borrower nor any other Person shall have rights as a third party
beneficiary of any of such provisions.
 
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8.2           Rights as a Lender.
 
The Person serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent and the term
“Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the
context otherwise requires, include the Person serving as the Administrative
Agent hereunder in its individual capacity.  Such Person and its Affiliates may
accept deposits from, lend money to, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if such Person were
not the Administrative Agent hereunder and without any duty to account therefor
to the Lenders.
 
8.3           Exculpatory Provisions.
 
The Administrative Agent shall not have any duties or obligations except those
expressly set forth herein and in the other Credit Documents.  Without limiting
the generality of the foregoing, the Administrative Agent:
 
(a)           shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default or Event of Default has occurred and is
continuing;
 
(b)           shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Credit Documents that the
Administrative Agent is required to exercise as directed in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be
expressly provided for herein or in the other Credit Documents), provided that
the Administrative Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Credit Document or applicable law; and
 
(c)           shall not, except as expressly set forth herein and in the other
Credit Documents, have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of its
Affiliates that is communicated to or obtained by the Person serving as the
Administrative Agent or any of its Affiliates in any capacity.
 
The Administrative Agent shall not be liable for any action taken or not taken
by it (i) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 9.5 and 7.2) or (ii) in the absence of its
own gross negligence or willful misconduct.  The Administrative Agent shall be
deemed not to have knowledge of any Default or Event of Default unless and until
notice describing such Default or Event of Default is given to the
Administrative Agent by the Borrower or a Lender.
 
 
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The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Credit Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default or Event of Default,
(iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Credit Document or any other agreement, instrument or
document or (v) the satisfaction of any condition set forth in Article III or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.
 
8.4           Reliance by Administrative Agent.
 
The Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic
message, internet or intranet website posting or other distribution) believed by
it to be genuine and to have been signed, sent or otherwise authenticated by the
proper Person.  The Administrative Agent also may rely upon any statement made
to it orally or by telephone and believed by it to have been made by the proper
Person, and shall not incur any liability for relying thereon.  In determining
compliance with any condition hereunder to the making of a Loan, that by its
terms must be fulfilled to the satisfaction of a Lender, the Administrative
Agent may presume that such condition is satisfactory to such Lender unless the
Administrative Agent shall have received notice to the contrary from such Lender
prior to the making of such Loan.  The Administrative Agent may consult with
legal counsel (who may be counsel for the Borrower), independent accountants and
other experts selected by it, and shall not be liable for any action taken or
not taken by it in accordance with the advice of any such counsel, accountants
or experts.
 
8.5           Delegation of Duties.
 
The Administrative Agent may perform any and all of its duties and exercise its
rights and powers hereunder or under any other Credit Document by or through any
one or more sub-agents appointed by the Administrative Agent.  The
Administrative Agent and any such sub-agent may perform any and all of its
duties and exercise its rights and powers by or through their respective Related
Parties.  The exculpatory provisions of this Article shall apply to any such
sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.
 
8.6           Resignation of Administrative Agent.
 
The Administrative Agent may at any time give notice of its resignation to the
Lenders and the Borrower.  Upon receipt of any such notice of resignation, the
Required Lenders shall have the right, in consultation with the Borrower, to
appoint a successor, which shall be a bank with an office in the United States,
or an Affiliate of any such bank with an office in the United States.  If no
such successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Administrative
Agent
 
 
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notice of its resignation, then the retiring Administrative Agent may, on behalf
of the Lenders, appoint a successor Administrative Agent meeting the
qualifications set forth above; provided that if the Administrative Agent shall
notify the Borrower and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Credit
Documents (except that in the case of any collateral security held by the
Administrative Agent on behalf of the Lenders under any of the Credit Documents,
the retiring Administrative Agent shall continue to hold such collateral
security until such time as a successor Administrative Agent is appointed) and
(2) 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
directly, until such time as the Required Lenders appoint a successor
Administrative Agent as provided for above in this Section.  Upon the acceptance
of a successor’s appointment as Administrative Agent hereunder, such successor
shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring (or retired) Administrative Agent, and the retiring
Administrative Agent shall be discharged from all of its duties and obligations
hereunder or under the other Credit Documents (if not already discharged
therefrom as provided above in this Section).  The fees payable by the Borrower
to a successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such
successor.  After the retiring Administrative Agent’s resignation hereunder and
under the other Credit Documents, the provisions of this Article and Section 9.1
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while the retiring Administrative
Agent was acting as Administrative Agent.
 
8.7           Non-Reliance on Administrative Agent and Other Lenders.
 
Each Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.  Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Credit Document or any related
agreement or any document furnished hereunder or thereunder.
 
8.8           No Other Duties, Etc.
 
Anything herein to the contrary notwithstanding, none of the Arranger or other
agents listed on the cover page hereof shall have any powers, duties or
responsibilities under this Agreement or any of the other Credit Documents,
except in its capacity, as applicable, as the Administrative Agent or a Lender
hereunder.
 
 
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ARTICLE IX
 
MISCELLANEOUS
 
9.1           Expenses; Indemnity; Damage Waiver.
 
(a)           The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates (including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent), in connection with the syndication of the credit facilities provided for
herein, the preparation, negotiation, execution, delivery and administration of
this Agreement and the other Credit Documents or any amendments, modifications
or waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the Administrative Agent or any Lender
(including the fees, charges and disbursements of any counsel for the
Administrative Agent or any Lender), in connection with the enforcement or
protection of its rights (A) in connection with this Agreement and the other
Credit Documents, including its rights under this Section, or (B) in connection
with the Loans made hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans, and (iii) any civil penalty or fine assessed by OFAC against, and all
reasonable costs and expenses (including counsel fees and disbursements)
incurred in connection with defense thereof by, the Administrative Agent or any
Lender as a result of conduct of the Borrower that violates a sanction enforced
by OFAC.
 
(b)           The Borrower shall indemnify the Administrative Agent (and any
sub-agent thereof), each Lender, and each Related Party of any of the foregoing
persons (each such person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses (including the fees, charges and disbursements of any counsel
for any Indemnitee), incurred by any Indemnitee or asserted against any
Indemnitee by any third party or by the Borrower or any of its Subsidiaries
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Credit Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations hereunder or thereunder or the consummation of
the transactions contemplated hereby or thereby, (ii) any Loan or the use or
proposed use of the proceeds therefrom, (iii) any actual or alleged presence or
release of Hazardous Substances on or from any property owned or operated by the
Borrower or any of its Subsidiaries, or any Environmental Liabilities related in
any way to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by the Borrower or any of its Subsidiaries, and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses (x) are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or
(y) result from a claim brought by the Borrower against an Indemnitee for breach
in bad faith of such Indemnitee’s obligations hereunder or under any other
Credit Document, if the Borrower has obtained a final and nonappealable judgment
in its favor on such claim as determined by a court of competent jurisdiction.
 
 
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(c)           To the extent that the Borrower for any reason fails to
indefeasibly pay any amount required under Section 9.1(a) or Section 9.1(b) to
be paid by it to the Administrative Agent (or any sub-agent thereof) or any
Related Party of any of the foregoing, each Lender severally agrees to pay to
the Administrative Agent (or any such sub-agent) or such Related Party, as the
case may be, such Lender’s proportion (based on the percentages as used in
determining the Required Lenders as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount, provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent (or any such sub-agent) in its capacity as such, or against
any Related Party of any of the foregoing acting for the Administrative Agent
(or any such sub-agent) in connection with such capacity.  The obligations of
the Lenders under this Section 9.1(c) are subject to the provisions of
Section 2.3(c).
 
(d)           To the fullest extent permitted by applicable law, the Borrower
shall not assert, and each 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, any other Credit Document or any
agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or the use of the proceeds thereof.  No Indemnitee
referred to in Section 9.1(b) shall be liable for any damages arising from the
use by unintended recipients of any information or other materials distributed
by it through telecommunications, electronic or other information transmission
systems (including Intralinks, SyndTrak or similar systems) in connection with
this Agreement or the other Credit Documents or the transactions contemplated
hereby or thereby.
 
(e)           All amounts due under this Section shall be payable by the
Borrower not later than ten Business Days after demand therefor.
 
9.2           GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE;
SERVICE OF PROCESS.
 
(a)           THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS SHALL (EXCEPT AS MAY
BE EXPRESSLY OTHERWISE PROVIDED IN ANY CREDIT DOCUMENT) BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (INCLUDING
SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT
EXCLUDING ALL OTHER CHOICE OF LAW AND CONFLICTS OF LAW RULES).
 
(b)           THE BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF
THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH STATE
 
 
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COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER CREDIT DOCUMENT SHALL AFFECT ANY
RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
 
(c)           THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT IN ANY COURT REFERRED
TO IN SECTION 9.2(b).  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
 
(d)           EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN SECTION 9.4.  NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW.
 
9.3           WAIVER OF JURY TRIAL
 
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE OTHER CREDIT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
 
9.4           Notices; Effectiveness; Electronic Communication.
 
(a)           Except in the cases of notices and other communications expressly
permitted to be given by telephone (and except as provided in Section 9.4(b)),
all notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopier as follows:
 
 
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(i)           if to the Borrower or the Administrative Agent, to it at the
address (or telecopier number) specified for such Person on Schedule 1.1(a); and
 
(ii)           if to any Lender, to it at its address (or telecopier number) set
forth in its Administrative Questionnaire.
 
Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient).  Notices delivered through electronic communications to the extent
provided in Section 9.4(b) shall be effective as provided in Section 9.4(b).
 
(b)           Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communication (including e-mail and
internet or intranet websites) pursuant to procedures approved by the
Administrative Agent, provided that the foregoing shall not apply to notices to
any Lender pursuant to Article II if such Lender has notified the Administrative
Agent that it is incapable of receiving notices under such Article by electronic
communication.  The Administrative Agent or the Borrower may, in its discretion,
agree to accept notices and other communications to it hereunder by electronic
communication pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or communications.  Unless
the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or other
communications posted to an internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (i) of notification that such notice or
communication is available and identifying the website address therefor.
 
(c)           Any party hereto may change its address or telecopier number for
notices and other communications hereunder by notice to the other parties hereto
(except that each Lender need not give notice of any such change to the other
Lenders in their capacities as such).
 
9.5           Amendments, Waivers, etc.
 
No amendment, modification, waiver or discharge or termination of, or consent to
any departure by the Borrower from, any provision of this Agreement or any other
Credit Document shall be effective unless in a writing signed by the Required
Lenders (or by the Administrative Agent at the direction or with the consent of
the Required Lenders), and then the same shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no such amendment, modification, waiver, discharge, termination or consent
shall:
 
 
 
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(a)           unless agreed to by each Lender directly affected thereby,
(i) reduce or forgive the principal amount of any Loan, reduce the rate of or
forgive any interest thereon (provided that only the consent of the Required
Lenders shall be required to waive the applicability of any post-default
increase in interest rates), or reduce or forgive any fees hereunder (other than
fees payable to the Administrative Agent or the Arranger for its own account),
(ii) extend the final scheduled maturity date or any other scheduled date for
the payment of any principal of or interest on any Loan (including any scheduled
date for the mandatory reduction or termination of any Commitments, but
excluding any mandatory prepayment of the Loans pursuant to Sections 2.6(c) or
reduction or termination of the Commitments in connection therewith), or extend
the time of payment of any fees hereunder (other than fees payable to the
Administrative Agent or the Arranger for its own account), or (iii) increase any
Commitment of any such Lender over the amount thereof in effect or extend the
maturity thereof (it being understood that a waiver of any condition precedent
set forth in Section 3.2 or of any Default or Event of Default or mandatory
reduction in the Commitments, if agreed to by the Required Lenders or all
Lenders (as may be required hereunder with respect to such waiver), shall not
constitute such an increase);
 
(b)           unless agreed to by all of the Lenders, (i) reduce the percentage
of the aggregate Commitments or of the aggregate unpaid principal amount of the
Loans, or the number or percentage of Lenders, that shall be required for the
Lenders or any of them to take or approve, or direct the Administrative Agent to
take, any action hereunder or under any other Credit Document (including as set
forth in the definition of “Required Lenders”), (ii) change any other provision
of this Agreement or any of the other Credit Documents requiring, by its terms,
the consent or approval of all the Lenders for such amendment, modification,
waiver, discharge, termination or consent, or (iii) change or waive any
provision of Section 2.14, any other provision of this Agreement or any other
Credit Document requiring pro rata treatment of any Lenders, or this
Section 9.5; and
 
(c)           unless agreed to by the Administrative Agent in addition to the
Lenders required as provided hereinabove to take such action, affect the
respective rights or obligations of the Administrative Agent hereunder or under
any of the other Credit Documents.
 
Notwithstanding the fact that the consent of all Lenders is required in certain
circumstances as set forth above, each Lender is entitled to vote as such Lender
sees fit on any bankruptcy reorganization plan that affects the Loans, and each
Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy
Code supersedes the unanimous consent provisions set forth herein.
 
9.6           Successors and Assigns.
 
(a)           The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Administrative Agent and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an assignee in
accordance with the provisions of Section 9.6(b), (ii) by way of participation
in accordance with the provisions of Section 9.6(d) or (iii) by way of pledge or
assignment of a security interest
 
 
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subject to the restrictions of Section 9.6(e) (and any other attempted
assignment or transfer by any party hereto shall be null and void).  Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in Section 9.6(d) and, to
the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
 
(b)           Any Lender may at any time assign to one or more assignees all or
a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitments and the Loans at the time owing to it); provided that
any such assignment shall be subject to the following conditions:
 
(i)           (A) in the case of an assignment of the entire remaining amount of
the assigning Lender’s Commitment and the Loans at the time owing to it or in
the case of an assignment to a Lender, an Affiliate of a Lender or an Approved
Fund, no minimum amount need be assigned, and (B) in any case not described in
clause (A) above, the aggregate amount of the Commitment (which for this purpose
includes Loans outstanding thereunder) or, if the applicable Commitment is not
then in effect, the principal outstanding balance of the Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date) shall not be less than $5,000,000, treating
assignments to two or more Approved Funds under common management as one
assignment for purposes of the minimum amounts, unless each of the
Administrative Agent and, so long as no Default or Event of Default has occurred
and is continuing, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed);
 
(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 with respect to the Loan or the Commitment assigned;
 
(iii)           no consent shall be required for any assignment except to the
extent required by clause (B) of Section 9.6(b)(i) and, in addition:
 
(A)           the consent of the Borrower (such consent not to be unreasonably
withheld or delayed) shall be required unless (y) a Default or Event of Default
has occurred and is continuing at the time of such assignment or (z) such
assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; and
 
(B)           the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required if such assignment is to a
Person that is not a Lender, an Affiliate of such Lender or an Approved Fund
with respect to such Lender;
 
 
 
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(iv)           the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500 for each assignment and the assignee, if it is not
a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire;
 
(v)           no such assignment shall be made to the Borrower or any of the
Borrower’s Affiliates or Subsidiaries; and
 
(vi)           no such assignment shall be made to a natural person.
 
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to Section 9.6(c), from and after the effective date specified in each
Assignment and Assumption, the assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to
the benefits of Sections 2.15(a), 2.15(b), 2.16, 2.17 and 9.1 with respect to
facts and circumstances occurring prior to the effective date of such
assignment.  If requested by or on behalf of the assignee, the Borrower, at its
own expense, will execute and deliver to the Administrative Agent a new Note or
Notes to the order of the assignee (and, if the assigning Lender has retained
any portion of its rights and obligations hereunder, to the order of the
assigning Lender), prepared in accordance with the applicable provisions of
Section 2.4 as necessary to reflect, after giving effect to the assignment, the
Commitments and/or outstanding Loans, as the case may be, of the assignee and
(to the extent of any retained interests) the assigning Lender, in substantially
the form of Exhibits A.  Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 9.6(b)
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with Section 9.6(d).
 
(c)           The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at its address for notices referred to in
Schedule 1.1(a) a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”).  The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary.  The Register shall be
available for inspection by the Borrower at any reasonable time and from time to
time upon reasonable prior notice.  
 
(d)           Any Lender may at any time, without the consent of, or notice to,
the Borrower or the Administrative Agent, sell participations to any Person
(other than a natural person or the Borrower or any of the Borrower’s Affiliates
or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitments and/or the Loans; provided that (i) such Lender’s obligations
under
 
 
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this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Administrative Agent and the Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement.  Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, waiver or other
modification described in Section 9.5(a) and clause (i) of Section 9.5(b) that
affects such Participant.  Subject to Section 9.6(e), the Borrower agrees that
each Participant shall be entitled to the benefits of Sections 2.15(a), 2.15(b),
2.16 and 2.17 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to Section 9.6(b).  To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 7.3 as
though it were a Lender; provided such Participant agrees to be subject to
Section 2.14(b) as though it were a Lender.
 
(e)           A Participant shall not be entitled to receive any greater payment
under Section 2.15(a), Section 2.15(b) or Section 2.16 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent.  A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.16 unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 2.16(e) as though it were a Lender.
 
(f)           Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement (including under its
Notes, if any) to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.
 
(g)           The words “execution,” “signed,” “signature,” and words of like
import in any Assignment and Assumption shall be deemed to include electronic
signatures or the keeping of records in electronic form, each of which shall be
of the same legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the case may be,
to the extent and as provided for in any applicable law, including the Federal
Electronic Signatures in Global and National Commerce Act or any state laws
based on the Uniform Electronic Transactions Act.
 
(h)           Any Lender or Participant may, in connection with any assignment,
participation, pledge or proposed assignment, participation or pledge pursuant
to this Section 9.6, disclose to the Assignee, Participant or pledgee or
proposed Assignee, Participant or pledgee any information relating to the
Borrower and its Subsidiaries furnished to it by or on behalf of any other party
hereto, provided that such Assignee, Participant or pledgee or proposed
Assignee, Participant or pledgee agrees in writing to keep such information
confidential to the same extent required of the Lenders under Section 9.11.
 
 
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9.7           No Waiver.
 
The rights and remedies of the Administrative Agent and the Lenders expressly
set forth in this Agreement and the other Credit Documents are cumulative and in
addition to, and not exclusive of, all other rights and remedies available at
law, in equity or otherwise.  No failure or delay on the part of the
Administrative Agent or any Lender in exercising any right, power or privilege
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or privilege preclude other or further exercise thereof or
the exercise of any other right, power or privilege or be construed to be a
waiver of any Default or Event of Default.  No course of dealing between the
Borrower, the Administrative Agent or the Lenders or their agents or employees
shall be effective to amend, modify or discharge any provision of this Agreement
or any other Credit Document or to constitute a waiver of any Default or Event
of Default.  No notice to or demand upon the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of the Administrative Agent or
any Lender to exercise any right or remedy or take any other or further action
in any circumstances without notice or demand.
 
9.8           Survival.
 
All representations, warranties and agreements made by or on behalf of the
Borrower in this Agreement and in the other Credit Documents shall survive the
execution and delivery hereof or thereof and the making and repayment of the
Loans.  In addition, notwithstanding anything herein or under applicable law to
the contrary, the provisions of this Agreement and the other Credit Documents
relating to indemnification or payment of costs and expenses, including, without
limitation, the provisions of Sections 2.15(a), 2.15(b), 2.16, 2.17 and 9.1,
shall survive the payment in full of all Loans, the termination of the
Commitments, and any termination of this Agreement or any of the other Credit
Documents.
 
9.9           Severability.
 
To the extent any provision of this Agreement is prohibited by or invalid under
the applicable law of any jurisdiction, such provision shall be ineffective only
to the extent of such prohibition or invalidity and only in such jurisdiction,
without prohibiting or invalidating such provision in any other jurisdiction or
the remaining provisions of this Agreement in any jurisdiction.
 
9.10           Construction.
 
The headings of the various articles, sections and subsections of this Agreement
and the table of contents have been inserted for convenience only and shall not
in any way affect the meaning or construction of any of the provisions
hereof.  Except as otherwise expressly provided herein and in the other Credit
Documents, in the event of any inconsistency or conflict between any provision
of this Agreement and any provision of any of the other Credit Documents, the
provision of this Agreement shall control.
 
 
 
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9.11           Confidentiality.
 
Each of the Administrative Agent and the Lenders agree to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective
partners, directors, officers, employees, agents, advisors and other
representatives (it being understood that the Persons to whom such disclosure is
made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority purporting to have jurisdiction over it (including
any self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable Requirements of Law or
by any subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Credit
Document or any action or proceeding relating to this Agreement or any other
Credit Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement, or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its
obligations, (g)  subject to each such Person being informed of the confidential
nature of the Information and to its agreement to keep such Information
confidential, to (i) an investor or prospective investor in an Approved Fund
that also agrees that Information shall be used solely for the purpose of
evaluating an investment in such Approved Fund, (ii) a trustee, collateral
manager, servicer, backup servicer, noteholder or secured party in an Approved
Fund in connection with the administration, servicing and reporting on the
assets serving as collateral for an Approved Fund, or (iii) a nationally
recognized rating agency that requires access to information regarding the
Borrower, the Loans and Credit Documents in connection with ratings issued with
respect to an Approved Fund, (h) with the consent of the Borrower or (i) to the
extent such Information (x) becomes publicly available other than as a result of
a breach of this Section or (y) becomes available to the Administrative Agent,
any Lender or any of their respective Affiliates on a nonconfidential basis from
a source other than the Borrower or any of its Subsidiaries or Affiliates.
 
For purposes of this Section, “Information” means all information received from
the Borrower relating to the Borrower or any of its Subsidiaries or any of their
respective businesses, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower, provided that, in the case of information received
from the Borrower after the date hereof, such information is clearly identified
at the time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
 
9.12           Counterparts; Integration; Effectiveness.
 
This Agreement may be executed in counterparts (and by different parties hereto
in different counterparts), each of which shall constitute an original, but all
of which when taken together shall constitute a single contract.  This Agreement
and the other Credit Documents constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the
 
 
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subject matter hereof (except for the Engagement Letter).  Except as provided in
Section 3.1, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof that, when taken together, bear the signatures
of each of the other parties hereto.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement.
 
9.13           Disclosure of Information.
 
.  The Borrower agrees and consents to the Administrative Agent’s and the
Arranger’s disclosure of information relating to this transaction to Gold Sheets
and other similar bank trade publications.  Such information will consist of
deal terms and other information customarily found in such publications.
 
9.14           No Advisory or Fiduciary Responsibility.
 
.  In connection with all aspects of each transaction contemplated hereby, the
Borrower acknowledges and agrees that: (a) the credit facility provided for
hereunder and any related arranging or other services in connection therewith
(including in connection with any amendment, waiver or other modification hereof
or of any other Credit Document) are an arm’s−length commercial transaction
between the Borrower and its Affiliates, on the one hand, and the Administrative
Agent and the Arranger, on the other hand, and the Borrower is capable of
evaluating and understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated hereby and by the other Credit
Documents (including any amendment, waiver or other modification hereof or
thereof); (b) in connection with the process leading to such transaction, the
Administrative Agent and the Arranger each is and has been acting solely as a
principal and is not the financial advisor, agent or fiduciary, for the Borrower
or any of its Affiliates, or, to its knowledge, stockholders, creditors or
employees or any other Person; (c) neither the Administrative Agent nor the
Arranger has assumed or will assume an advisory, agency or fiduciary
responsibility in favor of the Borrower with respect to any of the transactions
contemplated hereby or the process leading thereto, including with respect to
any amendment, waiver or other modification hereof or of any other Credit
Document (irrespective of whether the Administrative Agent or the Arranger has
advised or is currently advising the Borrower or any of its Affiliates on other
matters) and neither the Administrative Agent nor the Arranger has any
obligation to the Borrower or any of its Affiliates with respect to the
transactions contemplated hereby except those obligations expressly set forth
herein and in the other Credit Documents; (iv) the Administrative Agent and the
Arranger and their respective Affiliates may be engaged in a broad range of
transactions that involve interests that differ from those of the Borrower and
its Affiliates, and neither the Administrative Agent nor the Arranger has any
obligation to disclose any of such interest by virtue of any advisory, agency or
fiduciary relationship and (v) the Administrative Agent and the Arranger have
not provided and will not provide any legal, accounting, regulatory or tax
advice with respect to any of the transactions contemplated hereby (including
any amendment, waiver or other modification hereof or of any other Loan
Document) and the Borrower has consulted its own legal, accounting, regulatory
an tax advisors to the extent it has deemed appropriate. The Borrower hereby
waives and releases, to the fullest extent permitted by Law, any claims that it
may have against the Administrative Agent and the Arranger with respect to any
breach or alleged breach of agency or fiduciary duty.
 
 
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9.15           USA Patriot Act Notice.
 
Each Lender that is subject to the PATRIOT Act and the Administrative Agent (for
itself and not on behalf of any Lender) hereby notifies the Borrower that
pursuant to the requirements of the PATRIOT Act, it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender or the Administrative Agent, as applicable, to identify the
Borrower in accordance with the PATRIOT Act.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

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

 
AMERICAN FINANCIAL GROUP, INC.
 
 
         
 
By:
 /s/Keith A. Jensen       Name:  Keith A. Jensen       Title:    Senior Vice
President          

 

Signature Page to Credit Agreement
 
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WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent and as a Lender
 
 
         
 
By:
 /s/Kimberly Shaffer       Name:  Kimberly Shaffer        Title:    Managing
Director          

 
 

Signature Page to Credit Agreement

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BARCLAYS BANK PLC, as a Lender
 
 
         
 
By:
/s/Jonathan Bush       Name:  Jonathan Bush       Title:    Director -
Insurance           

 

Signature Page to Credit Agreement

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JP MORGAN CHASE BANK, NA, as a Lender
 
 
         
 
By:
 /s/Craig Fegley       Name:  Craig Fegley       Title:    Vice President       
   

Signature Page to Credit Agreement
 
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U.S. BANK, NATIONAL ASSOCIATION, as a Lender
 
 
         
 
By:
 /s/Patrick McGraw       Name:  Patrick McGraw       Title:    Vice President  
       

 

Signature Page to Credit Agreement
 
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PNC BANK, NATIONAL ASSOCIATION, as a Lender
 
 
         
 
By:
 /s/C. Joseph Richardson       Name:  C. Joseph Richardson       Title:   
Senior Vice President          

 

 

Signature Page to Credit Agreement
 
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Schedule 1.1(a)

Commitments and
Notice Addresses

Commitments

 
 
Lender
Commitment
Wachovia Bank, National Association
$40,000,000
 
Barclays Bank PLC
$30,000,000
 
JP Morgan Chase Bank, N.A.
$25,000,000
 
U.S. Bank, National Association
$15,000,000
 
PNC Bank, National Association
$10,000,000
 
Total
$120,000,000
 

Notice Addresses

Party
Address
Borrower
American Financial Group, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
Attention: David J. Witzgall, Vice President & Treasurer
Telephone: (513) 369-3665
Telecopier: (513) 369-3873
 
Electronic Mail: dwitzgall@gaic.com
Website Address: www.afginc.com
 
U.S. Taxpayer Identification Number: 31-1544320
Wachovia Bank, National Association
Wachovia Bank, N.A.
Charlotte, NC
ABA:   053000219
Acct:  01459670001944
Acct Name: Agency Svcs Synd Clearing
 
Additional details should include the following:
Ref:  Include Deal Name for tracking purposes
Bank:  Include name of Account Administrator for the deal
Order Party details: Include name of Borrower if different from Deal Name
 
Address for notices as Administrative Agent:
Wachovia Bank, National Association
1525 W. W.T. Harris Blvd
Building 3A2, Mailcode NC 0680
Charlotte, North Carolina  28262
Attention:  Syndication Agency Services
Telephone:  (704) 383-3721
Telecopy:  (704) 383-0288
 

 
 
 
 
 
 
 
 
 
 

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