Exhibit 10.1

EXECUTION VERSION

 

 

CREDIT AGREEMENT

Dated as of December 21, 2010

among

CNO FINANCIAL GROUP, INC.,

as Company,

MORGAN STANLEY SENIOR FUNDING, INC.,

as Agent,

and

THE LENDERS PARTY HERETO

 

 

MORGAN STANLEY SENIOR FUNDING, INC.

and

BARCLAYS CAPITAL,

as Joint Lead Arrangers and Joint Bookrunners,

BARCLAYS CAPITAL,

as Syndication Agent

and

FBR CAPITAL MARKETS & CO.,

as Documentation Agent

 

 

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TABLE OF CONTENTS

 

          Page      ARTICLE 1       DEFINITIONS   

Section 1.01.

   Certain Defined Terms      1   

Section 1.02.

   Other Interpretive Provisions      24   

Section 1.03.

   Classification of Loans and Borrowings      25   

Section 1.04.

   Accounting Principles      25       ARTICLE 2       THE CREDITS   

Section 2.01.

   Loan      25   

Section 2.02.

   [RESERVED]      26   

Section 2.03.

   Borrowing, Conversion and Continuation of Loans      26   

Section 2.04.

   Notes; Loan Accounts      27   

Section 2.05.

   Termination of Commitments      27   

Section 2.06.

   Payment at Maturity      28   

Section 2.07.

   Repayment of Loans      28   

Section 2.08.

   Optional and Mandatory Prepayments      28   

Section 2.09.

   Interest      30   

Section 2.10.

   Fees      31   

Section 2.11.

   Computation of Fees and Interest      31   

Section 2.12.

   Payments Generally      31   

Section 2.13.

   Sharing of Payments by Lenders      33       ARTICLE 3       TAXES, YIELD
PROTECTION AND ILLEGALITY   

Section 3.01.

   Taxes      33   

Section 3.02.

   Illegality      36   

Section 3.03.

   Increased Costs and Reduction of Return      37   

Section 3.04.

   Funding Losses      37   

Section 3.05.

   Inability to Determine Rates      38   

Section 3.06.

   Certificates of Lenders      38   

Section 3.07.

   Substitution of Lenders      38   

Section 3.08.

   Survival      39       ARTICLE 4       CONDITIONS PRECEDENT   

Section 4.01.

   Conditions of Initial Borrowing      39   

Section 4.02.

   Conditions to All Borrowings      42   

Section 4.03.

   Determinations Under Section 4.01      42   

 

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          Page        ARTICLE 5           REPRESENTATIONS AND WARRANTIES   

Section 5.01.

   Corporate Existence and Power      43   

Section 5.02.

   Corporate Authorization; No Contravention      43   

Section 5.03.

   Governmental Authorization      43   

Section 5.04.

   Binding Effect      44   

Section 5.05.

   Litigation      44   

Section 5.06.

   No Default      44   

Section 5.07.

   ERISA Compliance      44   

Section 5.08.

   Margin Regulations      45   

Section 5.09.

   Title to Properties      45   

Section 5.10.

   Taxes      45   

Section 5.11.

   Financial Condition      46   

Section 5.12.

   Environmental Matters      47   

Section 5.13.

   Regulated Activities and Regulated Entities      47   

Section 5.14.

   Subsidiaries      48   

Section 5.15.

   Insurance Licenses      48   

Section 5.16.

   Full Disclosure      48   

Section 5.17.

   Solvency      48   

Section 5.18.

   Security Interests      48   

Section 5.19.

   Insurance      49   

Section 5.20.

   OFAC; Anti-Terrorism Laws; PATRIOT Act      49   

Section 5.21.

   Surplus Debenture Interest and Dividends      49       ARTICLE 6      
AFFIRMATIVE COVENANTS   

Section 6.01.

   Financial Statements      50   

Section 6.02.

   Certificates; Other Information      51   

Section 6.03.

   Notices      53   

Section 6.04.

   Preservation of Corporate Existence, Etc.      54   

Section 6.05.

   Insurance      54   

Section 6.06.

   Payment of Obligations      55   

Section 6.07.

   Compliance with Laws      55   

Section 6.08.

   Compliance with ERISA      55   

Section 6.09.

   Inspection of Property and Books and Records      55   

Section 6.10.

   Information Regarding Collateral      56   

Section 6.11.

   Use of Proceeds      56   

Section 6.12.

   Additional Subsidiaries; Immaterial Subsidiaries      56   

Section 6.13.

   Further Assurances      56   

Section 6.14.

   Maintenance of Ratings      57   

Section 6.15.

   Post-Closing Matters      57       ARTICLE 7       NEGATIVE COVENANTS   

Section 7.01.

   Limitation on Indebtedness; Certain Capital Stock      57   

Section 7.02.

   Liens      59   

Section 7.03.

   Disposition of Assets      61   

Section 7.04.

   [Reserved.]      63   

 

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          Page   Section 7.05.    Transactions with Affiliates      63   
Section 7.06.    Change in Business      63    Section 7.07.    Fundamental
Changes      63    Section 7.08.    Restricted Payments      64    Section 7.09.
   Investments and Acquisitions      64   

Section 7.10.

   Prepayment of Certain Indebtedness; Modifications of Certain Agreements;
Synthetic Purchase Agreements      65    Section 7.11.    Debt to Total
Capitalization Ratio      66    Section 7.12.    Interest Coverage Ratio      66
   Section 7.13.    [Intentionally Omitted.]      66    Section 7.14.   
Aggregate RBC Ratio      66    Section 7.15.    Combined Statutory Capital and
Surplus Level      66    Section 7.16.    Investment Portfolio Requirement     
67    Section 7.17.    Restrictive Agreements      67    Section 7.18.   
Holding Company Activities      68    Section 7.19.    Changes in Accounting
Policies; Fiscal Year      68       ARTICLE 8       EVENTS OF DEFAULT   
Section 8.01.    Events of Default      68    Section 8.02.    Remedies      71
   Section 8.03.    Rights Not Exclusive      71       ARTICLE 9       THE AGENT
   Section 9.01.    Appointment and Authority      72    Section 9.02.    Rights
as a Lender      72    Section 9.03.    Exculpatory Provisions      72   
Section 9.04.    Reliance by Agent      73    Section 9.05.    Delegation of
Duties      73    Section 9.06.    Resignation of Agent      73    Section 9.07.
   Non-Reliance on Agent and Other Lenders      74    Section 9.08.    No Other
Duties, Etc.      74    Section 9.09.    Agent May File Proofs of Claim      74
   Section 9.10.    Collateral and Guaranty Matters      75    Section 9.11.   
Indemnification of Agent      75    Section 9.12.    Withholding Tax      76   
   ARTICLE 10       MISCELLANEOUS    Section 10.01.    Amendments and Waivers   
  76    Section 10.02.    Notices      77    Section 10.03.    No Waiver;
Cumulative Remedies      78    Section 10.04.    Costs and Expenses      78   
Section 10.05.    Company Indemnification; Damage Waiver      79   
Section 10.06.    Payments Set Aside      80    Section 10.07.    Assignments,
Successors, Participations, Etc.      80    Section 10.08.    Confidentiality   
  82   

 

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          Page   Section 10.09.    Set-off      83    Section 10.10.   
Notification of Addresses, Lending Offices, Etc.      83    Section 10.11.   
Counterparts      83    Section 10.12.    Survival of Representations and
Warranties      83    Section 10.13.    Severability      84    Section 10.14.
   Replacement of Defaulting Lenders and Non-Consenting Lenders      84   
Section 10.15.    Governing Law; Jurisdiction; Consent to Service of Process   
  84    Section 10.16.    Waiver of Jury Trial      85    Section 10.17.    USA
PATRIOT Act Notice      85    Section 10.18.    Entire Agreement      86   

 

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SCHEDULES

   Schedule 2.01    Commitments Schedule 5.05    Litigation Schedule 5.07   
ERISA Schedule 5.13    Investment Companies Schedule 5.14    Subsidiaries
Schedule 6.15    Post-Closing Matters Schedule 7.01    Existing Indebtedness
Schedule 7.02    Existing Liens Schedule 7.09    Existing and Committed
Investments Schedule 7.17    Restrictive Agreements Schedule 10.02    Addresses
for Notices

EXHIBITS

   Exhibit A    Form of Compliance Certificate Exhibit B    Form of Note Exhibit
C    Form of Loan Notice Exhibit D    Form of Assignment and Assumption Exhibit
E    Eurodollar Rate Funding Loss Determination Methodology Exhibit F    Form of
Security Agreement Exhibit G-1   

United States Tax Compliance Certificate (For Foreign Lenders That Are Not
Partnerships For U.S. Federal Income Tax Purposes)

Exhibit G-2   

United States Tax Compliance Certificate (For Foreign Lenders That Are
Partnerships For U.S. Federal Income Tax Purposes)

Exhibit G-3   

United States Tax Compliance Certificate (For Foreign Participants That Are Not
Partnerships For U.S. Federal Income Tax Purposes)

Exhibit G-4   

United States Tax Compliance Certificate (For Foreign Participants That Are
Partnerships For U.S. Federal Income Tax Purposes)

Exhibit H-1    Form of Opinion of Dewey & LeBoeuf LLP Exhibit H-2    Form of
Opinion of Karl Kindig Exhibit H-3    Form of Opinion of Baker & Daniels LLP
Exhibit I    Form of Solvency Certificate Exhibit J    Form of Pari Passu
Intercreditor Agreement

 

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CREDIT AGREEMENT

This CREDIT AGREEMENT is entered into as of December 21, 2010, by and among CNO
FINANCIAL GROUP, INC., a Delaware corporation (together with its successors, the
“Company”), the lenders from time to time party to this Agreement (collectively,
the “Lenders”; individually, each a “Lender”), and MORGAN STANLEY SENIOR
FUNDING, INC., as administrative agent for the Lenders.

WHEREAS, the Company desires to obtain from the Lenders a term loan facility in
an aggregate principal amount of $375,000,000, the proceeds of which will be
used, together with the proceeds from the offering of the Senior Secured Notes,
(i) to refinance in full all indebtedness outstanding under the Existing Credit
Agreement and (ii) to pay fees and expenses incurred in connection with the
foregoing;

WHEREAS, the Company is willing to secure its obligations under this Agreement
and certain other obligations by granting Liens on substantially all of its
assets to the Agent, for the benefit of the Secured Parties, as provided in the
Security Documents; and

WHEREAS, the Company is willing to cause each of its current and future Domestic
Subsidiaries (other than Insurance Subsidiaries, Subsidiaries of Insurance
Subsidiaries and Immaterial Subsidiaries) to (i) guarantee the foregoing
obligations of the Company and (ii) secure such guarantee thereof by granting
Liens on substantially all of the assets of such Subsidiaries to the Agent, for
the benefit of the Secured Parties, as provided in the Security Documents;

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

ARTICLE 1

DEFINITIONS

Section 1.01. Certain Defined Terms.

The following terms have the following meanings:

“Account Control Agreement” has the meaning specified in the Security Agreement.

“Acquisition” means (i) any Investment by the Company or any of its Subsidiaries
in a Person (other than an existing Wholly-Owned Subsidiary) whereby such Person
becomes a direct or indirect Subsidiary of the Company or is merged with and
into the Company or such Subsidiary or (ii) an acquisition by the Company or any
of its Subsidiaries of the property and assets of any Person (other than an
existing Wholly-Owned Subsidiary) that constitutes all or substantially all of
the assets of such Person or any division, line of business, book of business or
business unit of such Person; provided that capital expenditures (as determined
in accordance with GAAP) that do not, individually or as part of a series of
related transactions, result in the acquisition of all or substantially all of
the assets of any Person or any division, line of business, book of business or
business unit of such Person shall be deemed not to be Acquisitions.

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power (a) to vote 10%
or more of the securities (on a fully diluted basis) having ordinary voting
power for the election of directors or

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managing general partners of the other Person or (b) to direct or cause the
direction of the management and policies of the other Person, whether through
the ownership of voting securities, membership interests, by contract or
otherwise.

“Agent” means MSSF, in its capacity as administrative agent under the Loan
Documents, and its successors and permitted assigns in such capacity.

“Agent-Related Persons” means the initial Agent and any successor Agent,
together with their respective Affiliates, and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.

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

“Aggregate RBC Ratio” means, with respect to the Insurance Subsidiaries taken as
a whole, on any date of determination, one-half of the ratio (expressed as a
percentage) of (a) the aggregate Total Adjusted Capital (as defined by each
relevant Insurance Subsidiary’s Department) for the Insurance Subsidiaries to
(b) the aggregate Authorized Control Level Risk-Based Capital (as defined by
each relevant Insurance Subsidiary’s Department) for the Insurance Subsidiaries.

“Agreement” means this Credit Agreement.

“A.M. Best” means A.M. Best Company.

“Annual Statement” means the annual statutory financial statement of any
Insurance Subsidiary required to be filed with the insurance commissioner (or
similar authority) of its jurisdiction of incorporation, which statement shall
be in the form required by such Insurance Subsidiary’s jurisdiction of
incorporation or, if no specific form is so required, in the form of financial
statements permitted by such insurance commissioner (or such similar authority)
to be used for filing annual statutory financial statements and shall contain
the type of information permitted or required by such insurance commissioner (or
such similar authority) to be disclosed therein, together with all exhibits or
schedules filed therewith.

“Anti-Money Laundering Laws” means any and all laws, judgments, orders,
executive orders, decrees, ordinances, rules, regulations, statutes, case law or
treaties applicable to a Obligor, its subsidiaries or Affiliates, related to
terrorism financing or money laundering including any applicable provision of
Title III of the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT Act) of 2001
(Title III of Pub. L. 107-56) and The Currency and Foreign Transactions
Reporting Act (also known as the “Bank Secrecy Act”, 31 U.S.C. §§ 5311-5330 and
12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959).

“Anti-Terrorism Laws” means any Requirement of Law related to terrorism
financing or money laundering, including the Patriot Act, The Currency and
Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act,” 31
U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959), the
Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) and Executive
Order 13224 (effective September 24, 2001).

“Applicable Margin” means, for any day, a percentage per annum equal to (a) with
respect to any Eurodollar Rate Loan, 6.00% or (b) with respect to any Base Rate
Loan, 5.00%.

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

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“Asset Sale” means any Disposition of property or series of related Dispositions
of property pursuant to Section 7.03(e) (only to the extent proceeds therefrom
are not required to be retained by any Insurance Subsidiary pursuant to
regulatory restrictions), (m) or (n).

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee substantially in the form of Exhibit D or in
another form reasonably acceptable to the Agent.

“Attorney Costs” means and includes all reasonable fees, expenses and
disbursements of any law firm or other external legal counsel and, without
duplication, the reasonable allocated cost of internal legal services and all
reasonable out-of pocket expenses and out-of pocket disbursements of internal
counsel.

“Base Rate” means for any day a fluctuating rate per annum equal to the highest
of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest, if any,
quoted for such day in The Wall Street Journal as the “U.S. Prime Rate”, (c) the
Eurodollar Rate for an Interest Period of one month beginning on such day (or if
such day is not a Business Day, the Business Day immediately preceding such day)
plus 1.00% per annum and (d) 2.50% per annum.

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

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

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

“Calculation Period” means, with respect to any ratio or calculation, the period
for which such ratio or calculation is being calculated.

“Capital Adequacy Regulation” means any guideline, request or directive of any
central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.

“Capital and Surplus” means, as to any Insurance Subsidiary, as of any date, the
total amount shown on line 38, page 3, column 1 (or such other line on which the
equivalent information is provided on any other such Annual Statement) of the
Annual Statement of such Insurance Subsidiary as of such date, or an amount
determined in a consistent manner for any date other than one as of which an
Annual Statement is prepared.

“Capital Expenditures” means, for any period, (a) the additions to property,
plant and equipment capitalized in accordance with GAAP and other capital
expenditures of the Company and its Subsidiaries that are (or would be) set
forth in a consolidated statement of cash flows of the Company and its
Subsidiaries for such period prepared in accordance with GAAP and (b) any
Capitalized Lease Liabilities incurred by the Company and its Subsidiaries
during such period.

“Capital Stock” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other

 

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than a corporation) and any and all warrants, rights or options to purchase any
of the foregoing; provided that, for the avoidance of doubt, Capital Stock shall
not be deemed to include debt convertible or exchangeable for any of the
foregoing.

“Capitalized Lease Liabilities” means, with respect to any Person, all monetary
obligations of such Person under any leasing or similar arrangement that, in
accordance with GAAP, would be classified as a capitalized lease, and, for
purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.

“Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition;
(b) certificates of deposit, time deposits, eurodollar time deposits or
overnight bank deposits having maturities of twelve months or less from the date
of acquisition issued by any commercial bank organized under the laws of the
United States or any state thereof having combined capital and surplus of not
less than $500,000,000 and a short term deposit rating of at least A-1 by S&P
and P-l by Moody’s, or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease publishing ratings
of commercial paper issuers generally; (c) commercial paper of an issuer rated
at least A-1 by S&P and P-l by Moody’s, or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within nine months from the date of acquisition; (d) repurchase obligations of
any Lender or of any commercial bank satisfying the requirements of clause
(b) of this definition, having a term of not more than 30 days, with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P and A2 by Moody’s; (f) securities with maturities of one year or less
from the date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; or (g) shares of money market mutual or similar funds that invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.

“Cash Interest Expense” means, for any Calculation Period, the sum of (a) total
interest expense, to the extent paid or payable in cash, of the Company and its
Subsidiaries determined on a consolidated basis in accordance with GAAP,
excluding interest paid or, without duplication, accrued but unpaid by any
Insurance Subsidiary to the extent otherwise included in total interest expense
in this clause (a) for such Calculation Period, and (b) total dividends paid or
payable in cash on any preferred stock issued by the Company to the extent the
terms of such preferred stock require payment of cash dividends for such
Calculation Period; provided, that, following the conversion of any such
preferred stock into common stock, any cash dividends paid on such preferred
stock during the applicable Calculation Period shall, on a Pro Forma Basis, as
if the conversion was completed on the first day of the Calculation Period, be
excluded from calculations of Cash Interest Expense for such Calculation Period.

“Cash Management Obligations” means obligations owed by any Obligor to any
Lender or any Affiliate of a Lender in respect of any overdraft and related
liabilities arising from treasury, depository and cash management services or
any automated clearing house transfers of funds or in respect of any credit card
or similar services.

 

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“Casualty Event” means any casualty or other insured damage to any property of
the Company or any of its Subsidiaries (other than Insurance Subsidiaries or
Subsidiaries of Insurance Subsidiaries), or any taking of any such property
under power of eminent domain or by condemnation or similar proceeding, or any
transfer of any such property in lieu of a condemnation or similar taking
thereof.

“CBOs” means notes or other instruments (other than CMOs) secured by collateral
consisting primarily of debt securities and/or other types of debt obligations,
including loans.

“CDOC” means CDOC, Inc., a Delaware corporation, and a direct Wholly-Owned
Subsidiary of the Company on the Effective Date.

“CDOC Preferred Stock” means preferred stock of CDOC that is held by one or more
of the Insurance Subsidiaries.

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980.

“Change of Control” means (a) any acquisition, directly or indirectly, by any
person or group (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), of beneficial ownership (within the meaning of Rule 13d-3 of the
SEC under the Exchange Act) of 35% or more of the outstanding shares of Voting
Stock of the Company, (b) during any period of 12 consecutive calendar months,
commencing on the Effective Date, the ceasing of those individuals (the
“Continuing Directors”) who (i) were directors of the Company on the first day
of each such period or (ii) who subsequently became directors of the Company and
whose election or initial nomination for election subsequent to that date was
approved by a majority of the Continuing Directors then on the board of
directors of the Company, to constitute a majority of the board of directors of
the Company, or (c) the occurrence of a “change of control” (howsoever defined)
in the indenture or any other instrument governing any Indebtedness or preferred
stock with an aggregate outstanding amount in excess of $50,000,000.

“Closing Date” means December 21, 2010, or, if later, the first date all the
conditions precedent in Section 4.01 are satisfied or waived in accordance with
Section 10.01.

“CMOs” means notes or other instruments secured by collateral consisting
primarily of mortgages, mortgage-backed securities and/or other types of
mortgage-related obligations.

“CNO Available Cash Flow” means, for any Calculation Period, the sum, without
duplication, of (a) dividends paid in cash to the Company by any Subsidiary plus
(b) interest paid in cash to the Company by any Subsidiary pursuant to any
Indebtedness owing by such Subsidiary to the Company plus (c) interest or
principal paid in cash to the Company with respect to any Surplus Debenture plus
(d) amounts paid in cash to the Company under the Tax Sharing Agreement plus
(e) management and other similar fees received by the Company under servicing
agreements or otherwise from any Subsidiary plus (f) amounts paid in cash to the
Company pursuant to a loan made to it by any Subsidiary plus (g) the Company’s
Investment Income received in cash minus (h) cash operating expenses of the
Company minus (i) Capital Expenditures of the Company made in cash minus (j) any
amounts paid by the Company in respect of interest on or in repayment of any
loan referred to in clause (f) above plus (k) non-recurring cash and non-cash
charges (not to exceed $40,000,000 in the aggregate (of which up to $25,000,000
may be cash charges) for all Calculation Periods) related to restructuring,
consolidation, severance or discontinuance of any portion of the operations,
employees and/or management of the Company minus (l) any amounts paid in cash by
the Company to any Insurance Subsidiary in respect of any overpayment by such
Insurance Subsidiary of amounts required to be paid by such Insurance Subsidiary
to the Company under the Tax Sharing Agreement, in each case for such
Calculation Period. Amounts received by the Company

 

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or any of its Subsidiaries and required to be applied to prepay the Borrowings
pursuant to Section 2.08(b) (other than pursuant to Section 2.08(b)(iv)) shall,
to the extent otherwise included in CNO Available Cash Flow for any Calculation
Period, be excluded from this calculation for such Calculation Period.

“Code” means the Internal Revenue Code of 1986, and regulations promulgated
thereunder.

“Collateral” means, collectively, all of the Security Agreement Collateral and
all other property of whatever kind and nature subject or purported to be
subject from time to time to a Lien under any Security Document.

“Collateral and Guarantee Requirement” means the requirement that:

(a) the Agent shall have received from each Obligor either (i) a counterpart of
the Security Agreement duly executed and delivered on behalf of such Obligor or
(ii) in the case of any Person that becomes an Obligor after the Effective Date,
a supplement to the Security Agreement, in the form specified therein, duly
executed and delivered on behalf of such Obligor;

(b) all outstanding Capital Stock in any Subsidiary owned by or on behalf of any
Obligor shall have been pledged pursuant to the Security Agreement (except that,
in the case of Foreign Subsidiaries, (x) such pledge shall be limited to 65% of
the outstanding Voting Stock and 100% of the outstanding Capital Stock (other
than Voting Stock) of first-tier Foreign Subsidiaries and (y) no assets of any
Foreign Subsidiary (including any Capital Stock or Voting Stock of a Subsidiary
owned by a Foreign Subsidiary) shall be subject to the Collateral and Guarantee
Requirement) and the Agent shall have received all certificates or other
instruments representing such Capital Stock, together with stock powers or other
instruments of transfer with respect thereto endorsed in blank;

(c) all documents and instruments, including Uniform Commercial Code financing
statements, required by law or reasonably requested by the Agent to be filed,
registered or recorded to create the Liens intended to be created by the
Security Documents and perfect or record such Liens to the extent, and with the
priority, required by the Security Agreement, shall have been filed, registered
or recorded or delivered to the Agent for filing, registration or recording;

(d) each Obligor shall have obtained all consents and approvals required to be
obtained by it in connection with the execution and delivery of all Security
Documents to which it is a party, the performance of its obligations thereunder
and the granting of the Liens granted by it thereunder; and

(e) each Obligor shall have taken all other action required under the Security
Documents to perfect, register and/or record the Liens granted by it thereunder.

“Combined Statutory Capital and Surplus” means, as of the last day of any Fiscal
Quarter, the sum of the amounts shown on the Combined Statutory Statement of the
Insurance Subsidiaries as of the last day of such Fiscal Quarter on (i) p. 3,
line 38 and (ii) p. 3, line 24.1.

“Combined Statutory Statement” means a statement combining the Quarterly
Statements or Annual Statements, as applicable, of all the Insurance
Subsidiaries.

“Commitment” means, as to each Lender, its obligation to make Loans to the
Company pursuant to Section 2.01 in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth opposite such Lender’s name
on Schedule 2.01 under the caption “Commitment” or opposite such

 

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caption in the Assignment and Assumption pursuant to which such Lender becomes a
party hereto, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement.

“Company” has the meaning specified in the introduction to this Agreement.

“Compensation Period” has the meaning specified in Section 2.12(c)(ii).

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

“Contingent Obligation” means, without duplication, any agreement, undertaking
or arrangement by which any Person guarantees, endorses or otherwise becomes or
is contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the debt,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection or indemnities under contracts entered
into in the ordinary course of business and not in respect of Indebtedness or
the issuance of Capital Stock), or guarantees the payment of dividends or other
distributions upon the shares of any other Person; provided that the obligations
of any Person under Reinsurance Agreements or in connection with Investments of
Insurance Subsidiaries permitted by the applicable Department shall not be
deemed Contingent Obligations of such Person. The amount of any Contingent
Obligation of any Person shall (subject to any limitation set forth therein) be
deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith.

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

“Debt to Total Capitalization Ratio” means, as of any date of determination,
without duplication, the ratio of (a) the principal amount of and accrued but
unpaid interest on all Indebtedness of the Company outstanding on such date,
other than (i) Indebtedness owing to any Subsidiary Guarantor and
(ii) Indebtedness of the kind referred to in clause (e) of the definition of
“Indebtedness,” to (b) Total Capitalization on such date.

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

“Default” means any event or circumstance that constitutes an Event of Default
or that, with the giving of notice, the lapse of time, or both, would (if not
cured or otherwise remedied during such time) constitute an Event of Default.

“Defaulting Lender” means any Lender that, as determined by the Agent (following
consultation with the Company), (a) has failed to perform any of its funding
obligations hereunder, including in respect of its Loans, within three Business
Days of the date required to be funded by it hereunder, (b) has notified the
Company or the Agent that it does not intend to comply with its funding
obligations or has made a public statement to that effect with respect to its
funding obligations hereunder, (c) has failed, within three Business Days after
request by the Agent, to confirm in a manner satisfactory to the Agent that it
will comply with its funding obligations, or (d) has, or has a direct or
indirect parent company that has, (i) become the subject of a proceeding under
any Debtor Relief Law, (ii) had a receiver, conservator,

 

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trustee, administrator, assignee for the benefit of creditors or similar Person
charged with reorganization or liquidation of its business or a custodian
appointed for it, or (iii) taken any action in furtherance of, or indicated its
consent to, approval of or acquiescence in any such proceeding or appointment;
provided that a Lender shall not be a Defaulting Lender solely by virtue of the
ownership or acquisition of any equity interest in that Lender or any direct or
indirect parent company thereof by a Governmental Authority.

“Department” means, with respect to any Insurance Subsidiary, the Governmental
Authority of such Insurance Subsidiary’s state of domicile with which such
Insurance Subsidiary is required to file its Annual Statement.

“Disposition” means the sale, assignment, leasing as lessor (other than in the
ordinary course), transfer, contribution, conveyance, issuance or other disposal
of, or granting of options, warrants or other rights with respect to, any of a
Person’s assets (including any transaction pursuant to a Reinsurance Agreement
or a sale and leaseback transaction and, in the case of any Subsidiary, the
issuance or sale of its Capital Stock). The terms “Dispose”, “Disposing of” and
“Disposed of” shall have correlative meaning.

“Disqualified Capital Stock” means any Capital Stock which, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, (a) matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the first anniversary of the Maturity Date, (b) is convertible into or
exchangeable (unless at the sole option of the issuer thereof) for (i) debt
securities or (ii) any Capital Stock referred to in (a) above, in each case at
any time on or prior to the first anniversary of the Maturity Date, or
(c) contains any repurchase obligation which may come into effect prior to
payment in full of all Obligations; provided, however, that any Capital Stock
that would not constitute Disqualified Capital Stock but for provisions thereof
giving holders thereof (or the holders of any security into or for which such
Capital Stock is convertible, exchangeable or exercisable) the right to require
the issuer thereof to redeem such Capital Stock upon the occurrence of a change
in control or an asset sale occurring prior to the first anniversary of the
Maturity Date shall not constitute Disqualified Capital Stock if such Capital
Stock provides that the issuer thereof will not redeem any such Capital Stock
pursuant to such provisions prior to the repayment in full of the Obligations.

“Dollars,” “dollars” and “$” each mean lawful money of the United States.

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

“Economic Sanctions Laws” means any and all laws, judgments, orders, executive
orders, decrees, ordinances, rules, regulations, statutes, case law or treaties
applicable to a Obligor, its Subsidiaries or Affiliates relating to economic
sanctions and terrorism financing, including any applicable provisions of the
Trading with the Enemy Act (50 U.S.C. App. §§ 5(b) and 16, as amended), the
International Emergency Economic Powers Act (50 U.S.C. §§ 1701-1706, as amended)
and Executive Order 13224 (effective September 24, 2001), as amended.

“Effective Date” means the date on which all conditions precedent set forth in
Sections 4.01 and 4.02 are satisfied or waived in accordance with Section 10.01.

“Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; (c) an
Approved Fund; and (d) any other Person (other than a natural person) approved
by (i) the Agent and (ii) unless an Event of Default has occurred and is
continuing, the Company (each such approval not to be unreasonably withheld or
delayed); provided that (x) notwithstanding the foregoing, “Eligible Assignee”
shall not include

 

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the Company or any of the Company’s Subsidiaries and (y) the Company shall be
deemed to have approved an assignee unless it shall object thereto by written
notice to the Agent within five (5) Business Days after having received notice
thereof.

“Embargoed Person” means any party that (i) is publicly identified on the most
current list of “Specially Designated Nationals and Blocked Persons” published
by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or
resides, is organized or chartered or has a place of business in a country or
territory subject to OFAC sanctions or embargo programs or (ii) is publicly
identified as prohibited from doing business with the United States under the
International Emergency Economic Powers Act, the Trading With the Enemy Act or
any other Requirement of Law.

“Environment” means ambient air, indoor air, surface water, groundwater,
drinking water, soil, surface and subsurface strata, and natural resources such
as wetlands, flora and fauna.

“Environmental Claims” means all written claims, complaints, notices or
inquiries, by any Governmental Authority or other Person alleging potential
liability or responsibility for violation of any Environmental Law, or for
release or injury to the environment or threat to public health, personal injury
(including sickness, disease or death), property damage, natural resources
damage, or otherwise alleging liability or responsibility for damages (punitive
or otherwise), cleanup, removal, remedial or response costs, restitution, civil
or criminal penalties, injunctive relief or other type of relief, resulting from
or based upon the presence, placement, or Release (including intentional or
unintentional, negligent or non-negligent, sudden or non-sudden or accidental or
non-accidental placement, spills, leaks, discharges, emissions or releases) of
any Hazardous Material at, in, under or from property, whether or not owned by
the Company or any of its Subsidiaries, excluding in any case liabilities or
claims arising under any insurance contract or policy, reinsurance agreement or
retrocession agreement relating to any of the foregoing.

“Environmental Laws” means all Requirements of Law relating to pollution or
protection of the Environment, health and safety.

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

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

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

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan;
(b) with respect to any Pension Plan, the failure to satisfy the minimum funding
standard under Section 412 of the Code and Section 302 of ERISA, whether or not
waived, the failure to make by its due date a required installment under
Section 430(j) of the Code with respect to any Pension Plan or the failure to
make a required contribution to a Multiemployer Plan; (c) a withdrawal by the
Company, any of its Subsidiaries or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a

 

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substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (d) a complete or partial withdrawal by the Company, any of its
Subsidiaries or any ERISA Affiliate from a Multiemployer Plan or notification
that a Multiemployer Plan is in reorganization; (e) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination under
Section 4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (f) an event or condition that
could reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (g) the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Company, any of its Subsidiaries or any ERISA
Affiliate.

“Eurodollar Rate” means for any Interest Period with respect to a Eurodollar
Rate Loan:

(a) the rate per annum equal to the rate determined by the Agent to be the
offered rate that appears on the Reuters page (or any successor thereto) that
displays an average British Bankers Association Interest Settlement Rate for
deposits in Dollars (for delivery on the first day of such Interest Period) with
a term equivalent to such Interest Period, determined as of approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period, or

(b) if the rate referenced in the preceding clause (a) does not appear on such
page or service or such page or service shall not be available, the rate per
annum equal to the rate determined by the Agent to be the offered rate on such
other page or other service that displays an average British Bankers Association
Interest Settlement Rate for deposits in Dollars (for delivery on the first day
of such Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period, or

(b) if the rates referenced in the preceding clauses (a) and (b) are not
available, the rate per annum determined by the Agent as the rate of interest at
which deposits in Dollars for delivery on the first day of such Interest Period
in same day funds in the approximate amount of the Eurodollar Rate Loan being
made, continued or converted by MSSF and with a term equivalent to such Interest
Period would be offered by MSSF’s London Branch to major banks in the London
interbank eurodollar market at their request at approximately 4:00 p.m. (London
time) two Business Days prior to the first day of such Interest Period;

provided that the Eurodollar Rate shall not be deemed to be less than 1.50% per
annum.

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

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

“Exchange Act” means the Securities Exchange Act of 1934 and the regulations
promulgated thereunder.

“Excluded Subsidiary” means any Subsidiary that is a Foreign Subsidiary, a
Subsidiary of a Foreign Subsidiary, a non-Wholly-Owned Subsidiary or an
Immaterial Subsidiary.

“Excluded Taxes” means, with respect to the Agent, any Lender or any other
recipient of any payment to be made by or on account of any obligation of any
Obligor under any Loan Document, (a) Taxes imposed on or measured by its net
income (however denominated, and including (for the avoidance

 

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of doubt) any backup withholding in respect thereof under Section 3406 of the
Code or any similar provision of state, local or foreign law), franchise Taxes
imposed on it in lieu of net income Taxes (including, for the avoidance of
doubt, any such Taxes measured by overall gross receipts) and branch profits (or
similar) Taxes imposed on it, in each case, by a jurisdiction (or any political
subdivision thereof) as a result of the recipient being organized, having an
office or being engaged in business (other than a business arising (or being
deemed to arise) solely as a result of the Loan Documents or the transactions
contemplated by the Loan Documents) in such jurisdiction, (b) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Company
under Section 10.14), any U.S. federal withholding Tax that (i) is imposed on
amounts payable to such Foreign Lender under any laws in effect at the time such
Foreign Lender becomes a party hereto (or designates a new lending office),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, immediately prior to the time of designation of a new lending office
(or assignment), to receive additional amounts from the Company with respect to
such withholding Tax pursuant to Section 3.01(a); or (ii) is attributable to
such Foreign Lender’s failure to comply with Section 3.01(e) and (c) any United
States federal withholding Tax that is imposed pursuant to FATCA.

“Existing Convertible Debentures” means the Company’s 7.0% Convertible Senior
Debentures due 2016, to the extent outstanding on the Closing Date.

“Existing Credit Agreement” means the Second Amended and Restated Credit
Agreement, dated as of October 10, 2006, by and among the Company, the lenders
named therein, Wilmington Trust FSB (as successor agent to Bank of America,
N.A.), as agent for such lenders, and JPMorgan Chase Bank, N.A., as syndication
agent (as amended by Amendment No. 1, by Amendment No. 2 and Amendment No. 3
thereto dated as of June 12, 2007, March 30, 2009 and December 22, 2009,
respectively).

“Facility” means, at any time, (a) on or prior to the Effective Date, the
aggregate amount of the Commitments at such time and (b) thereafter, the
aggregate principal amount of the Loans of all Lenders outstanding at such time.

“FATCA” means current Sections 1471 through 1474 of the Code and any amended or
successor version that is substantively comparable (including any Treasury
regulations or other official administrative guidance promulgated thereunder).

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

“Financial Strength Rating Condition” has the meaning specified in
Section 2.08(b).

“Fiscal Quarter” means any fiscal quarter of a Fiscal Year.

“Fiscal Year” means any period of twelve consecutive calendar months ending on
December 31.

“Foreign Lender” means any Lender that is not a U.S. Person within the meaning
of Section 7701(a)(30) of the Code.

 

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“Foreign Subsidiary” means a Subsidiary (which may be a corporation, limited
liability company, partnership or other legal entity) organized under the laws
of a jurisdiction outside the United States, other than any such entity that is
(whether as a matter of law, pursuant to an election by such entity or
otherwise) treated as a partnership in which any Obligor is a partner or as a
branch of any Obligor for United States income tax purposes.

“FRB” means the Board of Governors of the Federal Reserve System and any
Governmental Authority succeeding to any of its principal functions.

“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 set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), that are applicable to the circumstances as of the date of
determination.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial or regulatory functions of or pertaining to government and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing, including any board of
insurance, insurance department or insurance commissioner.

“Historical Statutory Statements” has the meaning specified in Section 5.11.

“Hazardous Material” means: (a) any “hazardous substance,” as defined by CERCLA;
(b) any “hazardous waste,” as defined by the Resource Conservation and Recovery
Act; (c) petroleum and any petroleum product; or (d) any other pollutant,
contaminant, chemical, material, waste or substance in any form as to which
liability or standards of conduct can be imposed under any Environmental Law.

“Immaterial Subsidiary” means any Non-Insurance Subsidiary that (a) has assets
with an aggregate fair market value less than $5,000,000 as of the end of the
most recently ended Fiscal Quarter, (b) has aggregate revenues less than
$10,000,000 for the period of four consecutive Fiscal Quarters most recently
ended, (c) has no Indebtedness (other than Indebtedness existing on the date
hereof and listed in Schedule 7.01 or permitted under Section 7.01(a)(x) and
other Indebtedness in an aggregate principal amount not exceeding at any time
one-half of the fair market value of the assets of such Subsidiary at such
time), (d) is not integral to the business or operations of the Company or its
Subsidiaries (other than Immaterial Subsidiaries), (e) has no Subsidiaries
(other than Immaterial Subsidiaries), and (f) is not an Obligor; provided that
CNO Management Services Company shall not be deemed to be an Immaterial
Subsidiary so long as it is the manager of CNO Services, LLC pursuant to the
latter’s limited liability company agreement.

“Indebtedness” means, with respect to any Person, without duplication: (a) all
indebtedness of such Person for borrowed money or in respect of loans or
advances; (b) all indebtedness of such Person evidenced by bonds, debentures,
notes or other similar instruments; (c) all indebtedness in respect of letters
of credit, whether or not drawn, and bankers’ acceptances and letters of
guaranty issued for the account or upon the application or request of such
Person; (d) all Capitalized Lease Liabilities of such Person; (e) the
liabilities (if any) of such Person in respect of Swap Contracts as determined
by reference to the Swap Termination Value thereof; (f) all obligations of such
Person to pay the deferred purchase price

 

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of property or services that are included as liabilities in accordance with GAAP
(other than accrued expenses incurred and trade accounts payable in each case in
the ordinary course of business) and all obligations secured by a Lien on
property owned or being purchased by such Person, but only to the extent of the
lesser of the obligations secured or the value of the property to which such
Lien is attached (including obligations arising under conditional sales or other
title retention agreements); (g) any obligations of a partnership of the kind
referred to in clauses (a) through (f) above or clause (h) or (i) below in which
such Person is a general partner; (h) solely for purposes of Section 7.11, all
obligations in respect of preferred stock (other than preferred stock that
qualifies as permanent equity for purposes of GAAP) of such Person; and (i) all
Contingent Obligations of such Person in connection with Indebtedness or
obligations of others of the kinds referred to in clauses (a) through (h) above.

“Indemnified Liabilities” has the meaning specified in Section 10.05.

“Indemnified Person” has the meaning specified in Section 10.05.

“Indemnified Taxes” means all Taxes other than Excluded Taxes.

“Independent Auditor” has the meaning specified in Section 6.01(a).

“Insolvency Proceeding” means, with respect to any Person, (a) any case, action
or proceeding with respect to such Person before any court or other Governmental
Authority relating to bankruptcy, reorganization, insolvency, liquidation,
conservation, rehabilitation, receivership, dissolution, winding-up or relief of
debtors or (b) any general assignment for the benefit of creditors, composition,
marshalling of assets for creditors or other similar arrangement in respect of
its creditors generally or any substantial portion of its creditors, in any
case, undertaken under U.S. Federal, state or foreign law, including title 11 of
the United States Code.

“Insurance Subsidiary” means any Subsidiary that is required to be licensed as
an insurer or reinsurer.

“Intercreditor Agreement” shall mean the Pari Passu Intercreditor Agreement
substantially in the form attached hereto as Exhibit J.

“Interest Coverage Ratio” means, for any Calculation Period, the ratio of
(a) CNO Available Cash Flow for such Calculation Period to (b) Cash Interest
Expense for such Calculation Period.

“Interest Payment Date” means (a) with respect to any Base Rate Loan, the last
Business Day of each calendar quarter and (b) with respect to any Eurodollar
Rate Loan, the last day of each Interest Period applicable to the Borrowing of
which such Loan is a part; provided that if any Interest Period for a Eurodollar
Rate Loan exceeds three months, the date that falls three months after the
beginning of such Interest Period and after each Interest Payment Date
thereafter is also an Interest Payment Date (but in each case, subject to the
definition of “Interest Period”).

“Interest Period” means, with respect to any Eurodollar Rate Borrowing, the
period beginning on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Company may elect; provided that:

(i) if any Interest Period would otherwise end on a day that is not a Business
Day, that Interest Period shall be extended to the following Business Day unless
the result of such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the preceding
Business Day;

 

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

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

For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective date of the
most recent continuation of such Borrowing.

“Interest Type” means, when used with respect to any Loan or Borrowing, whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Eurodollar Rate or the Base Rate.

“Investment” means any advance, loan, extension of credit (by way of guaranty or
otherwise) or capital contribution to, or purchase (including purchases financed
with equity) of any Capital Stock, bonds, notes, debentures or other debt
securities of, or any other investment in, any Person. For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment, but shall be reduced by the amount equal to any returns in respect
of such Investment received by the investor thereof in the same form as the
original Investment (or in cash).

“Investment Grade Asset” means any Investment with a fixed maturity that has a
rating of (x) at least BBB- by S&P and, if such Investment is rated by Moody’s,
at least Ba2 from Moody’s or (y) at least Baa3 by Moody’s and, if such
Investment is rated by S&P, at least BB from S&P, or, if such Investment is not
rated by either S&P or Moody’s, an NAIC rating of at least Class 2.

“Investment Income” means the amount of earnings of the Company on Investments,
net of expenses actually incurred in connection with such Investments and taking
into account realized gains and losses on such Investments.

“IRS” means the Internal Revenue Service or any Governmental Authority
succeeding to any of its principal functions under the Code.

“Lenders” has the meaning specified in the introduction to this Agreement and
includes any other Person that shall have become a party hereto pursuant to an
Assignment and Assumption in accordance with Section 10.07, other than any such
Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.

“Lending Office” means, as to any Lender, the office or offices of such Lender
specified as its “Lending Office” or “Domestic Lending Office” or “Eurodollar
Lending Office,” as the case may be, on Schedule 10.02 or in its administrative
questionnaire delivered to the Agent, or such other office or offices as such
Lender may from time to time notify the Company and the Agent.

“License” means any license, certificate of authority, permit or other
authorization that is required to be obtained from any Governmental Authority in
connection with the operation, ownership or transaction of insurance business.

“Lien” means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced

 

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by, any conditional sale or other title retention agreement, the interest of a
lessor under a capital lease or any financing lease having substantially the
same economic effect as any of the foregoing) and any contingent or other
agreement to provide any of the foregoing, but not including the interest of a
lessor under an operating lease or a licensor under a license that does not
otherwise secure an obligation.

“Loan” has the meaning set forth in Section 2.01(a).

“Loan Documents” means this Agreement, all Notes, the Intercreditor Agreement,
the Security Documents and any fee letter agreement entered into pursuant to
Section 2.10, and in the case of the Security Documents, all Secured Swap
Contracts.

“Loan Notice” means a notice of (a) Borrowing, (b) a conversion of a Loan from
one Interest Type to the other or (c) a continuation of Eurodollar Rate Loans,
substantially in the form of Exhibit C.

“Margin Stock” means “margin stock” as such term is defined in Regulation T, U
or X of the FRB.

“Material Acquisition” means any acquisition of assets by the Company or its
Subsidiaries in a transaction or series of related transactions for
consideration exceeding $80,000,000, other than any such acquisition by any
Insurance Subsidiary in the ordinary course of business in compliance with
Section 7.16 and the investment policy approved by the board of directors of
such Insurance Subsidiary.

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

“Material Disposition” means any disposition of assets by the Company or its
Subsidiaries in a transaction or series of related transactions for
consideration exceeding $80,000,000, other than any such disposition by any
Insurance Subsidiary in the ordinary course of business consistent with the
investment policy approved by the board of directors of such Insurance
Subsidiary.

“Maturity Date” means September 30, 2016, or if such day is not a Business Day,
the next preceding Business Day.

“Moody’s” means Moody’s Investors Service, Inc., together with any Person
succeeding thereto by merger, consolidation or acquisition of all or
substantially all of its assets, including substantially all of its business of
rating securities.

“MSSF” means Morgan Stanley Senior Funding, Inc.

“Multiemployer Plan” means a “multiemployer plan,” within the meaning of
Section 4001(a)(3) of ERISA, to which the Company, any of its Subsidiaries or
any ERISA Affiliate makes, is making or is obligated to make contributions or,
during the preceding six calendar years, has made, or been obligated to make,
contributions.

“NAIC” means the National Association of Insurance Commissioners or any
successor thereto, or in the absence of the National Association of Insurance
Commissioners or such successor, any other association, agency or other
organization performing advisory, coordination or other like functions among
insurance departments, insurance commissioners and similar Governmental
Authorities of the various states of the United States toward the promotion of
uniformity in the practices of such Governmental Authorities.

 

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“Net Income” means, for any Person for any Calculation Period, the net income
(or loss) of such Person for such period as determined in accordance with GAAP.

“Net Proceeds” means (a) with respect to any Asset Sale or Casualty Event, the
aggregate amount of cash and cash equivalents received in respect of such Asset
Sale or Casualty Event, as the case may be (including any such amounts received
by way of deferred payment of principal pursuant to a note or installment
receivable or purchase price adjustment receivable or otherwise, but only as and
when received and, in the case of a Casualty Event, insurance proceeds,
condemnation awards and similar payments), minus the sum of (i) all costs and
expenses (including legal fees, notarial fees, accountants’ fees, investment
banking fees, survey costs and title insurance premiums) paid by the Company or
any of its Subsidiaries to third parties, amounts applied to the repayment of
Indebtedness (other than the Loans) secured by a Lien (other than a Lien that
ranks pari passu with or junior to the Liens securing the Obligations) expressly
permitted hereunder on any asset that is the subject of such Asset Sale or
Casualty Event, costs of discontinuance (including any reasonable severance
payments), Taxes other than Income Taxes (after taking into account any
available tax credits, exemptions or deductions and any tax sharing
arrangements) and other customary fees and expenses incurred in connection with
such Asset Sale or Casualty Event and required to be paid in cash or deducted
from the proceeds of such Asset Sale or Casualty Event, (ii) the estimated
income tax or other Taxes to the extent payable by the Person selling or
Disposing of such asset actually required to be paid in cash in connection with
such Asset Sale (after taking into account any available tax credits, exemptions
or deductions and any tax sharing arrangements), (iii) purchase price
adjustments reasonably expected to be payable in connection therewith and the
aggregate amount of reserves taken by the Company or any of its Subsidiaries in
accordance with GAAP against indemnification obligations incurred in connection
therewith (not to exceed, in the aggregate, 10% of the purchase price for the
relevant Asset Sale) so long as, if any such amount ceases to be payable, it
shall then become “Net Proceeds” and (iv) for an Insurance Subsidiary or any
Subsidiary of an Insurance Subsidiary, any amounts that the Department will not
permit such Insurance Subsidiary or such Subsidiary of an Insurance Subsidiary
to distribute (including as a dividend or otherwise) directly or indirectly to
the Company as a result of such Asset Sale or Casualty Event, and (b) with
respect to any issuance of Capital Stock of, or capital contribution to, the
Company or any Subsidiary, or any incurrence of Indebtedness by the Company or
any of its Subsidiaries, the proceeds thereof in the form of cash and cash
equivalents, minus the costs and expenses paid or payable within 90 days of
incurrence (so long as, if any such amount is not paid within such period, it
shall become “Net Proceeds” on the last day of such period) by the Company or
any of its Subsidiaries to third parties in connection therewith (including
legal fees, notarial fees, accountants’ fees, investment banking fees,
underwriting discounts and commissions, taxes and other customary fees and
expenses incurred in connection therewith) and required to be paid in cash or
deducted from the proceeds of such issuance, contribution or incurrence. For
purposes of this definition, the Net Proceeds received by any Person in respect
of any Disposition shall include such cash or cash equivalents as may be
received (“subsequent cash proceeds”) by such Person at any time or from time to
time in connection with the sale, transfer, lease or other disposition, or
otherwise in respect of, any consideration other than cash or cash equivalents
received by such Person in respect of such Disposition, less the estimated
income tax or other Taxes to the extent payable by the Person selling or
Disposing of such asset to be paid in connection with the receipt of such
subsequent cash proceeds (after taking into account any available tax credits,
exemptions or deductions and any tax sharing arrangements) that was not
theretofore deducted in computing Net Proceeds.

“Non-Consenting Lender” means a Lender that does not consent to an amendment or
waiver pursuant to Section 10.01 that requires the consent of all or all
affected Lenders in order to become effective and as to which Lenders holding
more than 50% of the Loans under the Facility have consented.

 

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“Non-Insurance Subsidiary” means any Subsidiary that is not an Insurance
Subsidiary.

“Note” has the meaning specified in Section 2.04(b).

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Obligor arising under any Loan Document or
otherwise with respect to any Loan, whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest and fees that accrue after
the commencement by or against any Obligor of any proceeding under any Debtor
Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding. Without
limiting the generality of the foregoing, the Obligations of the Obligors under
the Loan Documents include (a) the obligation to pay principal, interest,
charges, expenses, fees, attorney costs, indemnities and other amounts payable
by any Obligor under any Loan Document and (b) the obligation of any Obligor to
reimburse any amount in respect of any of the foregoing that any Lender, in its
sole discretion, may elect to pay or advance on behalf of such Obligor.

“Obligors” means the Company and the Subsidiary Guarantors.

“OFAC” has the meaning set forth in the definition of “Embargoed Person.”

“Organization Documents” means (i) with respect to any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
designation or instrument relating to the rights of preferred shareholders of
such corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation, (ii) with respect to any limited liability company, the certificate
or articles of formation or organization and operating agreement, and all
applicable resolutions or consents of the governing body (or any committee
thereof) of such limited liability company and (iii) 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, and all applicable resolutions or consents of the
governing body (or any committee thereof), or in the case of clauses (i),
(ii) and (iii), the equivalent or comparable constituent documents with respect
to any Foreign Subsidiary.

“Other Taxes” means any present or future recording, stamp, court or documentary
Taxes or any other excise, sales or property Taxes, charges or similar levies
that arise from any payment made under this Agreement or any other Loan Document
or from the execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, this Agreement or any other Loan Document.

“Outstanding Amount” means, with respect to Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments of Loans occurring on such date.

“Participant” has the meaning specified in Section 10.07(d).

“Patriot Act” has the meaning specified in Section 10.17.

“PBGC” means the Pension Benefit Guaranty Corporation or any Governmental
Authority succeeding to any of its principal functions under ERISA.

 

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“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA that the Company, any of its Subsidiaries or any
ERISA Affiliate sponsors or maintains, or to which it makes, is making or is
obligated to make contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding five plan years.

“Perfection Certificate” means a certificate substantially in the form of
Exhibit E to the Security Agreement or any other form approved by the Agent.

“Permitted Swap Obligations” means all obligations (contingent or otherwise) of
the Company or any Subsidiary existing or arising under Swap Contracts, provided
that each of the following criteria is satisfied: (a) such obligations are (or
were) entered into by such Person in the ordinary course of business for the
purpose of directly mitigating risks associated with liabilities, commitments or
assets held by such Person, or changes in the value of securities issued by such
Person in conjunction with a securities repurchase program not otherwise
prohibited hereunder, and not for purposes of speculation or taking a “market
view” and (b) such Swap Contracts do not contain any provision (“walk-away”
provision) exonerating the non-defaulting party from its obligation to make
payments on outstanding transactions to the defaulting party.

“Permitted Transactions” means (a) mortgage-backed security transactions in
which an investor sells mortgage collateral, such as securities issued by the
Government National Mortgage Association and the Federal Home Loan Mortgage
Corporation, for delivery in the current month while simultaneously contracting
to repurchase “substantially the same” (as determined by the Public Securities
Association and GAAP) collateral for a later settlement, (b) transactions in
which an investor lends cash to a primary dealer and the primary dealer
collateralizes the borrowing of the cash with certain securities,
(c) transactions in which an investor lends securities to a primary dealer and
the primary dealer collateralizes the borrowing of the securities with cash
collateral, (d) transactions in which an investor makes loans of securities to a
broker-dealer under an agreement requiring such loans to be continuously secured
by cash collateral or United States government securities, (e) transactions
structured as, and submitted to the NAIC Securities Valuation Office for
approval as, Replication (Synthetic Asset) Transactions (RSAT) (provided that,
to the extent that such approval is not granted in respect of any such
transaction, such transaction shall cease to constitute a Permitted Transaction
30 days following the date of such rejection, denial or non-approval) and
(f) transactions in which a federal home loan mortgage bank (a “FHLMB”) makes
loans to an Insurance Subsidiary, that are sufficiently secured by appropriate
assets of such Insurance Subsidiary consisting of government agency
mortgage-backed securities in accordance with the rules, regulations and
guidelines of such FHLMB for its loan programs.

“Person” means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture or Governmental Authority or other entity of whatever nature.

“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) that
the Company or any of its Subsidiaries sponsors or maintains or to which the
Company or any of its Subsidiaries makes, is making or is obligated to make,
contributions and includes any Pension Plan.

“Pro Forma Basis” means, with respect to compliance with any test or covenant
hereunder and in connection with any event or transaction requiring a
calculation on a Pro Forma Basis for any period, compliance with such test or
covenant after giving effect to such event or transaction, and (i) in the case
of any Material Acquisition or Material Disposition, including pro forma
adjustments only to the extent consistent with Article 11 of Regulation S-X
under the Securities Act and using for purposes of determining such compliance
(x) in the case of any Material Acquisition, the historical financial statements
of all

 

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entities or assets so acquired or to be acquired and (y) the consolidated
financial statements of the Company and its Subsidiaries, which shall be
reformulated as if such Material Acquisition or Material Disposition, and any
other Material Acquisitions or Material Dispositions that have been consummated
during such period, had been consummated on the first day of such period;
(ii) in the case of any incurrence or prepayment or repayment of Indebtedness
(other than under revolving credit facilities in the ordinary course of
business), assuming such Indebtedness was incurred, prepaid or repaid on the
first day of such period and assuming that such Indebtedness bears interest
during the portion of such period prior to the date of incurrence at, in the
case of Indebtedness bearing interest at a floating rate, the weighted average
of the interest rates applicable to outstanding Loans during such period and, in
the case of Indebtedness bearing interest at a fixed rate, such fixed rate;
(iii) in the case of the declaration or payment of any dividend, assuming such
dividend had been declared and paid on the first day of such period; and
(iv) making such other pro forma adjustments as would be permitted or required
by Regulation S-X under the Securities Act; provided, however, that such
compliance calculation shall take into account other cost savings measures
identified by the Company which the Agent, in its reasonable business judgment,
deems reasonably identifiable and factually supportable, and which cost savings
measures have been certified by a Responsible Officer.

“Pro Rata Share” means, as to any Lender (a) at any time at which the
Commitments under the Facility remain outstanding, the percentage equivalent
(expressed as a decimal, rounded to the ninth decimal place) at such time of
such Lender’s Commitment under the Facility divided by the combined Commitments
of all Lenders under the Facility, and (b) after the termination of the
Commitments under the Facility, the percentage equivalent (expressed as a
decimal, rounded to the ninth decimal place) at such time of the principal
amount of such Lender’s outstanding Loans under the Facility divided by the
aggregate principal amount of the outstanding Loans of all the Lenders under the
Facility.

“Purchase Money Debt” means Indebtedness incurred by a Person in connection with
the purchase of fixed or capital assets by such Person, in which assets the
seller or financier thereof has taken or retained a Lien; provided that (x) any
such Lien attaches to such assets concurrently with or within 120 days after the
purchase thereof by such Person and (y) at the time of incurrence of such
Indebtedness, the aggregate principal amount of such Indebtedness shall not
exceed the costs of the assets so purchased plus fees and expenses reasonably
related thereto.

“Quarterly Statement” means the quarterly statutory financial statement of any
Insurance Subsidiary required to be filed with the insurance commissioner (or
similar authority) of its jurisdiction of incorporation or, if no specific form
is so required, in the form of financial statements permitted by such insurance
commissioner (or such similar authority) to be used for filing quarterly
statutory financial statements and shall contain the type of financial
information permitted by such insurance commissioner (or such similar authority)
to be disclosed therein, together with all exhibits or schedules filed
therewith.

“Refinance” means, with respect to any Indebtedness, to refinance, refund,
renew, replace, exchange or extend such Indebtedness.

“Refinancing Indebtedness” means, with respect to any Indebtedness, any
Refinancing of such Indebtedness; provided that (a) the principal amount (or
accreted value, if applicable) thereof does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness being Refinanced except by an
amount equal to unpaid accrued interest and premium thereon plus other
reasonable amount paid, and fees and expenses reasonably incurred, in connection
with such Refinancing and as otherwise permitted to be incurred pursuant to
Section 7.01 (it being understood that any such Indebtedness otherwise permitted
to be incurred shall constitute Indebtedness under the relevant provision of
Section 7.01 pursuant to which it shall be incurred and not Refinancing
Indebtedness), (b) such Refinancing Indebtedness shall have a final maturity
date equal to or later than the final maturity date of, and has a Weighted

 

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Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being Refinanced, (c) if the Indebtedness being
Refinanced is contractually subordinated in right of payment to the Obligations,
such Refinancing Indebtedness shall be contractually subordinated in right of
payment to the Obligations on terms that are at least as favorable to the
Lenders as those contained in the documentation governing the Indebtedness being
Refinanced, taken as a whole, (d) such Refinancing Indebtedness shall be
incurred by the Person or Persons who are the obligors on the Indebtedness being
Refinanced or would otherwise be permitted to incur such Indebtedness (including
any guarantees thereof pursuant to Section 7.01 and Section 7.09), (e) at the
time thereof, no Event of Default shall have occurred and be continuing,
(f) such Refinancing Indebtedness shall be unsecured if the Indebtedness being
Refinanced is unsecured, (g) such Refinancing Indebtedness is not secured by any
additional property or collateral other than (i) property or collateral securing
the Indebtedness being Refinanced and (ii) proceeds and products thereof and
(h) if any Liens securing the Indebtedness being Refinanced is subordinated to
the Liens securing the Obligations, the Liens securing the Refinancing
Indebtedness shall be subordinated to the Liens securing the Obligations on
terms that are at least as favorable to the Secured Parties as those contained
in the documentation governing the Indebtedness being Refinanced, taken as a
whole.

“Register” has the meaning specified in Section 10.07(c).

“Reinsurance Agreements” means any agreement, contract, treaty, certificate or
other arrangement by which any Insurance Subsidiary agrees to transfer or cede
to another insurer all or part of the liability assumed or assets held by it
under one or more insurance, annuity, reinsurance or retrocession policies,
agreements, contracts, treaties, certificates or similar arrangements.
Reinsurance Agreements shall include, but not be limited to, any agreement,
contract, treaty, certificate or other arrangement that is treated as such by
the applicable Department.

“Release” means any release, spill, emission, discharge, deposit, disposal,
leaking, pumping, pouring, dumping, emptying, injection or leaching into the
Environment.

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

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA
or the regulations thereunder, other than any such event for which the 30-day
notice requirement under ERISA has been waived in regulations issued by the
PBGC.

“Required Lenders” means, as of any date of determination, Lenders holding more
than 50% of the Total Outstandings; provided that the portion of the Total
Outstandings held or deemed held by any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders.

“Requirement of Law” means, as to any Person, any law (statutory or common),
treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or legally binding upon the
Person or any of its property or to which the Person or any of its property is
subject.

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer or assistant treasurer of an Obligor. Any document
delivered under any Loan Document that is signed by a Responsible Officer of an
Obligor shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Obligor and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Obligor. Unless otherwise specified, “Responsible Officer” means a
Responsible Officer of the Company.

 

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“Restricted Payments” has the meaning set forth in Section 7.08.

“S&P” means Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc.,
together with any Person succeeding thereto by merger, consolidation or
acquisition of all or substantially all of its assets, including substantially
all of its business of rating securities.

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

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

“Secured Guarantee” has the meaning specified in the Security Agreement.

“Secured Obligations” has the meaning specified in the Security Agreement.

“Secured Parties” has the meaning specified in the Security Agreement.

“Secured Swap Contract” means any Swap Contract entered into by an Obligor with
a Lender (or an Affiliate of a Lender), at the time such Swap Contract was
entered into, to hedge interest rate risk of such Obligor and Subsidiaries that
are not Insurance Subsidiaries.

“Securities Act” means the Securities Act of 1933 and the regulations
promulgated thereunder.

“Security Agreement” means the Guarantee and Security Agreement, dated as of the
Closing Date, among the Obligors and the Agent, substantially in the form
attached hereto as Exhibit F.

“Security Agreement Collateral” means all property pledged or granted as
collateral pursuant to the Security Agreement.

“Security Documents” means the Security Agreement, each mortgage and each other
security agreement, instrument or document executed and delivered pursuant
thereto or pursuant to Section 6.12 or Section 6.13 to secure any of the Secured
Obligations.

“Senior Secured Notes” means $275.0 million aggregate principal amount of 9.00%
senior secured notes due 2018 of the Company issued under the Senior Secured
Notes Indenture.

“Senior Secured Notes Documents” means the Senior Secured Notes Indenture and
the other documents governing the Senior Secured Notes.

“Senior Secured Notes Indenture” means the Indenture, dated as of the Closing
Date, between the Company, the Subsidiary Guarantors and Wilmington Trust FSB,
as trustee.

“Single Employer Pension Plan” means a pension plan as such term is defined in
Section 3(2) of ERISA, other than a multiemployer plan as defined in
Section 4001(a)(3) of ERISA, to which the Company, any of its Subsidiaries or
any ERISA Affiliate may have liability, including any liability by reason of
having been a substantial employer within the meaning of Section 4063 of ERISA
at any time during the preceding five years or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.

 

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“Statutory Net Income” means, for any period, the net income of an Insurance
Subsidiary determined in accordance with SAP.

“Subsidiary” of a Person means any corporation, partnership, limited liability
company, limited liability partnership, joint venture, trust, association or
other unincorporated organization of which or in which such Person and such
Person’s Subsidiaries own directly or indirectly more than 50% of (a) the
combined voting power of all classes of stock having general voting power under
ordinary circumstances to elect a majority of the board of directors, if it is a
corporation, (b) the voting or managing interests (which shall mean the general
partner in the case of a partnership), if it is a partnership, joint venture or
similar entity, (c) the beneficial interest, if it is a trust, association or
other unincorporated organization or (d) the membership interest, if it is a
limited liability company; provided that neither Resortport Investment
Partnership nor any of its Subsidiaries shall be considered a Subsidiary for any
purpose of this Agreement. Unless otherwise specified, “Subsidiary” means a
Subsidiary of the Company.

“Subsidiary Guarantors” means each Subsidiary listed on the signature pages of
the Security Agreement under the caption “Subsidiary Guarantors” and each
Subsidiary that shall, at any time after the date thereof, become a Subsidiary
Guarantor pursuant to Section 23 of the Security Agreement. For the avoidance of
doubt, no Insurance Subsidiary, Subsidiary of an Insurance Subsidiary, Foreign
Subsidiary or, subject to Section 6.12(b), Immaterial Subsidiary shall be
required to be a Subsidiary Guarantor.

“Surplus Debentures” means, as to any Insurance Subsidiary, debt securities of
such Insurance Subsidiary issued to the Company or any other Subsidiary the
proceeds of which are permitted to be included, in whole or in part, as Capital
and Surplus of such Insurance Subsidiary as approved and permitted by the
applicable Department.

“Swap Contract” means any agreement relating to any transaction that is a rate
swap, basis swap, forward rate transaction, commodity swap, commodity option,
equity or equity index swap or option, bond, note or bill option, interest rate
option, forward foreign exchange transaction, cap, collar or floor transaction,
currency swap, cross-currency rate swap, swaption, currency option or any other
similar transaction (including any option to enter into any of the foregoing) or
any combination of the foregoing, and any master agreement relating to or
governing any or all of the foregoing.

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

“Synthetic Purchase Agreement” means any agreement pursuant to which the Company
or any of its Subsidiaries is or may become obligated to make (a) any payment in
connection with the purchase by any third party from a Person other than the
Company or any of its Subsidiaries (other than any Subsidiary that is a
Subsidiary of an Insurance Subsidiary but is not itself an Insurance Subsidiary)
of any Capital Stock or Indebtedness of the Company or any of its Subsidiaries
(other than any Subsidiary that is a Subsidiary of an Insurance Subsidiary but
is not itself an Insurance Subsidiary) or (b) any payment the amount of which is
determined by reference to the price or value at any time of any such Capital
Stock or Indebtedness; provided that (i) no phantom stock or similar plan
providing for payments only to current

 

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or former directors, officers or employees of the Company or any of its
Subsidiaries (or to their heirs or estates) and (ii) no such agreement in
respect of any Disposition of any Capital Stock of a Subsidiary of the Company
that is permitted by Section 7.03 shall in either case be deemed to be a
Synthetic Purchase Agreement.

“Tax Sharing Agreement” means the amended and restated consolidated income tax
agreement dated January 1, 2004 among the Company and certain of its
Subsidiaries and any amendment, extension, renewal or replacement thereof.

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

“Total Capitalization” means, without duplication, (a) the amount described in
clause (a) of the definition of “Debt to Total Capitalization Ratio” plus
(b) the Total Shareholders’ Equity of the Company.

“Total Outstandings” means the aggregate Outstanding Amount of all Loans.

“Total Shareholders’ Equity” means the total common and preferred shareholders’
equity of the Company as determined in accordance with GAAP (calculated
excluding (i) unrealized gains (losses) on securities as determined in
accordance with FASB ASC 320 (Investments–Debt and Equity Securities) and
(ii) any charges taken to write off any goodwill included on the Company’s
balance sheet on the Effective Date to the extent such charges are required by
FASB ASC 320 (Investments–Debt and Equity Securities) and ASC 350
(Intangibles–Goodwill and Others).

“Transaction Liens” means the Liens granted by the Obligors under the Security
Documents.

“Transactions” means the execution, delivery and performance by each Obligor of
the Loan Documents to which it is to be a party, the borrowing of the Loans
hereunder on the Closing Date, the refinancing of the Existing Credit Agreement,
the offering of the Senior Secured Notes and the payment of fees and expenses
incurred in connection with the foregoing.

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 400l(a)(16) of ERISA over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

“Uniform Commercial Code” means the Uniform Commercial Code as in effect from
time to time in the State of New York; provided that, if perfection or the
effect of perfection or non-perfection or the priority of any Transaction Lien
on any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, “Uniform Commercial Code” means the Uniform
Commercial Code as in effect from time to time in such other jurisdiction for
purposes of the provisions hereof relating to such perfection, effect of
perfection or non-perfection or priority.

“United States” and “U.S.” each means the United States of America.

“Voting Stock” of any Person means Capital Stock of such Person entitling the
holders thereof (whether at all times or only so long as no senior class of
stock or other relevant equity interest has voting power by reason of any
contingency) to vote in the election of the board of directors or similar
governing body of such Person.

 

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“Weighted Average Life to Maturity” means, when applied to any Indebtedness at
any date, the number of years obtained by dividing: (a) the sum of the products
obtained by multiplying (i) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (ii) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment; by (b) the then outstanding principal amount of such
Indebtedness.

“Wholly-Owned Subsidiary” means any Person in which all of the Capital Stock
(other than directors’ and national citizen qualifying shares or similar de
minimis holdings by another Person, in each case, as required by law) is owned,
beneficially and of record, by the Company, or by one or more of the other
Wholly-Owned Subsidiaries, or both.

Section 1.02. Other Interpretive Provisions.

(a) The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.

(b) The words “hereof,” “herein,” “hereunder” and similar words refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
subsection, Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.

(c) (i) The term “documents” includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced.

(ii) The term “including” is not limiting and means “including without
limitation.”

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

(d) Unless otherwise expressly provided herein or the context requires
otherwise, (i) references to agreements (including this Agreement) and other
contractual instruments shall be deemed to include all subsequent amendments and
other modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document,
(ii) references to any statute or regulation are to be construed as including
all statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation, (iii) any reference
herein to a Person shall be construed to include such Person’s permitted
successors and assigns and (iv) the word “property” shall be construed to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.

(e) The captions and headings of this Agreement are for convenience of reference
only and shall not affect the interpretation of this Agreement.

(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.

(g) This Agreement and the other Loan Documents are the result of negotiations
among and have been reviewed by counsel to the Agent, the Company and the other
parties, and are the products of all parties. Accordingly, they shall not be
construed against the Lenders or the Agent merely because of the Agent’s or
Lenders’ involvement in their preparation.

 

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Section 1.03. Classification of Loans and Borrowings.

For purposes of this Agreement, Loans may be classified and referred to by
Interest Type (e.g., a “Eurodollar Rate Loan”). Borrowings also may be
classified and referred to by Interest Type (e.g., a “Eurodollar Rate
Borrowing”).

Section 1.04. Accounting Principles.

(a) Unless the context otherwise clearly requires, all accounting terms not
expressly defined herein shall be construed, and all financial computations
required under this Agreement shall be made, in accordance with GAAP as in
effect from time to time, consistently applied. Notwithstanding the foregoing,
for purposes of determining compliance with any covenant (including the
computation of any financial covenant) contained herein, Indebtedness of the
Company and its Subsidiaries shall be deemed to be carried at 100% of the
outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB
ASC 470-20 on financial liabilities shall be disregarded.

(b) References herein to particular columns, lines or sections of any Person’s
Annual Statement shall be deemed, where appropriate, to be references to the
corresponding column, line or section of such Person’s Quarterly Statement, or
if no such corresponding column, line or section exists or if any report form
changes, then to the corresponding item referenced thereby. In the event the
columns, lines or sections of the Annual Statement or Quarterly Statement
referenced herein are changed or renumbered from the columns, lines and sections
applicable to the 2009 Annual Statement, or the September 30, 2010 Quarterly
Statement, all such references shall be deemed references to such column, line
or section as so renumbered or changed.

(c) In the event of any future Material Acquisition or Material Disposition,
determinations of compliance with the financial covenants contained herein for
any applicable calculation period shall be made on a Pro Forma Basis.

(d) If, at any time after the date of this Agreement, any material change is
made to GAAP or the Company’s accounting practices that would affect in any
material respect the determination of compliance with the covenants set forth in
this Agreement, the Company shall notify the Agent of the change and the Company
and the Agent shall negotiate in good faith to amend such covenant, subject to
the approval of the Required Lenders, to restore the Company and the Lenders to
the position they occupied before the implementation of such material change in
GAAP or accounting practices; provided that if the Company and the Agent are
unable to reach agreement within 30 days following the implementation of such
material change, the Agent shall be permitted, acting in good faith, to make
such amendments, in each case subject to the approval of the Required Lenders,
to the covenants set forth in this Agreement as it reasonably determines are
necessary to restore the Company and the Lenders to the position they occupied
prior to the implementation thereof.

ARTICLE 2

THE CREDITS

Section 2.01. Loan.

(a) Subject to the terms and conditions set forth herein, each Lender severally
agrees to make a single loan (a “Loan”) to the Company on the Effective Date in
an amount not to exceed such Lender’s Commitment at such time. The Borrowing
shall consist of Loans made simultaneously by the Lenders ratably according to
their Commitments. Amounts borrowed under this Section 2.01(a) and repaid or
prepaid may not be reborrowed.

 

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(b) Each Loan shall be made as part of a Borrowing consisting of Loans of the
same Interest Type made by the Lenders ratably in accordance with their
respective Commitments.

(c) Subject to Section 2.03, Loans may be Base Rate Loans or Eurodollar Rate
Loans; provided that any Eurodollar Rate Loans shall have an Interest Period of
not greater than one month until the earlier of (i) 90 days from the Effective
Date and (ii) completion of syndication of the Facility (as determined by the
Agent).

(d) Loans shall be convertible from one Interest Type to the other; provided
that (x) the Company may not select the Eurodollar Rate for any Borrowing if the
aggregate amount of such Borrowing is less than $5,000,000 and (y) there shall
not be more than 10 different Interest Periods in effect in respect of all Loans
then outstanding.

Section 2.02. [RESERVED].

Section 2.03. Borrowing, Conversion and Continuation of Loans.

(a) Each Borrowing and each conversion of Loans from one Interest Type to the
other, and each continuation of Eurodollar Rate Loans shall be made upon the
Company’s irrevocable written notice to the Agent in the form of a Loan Notice,
appropriately completed and signed by a Responsible Officer of the Company. Each
such notice must be received by the Agent not later than 12:00 Noon (New York
City time) (i) on the requested date of a Borrowing of Base Rate Loans, and
(ii) three Business Days prior to the requested date of a Borrowing or any
conversion to or continuation of Eurodollar Rate Loans or of any conversion of
Eurodollar Rate Loans to Base Rate Loans; provided that, in the case of any
Borrowing of Eurodollar Rate Loans on the Effective Date, such notice shall be
accompanied by a customary funding indemnity letter in favor of the Agent, and
in form and substance reasonably satisfactory to the Agent.

(b) Each Loan Notice shall specify (i) whether the Company is requesting a
borrowing of Loans, a conversion of Loans from one Interest Type to the other,
or a continuation of Eurodollar Rate Loans, (ii) the requested date of the
borrowing, conversion or continuation, as the case may be (which shall be a
Business Day), (iii) the principal amount of Loans to be borrowed, converted or
continued, (iv) the Interest Type of Loans to be borrowed or to which existing
Loans are to be converted, and (v) if applicable, the duration of the Interest
Period with respect thereto (each such Interest Period shall comply with the
provisions of the definition of “Interest Period”).

(c) If the Company fails to specify an Interest Type of Loan in a Loan Notice or
if the Company fails to give a timely notice requesting a conversion or
continuation, then such Loans shall be continued as of the last day of the
applicable Interest Period as Eurodollar Rate Loans having a one month Interest
Period. If the Company requests a borrowing of, conversion to, or continuation
of, Eurodollar Rate Loans in any such Loan Notice, but fails to specify an
Interest Period, it will be deemed to have specified an Interest Period of one
month.

(d) Following receipt of a Loan Notice, the Agent shall promptly notify each
Lender of the amount of its Pro Rata Share of the applicable Loans, and if no
timely notice of a conversion or continuation is provided by the Company, the
Agent shall notify each Lender of the details of any automatic extension of such
Eurodollar Rate Loan for a one month Interest Period. In the case of a
Borrowing, each Lender shall make the amount of its Loan available to the Agent
in immediately available funds at the Agent’s Office not later than 1:00 p.m.
(New York City time) on the Business Day specified in the applicable Loan
Notice. Upon satisfaction of the applicable conditions set forth in
Section 4.01, the Agent shall make all funds so received available to the
Company in like funds as received by the Agent either by (i) crediting the
account of the Company on the books of the Agent with the amount of such funds
or (ii) wire transfer of such funds, in each case in accordance with
instructions provided to (and reasonably acceptable to) the Agent by the
Company.

 

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(e) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued
or converted only on the last day of an Interest Period for such Eurodollar Rate
Loan.

(f) Notwithstanding any contrary provision hereof, if (i) an Event of Default as
set forth in Section 8.01(a), (f) or (g) has occurred and is continuing, unless
the Required Lenders otherwise consent or (ii) any other Event of Default has
occurred and is continuing and the Required Lenders have requested, each
Borrowing will be converted into a Base Rate Borrowing at the end of the
Interest Period applicable thereto.

(g) The Agent shall promptly notify the Company and the Lenders of the interest
rate applicable to any Interest Period for Eurodollar Rate Loans upon
determination of such interest rate. The determination of the Eurodollar Rate by
the Agent shall be conclusive in the absence of manifest error. At any time that
Base Rate Loans are outstanding, the Agent shall notify the Company and the
Lenders of any change in the U.S. Prime Rate used in determining the Base Rate
promptly following the public announcement of such change.

(h) The failure of any Lender to make the Loan to be made by it as part of any
Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Loan on the date of such Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on the date of any Borrowing.

Section 2.04. Notes; Loan Accounts.

(a) Each Loan made by each Lender shall be evidenced by one or more loan
accounts or records maintained by such Lender and by the Agent in the ordinary
course of business. The loan accounts or records maintained by the Agent and
each Lender shall be presumptive evidence of the amount of the Loans made by the
Lenders to the Company and the interest and payments thereon. Any failure so to
record or any error in doing so shall not, however, limit or otherwise affect
the obligation of the Company hereunder to pay any amount owing with respect to
the Loans. In the event of any conflict between the accounts and records
maintained by any Lender and the accounts and records of the Agent in respect of
such matters, the accounts and records of the Agent shall control in the absence
of manifest error.

(b) Upon the request of any Lender made through the Agent, instead of or in
addition to loan accounts, the Loans made by each Lender may be evidenced by one
or more notes in substantially the form of Exhibit B hereto (each such note, a
“Note”). Each Lender shall endorse on the schedules annexed to its Note the
date, amount and maturity of each Loan deemed made by it and the amount of each
payment of principal made by the Company with respect thereto. Each such Lender
is irrevocably authorized by the Company to endorse its Note and each Lender’s
record shall be conclusive absent demonstrable error; provided that the failure
of a Lender to make, or an error in making, a notation thereon with respect to
any Loan shall not limit or otherwise affect the obligations of the Company
hereunder or under any such Note to such Lender.

Section 2.05. Termination of Commitments.

Unless previously terminated, the Loan Commitments under the Facility will
terminate on the Effective Date immediately after the funding of Loans.

 

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Section 2.06. Payment at Maturity.

The Company shall repay to the Agent on the Maturity Date, for the account of
each Lender, the then unpaid principal amount of such Lender’s Loans together
with accrued and unpaid interest thereon to but excluding the date of such
payment.

Section 2.07. Repayment of Loans.

The Company shall repay to the Agent, for the ratable account of the Lenders,
the aggregate principal amount of Loans set forth below, together with accrued
and unpaid interest on the principal amount to be paid to but excluding the date
of such payment, on the following dates or if any such date is not a Business
Day, on the immediately preceding Business Day (which installments shall be
reduced as a result of the application of prepayments in accordance with
Section 2.08(c)):

 

Date

   Amortization Payment March 31, 2011    $7,500,000 June 30, 2011    $7,500,000
September 30, 2011    $7,500,000 December 31, 2011    $7,500,000 March 31, 2012
   $10,000,000 June 30, 2012    $10,000,000 September 30, 2012    $10,000,000
December 31, 2012    $10,000,000 March 31, 2013    $13,750,000 June 30, 2013   
$13,750,000 September 30, 2013    $13,750,000 December 31, 2013    $13,750,000
March 31, 2014    $18,750,000 June 30, 2014    $18,750,000 September 30, 2014   
$18,750,000 December 31, 2014    $18,750,000 March 31, 2015    $21,250,000
June 30, 2015    $21,250,000 September 30, 2015    $21,250,000 December 31, 2015
   $21,250,000 March 31, 2016    $30,000,000 June 30, 2016    $30,000,000

September 30, 2016

(Maturity Date)

   $30,000,000

; provided that to the extent not previously paid, all Loans shall be due and
payable on the Maturity Date.

Section 2.08. Optional and Mandatory Prepayments.

(a) Optional Prepayments. The Company will have the right at any time to prepay
any Borrowing in whole or in part, in minimum amounts of $1,000,000 or any
multiple of $1,000,000 in excess thereof, subject to the provisions of this
Section.

 

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(b) Mandatory Prepayments. The Company shall be required to make mandatory
prepayments as set forth in subclauses (i) to (v) below; provided that
subclauses (ii), (iii), and (iv) shall not apply if (x) the Debt to Total
Capitalization Ratio is equal to or less than 20% and (y) either (1) each of the
Company’s Insurance Subsidiaries (other than Conseco Life Insurance Company,
Conseco Life Insurance Company of Texas and Bankers Conseco Life Insurance
Company) has a financial strength rating of not less than A- (stable) from A.M.
Best Company, in each case at the time such prepayment is required to be made
(the “Financial Strength Rating Condition”) or (2) the Facility has a rating of
not less than BBB- (stable) from S&P and Baa3 (stable) from Moody’s, in each
case at the time such prepayment is required to be made.

(i) Indebtedness. Within one Business Day after any Net Proceeds are received by
or on behalf of the Company or any Subsidiary in respect of the incurrence of
any Indebtedness pursuant to Section 7.01(a)(i)(B), the Company shall prepay
Loans in an aggregate amount equal to such Net Proceeds.

(ii) Equity Issuances. Within five Business Days after any Net Proceeds are
received by or on behalf of the Company or any Subsidiary in respect of the
issuance by the Company or such Subsidiary of any Capital Stock (other than
Disqualified Capital Stock), or the receipt by the Company or such Subsidiary of
any capital contribution (other than (x) issuances of Capital Stock to the
Company or any of its Subsidiaries or capital contributions by the Company or
any of its Subsidiaries or (y) the issuance of Capital Stock to, or otherwise
acquired by, directors, officers or employees of the Company or any of its
Subsidiaries pursuant to any stock option, restricted stock or similar
compensation plan approved by the board of directors of the Company or (z) the
issuance of Capital Stock as consideration for, or the Net Proceeds of which are
used to fund, an Acquisition permitted under this Agreement), the Company shall
prepay Loans in an aggregate amount equal to 50% of such Net Proceeds.

(iii) Asset Sales. Within five Business Days after any Net Proceeds are received
by or on behalf of the Company or any Subsidiary in respect of any Asset Sale,
the Company shall prepay Loans in an aggregate amount equal to such Net
Proceeds; provided that a prepayment of Loans shall be required pursuant to this
paragraph only to the extent that the aggregate Net Proceeds of all Asset Sales
in any Fiscal Year exceeds $5,000,000; provided that so long as no Event of
Default shall have occurred and be continuing, and except in the case of the Net
Proceeds from any sale of an Insurance Subsidiary that would constitute a
Material Disposition, the Company may reinvest all or any portion of such Net
Proceeds in assets useful in its business so long as, within 180 days after the
receipt of such Net Proceeds, such reinvestment shall have been consummated or
the Company shall have entered into a definitive agreement for such
reinvestment, and such reinvestment shall have been consummated no later than
270 days after the receipt of such Net Proceeds (in each case, as certified by
the Company in writing to the Agent); and provided further that any Net Proceeds
not subject to such definitive agreement or so reinvested by such 180th or 270th
day, as the case may be, shall be immediately applied to the prepayment of the
Loans as set forth in this Section 2.08(b)(iii).

(iv) Casualty Events. Within five Business Days after any Net Proceeds are
received by or on behalf of the Company or any Subsidiary (that is not an
Insurance Subsidiary or a Subsidiary of an Insurance Subsidiary) in respect of
any Casualty Event, the Company shall prepay Loans in an aggregate amount equal
to such Net Proceeds; provided that a prepayment of Loans shall be required
pursuant to this paragraph only to the extent that the aggregate Net Proceeds of
all Casualty Events in any Fiscal Year exceeds $10,000,000; provided that, so
long as no Event of Default shall have occurred and be continuing, the Company
may apply all or any portion of such Net Proceeds to the repair or restoration
of the property subject to such Casualty Event or the acquisition

 

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of replacement property so long as within 365 days after the receipt of such Net
Proceeds, such repair, restoration or replacement shall have been consummated
(as certified by the Company in writing to the Agent); and provided, further
that any Net Proceeds not so applied by such 365th day shall be immediately
applied to the prepayment of the Loans as set forth in this Section 2.08(b)(iv).

(v) Restricted Payments. Concurrently with or prior to any Restricted Payment
pursuant to Section 7.08(d) or Section 7.08(e) (including any payment made
pursuant to Section 7.10(a)(iv) deemed to be such a Restricted Payment), the
Company shall prepay Loans in an aggregate amount equal to 100% of such
Restricted Payment.

(c) Application of Prepayments. Each prepayment of any Loans pursuant to
Sections 2.08(b)(i) to (iv) shall be applied, first, to the Loans for
application to the scheduled principal repayments thereof due within twelve
months after the occurrence of the event giving rise to such prepayment in
direct order of maturity and, second, to the Loans for application ratably to
the remaining principal repayment installments thereof until paid in full. Each
prepayment of Loans pursuant to Section 2.08(b)(v) shall be applied to the
scheduled principal repayments of the Loans in inverse order of maturity. Each
prepayment pursuant to Section 2.08(a) shall be applied to the remaining
scheduled principal repayments of Loans as directed by the Company and, if not
specified by the Company, to the remaining scheduled principal repayments of
Loans in direct order of maturity.

(d) Notice of Prepayments. The Company shall notify the Agent in writing of any
prepayment of any Borrowing hereunder (i) in the case of a Eurodollar Rate
Borrowing, not later than 12:00 Noon (New York City time) three Business Days
before the date of prepayment and (ii) in the case of a Base Rate Borrowing, not
later than 12:00 Noon (New York City time) on the prepayment date. Each such
notice shall be irrevocable (other than to the extent provided in connection
with refinancing the Obligations) and shall specify the prepayment date, the
principal amount of each Borrowing or portion thereof to be prepaid and, in the
case of a mandatory prepayment, a reasonably detailed calculation of the amount
of Net Proceeds giving rise to such prepayment. Promptly after it receives any
such notice, the Agent shall advise the Lenders of the contents thereof.

Section 2.09. Interest.

(a) Each Base Rate Loan shall bear interest on the outstanding principal amount
thereof for each day at a rate per annum equal to the Base Rate plus the
Applicable Margin.

(b) Each Eurodollar Rate Loan shall bear interest on the outstanding principal
amount for each Interest Period applicable thereto at a rate per annum equal to
the Eurodollar Rate for such Interest Period plus the Applicable Margin.

(c) Notwithstanding the foregoing, upon the occurrence of any Event of Default,
for so long as such Event of Default shall be continuing, the principal of and
interest on each Loan shall, without further notice in the case of any Event of
Default pursuant to Section 8.01(a), (f) or (g), and upon notice from the Agent
(upon the instruction of the Required Lenders) in the case of any other Event of
Default, bear interest, after as well as before judgment to the extent permitted
by law, at a rate per annum equal to 2% plus the rate otherwise applicable to
such Loan as provided in the preceding subsections of this Section. In addition,
if any fee or other amount (other than principal or interest on any Loan)
payable by the Company pursuant to any Loan Document is not paid when due,
whether upon acceleration or otherwise, such overdue amount shall bear interest,
after as well as before judgment to the extent permitted by law, at a rate per
annum equal to 2.0% plus the rate otherwise applicable to Base Rate Loans as
provided in the preceding subsections of this Section.

 

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(d) Interest on each Loan shall be paid in arrears on each Interest Payment Date
for such Loan; provided that (i) interest accrued pursuant to Section 2.09(c)
shall be payable on demand of the Agent (upon the instruction of the Required
Lenders; provided no such instruction shall be required in the case of an Event
of Default pursuant to Section 8.01(a), (f), or (g)), (ii) upon any repayment or
prepayment of any Loan, interest accrued on the principal amount repaid shall be
payable on the date of such repayment and (iii) upon any conversion of a
Eurodollar Rate Loan before the end of the current Interest Period therefor,
interest accrued on such Loan shall be payable on the effective date of such
conversion.

(e) Anything herein to the contrary notwithstanding, the obligations of the
Company to any Lender hereunder shall be subject to the limitation that payments
of interest shall not be required for any period for which interest is computed
hereunder to the extent (but only to the extent) that contracting for or
receiving such payment by such Lender would be contrary to the provisions of any
law applicable to such Lender limiting the highest rate of interest that may be
lawfully contracted for, charged or received by such Lender, and in such event
the Company shall pay such Lender interest at the highest rate permitted by
applicable law.

Section 2.10. Fees.

The Company shall pay to the Agent, for its own account, fees payable in the
amounts and at the times separately agreed upon by the Company and the Agent.
Such fees shall be fully earned when paid and shall not be refundable under any
circumstances.

Section 2.11. Computation of Fees and Interest.

(a) All computations of interest for Base Rate Loans when the Base Rate is
determined by the “U. S. Prime Rate” shall be made on the basis of a year of 365
or 366 days, as the case may be, and actual days elapsed. All other computations
of fees and interest shall be made on the basis of a 360-day year and actual
days elapsed (which results in more interest being paid than if computed on the
basis of a 365-day year). Interest and fees shall accrue during each period
during which interest or such fees are computed from the first day thereof to
the last day thereof.

(b) Each determination of an interest rate by the Agent shall be conclusive and
binding on the Company and the Lenders in the absence of demonstrable error. The
Agent will, at the request of the Company or any Lender, deliver to the Company
or the Lender, as the case may be, a statement showing the quotations used by
the Agent in determining any interest rate and the resulting interest rate.

Section 2.12. Payments Generally.

(a) All payments to be made by the Company under the Loan Documents shall be
made without condition or deduction for any defense, set-off, recoupment or
counterclaim. Except as otherwise expressly provided in any Loan Document, all
payments to be made by the Company under any Loan Document shall be made to the
Agent for the account of the Lenders at the Agent’s Office, and shall be made in
dollars and in immediately available funds, no later than 3:00 p.m. (New York
City time) on the date specified in such Loan Document. The Agent will promptly
distribute to each Lender its Pro Rata Share (or other applicable share as
expressly provided herein) of such payment in like funds as received. Any
payment received by the Agent later than 3:00 p.m. (New York City time) shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.

(b) Subject to the provisions set forth in the definition of “Interest Period”
herein, whenever any payment is due on a day other than a Business Day, such
payment shall be made on the following Business Day, and such extension of time
shall in such case be included in the computation of interest or fees, as the
case may be.

 

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(c) Unless the Company or any Lender has notified the Agent, prior to the date
any payment is required to be made by it to the Agent hereunder, that the
Company or such Lender, as the case may be, will not make such payment, the
Agent may assume that the Company or such Lender, as the case may be, has timely
made such payment and may (but shall not be so required to), in reliance
thereon, make available a corresponding amount to the Person entitled thereto.
If and to the extent that such payment was not in fact made to the Agent in
immediately available funds, then:

(i) if the Company failed to make such payment, each Lender shall forthwith on
demand repay to the Agent the portion of such assumed payment that was made
available to such Lender in immediately available funds, together with interest
thereon in respect of each day from and including the date such amount was made
available by the Agent to such Lender to the date such amount is repaid to the
Agent in immediately available funds at the Federal Funds Rate from time to time
in effect; and

(ii) if any Lender failed to make such payment, such Lender shall forthwith on
demand pay to the Agent the amount thereof in immediately available funds,
together with interest thereon for the period from the date such amount was made
available by the Agent to the Company to the date such amount is recovered by
the Agent (the “Compensation Period”) at a rate per annum equal to the Federal
Funds Rate from time to time in effect. If such Lender pays such amount to the
Agent, then such amount shall constitute such Lender’s Loan included in the
applicable Borrowing. If such Lender does not pay such amount forthwith upon the
Agent’s demand therefor, the Agent may make a demand therefor upon the Company,
and the Company shall pay such amount to the Agent, together with interest
thereon for the Compensation Period at a rate per annum equal to the rate of
interest applicable to the applicable Borrowing. Nothing herein shall be deemed
to relieve any Lender from its obligation to fulfill its Commitment or to
prejudice any rights that the Agent or the Company may have against any Lender
as a result of any default by such Lender hereunder.

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

(d) If any Lender makes available to the Agent funds for any Loan to be made by
such Lender as provided in the foregoing provisions of this Article 2, and such
funds are not made available to the Company by the Agent because the conditions
to the extension of Loans set forth in Article 4 are not satisfied or waived in
accordance with the terms hereof, the Agent shall return such funds (in like
funds as received from such Lender) to such Lender, without interest.

(e) The obligations of the Lenders hereunder to make Loans are several and not
joint. The failure of any Lender to make any Loan on any date required hereunder
shall not relieve any other Lender of its corresponding obligation to do so on
such date, and no Lender shall be responsible for the failure of any other
Lender to so make its Loan.

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

 

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Section 2.13. Sharing of Payments by Lenders.

If any Lender shall, by exercising any right of setoff or counterclaim or
otherwise, obtain payment (a) on account of any Obligations due and payable
hereunder and under the other Loan Documents at such time resulting in such
Lender receiving payment in excess of its ratable share (calculated according to
the proportion of (i) the amount of such Obligations due and payable to such
Lender at such time to (ii) the aggregate amount of the Obligations due and
payable to all Lenders hereunder and under the other Loan Documents at such
time) of payments on account of the Obligations due and payable to all Lenders
hereunder and under the other Loan Documents at such time obtained by all the
Lenders at such time or (b) of or on account of any of Obligations owing (but
not due and payable) to such Lender hereunder and under the other Loan Documents
at such time in excess of its ratable share (calculated according to the
proportion of (i) the amount of such Obligations owing (but not due and payable)
to such Lender at such time to (ii) the aggregate amount of Obligations owing
(but not due and payable) to all Lenders hereunder and under the other Loan
Documents at such time) of payments on account of Obligations owing (but not due
and payable) to all Lenders hereunder and under the other Loan Documents at such
time obtained by all the Lenders at such time, then in each case, such Lender
shall (x) notify the Agent of such fact, and (y) purchase (for cash at face
value) participations in the Obligations of the other Lenders due and payable or
owing, as the case may be, or make such other adjustments as shall be equitable,
so that the benefit of such excess payments shall be shared by all such Lenders,
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 (1) any
payment made by the Company pursuant to and in accordance with the express terms
of this Agreement or (2) 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 Company or any Subsidiary thereof (as to which
the provisions of this Section shall apply).

Each Obligor consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Obligor rights of setoff and counterclaim (subject to Section 10.09) with
respect to such participation as fully as if such Lender were a direct creditor
of such Obligor in the amount of such participation.

ARTICLE 3

TAXES, YIELD PROTECTION AND ILLEGALITY

Section 3.01. Taxes.

(a) Payments Free of Indemnified Taxes and Other Taxes. Any and all payments by
or on account of any obligation of any Obligor hereunder or under any other Loan
Document shall be made free and clear of and without deduction or withholding
for any Indemnified Taxes or Other Taxes, provided that if any applicable
withholding agent shall be required by applicable law to deduct or withhold any
Indemnified Taxes (including any Other Taxes) from such payments, then (i) the
sum payable by the applicable Obligor shall be increased as necessary so that
after all required deductions or withholdings have been made (including
deductions applicable to additional sums payable under this Section) the Agent
or Lender, as the case may be, receives an amount equal to the sum it would have
received had no such deductions or withholdings been made, (ii) the applicable
withholding agent shall make such deductions or withholdings and (iii) the
applicable withholding agent shall timely pay the full amount deducted or
withheld to the relevant Governmental Authority in accordance with applicable
law.

 

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(b) Payment of Other Taxes by the Company. Without limiting the provisions of
subsection (a) above, the Company shall timely pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

(c) Indemnification by the Company. Without duplication of Section 3.01(a), the
Company shall indemnify the Agent and each Lender, within 10 Business Days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes (including Indemnified Taxes or Other Taxes imposed on or attributable to
amounts payable under this Section) imposed on or payable by the Agent or such
Lender, as the case may be, and reasonable expenses arising therefrom, whether
or not such Indemnified Taxes or Other Taxes were correctly or legally imposed
or asserted by the relevant Governmental Authority. A certificate setting forth
the amount of such payment or liability delivered to the Company by a Lender
(with a copy to the Agent), or by the Agent on its own behalf or on behalf of a
Lender, shall be conclusive absent manifest error. If the Company reasonably
believes that there is an appropriate basis to pursue a refund of any
Indemnified Tax or Other Tax indemnified by the Company under this
Section 3.01(c), or for which any Obligor has paid additional amounts under
Section 3.01(a), the affected Agent or Lender (as applicable) shall, upon the
Company’s written request and at the Company’s expense, pursue such refund;
provided that no Agent or Lender shall be obligated to pursue any such refund if
such Agent or Lender determines in good faith that it would be materially
disadvantaged or prejudiced, or subject to any unreimbursed cost or expense, by
pursuing such refund. Any refund described in the preceding sentence that is
received by the Agent or any Lender shall be payable to the Company to the
extent provided in Section 3.01(g).

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

(e) Status of Lenders. Each Lender shall deliver to the Company and to the
Agent, whenever reasonably requested by the Company or the Agent, such properly
completed and executed documentation prescribed by applicable laws and such
other reasonably requested information as will permit the Company or the Agent,
as the case may be, (A) to determine whether or not payments made hereunder or
under any other Loan Document are subject to Taxes, (B) to determine, if
applicable, the required rate of withholding or deduction and (C) to establish
such Lender’s entitlement to any available exemption from, or reduction of,
applicable Taxes in respect of any payments to be made to such Lender pursuant
to any Loan Document or otherwise to establish such Lender’s status for
withholding tax purposes in an applicable jurisdiction. If any form,
certification or other documentation provided by a Lender pursuant to this
Section 3.01(e) (including any of the specific documentation described below)
expires or becomes obsolete or inaccurate in any respect, such Lender shall
promptly notify the Company and the Agent in writing and shall promptly update
or otherwise correct the affected documentation or promptly notify the Company
and the Agent in writing that such Lender is not legally eligible to do so.

Without limiting the generality of the foregoing,

(A) any Lender that is a “United States person” within the meaning of
Section 7701(a)(30) of the Code shall deliver to the Company and the Agent duly
completed and executed originals of IRS Form W-9 or such other documentation or
information prescribed by applicable laws or reasonably requested by the Company
or the Agent (in such number of signed originals as shall be requested by the
recipient) on or prior to the date on which such Lender becomes a Lender under
this Agreement (and from time to

 

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time thereafter upon request of the Company or the Agent) as will enable the
Company or the Agent, as the case may be, to determine whether or not such
Lender is subject to U.S. federal backup withholding or information reporting
requirements; and

(B) each Foreign Lender that is entitled under the Code or any applicable treaty
to an exemption from or reduction of U.S. federal withholding tax with respect
to any payments hereunder or under any other Loan Document shall deliver to the
Company and the Agent (in such number of signed originals as shall be requested
by the recipient) on or prior to the date on which such Foreign Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the request
of the Company or the Agent), duly completed and executed copies of whichever of
the following is applicable:

(i) IRS Form W-8BEN (or any successor thereto) claiming eligibility for benefits
of an income tax treaty to which the United States is a party,

(ii) IRS Form W-8ECI (or any successor thereto) claiming that specified payments
(as applicable) under this Agreement or any other Loan Documents (as applicable)
constitute income that is effectively connected with such Foreign Lender’s
conduct of a trade or business in the United States,

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Sections 881(c) or 871(h) of the Code (the “Portfolio
Interest Exemption”), (x) a certificate, substantially in the form of
Exhibit G-1, G-2, G-3 or G-4, as applicable (a “Tax Status 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 Company,
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 that no
interest to be received is effectively connected with a U.S. trade or business
and (y) IRS Form W-8BEN (or any successor thereto),

(iv) where such Lender is a partnership (for U.S. federal income tax purposes)
or otherwise not a beneficial owner (e.g., where such Lender has sold a
participation), IRS Form W-8IMY (or any successor thereto) and all required
supporting documentation (including, where one or more of the underlying
beneficial owner(s) is claiming the benefits of the Portfolio Interest
Exemption, a Tax Status Certificate of such beneficial owner(s) (provided that,
if the Foreign Lender is a partnership and not a participating Lender, the Tax
Status Certificate from the beneficial owner(s) may be provided by the Foreign
Lender on behalf of the beneficial owner(s)), or

(v) any other form prescribed by applicable laws as a basis for claiming
exemption from or a reduction in United States federal withholding tax together
with such supplementary documentation as may be prescribed by applicable Laws to
permit the Company or the Agent to determine the withholding or deduction
required to be made; and

(C) Each Lender shall deliver to the Company and the Agent (in such number of
duly completed and executed originals as shall be requested by the recipient),
at such time or times reasonably requested by the Company or the Agent, such
documentation prescribed by applicable law or reasonably requested by the
Company or the Agent (1) to comply with the Company’s and/or Agent’s obligations
under FATCA, (2) to determine that such Lender has complied with such Lender’s
obligations under FATCA and/or (3) to determine the amount to deduct and
withhold from any payment under this Agreement or the other Loan Documents
pursuant to FATCA.

Notwithstanding anything to the contrary in this Section 3.01(e), no Lender
shall be required to deliver any documentation that it is not legally eligible
to provide.

 

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(f) Indemnification by the Lenders. Each Lender shall severally indemnify each
Obligor for any Excluded Taxes attributable to such Lender that are imposed on
or are payable by such Obligor (and any reasonable expenses arising therefrom)
as a result of the failure of such Lender to deliver any documentation pursuant
to Section 3.01(e) that such Lender was required and legally eligible to
provide, or as a result of such Lender providing any documentation that such
Lender was not legally eligible to provide. Any indemnification payment due
under this Section 3.01(f) shall be payable to the Company within 10 Business
Days after written demand therefor.

(g) Treatment of Certain Refunds. If the Agent or any Lender determines, in its
good faith discretion, that it has received a refund (whether received in cash
or applied as an offset against other Taxes due) of any Indemnified Taxes or
Other Taxes as to which it has been indemnified by an Obligor or with respect to
which an Obligor has paid additional amounts pursuant to this Section, it shall
promptly pay to the Company an amount equal to such refund (but only to the
extent of indemnity payments made, or additional amounts paid, by an Obligor
under this Section 3.01 with respect to the Indemnified Taxes or Other Taxes
giving rise to such refund), net of all out-of-pocket expenses of the Agent or
such Lender (including any Taxes), 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 Company, upon the request of the
Agent or such Lender, agrees to repay the amount paid over to the Company (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority (other than any penalties arising from the gross negligence or willful
misconduct of the Agent or the Lender)) to the Agent or such Lender in the event
the Agent or such Lender is required to repay such refund to such Governmental
Authority. Such Lender or Agent, as the case may be, shall, at the Company’s
reasonable request, provide the Company with a copy of any notice of assessment
or other evidence reasonably satisfactory to the Company of the requirement to
repay such refund received from the relevant taxing authority. This subsection
shall not be construed to require the Agent, or any Lender to make available its
tax returns (or any other information relating to its taxes that it deems
confidential) to the Company or any other Person.

Section 3.02. Illegality.

(a) If any Lender determines that the introduction of any Requirement of Law, or
any change in any Requirement of Law, or in the interpretation or administration
of any Requirement of Law, after the Effective Date, has made it unlawful, or
that any central bank or other Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable Lending Office to make Eurodollar
Rate Loans, then, on notice thereof by the Lender to the Company through the
Agent, any obligation of that Lender to make Eurodollar Rate Loans shall be
suspended until the Lender notifies the Agent and the Company that the
circumstances giving rise to such determination no longer exist.

(b) If a Lender determines that it is unlawful for such Lender to maintain any
Eurodollar Rate Loan after the Effective Date, the Company shall, upon its
receipt of written notice of such fact and demand from such Lender (with a copy
to the Agent), prepay in full such Eurodollar Rate Loans of that Lender then
outstanding, together with interest accrued thereon and amounts required under
Section 3.04, either on the last day of the Interest Period thereof, if the
Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day,
or immediately, if the Lender may not lawfully continue to maintain such
Eurodollar Rate Loan. If the Company is required to so prepay any Eurodollar
Rate Loan, then concurrently with such prepayment, the Company shall borrow from
the affected Lender, in the amount of such prepayment, a Base Rate Loan.

(c) If the obligation of any Lender to make or maintain Eurodollar Rate Loans
has been so terminated or suspended, the Company may elect, by giving notice to
the Lender through the Agent, that all Loans which would otherwise be made or
maintained by the Lender as Eurodollar Rate Loans shall instead be Base Rate
Loans.

 

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(d) Before giving any notice to the Agent under this Section 3.02, the affected
Lender shall designate a different Lending Office with respect to its Eurodollar
Rate Loans if such designation will avoid the need for giving such notice or
making such demand and will not, in the judgment of the Lender, be illegal or
otherwise disadvantageous to the Lender.

Section 3.03. Increased Costs and Reduction of Return.

(a) If any Lender determines that, due to either (i) the introduction of or any
change in or in the interpretation of any law or regulation or (ii) the
compliance by that Lender with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law) after the
Effective Date, there shall be any increase in the cost to such Lender of
agreeing to make or making, funding or maintaining any Eurodollar Rate Loans,
then the Company shall be liable for, and shall from time to time, promptly upon
written demand (with a copy of such demand to be sent to the Agent), pay to the
Agent for the account of such Lender, additional amounts as are sufficient to
compensate such Lender for such increased costs. Notwithstanding anything herein
to the contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act
and all rules, regulations, orders, requests, guidelines or directives in
connection therewith are deemed to have been adopted and to have taken effect
after the date hereof.

(b) If any Lender shall have determined that (i) the introduction of any Capital
Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Lender (or
its Lending Office) or any corporation controlling the Lender with any Capital
Adequacy Regulation, in each case after the Effective Date, affects or would
affect the amount of capital required or expected to be maintained by the Lender
or any corporation controlling the Lender and (taking into consideration such
Lender’s or such corporation’s policies with respect to capital adequacy and
such Lender’s desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitment, loans, credits or
obligations under this Agreement, then, thirty (30) days after written demand by
such Lender to the Company through the Agent, the Company shall pay to the
Lender, from time to time as specified by the Lender, additional amounts
sufficient to compensate the Lender for such increase; provided that the Company
shall not be required to compensate a Lender for any such increases in capital
for any period more than 120 days prior to the date such Lender delivers such
demand.

(c) Section 3.01 and not this Section 3.03 shall be the only Section of this
Agreement that applies to increased costs with respect to Indemnified Taxes,
Excluded Taxes and Other Taxes.

Section 3.04. Funding Losses.

The Company shall reimburse each Lender and hold each Lender harmless from any
loss (other than loss of profits or the Applicable Margin) or expense which the
Lender may sustain or incur as a consequence of:

(a) the failure of the Company to make on a timely basis any payment of
principal of any Eurodollar Rate Loan;

(b) the failure of the Company to continue a Loan after the Company has given
(or is deemed to have given) a Notice of Continuation;

 

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(c) the failure of the Company to make any prepayment of any Loan in accordance
with any notice delivered under Section 2.08; or

(d) the prepayment (including pursuant to Section 2.08) or other payment
(including after acceleration thereof) of a Eurodollar Rate Loan on a day that
is not the last day of the relevant Interest Period;

including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Eurodollar Rate Loans or from fees
payable to terminate the deposits from which such funds were obtained, but
excluding any administrative fee or other amount chargeable by such Lender for
the calculation of such loss. For purposes of calculating amounts payable by the
Company to the Lenders under this Section 3.04 and under Section 3.03(a), each
Eurodollar Rate Loan made by a Lender (and each related reserve, special deposit
or similar requirement) shall be conclusively deemed to have been funded at the
Eurodollar Rate used in determining the Eurodollar Rate for such Eurodollar Rate
Loan (but without giving effect to the proviso to the definition of “Eurodollar
Rate”) by a matching deposit or other borrowing in the London interbank market
for a comparable amount and for a comparable period, whether or not such
Eurodollar Rate Loan is in fact so funded.

Section 3.05. Inability to Determine Rates.

If the Required Lenders determine that for any reason adequate and reasonable
means do not exist for determining the Eurodollar Rate for any requested
Interest Period with respect to a proposed Eurodollar Rate Loan, or that the
Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan does not adequately and fairly reflect the cost to such
Lenders of funding such Loan, the Agent will promptly so notify the Company and
each Lender. Thereafter, the obligation of the Lenders to make or maintain
Eurodollar Rate Loans shall be suspended until the Agent (upon the instruction
of the Required Lenders) revokes such notice in writing. Upon receipt of such
notice, the Company may revoke any notice of continuation then submitted by it
pursuant to Section 2.03. If the Company does not revoke such notice of
continuation, the Lenders shall make, convert or continue the Loans, as proposed
by the Company, in the amount specified in the applicable notice submitted by
the Company, but such Loans shall be made, converted or continued as Base Rate
Loans instead of Eurodollar Rate Loans. Notwithstanding the foregoing, the Agent
and each Lender shall take any reasonable actions available to them (including
designation of different Lending Offices), consistent with legal and regulatory
restrictions, that will avoid the need to take the steps described in this
Section 3.05, which will not, in the reasonable judgment of the Agent or such
Lender, be disadvantageous to the Agent, such Lender or the Company, as compared
to the steps described in this Section 3.05.

Section 3.06. Certificates of Lenders.

Any Lender claiming reimbursement or compensation under this Article shall
deliver to the Company (with a copy to the Agent) a certificate setting forth in
reasonable detail the amount payable to the Lender hereunder and such
certificate shall be conclusive and binding on the Company in the absence of
demonstrable error. Such certificate shall set forth in reasonable detail (in
the form of Exhibit E hereto for amounts claimed with respect to Eurodollar Rate
Loans under Section 3.04 and in a form reasonably determined by the applicable
Lender with respect to Base Rate Loans) the methodology used in determining the
amount payable to the Lender.

Section 3.07. Substitution of Lenders.

If the Company receives notice from any Lender of a claim for compensation under
Section 3.01, 3.02 or 3.03, the Company may, upon notice to such Lender and the
Agent, replace such Lender by causing

 

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such Lender to assign its Loans (with the assignment fee to be paid by the
Company in such instance) pursuant to Section 10.07(b) to one or more other
Lenders or Eligible Assignees procured by the Company; provided that (x) the
Company shall be obligated to replace all Lenders that have made similar
requests for compensation and (y) each 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 under the Loan
Documents from the applicable assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Company (in the case of all
other amounts). The Company shall release such Lender from its obligations under
the Loan Documents. Any Lender being replaced shall execute and deliver an
Assignment and Assumption with respect to such Lender’s outstanding Loans.

Section 3.08. Survival.

The agreements and obligations of the Company in Section 3.01, Section 3.03,
Section 3.04 and Section 3.06 shall survive the termination of this Agreement
and the payment of all other Obligations.

ARTICLE 4

CONDITIONS PRECEDENT

Section 4.01. Conditions of Initial Borrowing.

The obligation of each Lender to make any Loans hereunder on the Closing Date is
subject to satisfaction of the following conditions precedent:

(a) The Agent shall have received each of the following, each of which shall be
originals or facsimiles or Adobe PDFs delivered by electronic mail (followed
promptly by originals) unless otherwise specified, each properly executed by a
Responsible Officer of the signing Obligor, each dated the Effective Date (or,
in the case of certificates of governmental officials, a recent date before the
Effective Date) and each in form and substance reasonably satisfactory to the
Agent and each of the Lenders:

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

(ii) a Note executed by the Company in favor of each Lender that has requested a
Note at least three Business Days prior to the Effective Date.

(b) The Agent shall have received:

(i) copies of the resolutions of the board of directors, authorized subcommittee
thereof, or other equivalent body of each Obligor authorizing the Transactions
to which such Obligor is a party, certified as of the Effective Date by the
Secretary or an Assistant Secretary of such Obligor (or in the case of a limited
liability company, of its manager); and

(ii) a certificate of the Secretary or Assistant Secretary of each Obligor (or
in the case of a limited liability company, of its manager) certifying the names
and true signatures of the officers of such Obligor authorized to execute,
deliver and perform, as applicable, this Agreement and all other Loan Documents
to be delivered by such Obligor hereunder.

 

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(iii) the following personal property collateral requirements:

(A) certificates representing the Pledged Equity referred to in the Security
Agreement that constitutes certificated securities (as defined in the Uniform
Commercial Code) accompanied by undated stock powers executed in blank and
instruments evidencing the Pledged Debt indorsed in blank to the extent required
by the Security Agreement;

(B) proper financing statements in form appropriate for filing, duly prepared
for filing under the Uniform Commercial Code of all jurisdictions that the Agent
may deem necessary in order to perfect the Liens created under the Security
Agreement, covering the Collateral described in the Security Agreement;

(C) proper filings in form appropriate for filing with the United States Patent
and Trademark Office and United States Copyright Office together with evidence
that all action that the Agent may deem necessary in order to perfect the Liens
created under the Intellectual Property Security Agreement (as defined in the
Security Agreement) has been taken or will be taken promptly after the Closing
Date;

(D) evidence of the completion of, or of arrangements reasonably satisfactory to
the Agent for the completion of, all other actions, recordings and filings of or
with respect to the Security Agreement that the Agent may deem necessary in
order to perfect the Liens created thereby;

(E) evidence that all other action that the Agent may deem necessary in order to
perfect the Liens created under the Security Agreement has been taken or that
arrangements reasonably satisfactory to the Agent for the completion thereof
have been made;

(F) certified copies of Uniform Commercial Code, tax and judgment lien searches,
or equivalent reports or searches, each of a recent date listing all effective
financing statements, lien notices or comparable documents that name any Obligor
as debtor and that are filed in those state and county jurisdictions in which
any Obligor is organized or maintains its principal place of business and such
other searches that the Agent deems necessary; and United States Patent and
Trademark Office and United States Copyright Office searches in form and scope
reasonably satisfactory to the Agent; and

(G) evidence reasonably acceptable to the Agent of payment or arrangements for
payment by the Loan Parties of all applicable recording taxes, fees, charges,
costs and expenses required for the recording of the Security Documents.

(c) The Agent shall have received:

(i) the articles or certificate of incorporation or equivalent document of each
Obligor as in effect on the Effective Date, certified by the Secretary of State
of its state of incorporation or organization as of a recent date;

 

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(ii) the bylaws or equivalent document of each Obligor as in effect on the
Effective Date, certified by the Secretary or Assistant Secretary of such
Obligor as of the Effective Date;

(iii) a certificate of good standing or equivalent document for each Obligor
from the Secretary of State (or similar, applicable Governmental Authority) of
its state of incorporation or organization as of a recent date; and

(iv) a compliance certificate for each Insurance Subsidiary from the Department
of Insurance of its jurisdiction of domicile as of a recent date.

(d) The Agent shall have received a written opinion, reasonably acceptable to
the Agent in form and substance, (addressed to the Agent and the Lenders and
dated the Effective Date) from each of (i) Dewey & LeBoeuf LLP, counsel for the
Obligors, substantially in the form of Exhibit H-1, (ii) Karl Kindig, counsel
for the Obligors, substantially in the form of Exhibit H-2 and (iii) Baker &
Daniels LLP, Indiana counsel for the Obligors, substantially in the form of
Exhibit H-3.

(e) The Agent shall have been paid all accrued and unpaid fees, and reasonable
costs and expenses to the extent then due and payable to the Agent on or before
the Effective Date, including Attorney Costs of the Agent to the extent invoiced
2 Business Days prior to the Effective Date.

(f) The Agent shall be satisfied (and may, but shall not be obligated to, rely
on the receipt of a certificate from any Company or any Affiliate thereof for
all or part of such purpose) that the Senior Secured Notes shall have been
issued in accordance with the Senior Secured Notes Indenture, and the Company
shall have received net proceeds thereof.

(g) (i) All Indebtedness and other obligations issued under or in connection
with the Existing Credit Agreement shall have been repaid in full, (ii) the
Existing Credit Agreement and all documents executed in connection therewith
shall have been terminated on terms satisfactory to the Agent and (iii) the
Agent shall have received an executed payoff letter with respect thereto in form
and substance satisfactory to the Agent.

(h) The Agent shall have received (i) a certificate signed by a Responsible
Officer on behalf of the Company, dated as of the Effective Date, confirming the
satisfaction of the conditions set forth in Section 4.01(a) and Section 4.01(b)
and confirming that the Company and its Subsidiaries have received all required
approvals of the transactions contemplated hereby and by the other Loan
Documents, including the Transactions, from each applicable Governmental
Authority and (ii) a solvency certificate executed by the Chief Financial
Officer of the Company, substantially in the form of Exhibit I.

(i) All governmental authorizations and third party approvals (or arrangements
reasonably satisfactory to the Lenders in lieu of such approvals) necessary in
connection with the financing contemplated hereby and the continuing operations
of the Company and its Subsidiaries shall have been obtained and be in full
force and effect, in each case except for such authorizations and approvals as
would not be reasonably likely to have a Material Adverse Effect.

(j) The Agent shall have received such other approvals, documents or materials
as the Agent may reasonably request, all in form and substance reasonably
satisfactory to the Agent.

 

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(k) The Company and each of the Subsidiary Guarantors shall have provided the
documentation and other information to the Agent that are required by regulatory
authorities under applicable “know-your-customer” rules and regulations,
including the Patriot Act, to the extent the Company shall have received written
requests therefor at least five business days prior to the Closing Date.

Section 4.02. Conditions to All Borrowings.

The obligation of each Lender to make any Loans (including on the Closing Date)
is subject to satisfaction of the following conditions precedent:

(a) The representations and warranties of the Company contained in Article 5 or
any other Loan Document, or which are contained in any document furnished at any
time under or in connection herewith or therewith, (x) which are not qualified
as to materiality shall be true and correct in all material respects and
(y) which are qualified as to materiality shall be true and correct, in each
case, on and as of the date of such Loan Notice and after giving effect to 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 in all material respects, or true and correct, as the case may be, as of
such earlier date, and except that for purposes of this Section 4.02, the
representations and warranties contained in Sections 5.11(a) and (b) shall be
deemed to refer to the most recent statements furnished prior to the Closing
Date or pursuant to Sections 6.01(a) and (b), respectively.

(b) No Default or Event of Default shall have occurred and be continuing on such
date or immediately after giving effect to the proposed Borrowing.

(c) No order, judgment or decree of any Governmental Authority shall purport to
restrain any Lender from making any Loans to be made by it. No injunction or
other restraining order shall have been issued, shall be pending or noticed with
respect to any action, suit or proceeding seeking to enjoin or otherwise prevent
the consummation of, or to recover any damages or obtain relief as a result of,
the transactions contemplated by this Agreement or the making of Loans
hereunder.

(d) The Agent shall have received a Loan Notice in accordance with the
requirements hereof.

Each Loan Notice (other than a notice of conversion requesting only a conversion
of Loans to the other Interest Type, or a continuation of Eurodollar Rate Loans)
submitted by the Company shall be deemed to be a representation and warranty
that the conditions specified in Sections 4.02(a) and (b) have been satisfied
(or waived) on and as of the date of the applicable Borrowing.

Section 4.03. Determinations Under Section 4.01.

For purposes of determining compliance with the conditions specified in
Section 4.01, each of the Lenders shall be deemed to have consented to, approved
or accepted or to be satisfied with each document or other matter required
thereunder to be consented to or approved by, or acceptable or satisfactory to,
the Lenders unless an officer of the Agent responsible for the Transactions
shall have received notice from such Lender prior to the Effective Date
specifying its objection thereto and, in the case of any Lender, such Lender
shall not have made available to the Agent on the Effective Date such Lender’s
Pro Rata Share of the borrowing to be made on such date.

 

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ARTICLE 5

REPRESENTATIONS AND WARRANTIES

The Company represents and warrants to the Agent and each Lender that:

Section 5.01. Corporate Existence and Power.

The Company and each of its Subsidiaries:

(a) is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization;

(b) has the corporate (or other organizational) power and authority and all
governmental licenses, authorizations, consents and approvals to own its assets
and carry on its business;

(c) is duly qualified and is licensed and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification or license; and

(d) is in compliance with all Requirements of Law;

except, in each case referred to in clauses (a) (other than with respect to the
Company), (b), (c) and (d), to the extent that the failure to do so,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

Section 5.02. Corporate Authorization; No Contravention.

The Transactions to be entered into by each Obligor are within its corporate or
other organizational powers. The Transactions (including the execution, delivery
and performance by each Obligor of each Loan Document to which it is a party)
have been duly authorized by all necessary corporate or other organizational
action of each Obligor, and do not and will not:

(a) contravene the terms of any of such Obligor’s Organization Documents;

(b) conflict with or result in any breach or contravention of, or result in or
require the creation of any Lien (other than the Transaction Liens and the Liens
securing the Senior Secured Notes) under, any document evidencing any material
Contractual Obligation to which such Obligor is a party; or

(c) violate any Requirement of Law or any order, injunction, writ or decree of
any Governmental Authority to which such Obligor or its property is subject,
except to the extent that such violations, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

Section 5.03. Governmental Authorization.

No approval, consent, exemption, authorization, or other action by, or notice
to, or filing with, any Governmental Authority is necessary or required in
connection with the Transactions (including the execution, delivery or
performance by, or enforcement against, each Obligor of each Loan Document to
which it is a party), except (i) such as have been obtained and are in full
force and effect and (ii) filings necessary to perfect the Transaction Liens.

 

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Section 5.04. Binding Effect.

This Agreement has been duly executed and delivered by the Company and
constitutes, and each other Loan Document to which any Obligor is to be a party,
when executed and delivered by such Obligor, will constitute, a legal, valid and
binding obligation of the Company or such Obligor, as the case may be, in each
case enforceable against the Company or such Obligor, as the case may be, in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’
rights generally or by equitable principles relating to enforceability.

Section 5.05. Litigation.

Except as set forth on Schedule 5.05, there are no actions, suits, proceedings,
claims or disputes pending, or to the knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against the Company or any of its Subsidiaries or any of their
respective properties that: (a) purport to affect or pertain to this Agreement
or any other Loan Document, or any of the transactions (including the
Transactions) contemplated hereby or thereby; or (b) individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect. No
injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other
Loan Document or directing that the transactions (including the Transactions)
provided for herein or therein not be consummated as herein or therein provided.

Section 5.06. No Default.

No Default or Event of Default has occurred and is continuing. Without limiting
the foregoing, no Default would result from the consummation of the
Transactions. As of the Effective Date, neither the Company nor any Subsidiary
is in default under or with respect to any Contractual Obligation in any respect
that, individually or together with all such defaults, could reasonably be
expected to have a Material Adverse Effect.

Section 5.07. ERISA Compliance.

(a) Each Plan is in compliance with the applicable provisions of ERISA, the Code
and other federal or state law except to the extent that such non-compliance
could not reasonably be expected to have a Material Adverse Effect. Each Plan
that is intended to qualify under Section 401(a) of the Code has either
(i) received a favorable determination letter from the IRS and to the knowledge
of the Company, nothing has occurred which would reasonably be expected to cause
the loss of such qualification or (ii) with respect to the Plans identified on
Schedule 5.07, is in the process of requesting a favorable determination letter
from the IRS as to its qualified status, and the Company is not aware of any
fact or issue that would reasonably be expected to cause the IRS to fail to
issue a favorable determination letter, except where such non-qualification
could not reasonably be expected to have a Material Adverse Effect. The Company,
its Subsidiaries and each ERISA Affiliate have made all required contributions
to any 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, except where such lack of
contribution or application for funding waiver could not reasonably be expected
to have a Material Adverse Effect.

(b) Except as set forth on Schedule 5.07, there are no pending or, to the
knowledge of the Company, 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. To the knowledge of the Company,
there has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that could reasonably be expected
to have a Material Adverse Effect.

 

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(c) Except for occurrences or circumstances that individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect,
(i) except as set forth on Schedule 5.07, since December 31, 2009, no ERISA
Event has occurred or is reasonably expected to occur; (ii) except as set forth
on Schedule 5.07, since December 31, 2009, no Pension Plan has any Unfunded
Pension Liability; (iii) none of the Company, any of its Subsidiaries or 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) none of the Company,
any of its Subsidiaries or any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred that, with the giving
of notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) none
of the Company, any of its Subsidiaries or any ERISA Affiliate has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.

Section 5.08. Margin Regulations.

Neither the Company nor any Subsidiary is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock. Margin Stock does not constitute more than
25% of the value of the consolidated assets of the Company and its Subsidiaries.
None of the proceeds of the Loans will be used to acquire Margin Stock. None of
the transactions contemplated by this Agreement (including the direct or
indirect use of the proceeds of the Loans) will violate or result in a violation
of the Securities Act of 1933, as amended, or the Exchange Act, or regulations
issued pursuant thereto, or Regulation T, U or X of the FRB.

Section 5.09. Title to Properties.

The Company and each Subsidiary have good legal title in fee simple or rights in
and power to transfer, or valid leasehold interests in, all real property
necessary or used in the ordinary conduct of their respective businesses, except
for such defects in title or interests as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. As of the
Effective Date, the property of the Company and its Subsidiaries is subject to
no Liens, other than Liens permitted under Section 7.02.

Section 5.10. Taxes.

(a) The Company and each of its Subsidiaries has timely filed all federal Tax,
material Income Tax and other material Tax returns and reports required to be
filed, and has paid all federal Tax, Income Tax and other material Taxes levied
or imposed upon it or its properties, income or assets that have become due and
payable (including in its capacity as a withholding agent), except those that
are (i) not more than 90 days overdue or (ii) being contested in good faith by
appropriate proceedings and for which adequate reserves have been provided in
accordance with SAP or GAAP, as applicable (provided such contest effectively
suspends collection of the same and enforcement of any Lien securing the same).
There is no current or proposed Tax audit, assessment, deficiency or other claim
or proceeding against the Company or any Subsidiary that could reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

(b) Except as could not be reasonably expected to, individually or in the
aggregate, result in a Material Adverse Effect (i) the Company and each of its
Subsidiaries has made adequate provision in accordance with SAP or GAAP (as
applicable) for all Taxes not yet due and payable and (ii) neither the Company
nor any Subsidiary has ever participated in a “listed transaction” within the
meaning of Treasury Regulation Section 1.6011-4.

 

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Section 5.11. Financial Condition.

(a) Each of (i) the audited consolidated financial statements of the Company and
its Subsidiaries dated December 31, 2009, and the related consolidated
statements of income, shareholders’ equity and cash flows for the Fiscal Year
ended on that date, reported on by PricewaterhouseCoopers LLP, independent
public accountants and (ii) the unaudited consolidated financial statements of
the Company and its Subsidiaries dated September 30, 2010, and the related
consolidated statements of income, shareholders’ equity and cash flows for the
period ended on that date:

(i) were prepared in accordance with GAAP consistently applied throughout the
period covered thereby, except as otherwise expressly noted therein, subject, in
the case of such unaudited financial statements, to ordinary, good faith year
end and audit adjustments and the absence of footnote disclosure;

(ii) fairly present in all material respects the financial condition, results of
operations, cash flows and changes in shareholders’ equity of the Company and
its Subsidiaries as of the date thereof and results of operations for the period
covered thereby; and

(iii) show all material indebtedness and other liabilities, direct or
contingent, of the Company and its consolidated Subsidiaries as of the date
thereof, including liabilities for Taxes, material commitments and Contingent
Obligations.

(b) Each of (i) the December 31, 2009 Annual Statement of each Insurance
Subsidiary and (ii) the September 30, 2010 Quarterly Statement of each Insurance
Subsidiary (collectively, the “Historical Statutory Statements”):

(i) were been prepared in accordance with SAP, except as may be reflected in the
notes thereto and subject, with respect to the Quarterly Statements, to the
absence of notes required by SAP and to normal year-end adjustments); and

(ii) were in all material respects, in compliance with applicable Requirements
of Law when filed and present fairly in all material respects the financial
condition of the respective Insurance Subsidiaries covered thereby as of the
respective dates thereof and changes in capital and surplus of the respective
Insurance Subsidiaries covered thereby for the respective periods then ended.

Except for liabilities and obligations disclosed or provided for in the
Historical Statutory Statements (including, without limitation, reserves, policy
and contract claims and statutory liabilities), no Insurance Subsidiary had, as
of the date of its respective Historical Statutory Statements, any material
liabilities or obligations of any nature whatsoever (whether absolute,
contingent or otherwise and whether or not due) that, in accordance with SAP,
would have been required to have been disclosed or provided for in such
Historical Statutory Statement.

(c) The financial projections provided to the Agent prior to the date hereof
(i) have been prepared in good faith based on reasonable assumptions and
(ii) are based on the best information available to the Company after due
inquiry (it being understood that financial projections are inherently
unreliable and no assurances are given by the Company and its Subsidiaries that
the results forecast in any projection will be realized and that actual results
may differ materially therefrom).

 

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(d) Since December 31, 2009, there has been no material adverse change in the
business, assets, operations or condition, financial or otherwise, of the
Company and its Subsidiaries, taken as a whole.

Section 5.12. Environmental Matters.

(a) All properties owned or leased by the Company or any of its Subsidiaries
have been, and continue to be, owned or operated by the Company and its
Subsidiaries in compliance with all Environmental Laws, except where failure to
so comply could not, individually or in the aggregate, be reasonably expected to
have a Material Adverse Effect.

(b) There have been no past, and there are no pending or, to the knowledge of
the Company, threatened, Environmental Claims against the Company or any of its
Subsidiaries, except where such Environmental Claims could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.

(c) There has been no Release of Hazardous Materials at, on, under or from any
property now or, to the knowledge of the Company, previously owned or leased by
the Company or any of its Subsidiaries that, individually or in the aggregate,
have had, or could reasonably be expected to have, a Material Adverse Effect.

(d) The Company and each of its Subsidiaries have been issued and are in
compliance with all permits, certificates, approvals, licenses and other
authorizations required under any Environmental Law to own and operate their
property or to conduct their businesses except where failure to obtain or comply
with the foregoing could not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect.

(e) There are no underground or above ground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now owned or leased
by the Company or any of its Subsidiaries that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

(f) To the knowledge of the Company, neither the Company nor any of its
Subsidiaries has directly transported or directly arranged for the
transportation of any Hazardous Material to any location that could reasonably
be expected to result in liability of the Company or any of its Subsidiaries
under any Environmental Law, except any liability which could not, individually
or in the aggregate, be reasonably expected to have a Material Adverse Effect.

(g) There are no polychlorinated biphenyls or friable asbestos present at any
property now owned or leased by the Company or any of its Subsidiaries that,
individually or in the aggregate, could be reasonably expected to have a
Material Adverse Effect.

Section 5.13. Regulated Activities and Regulated Entities.

Except as disclosed on Schedule 5.13, none of the Company, any Person
controlling the Company, or any Subsidiary, is an “Investment Company” within
the meaning of, or required to register under, the Investment Company Act of
1940. None of the Company or any Subsidiary is subject to regulation under the
Federal Power Act, the Interstate Commerce Act, any state public utilities code
or any other Federal or state statute or regulation limiting its ability to
incur Indebtedness.

 

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Section 5.14. Subsidiaries.

Schedule 5.14 sets forth the name of, and the ownership interest of the Company
(or the applicable Subsidiary) in, each of its Subsidiaries and identifies each
Subsidiary that is a Subsidiary Guarantor, a Foreign Subsidiary, an Immaterial
Subsidiary and/or an Insurance Subsidiary, in each case as of the Effective
Date. All the Company’s Subsidiaries are, and will at all times be, fully
consolidated in its consolidated financial statements. As of the Effective Date
(i) each Subsidiary is a Wholly-Owned Subsidiary and (ii) each Subsidiary (other
than the Insurance Subsidiaries, Subsidiaries of Insurance Subsidiaries, Foreign
Subsidiaries and Immaterial Subsidiaries) is also a Subsidiary Guarantor.

Section 5.15. Insurance Licenses.

No License of the Company or any Insurance Subsidiary, the loss of which
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect, is the subject of a proceeding for suspension or revocation. To
the Company’s knowledge, there is no sustainable basis for such suspension or
revocation, and no such suspension or revocation has been threatened by any
Governmental Authority.

Section 5.16. Full Disclosure.

The Company has disclosed to the Lenders all agreements, instruments and
corporate or other restrictions to which it or any Subsidiary is subject, and
all other matters known to any of them, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect. None of the
representations or warranties made by any Obligor in any Loan Document to which
it is a party as of the date such representations and warranties are made or
deemed made, and no report, financial statement, certificate or other
information furnished (other than financial projections) by or on behalf of any
Obligor to the Agent or any Lender in connection with the transactions
contemplated hereby and the negotiation of this Agreement or delivered hereunder
or under any other Loan Document, taken as a whole, when furnished, contained
any untrue statement of a material fact or omitted any material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances under which they are made, not misleading as of the time when
made or delivered.

Section 5.17. Solvency.

Immediately after the Transactions to occur on the Effective Date are
consummated, (a) the fair value of the assets of each Obligor, at a fair
valuation, will exceed its debts and liabilities, subordinated, contingent or
otherwise; (b) such Obligor does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Obligor’s ability to pay such debts
and liabilities as they mature; (c) each Obligor will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) no Obligor will have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and proposed to be conducted after the
Effective Date; provided that in the case of any Obligor that is a going
concern, the value of the assets of such Obligor (for purposes of clauses
(a) and (b) above) shall be determined on a going-concern basis.

Section 5.18. Security Interests.

On the Effective Date, the Security Documents will create valid security
interests in the Collateral to the extent set forth therein. At all times
thereafter, the Security Documents will create valid and, when financing
statements are filed in the offices specified in the Perfection Certificates
delivered pursuant to the Security Agreement, perfected security interests in
the Collateral from time to time covered or

 

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purportedly covered thereby to the extent that a security interest in such
Collateral may be perfected by filing under the Uniform Commercial Code. Such
security interests will be prior to all other Liens (except Liens permitted
under Section 7.02(c), Section 7.02(d), Section 7.02(e), Section 7.02(f),
Section 7.02(g), Section 7.02(h), Section 7.02(i), Section 7.02(k),
Section 7.02(l), Section 7.02(o), Section 7.02(q) and Section 7.02(r)) on the
Collateral until the applicable Security Interest are released in accordance
with the Loan Documents.

Section 5.19. Insurance.

The insurance maintained by or reserved on the books of the Company and its
Subsidiaries is sufficient to protect the Company and its Subsidiaries and their
respective directors and officers against such risks as are usually insured
against in accordance with industry practice by companies in the same or similar
business.

Section 5.20. OFAC; Anti-Terrorism Laws; PATRIOT Act.

(a) No Obligor, none of its Subsidiaries and, to the knowledge of senior
management of each Obligor, none of its controlled Affiliates and none of the
respective officers, directors, brokers or agents of such Obligor, such
Subsidiary or controlled Affiliate (i) has violated or is in violation of any
applicable Anti-Money Laundering Law or (ii) has engaged or engages in any
transaction, investment, undertaking or activity that conceals the identity,
source or destination of the proceeds from any category of offenses designated
in any applicable law, regulation or other binding measure implementing the
“Forty Recommendations” and “Nine Special Recommendations” published by the
Organisation for Economic Co-operation and Development’s Financial Action Task
Force on Money Laundering.

(b) No Obligor, none of its Subsidiaries and, to the knowledge of senior
management of each Obligor, none of its controlled Affiliates and none of the
respective officers, directors, brokers or agents of such Obligor, such
Subsidiary or such controlled Affiliate that is acting or benefiting in any
capacity in connection with the Loans (i) is an Embargoed Person or (ii) except
as otherwise authorized by OFAC, otherwise permitted for U.S. persons by a U.S.
Governmental Authority or by any rule, regulation or order of a U.S.
Governmental Authority, will use any proceeds of the Loans, or lend, contribute
or otherwise make available such proceeds to any Person for the purpose of
financing the activities of or with any Person or in any country or territory
that, at the time of funding or facilitation, is an Embargoed Person.

(c) Except as otherwise authorized by OFAC, no Obligor, none of its Subsidiaries
and, to the knowledge of senior management of each Obligor, none of its
controlled Affiliates and none of the respective officers, directors, brokers or
agents of such Obligor, such Subsidiary or such controlled Affiliate acting or
benefiting in any capacity in connection with the Loans (i) conducts any
business or engages in making or receiving any contribution of funds, goods or
services to or for the benefit of any Embargoed Person, (ii) deals in, or
otherwise engages in any transaction related to, any property or interests in
property blocked pursuant to any applicable Economic Sanctions Laws or
(iii) engages in or conspires to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any
of the applicable prohibitions set forth in any Economic Sanctions Laws.

Section 5.21. Surplus Debenture Interest and Dividends.

The Company has not received any notice from NAIC, any other Governmental
Authority or any other insurance regulatory authority that its Insurance
Subsidiaries will not be permitted to pay dividends or Surplus Debenture
interest, and has no reason to believe that such notice is forthcoming.

 

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ARTICLE 6

AFFIRMATIVE COVENANTS

Until all principal of and interest on each Loan and all fees and other amounts
payable hereunder have been paid in full (other than unmatured, surviving
contingent indemnification obligations not yet due and payable), the Company
covenants and agrees with the Lenders that:

Section 6.01. Financial Statements.

The Company shall deliver to the Agent and each Lender:

(a) promptly upon filing thereof with the SEC (including as part of a Form 10-K)
but not later than 90 days after the end of each Fiscal Year, copies of the
audited consolidated and the unaudited consolidating balance sheet of the
Company and its Subsidiaries as at the end of such year and the related audited
consolidated and unaudited consolidating statements of operations, shareholders’
equity and cash flows for such year, setting forth in the case of the audited
consolidated statements in comparative form the figures for the previous Fiscal
Year, and accompanied by the opinion of PricewaterhouseCoopers LLP or another
nationally-recognized independent public accounting firm (“Independent
Auditor”), which opinion shall state that such audited consolidated financial
statements present fairly in all material respects the financial position and
result of operations of the Company and its Subsidiaries for the periods
indicated in conformity with GAAP applied on a basis consistent with prior
years, except as stated therein. Such opinion shall be without a “going concern”
or like qualification and shall not be qualified as to scope;

(b) promptly upon filing thereof with the SEC (including as part of a Form 10-Q)
but not later than 50 days after the end of each of the first three Fiscal
Quarters of each Fiscal Year, copies of the condensed unaudited consolidated and
consolidating balance sheet of the Company and its Subsidiaries as of the end of
such quarter and the related condensed unaudited consolidated and consolidating
statements of operations, shareholders’ equity and cash flows for the period
commencing on the first day and ending on the last day of such quarter and for
the then elapsed portion of such Fiscal Year, setting forth in the case of the
consolidated statements in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous Fiscal Year, and certified by a Responsible Officer as fairly
presenting in all material respects, in accordance with GAAP (subject to the
absence of footnotes and year-end audit adjustments), the financial position,
the results of operations and cash flows of the Company and the Subsidiaries;

(c) as soon as available but not later than 75 days (or, in the case of the
Annual Statement prepared on a combined basis, 90 days) after the close of each
Fiscal Year of each Insurance Subsidiary, copies of the unaudited Annual
Statement of such Insurance Subsidiary on a stand-alone basis and on a combined
basis for all Insurance Subsidiaries, the stand-alone Annual Statement to be
certified by a Responsible Officer of such Insurance Subsidiary, all such
statements to be prepared in accordance with SAP consistently applied throughout
the periods reflected therein and, if required by the applicable Governmental
Authority, audited and certified by independent certified public accountants of
recognized national standing (such audited Annual Statement to be delivered as
soon as available but not later than June 15 of each Fiscal Year of such
Insurance Subsidiary);

(d) as soon as available but not later than 60 days (or, in the case of the
Quarterly Statement prepared on a combined basis, 75 days) after the close of
each of the first three Fiscal Quarters of each Fiscal Year of each Insurance
Subsidiary, copies of the Quarterly Statement of

 

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such Insurance Subsidiary on a stand-alone basis and on a combined basis for all
Insurance Subsidiaries, the stand-alone Quarterly Statement to be certified by a
Responsible Officer of such Insurance Subsidiary, all such statements to be
prepared in accordance with SAP consistently applied through the period
reflected therein;

(e) promptly following the delivery to or receipt by the Company or any of its
Subsidiaries of any regular or periodic final Triennial Examination Reports,
risk adjusted capital reports or results of any market conduct examination or
examination by any Department or the NAIC of the financial condition and
operations of, or any notice of any assertion as to violation of any Requirement
of Law by, any Insurance Subsidiary, or any report with respect to any Insurance
Subsidiary (including any summary report from the NAIC with respect to the
performance of such Insurance Subsidiary as measured against the ratios and
other financial measurements developed by the NAIC under its Insurance
Regulatory Information System as in effect from time to time) that could
reasonably be expected to result in a Material Adverse Effect; and

(f) within 90 days after the close of each Fiscal Year of each Insurance
Subsidiary, a copy of the “Statement of Actuarial Opinion” and “Management
Discussion and Analysis” for each such Insurance Subsidiary that is provided to
the applicable Department (or equivalent information should such Department no
longer require such a statement) as to the adequacy of reserves of such
Insurance Subsidiary, such opinion to be in the format prescribed by the
insurance code of the state of domicile of such Insurance Subsidiary.

Section 6.02. Certificates; Other Information.

The Company shall furnish to the Agent, for further distribution to each Lender:

(a) concurrently with the delivery of the financial statements referred to in
Section 6.01(a) and Section 6.01(b), a Compliance Certificate executed by a
Responsible Officer;

(b) concurrently with the delivery of the financial statements referred to in
Section 6.01(a), a certificate of the accounting firm that reported on such
financial statements stating (i) whether during the course of their examination
of such financial statements they obtained knowledge of any Default relating to
accounting matters (which certificate may be limited to the extent required by
auditing rules or guidelines), (ii) if a Default relating to accounting matters
has come to their attention, specifying the nature and period of existence
thereof and (iii) stating whether or not, based on their audit examination,
anything has come to their attention that causes them to believe that the
matters set forth in Schedule 3 to the Compliance Certificate delivered pursuant
to Section 6.02(a) for the applicable Fiscal Year to the extent such matters
relate to accounting are not stated in accordance with the terms of this
Agreement;

(c) promptly upon receipt thereof, copies of all final reports submitted to the
Company by independent public accountants in connection with each annual,
interim or special audit of the financial statements of the Company made by such
accountants, including the comment letter submitted by such accountants to
management in connection with their annual audit;

(d) promptly, copies of all Forms 10-K and 10-Q that the Company or any
Subsidiary may file with the SEC, all financial statements and reports that the
Company sends to its shareholders and copies of all other financial statements
and regular, periodic or special reports (including Form 8-K) that the Company
or any Subsidiary may make to, or file with, the SEC;

 

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(e) concurrently with the delivery of the financial statements referred to in
Section 6.01(a), a detailed consolidated budget for the next Fiscal Year
(including statements of projected operations and cash flows for such period and
setting forth the assumptions used in preparing such budget) and, promptly when
available, any significant revisions of such budget;

(f) promptly and in any event within three Business Days after learning thereof,
notification of any changes after the date hereof in any rating given by S&P,
Moody’s or A.M. Best in respect of the Company, any of its Subsidiaries or any
of their Indebtedness or securities;

(g) to the extent not otherwise provided under Section 6.01 or Section 6.02,
promptly upon receipt thereof, or delivery thereof by the Company or any
Subsidiary, as applicable, a copy of any written communication addressed to the
Company or any of its Subsidiaries setting forth or relating to the Company’s
and its Subsidiaries’ operations that may reasonably be expected to be
materially adverse to the interests of the Company, such Subsidiary or the
Lenders delivered to or received from S&P, Moody’s or A.M. Best or any other
rating agency;

(h) as soon as available but not later than five Business Days after receipt,
execution or delivery of any Reinsurance Agreement (other than any Reinsurance
Agreement entered into in the ordinary course of business for the purpose of
managing insurance risk consistent with industry practice), including any
proposal, binder, cover note or line slip (where the Person to be reinsured or
reinsured is an Insurance Subsidiary), (i) a written notice specifying each
Person party to such agreement, (ii) for each such Person, its most recently
published rating, if any, (iii) the subject matter of each such agreement and
(iv) if requested by the Agent or any Lender, attaching thereto, a true and
complete copy of such agreement;

(i) promptly after receipt of any notice of termination, cancellation (which
cancellation notice is not accompanied by a corresponding request for renewal),
commutation or recapture of any Reinsurance Agreement (other than any
Reinsurance Agreement that was entered into in the ordinary course of business
for the purpose of managing insurance risk consistent with industry practice)
where the Person reinsured is an Insurance Subsidiary, a copy thereof; and

(j) promptly, such additional information regarding the business, financial or
corporate affairs of the Company or any Subsidiary, or compliance with the terms
of any Loan Document, as the Agent, for itself or at the request of any Lender,
may from time to time reasonably request.

Documents required to be delivered pursuant to Section 6.01, Section 6.02 or
Section 6.03 may be delivered electronically and if so delivered, shall be
deemed to have been delivered on the date (i) on which the Company posts such
documents or provides a link thereto on the Company’s website on the Internet at
the website address listed on Schedule 10.02; or (ii) on which such documents
are posted on the Company’s behalf on IntraLinks/IntraAgency or another relevant
website, if any, to which each Lender and the Agent have access (whether a
commercial, third-party website or whether sponsored by the Agent); provided
that: the Company shall notify (which may be by facsimile or electronic mail)
the Agent of the posting of any such documents and provide to the Agent by
electronic mail electronic versions (i.e., soft copies) of such documents.
Except for Compliance Certificates, the Agent shall have no 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
Company 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.

 

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The Company hereby acknowledges that (a) the Agent will make available
information and projections (collectively, “Company Materials”) to the Lenders
by posting the Company Materials on IntraLinks or another similar secure
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 Company, its Subsidiaries or their
respective securities) (each, a “Public Lender”). The Company hereby agrees that
(w) it will use commercially reasonable efforts to identify that portion of the
Company Materials that may be distributed to the Public Lenders and that all
such Company Materials 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 Company Materials “PUBLIC,” the
Company shall be deemed to have authorized the Agent and the Lenders to treat
such Company Materials as not containing any material non-public information
with respect to the Company, its Subsidiaries or their respective securities for
purposes of United States federal and state securities laws, it being understood
that such Company Materials are subject to Section 10.08; (y) all Company
Materials marked “PUBLIC” are permitted to be made available through a portion
of the Platform designated “Public Lender”; and (z) the Agent shall be entitled
to treat any Company Materials that are not marked “PUBLIC” as being suitable
only for posting on a portion of the Platform not designated “Public Lender.”

Section 6.03. Notices.

The Company shall promptly notify the Agent:

(a) of the occurrence of any Default;

(b) of any matter that has resulted in, or could reasonably be expected to
result in, a Material Adverse Effect, including any of the following that could
reasonably be expected to have a Material Adverse Effect: (i) any breach or
non-performance of, or any default under, a Contractual Obligation of the
Company or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between the Company or any Subsidiary and any
Governmental Authority; (iii) the commencement of, or any material development
in, any litigation (including any governmental proceeding or arbitration
proceeding), tax audit or investigative proceeding, claim, lawsuit, and/or
investigation against or involving the Company or any of its Subsidiaries or any
of its or their businesses or operations, including pursuant to any applicable
Environmental Laws; (iv) the expiration without renewal, revocation, suspension
or restriction of, or the institution of any proceedings to revoke, suspend or
restrict, any License now or hereafter held by any Insurance Subsidiary that is
required to conduct insurance business in compliance with all applicable laws
and regulations; (v) the institution of any disciplinary proceedings against or
in respect of any Insurance Subsidiary, or the issuance of any order, the taking
of any action or any request for an extraordinary audit for cause by any
Governmental Authority; or (vi) the issuance or adoption of any judicial or
administrative order limiting or controlling the insurance business of any
Insurance Subsidiary (and not the insurance industry generally);

(c) of the filing or commencement of, or the occurrence of any development in,
any litigation or proceeding that seeks to enjoin, prohibit, discontinue or
otherwise impacts (i) the validity or enforceability of this Agreement or any of
the other Loan Documents or (ii) the transactions contemplated hereby or thereby
and, in the case of clause (ii), that could reasonably be expected to have a
Material Adverse Effect;

(d) of the occurrence of any of the following events affecting the Company, any
of its Subsidiaries or any ERISA Affiliate (but in no event more than 10 days
after such event) and deliver to the Agent and each Lender a copy of any notice
with respect to such event that is filed with a Governmental Authority and any
notice delivered by a Governmental Authority to the Company, any of its
Subsidiaries or any ERISA Affiliate with respect to such event:

(i) an ERISA Event; or

 

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(ii) a material increase in the Unfunded Pension Liabilities of any Pension
Plan;

(iii) the adoption of or the commencement of contributions to any Plan subject
to Section 412 of the Code by the Company, any of its Subsidiaries or any ERISA
Affiliate; or

(iv) the adoption of any amendment to a Plan subject to Section 412 of the Code,
if such amendment results in a material increase in contributions or Unfunded
Pension Liability;

provided that no such notice will be required under this Section 6.03(d) with
respect to the occurrence of any such event if such occurrence does not result
in, and is not reasonably expected to result in, any liability to the Company,
any of its Subsidiaries or any ERISA Affiliate of more than $25,000,000 in the
aggregate;

(e) of any material change in accounting policies or financial reporting
practices by the Company or any of its Subsidiaries; and

(f) of any casualty or other insured damage to any material portion of the
Collateral or the commencement of any action or proceeding for the taking of any
material portion of the Collateral under power of eminent domain or by
condemnation or similar proceeding.

Each notice under this Section shall be accompanied by a written statement by a
Responsible Officer setting forth details of the occurrence referred to therein,
and stating what action the Company or any affected Subsidiary proposes to take
with respect thereto and at what time. Each notice under Section 6.03(a) shall
describe with particularity any and all clauses or provisions of this Agreement
or other Loan Document that have been (or reasonably foreseeably will be)
breached or violated.

Section 6.04. Preservation of Corporate Existence, Etc.

The Company shall, and shall cause each Subsidiary (other than any Immaterial
Subsidiary) to (except as permitted by Section 7.03 or Section 7.07):

(a) preserve and maintain in full force and effect its existence and good
standing under the laws of its state or jurisdiction of incorporation or
organization, as applicable; and

(b) preserve and maintain in full force and effect all governmental rights,
privileges, qualifications, permits, licenses and franchises necessary in the
normal conduct of its business, except, in the case of this clause (b), where
such failure to preserve and maintain could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

Section 6.05. Insurance.

The Company shall, and shall cause each Subsidiary to, maintain with financially
sound and reputable independent insurers insurance against losses or damage of
the kinds customarily insured against by

 

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Persons engaged in the same or similar business, of such types and in such
amounts (after giving effect to any self-insurance reasonable and customary for
similarly situated Persons engaged in the same or similar businesses as the
Company and its Subsidiaries) as are customarily carried under similar
circumstances by such other Persons.

Section 6.06. Payment of Obligations.

The Company shall, and shall cause each Subsidiary to, pay and discharge as the
same shall become due and payable, all of the following: all material Tax
liabilities imposed upon it or its material properties or assets, unless the
same (a) are not overdue for a period of more than 90 days or (b) are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with SAP or GAAP (as applicable) are being maintained by the Company
or such Subsidiary and such contest effectively suspends collection of the same
and the enforcement of any Lien securing the same.

Section 6.07. Compliance with Laws.

The Company shall, and shall cause each Subsidiary to, comply with all
Requirements of Law of any Governmental Authority having jurisdiction over it or
its business (including the Federal Fair Labor Standards Act, the Patriot Act
and all applicable Environmental Laws), except (i) for such noncompliance that
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or (ii) as may be contested in good faith and by
appropriate proceedings and with respect to which adequate reserves are being
maintained in accordance with GAAP.

Section 6.08. Compliance with ERISA.

The Company shall, and shall cause each of its Subsidiaries and ERISA Affiliates
to: (a) maintain each Plan in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law;
(b) cause each Plan that is qualified under Section 401(a) of the Code to
maintain such qualification, and (c) make all required contributions to any Plan
subject to Section 412 of the Code, except where such failure to maintain as set
forth in (a) or (b) or to make contributions as set forth in (c) could not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect.

Section 6.09. Inspection of Property and Books and Records.

The Company shall, and shall cause each Subsidiary to, maintain proper books of
record and account, in which full, true and correct entries in all material
respects in conformity with GAAP or SAP, as applicable, consistently applied
(except as stated therein) shall be made of all financial transactions and
matters involving the assets and business of the Company and such Subsidiary.
Unless an Event of Default has occurred and is continuing, not more than once
per fiscal year, the Company shall permit, and shall cause each Subsidiary to
permit, representatives and independent contractors of the Agent or its
designees, at the Company’s expense, to visit and inspect any of their
respective properties, to examine their respective corporate, financial and
operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all at such reasonable
times during normal business hours, upon reasonable advance notice to the
Company; provided that members of senior management will be notified and
permitted to be present during any such meetings; and provided further that when
an Event of Default exists the Agent or any Lender (through coordination with
the Agent) may do any of the foregoing at any time during normal business hours
and without advance notice; provided that the Company shall not be required to
reimburse the costs of any Lender for more than one visit per Fiscal Quarter.

 

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Section 6.10. Information Regarding Collateral.

The Company will furnish to the Agent prompt written notice of any change in
(i) any Obligor’s legal name or any Obligor’s location (determined as provided
in Section 9-307 of the Uniform Commercial Code), (ii) any Obligor’s identity or
corporate structure or (iii) any Obligor’s Federal Taxpayer Identification
Number or organizational identification number. The Company will not effect or
permit any change referred to in the preceding sentence unless all filings have
been made under the Uniform Commercial Code (which filings may be made by the
Company if the Agent has failed to act after 30 days following notice of any
such changes) and all other actions have been taken that are required so that
such change will not at any time adversely affect the validity, perfection or
priority of any Transaction Lien on any of the Collateral.

Section 6.11. Use of Proceeds.

The Loans shall be used, together with the proceeds from the issuance of the
Senior Secured Notes, to refinance the Existing Credit Agreement and to pay fees
and expenses incurred in connection with this Agreement and the other
Transactions.

Section 6.12. Additional Subsidiaries; Immaterial Subsidiaries.

(a) If any additional Subsidiary is formed or acquired after the Effective Date,
the Company will, within five Business Days after such Subsidiary is formed or
acquired, notify the Agent thereof and cause the Collateral and Guarantee
Requirement to be satisfied with respect to such Subsidiary, whereupon such
Subsidiary will become an “Obligor,” a “Subsidiary Guarantor” and “Lien Grantor”
for purposes of the Loan Documents; provided that no Foreign Subsidiary,
Insurance Subsidiary, Subsidiary of an Insurance Subsidiary or, subject to
Section 6.12(b), Immaterial Subsidiary shall be required to be a Subsidiary
Guarantor. Without limiting the preceding sentence, if any Domestic Immaterial
Subsidiary that is not an Insurance Subsidiary or a Subsidiary of an Insurance
Subsidiary loses its status as an Immaterial Subsidiary, the Company shall
promptly (and in any event within 10 Business Days following the date on which
financial statements in respect of the Fiscal Quarter following which such
Subsidiary has lost its status as an Immaterial Subsidiary are required to be
delivered hereunder) cause the Collateral and Guarantee Requirement to be
satisfied with respect to such Subsidiary, whereupon such Subsidiary will become
an “Obligor,” a “Subsidiary Guarantor” and “Lien Grantor” for purposes of the
Loan Documents.

(b) If (i) the aggregate fair market value of the assets of all Immaterial
Subsidiaries exceeds $40,000,000 as of the end of the most recently ended Fiscal
Quarter or (ii) the aggregate revenues of all Immaterial Subsidiaries for the
period of four consecutive Fiscal Quarters most recently ended exceeds
$30,000,000, the Company shall promptly (and in any event within 10 Business
Days following the date on which financial statements in respect of such Fiscal
Quarter are required to be delivered hereunder) cause the Collateral and
Guarantee Requirement to be satisfied with respect to one or more of the
Immaterial Subsidiaries to the extent necessary to ensure that immediately after
giving effect thereto (x) the aggregate fair market value of the assets of all
Immaterial Subsidiaries shall not exceed $40,000,000 and (y) the aggregate
revenues of all Immaterial Subsidiaries for the period of four consecutive
Fiscal Quarters most recently ended shall not exceed $30,000,000, whereupon each
such Subsidiary will become an “Obligor,” a “Subsidiary Guarantor” and “Lien
Grantor” for purposes of the Loan Documents.

Section 6.13. Further Assurances.

(a) The Company will, and will cause each other Obligor to, execute and deliver
any and all further documents, financing statements, agreements and instruments,
and take all such further actions (including the filing and recording of
financing statements, fixture filings, mortgages, deeds of trust and

 

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other documents), that may be required under any applicable law to cause the
Collateral and Guarantee Requirement to be and remain satisfied, all at the
Company’s expense. The Company will provide to the Agent, from time to time upon
request, evidence reasonably satisfactory to the Agent as to the perfection and
priority of the Transaction Liens created or intended to be created by the
Security Documents.

(b) The Company will maintain concentration accounts solely with depositaries
that have entered into an Account Control Agreement with the Agent and the
Company on the terms, and subject to the exceptions, set forth in the Security
Agreement.

(c) With respect to any property (including any real property or improvements
thereto or any interest therein) acquired after the Effective Date by any
Obligor that is intended to be subject to the Lien created by any of the
Security Documents but is not so subject or ceases to be subject to Liens
permitted pursuant to Section 7.02 after the Effective Date, promptly (and in
any event within 30 days after the acquisition thereof or within 3 Business Days
of such ceasing) (i) execute and deliver to the Agent such amendments or
supplements to the relevant Security Documents or such other documents as the
Agent shall deem necessary or advisable to grant to the Agent, for the benefit
of the Secured Parties, a Lien on such property subject to no Liens other than
Liens permitted by this Agreement, and (ii) take all actions necessary to cause
such Lien to be duly perfected to the extent required by such Security Document
in accordance with all applicable Requirements of Law, including, but not
limited to, the filing of financing statements in such jurisdictions as may be
reasonably requested by the Agent, at the Company’s expense. The Company shall
otherwise take such actions and execute and/or deliver to the Agent such
documents as the Agent shall require to confirm the validity, perfection and
priority of the Lien of the Security Documents on such after-acquired
properties, including actions described in Section 6.13(a), all at the Company’s
expense.

Section 6.14. Maintenance of Ratings.

Use commercially reasonable efforts to maintain a rating of the Facility and a
corporate family credit rating of the Company by each of S&P and Moody’s.

Section 6.15. Post-Closing Matters.

Execute and deliver the documents and complete the tasks set forth on Schedule
6.15, in each case within the time limits specified on such schedule (unless the
Agent, in its discretion, shall have agreed to any particular longer period).

ARTICLE 7

NEGATIVE COVENANTS

Until all principal of and interest on each Loan and all fees and other amounts
payable hereunder have been paid in full (other than unmatured, surviving
contingent indemnification obligations not yet due and payable), the Company
covenants and agrees with the Lenders that:

Section 7.01. Limitation on Indebtedness; Certain Capital Stock.

(a) The Company shall not, and shall not permit any of its Subsidiaries to,
incur or at any time be liable with respect to any Indebtedness, except:

(i) (A) Indebtedness under the Loan Documents and (B) Refinancing Indebtedness
thereof; provided that the mandatory prepayments, covenants, events of default
and remedies

 

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applicable to such Refinancing Indebtedness shall not be more favorable taken as
a whole to the lenders thereof than those in the Loan Documents;

(ii) any Surplus Debentures issued by any Insurance Subsidiary to the Company or
any of its Subsidiaries that remain outstanding on the Effective Date, and
extensions, renewals or replacements thereof;

(iii) (A) the Senior Secured Notes issued on the Closing Date and
(B) Refinancing Indebtedness thereof; provided that the covenants, events of
default and remedies applicable to such Refinancing Indebtedness shall not be
more favorable taken as a whole to the holders thereof than those in the Senior
Secured Notes Documents;

(iv) Permitted Transactions entered into by Insurance Subsidiaries;

(v) Permitted Swap Obligations;

(vi) Indebtedness existing on the date hereof and listed in Schedule 7.01 and
Refinancing Indebtedness thereof;

(vii) non-recourse Indebtedness of Insurance Subsidiaries incurred in the
ordinary course of business (x) existing or arising under Swap Contracts entered
into by Insurance Subsidiaries or (y) resulting from the sale or securitization
of non-admitted assets, policy loans, CBOs and CMOs;

(viii) (A) Capitalized Lease Liabilities and Purchase Money Debt, and
Refinancing Indebtedness thereof (but disregarding the requirements of clauses
(b) through (h) of the definition thereof), in an aggregate principal amount not
to exceed $50,000,000 at any time outstanding and (B) Capitalized Lease
Liabilities arising from the sale and leaseback of the Company’s headquarters
pursuant to Section 7.03(m), and Refinancing Indebtedness thereof (but
disregarding the requirements of clauses (b) through (h) of the definition
thereof);

(ix) Indebtedness (including Surplus Debentures) owed by the Company or any
Subsidiary (other than any Excluded Subsidiary) to the Company or any Subsidiary
(other than any Excluded Subsidiary);

(x) Indebtedness (x) owed by any Excluded Subsidiary to any other Excluded
Subsidiary or (y) owed by any Excluded Subsidiary to the Company or any other
Subsidiary; provided that the aggregate principal amount outstanding under this
clause (y) shall not exceed $30,000,000 at any time;

(xi) Indebtedness in respect of letters of credit issued in connection with
reinsurance transactions entered into in the ordinary course of business;

(xii) Indebtedness in respect of surety and other similar bonds in the ordinary
course of business;

(xiii) other Indebtedness in an aggregate principal amount not to exceed
$50,000,000 at any time outstanding; provided that the aggregate principal
amount of Indebtedness of Subsidiaries that are not Obligors outstanding under
this clause (xiii), when taken together with the aggregate principal amount of
Indebtedness of Subsidiaries that are not Obligors outstanding under clause
(xiv) below, shall not exceed $25,000,000 at any time;

 

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(xiv) other unsecured Indebtedness in an aggregate principal amount of up to
$75,000,000; provided that the aggregate principal amount of Indebtedness of
Subsidiaries that are not Obligors outstanding under this clause (xiv), when
taken together with the aggregate principal amount of Indebtedness of
Subsidiaries that are not Obligors outstanding under clause (xiii) above, shall
not exceed $25,000,000 at any time;

(xv) Contingent Obligations of any Person in respect of Indebtedness otherwise
permitted to be incurred by such Person under this Section 7.01(a);

(xvi) Indebtedness consisting of the deferred purchase price of equity interests
(or option or warrants or similar instruments) of departing officers, directors
and employees of any Obligor or any Subsidiary issued (whether in the form of
notes or otherwise) for the purchase or redemption thereof pursuant to the terms
of an existing compensation plan or employment contract;

(xvii) Cash Management Obligations incurred in the ordinary course of business;
and

(xviii) Indebtedness of the Company owing to any Excluded Subsidiaries pursuant
to the Tax Sharing Agreement, provided that the aggregate amount of such
Indebtedness at any time outstanding, if such Indebtedness were treated as an
Investment in Excluded Subsidiaries, would not, when added to actual Investments
in Excluded Subsidiaries made pursuant to Section 7.09(h), result in a breach of
Section 7.09(h).

(b) The Company shall not permit any of its Subsidiaries to issue any Capital
Stock other than to the Company or another Subsidiary. The Company shall not
issue any Disqualified Capital Stock.

(c) The Company shall not at any time permit any Person, other than an Insurance
Subsidiary or CDOC, to own any CDOC Preferred Stock.

Section 7.02. Liens.

The Company shall not, and shall not permit any of its Subsidiaries to, create,
assume or suffer to exist any Lien on any property now owned or hereafter
acquired by it, except for the following:

(a) Transaction Liens;

(b) Liens on assets of Insurance Subsidiaries incurred in connection with
Permitted Transactions;

(c) collateral consisting of cash or Cash Equivalents securing Permitted Swap
Obligations in an aggregate amount not to exceed, at any time, $60,000,000;
provided that, for purposes of this clause (c), in the case of Cash Equivalents
described in clauses (a), (b), (e) and (f) of the definition thereof, the one
year (or twelve-month, as applicable) maturity limitation set forth in such
clauses shall be disregarded;

(d) Liens for Taxes that are not overdue for more than 90 days or for Taxes
being contested in good faith and by appropriate proceedings and with respect to
which adequate reserves are being maintained in accordance with GAAP;

(e) Liens existing on the date hereof and listed in Schedule 7.02, including
extensions, renewals and replacements of such Liens; provided that (i) such Lien
shall not apply to any additional property (other than after acquired title in
or on such property and proceeds of the

 

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existing collateral in accordance with the document creating such Lien) and
(ii) the Indebtedness secured thereby is not increased except as otherwise
permitted under Section 7.01 (in which case the portion representing any
additional increase must be permitted by another paragraph of this
Section 7.02);

(f) (i) Liens incurred in the ordinary course of business in connection with
worker’s compensation, unemployment insurance or other forms of governmental
insurance or benefits or to secure performance of tenders, statutory
obligations, leases and contracts (other than for borrowed money) entered into
in the ordinary course of business or to secure obligations on surety or appeal
bonds and (ii) collateral consisting of cash or Cash Equivalents securing
letters of credit issued in respect of obligations to insurers in an aggregate
amount not to exceed $20,000,000 at any time outstanding;

(g) (i) Liens of attorneys retained by the Company on a contingency fee basis
and (ii) Liens of mechanics, carriers, and materialmen and other like Liens
imposed by law and arising in the ordinary course of business in respect of
obligations that in the case of clause (ii) hereof are not overdue for more than
60 days or that are being contested in good faith and by appropriate proceedings
and with respect to which adequate reserves are being maintained in accordance
with GAAP;

(h) Liens arising in the ordinary course of business for sums being contested in
good faith and by appropriate proceedings and with respect to which adequate
reserves are being maintained in accordance with GAAP, or for sums not due, and
in either case not involving any deposits or advances for borrowed money or the
deferred purchase price of property or services;

(i) Liens securing Indebtedness permitted by Section 7.01(a)(viii); provided
that such Liens are limited to the assets financed by the relevant Capitalized
Lease Liabilities or Purchase Money Debt;

(j) easements, rights-of-way, zoning restrictions, restrictions and other
similar encumbrances incurred in the ordinary course of business that do not
secure any monetary obligation and which do not materially interfere with the
ordinary course of business of the Company and its Subsidiaries;

(k) Liens on property of the Company and its Subsidiaries in favor of landlords
securing licenses, subleases or leases of property not otherwise prohibited
hereunder;

(l) licenses, leases or subleases permitted hereunder granted to others not
materially interfering in any material respect in the business of the Company
and its Subsidiaries;

(m) attachment or judgment Liens not constituting an Event of Default under
Section 8.01(i);

(n) Liens arising from precautionary Uniform Commercial Code financing statement
filings with respect to operating leases or consignment arrangements entered
into by the Company and its Subsidiaries in the ordinary course of business;

(o) Liens incurred to secure Cash Management Obligations permitted by
Section 7.01(a)(xvii) in an aggregate amount not to exceed $10,000,000 and
customary set-off rights in favor of depositary banks;

 

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(p) other Liens securing obligations with respect to Indebtedness permitted by
Section 7.01(a)(xiii); provided that, to the extent that such Liens extend to,
or encumber, property which constitutes Collateral, such Liens are subject to
the Intercreditor Agreement;

(q) any Lien on any asset of any Person existing at the time such Person becomes
a Subsidiary of the Company, is merged or consolidated with or into the Company
or a Subsidiary of the Company and not created in contemplation of such event;

(r) Liens attaching solely to cash earnest money deposits required to be made
under the terms of any letter of intent or purchase agreement for a permitted
Acquisition;

(s) Liens incurred in connection with the collection or disposition of
delinquent accounts receivable in the ordinary course of business; and

(t) Liens securing Indebtedness permitted by Section 7.01(a)(i)(B) or
Section 7.01(a)(iii) and subject to the Intercreditor Agreement.

Section 7.03. Disposition of Assets.

The Company shall not, and shall not permit any of its Subsidiaries to Dispose
of (whether in one or a series of transactions) any property (including accounts
and notes receivable with or without recourse and Capital Stock of any
Subsidiary whether newly issued or otherwise) or enter into any agreement to do
any of the foregoing (unless (x) such agreement is conditioned upon receiving
any waiver or consent necessary pursuant to the terms hereof and (y) the Company
requests any such waiver or consent from Lenders not less than 10 Business Days
prior to the date of the anticipated consummation of the relevant transaction),
except:

(a) (i) Dispositions of inventory and equipment in the ordinary course of
business and (ii) Dispositions of Cash Equivalents;

(b) the sale of equipment to the extent that such equipment is exchanged for
credit against the purchase price of similar replacement equipment or the
proceeds of such sale are reasonably promptly applied to the purchase price of
such replacement equipment;

(c) Dispositions of Investments by any Insurance Subsidiary (other than any of
its Investments in Subsidiaries engaged in insurance lines of business) in the
ordinary course of business consistent with past practices and the investment
policy approved by the board of directors of such Insurance Subsidiary;

(d) Dispositions (i) by the Company or any Subsidiary to the Company or any
Subsidiary (other than any Excluded Subsidiary), (ii) by any Excluded Subsidiary
to any other Excluded Subsidiary in the ordinary course of business and (iii) to
Excluded Subsidiaries in an aggregate amount not to exceed $30,000,000;

(e) (i) any Dispositions pursuant to a Reinsurance Agreement so long as such
Disposition is entered into in the ordinary course of business for the purpose
of managing insurance risk consistent with industry practice and (ii) any other
Dispositions pursuant to a Reinsurance Agreement so long as the aggregate
statutory profit and/or gains on insurance policy sales or other portfolio
transfers resulting from all Dispositions described in this clause (ii)
consummated after the Effective Date do not exceed $400,000,000 in the aggregate
during the term of this Agreement or $150,000,000 in any Fiscal Year; provided
that (x) the Net Proceeds therefrom are,

 

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unless required to be retained by any Insurance Subsidiary pursuant to
regulatory restrictions, applied to prepay the Loans as provided in Section 2.08
and (y) any Net Proceeds therefrom that are required to be retained by any
Insurance Subsidiary pursuant to regulatory restrictions are so retained by such
Insurance Subsidiary;

(f) obsolete, surplus or worn out property disposed of by the Company or any of
its Subsidiaries in the ordinary course of business and consistent with past
practices of the Company and its Subsidiaries;

(g) transfers resulting from any casualty or condemnation of property or assets;

(h) licenses or sublicenses of intellectual property and general intangibles and
licenses, leases or subleases of other property in the ordinary course of
business and consistent with the past practices of the Company and its
Subsidiaries and which do not materially interfere with the business of the
Company and its Subsidiaries;

(i) Dispositions consisting of mergers, amalgamations and consolidations among
the Company and its Subsidiaries, or of any liquidation, winding up or
dissolution of any Subsidiary, in each case to the extent permitted by
Section 7.07(b);

(j) Dispositions of shares of Capital Stock in order to qualify members of the
board of directors or equivalent governing body of an Obligor or such other
nominal shares required to be held other than by the Company or such Obligor, as
required by applicable law;

(k) the sale, discount, forgiveness or other compromise of notes or other
accounts in the ordinary course of business or in connection with collection
thereof;

(l) issuances of Capital Stock (i) by the Company, (ii) by a directly or
indirectly Wholly-Owned Subsidiary of the Company to the Company or to one or
more Wholly-Owned Subsidiaries of the Company or (iii) by a non-Wholly-Owned
Subsidiary of the Company to the respective equity holders of such
non-Wholly-Owned Subsidiary, on a pro rata basis;

(m) the sale and leaseback of the Company’s headquarters located in Carmel,
Indiana, on fair and reasonable terms (as certified to the Agent in writing by a
Responsible Officer of the Company); and

(n) Dispositions not otherwise permitted hereunder (other than pursuant to
Reinsurance Agreements, which shall be subject to the limitations in clause
(e) above); provided that (w) such Dispositions shall be for fair market value
(which determination must be supported by a fairness opinion in form and
substance reasonably satisfactory to the Agent from a nationally-recognized
investment banking firm in connection with any Disposition or series of related
Dispositions in any single Fiscal Year the aggregate consideration for which
exceeds $125,000,000; provided that no fairness opinion is required in respect
of any Disposition or series of related Dispositions made at any time when
(i) the Debt to Total Capitalization Ratio is equal to or less than 20% and
(ii) the Financial Strength Rating Condition is satisfied) and at least 75% of
the consideration received in connection therewith at closing shall consist of
cash, (x) on a Pro Forma Basis after giving effect to such Disposition, the
Company and its Subsidiaries would be in compliance with all of the covenants
contained in the Loan Documents (including all financial and ratings covenants),
(y) no such Disposition shall include the sale of any Capital Stock of any
Subsidiary unless 100% of the Capital Stock of such Subsidiary owned by the
Obligors is sold and (z) the Net Proceeds thereof shall be applied to prepay the
Loans in accordance with Section 2.08.

 

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Upon consummation of a sale, transfer or other Disposition permitted under this
Section 7.03, Liens created under the Security Documents in respect of the
assets Disposed of shall be automatically released and the Agent shall (to the
extent applicable) deliver to the Company, upon the Company’s request and at the
Company’s expense, such documentation as necessary to evidence the release of
the Agent’s security interests, if any, in the assets being Disposed of,
including amendments or terminations of Uniform Commercial Code financing
statements, if any, the return of stock certificates, if any, and the release of
any Subsidiary being Disposed of in its entirety from all of its obligations, if
any, under the Loan Documents; provided that the Company shall have provided to
the Agent such certificates evidencing compliance with the Loan Documents as the
Agent shall reasonably request.

Section 7.04. [Reserved.]

Section 7.05. Transactions with Affiliates.

The Company shall not, and shall not suffer or permit any Subsidiary to, enter
into any transaction with any Affiliate of the Company, other than
(a) transactions having no less favorable to the Company or such Subsidiary than
would be obtained in a comparable arm’s-length transaction with a Person not an
Affiliate of the Company or such Subsidiary, (b) insurance transactions,
intercompany pooling and other reinsurance transactions entered into in the
ordinary course of business and consistent with past practice, (c) transactions
in the ordinary course between or among the Company and its Subsidiaries (other
than Excluded Subsidiaries) and between or among Subsidiaries (other than
Excluded Subsidiaries), (d) transactions among Excluded Subsidiaries in the
ordinary course of business, (e) any Restricted Payment permitted by
Section 7.08 and (f) arrangements for indemnification payments for directors and
officers of the Company and its Subsidiaries.

Section 7.06. Change in Business.

The Company shall not, and shall not suffer or permit any Subsidiary to, engage
in any business other than the businesses conducted by the Company and its
Subsidiaries on the date of this Agreement or any business substantially
related, incidental or complementary thereto as reasonably determined by the
board of directors of the Company.

Section 7.07. Fundamental Changes.

Unless the Obligations (other than unmatured, surviving contingent
indemnification obligations) shall be paid in full concurrently therewith, the
Company shall not, and shall not suffer or permit any of its Subsidiaries to,
enter into any merger, consolidation, amalgamation, or sale of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole, or liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), except (a) in connection with a Disposition of a Subsidiary
otherwise permitted by Section 7.03 and (b) if at the time thereof and
immediately after giving effect thereto no Event of Default shall have occurred
and be continuing, (i) any Subsidiary Guarantor (other than CDOC) may merge,
consolidate or amalgamate into the Company in a transaction in which the Company
is the surviving corporation, (ii) any Subsidiary Guarantor may merge,
consolidate or amalgamate into any Subsidiary in a transaction in which the
surviving entity is a Subsidiary Guarantor (and if CDOC is a party to such
transaction, CDOC is the surviving entity), (iii) any two Subsidiaries that are
not Subsidiary Guarantors may merge, consolidate or amalgamate; provided that if
either such Subsidiary is a direct Subsidiary of an Obligor, the surviving
entity shall be a direct Subsidiary of an Obligor, (iv) any Subsidiary that is
not a Subsidiary Guarantor may liquidate, wind up or dissolve so long as the
assets of such Subsidiaries are distributed to the Company or any of its
Subsidiaries and (v) any Subsidiary Guarantor (other than CDOC) may liquidate,
wind up or dissolve so long as the assets of such Subsidiary Guarantor are
distributed to the Company or another Subsidiary Guarantor.

 

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Section 7.08. Restricted Payments.

The Company shall not, and shall not suffer or permit any Subsidiary to, declare
or pay any dividend on (or make any payment to a related trust for the purpose
of paying a dividend), or make any payment on account of, or set apart assets
for a sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any Capital Stock of the Company or such
Subsidiary (or any related trust), whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Company or such Subsidiary
(collectively, “Restricted Payments”), except that:

(a) (i) any Subsidiary may declare or pay dividends with respect to its Capital
Stock to the Company and to any Wholly-Owned Subsidiary (and in the case of a
non-Wholly-Owned Subsidiary, to the Company and any Subsidiary and to each other
owner of Capital Stock or other equity interests of such Subsidiary on a pro
rata basis based on their relative ownership interests) and (ii) CDOC may from
time to time redeem the CDOC Preferred Stock;

(b) the Company may pay dividends solely in the form of shares of its Capital
Stock (other than Disqualified Capital Stock);

(c) the Company may purchase shares of Capital Stock held by employees of the
Company pursuant to the Company’s Amended and Restated Long-Term Incentive Plan,
as in effect on the Effective Date and any extension, renewal or replacement
thereof to allow employees to meet their tax obligations;

(d) the Company may make any Restricted Payment so long as (i) no Default or
Event of Default shall have occurred and be continuing or would result therefrom
and (ii) the Debt to Total Capitalization Ratio is equal to or less than 20% as
of the date of the making of any such Restricted Payment (calculated on a Pro
Forma Basis);

(e) the Company may make Restricted Payments, so long as (i) no Default or Event
of Default shall have occurred and be continuing or would result therefrom and
(ii) the aggregate amount of Restricted Payments pursuant to this
Section 7.08(e) shall not exceed $75,000,000;

(f) the Company may make cash payments in lieu of fractional shares in
connection with the exercise of warrants, options or other securities,
convertible or exchangeable for Capital Stock; and

(g) the payment by the Company of any dividend within 60 days after the date of
declaration thereof, if on the date of declaration such payment would have
complied with the provisions of this Section 7.08;

provided that payments made pursuant to Section 7.10(a)(iv) shall reduce,
dollar-for-dollar, the amount of Restricted Payments available under
Section 7.08(d) or (e), as applicable.

Section 7.09. Investments and Acquisitions.

The Company shall not, and shall not suffer or permit any Subsidiary to,
directly or indirectly, make any Acquisition or hold or make any other
Investment in any other Person, except:

(a) Investments in existence on the Effective Date and commitments to make
Investments existing on the Effective Date and listed on Schedule 7.09;

 

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(b) Investments consisting of non-cash consideration received in connection with
a Disposition not prohibited by the Loan Documents;

(c) Investments received in connection with the bankruptcy or reorganization of
customers and suppliers in the ordinary course of business;

(d) Investments consisting of Contingent Obligations permitted by Section 7.01
or Indebtedness permitted by Section 7.01;

(e) Investments in Cash Equivalents;

(f) Investments by any Insurance Subsidiary (including by any Subsidiary of such
Insurance Subsidiary that is not itself an Insurance Subsidiary) in the ordinary
course of business in compliance with Section 7.16 and consistent with the
investment policy approved by the board of directors of such Insurance
Subsidiary;

(g) (i) Investments by the Company or any Subsidiary in the Company or any
Subsidiary (other than any Excluded Subsidiary) in the ordinary course of
business and (ii) Investments by any Excluded Subsidiary in any other Excluded
Subsidiary in the ordinary course of business;

(h) Investments in Excluded Subsidiaries in the ordinary course of business in
an aggregate amount expended not to exceed $30,000,000;

(i) security deposits or pledges held or made in the ordinary course of
business;

(j) loans and advances in the ordinary course of business to employees for
moving, relocation or travel purposes, in each case subject to compliance with
the Requirements of Law;

(k) Permitted Swap Obligations;

(l) (i) Acquisitions (other than Acquisitions that constitute Investments
permitted by Section 7.09(f) above or Section 7.09(m) below), for aggregate
consideration in an amount not to exceed $200,000,000 in any Fiscal Year or
$400,000,000 during the term of this Agreement; provided that at the time of
such Acquisition no Default or Event of Default shall be continuing or shall
result therefrom (including any failure to be in compliance with the financial
covenants calculated on a Pro Forma Basis); and (ii) in the event (x) the Debt
to Total Capitalization Ratio is equal to or less than 20% (calculated on a Pro
Forma Basis), (y) the Financial Strength Rating Condition is satisfied and
(z) to the extent the consideration for such Acquisitions is paid in Capital
Stock of the Company (other than Disqualified Capital Stock), up to $300,000,000
of such consideration in any Fiscal Year, and up to $600,000,000 of such
consideration during the term of this Agreement, shall be disregarded from the
limits referred to above; and

(m) Investments not otherwise permitted hereby in an aggregate amount expended
not to exceed $75,000,000.

Section 7.10. Prepayment of Certain Indebtedness; Modifications of Certain
Agreements; Synthetic Purchase Agreements.

(a) The Company shall not, and shall not permit any of its Subsidiaries to, make
or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash, securities or other

 

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property, and including optional prepayments and open market purchases) of or in
respect of principal of or interest on any Existing Convertible Debentures or
any Refinancing Indebtedness thereof, or any payment or other distribution
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, defeasance or
termination of any Existing Convertible Debentures or any Refinancing
Indebtedness thereof, other than (i) payment of regularly scheduled interest
payments as and when due in respect thereof, (ii) to the extent funded with
Refinancing Indebtedness thereof, (iii) to the extent the consideration thereof
consists of Capital Stock (other than Disqualified Capital Stock) of the Company
or (iv) to the extent the Company could make a Restricted Payment under
Section 7.08(d) or (e) in an equal amount (with any payments pursuant to this
clause (iv) being deemed to be a Restricted Payment under Section 7.08(d) or
(e), as the case may be).

(b) The Company shall not, and shall not permit any of its Subsidiaries to,
amend, modify, waive or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, (i) the Senior Secured Notes Documents
in any manner adverse in any material respect to the Secured Parties or (ii) the
documents or instruments governing or evidencing any other Indebtedness or
Capital Stock if such Indebtedness or Capital Stock as such documents or
instruments are so amended, modified, waived or otherwise changed would not have
been permitted to be incurred or issued under this Agreement.

(c) The Company shall not, and shall not permit any of its Subsidiaries to,
amend or modify its respective Organization Documents, other than any amendments
or modifications which are not adverse in any material respect to the interests
of the Lenders.

(d) The Company shall not, and shall not permit any of its Subsidiaries to,
enter into or be party to, or make any payment under, any Synthetic Purchase
Agreement.

Section 7.11. Debt to Total Capitalization Ratio.

The Company shall maintain at all times a Debt to Total Capitalization Ratio of
not more than 30%.

Section 7.12. Interest Coverage Ratio.

The Company shall not permit the Interest Coverage Ratio as of the end of any
Fiscal Quarter for the four Fiscal Quarters then ended (or, if less, the number
of full Fiscal Quarters commencing after the Effective Date) to be less than
2.00 to 1.00 for such Fiscal Quarter.

Section 7.13. [Intentionally Omitted.]

Section 7.14. Aggregate RBC Ratio.

The Company shall not permit the Aggregate RBC Ratio as of the end of any Fiscal
Quarter to be less than (a) on or prior to December 31, 2011, 225% and
(b) thereafter, 250%.

Section 7.15. Combined Statutory Capital and Surplus Level.

The Company shall not permit the Combined Statutory Capital and Surplus of the
Insurance Subsidiaries as of the end of any Fiscal Quarter to be less than
$1,200,000,000.

 

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Section 7.16. Investment Portfolio Requirement.

The Company shall not permit any Insurance Subsidiary to purchase, make or
otherwise acquire:

(a) any Investment that is not an Investment Grade Asset, unless, after giving
effect thereto, the aggregate fair market value of all Investments of the
Insurance Subsidiaries that are not Investment Grade Assets (exclusive of the
Investments referred to in paragraphs (b), (c), and (d) below and policy loans
as specified on page 2, line 6 of the Company’s Annual Statements) will not
exceed 10% of the aggregate fair market value of all Investments held by the
Insurance Subsidiaries;

(b) any Investment that is non-NAIC rated, unless, after giving effect thereto,
the aggregate fair market value of all Investments of the Insurance Subsidiaries
that are non-NAIC rated (exclusive of the Investments referred to in paragraphs
(a), (c) and (d) hereof and policy loans as specified on page 2, line 6 of the
Company’s Annual Statement) will not exceed 6% of the aggregate fair market
value of all Investments held by the Insurance Subsidiaries;

(c) any Investment in real property mortgage loans classified on Schedule B-Part
1 of the Annual Statement, unless, after giving effect thereto, the aggregate
fair market value of all Investments of the Insurance Subsidiaries in such loans
(exclusive of Investments referred to in paragraphs (a), (b) and (d) hereof)
will not exceed 12% of the aggregate fair market value of all Investments held
by the Insurance Subsidiaries; and

(d) any Investment involving Capital Stock, unless, after giving effect thereto,
the aggregate fair market value of all Investments of the Insurance Subsidiaries
in Capital Stock (exclusive of Investments referred to in paragraphs (a),
(b) and (c) hereof) will not exceed 1% of the aggregate fair market value of all
Investments held by the Insurance Subsidiaries;

provided that (x) any Insurance Subsidiary shall be permitted to make any
Investment that it is committed to make as of the Effective Date and listed on
Schedule 7.09 (it being understood, however, that each such Investment shall be
taken into account for purposes of determining whether any additional
Investments may be purchased, made or otherwise acquired hereunder) and (y) if
one or more of the percentage thresholds referred in clauses (a), (b), (c) or
(d) above is exceeded solely as a result of the making of any Investment
permitted to be made pursuant to the preceding clause (x) (after giving effect
to any Investments made prior thereto), such event shall not constitute a
Default for purposes hereof.

Section 7.17. Restrictive Agreements.

The Company shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, enter into or permit to exist any agreement or other arrangement
that prohibits, restricts or imposes any condition on (a) the ability of the
Company or any Subsidiary to create or permit to exist any Lien on any of its
property to secure the Secured Obligations or (b) the ability of any Subsidiary
to pay dividends or other distributions with respect to any shares of its
Capital Stock or to make, repay or prepay loans or advances to the Company or
any other Subsidiary or to Dispose of assets to the Company or any other
Subsidiary; provided that (i) the foregoing shall not apply to restrictions and
conditions imposed by applicable law (including pursuant to regulatory
restrictions), (ii) the foregoing shall not apply to restrictions and conditions
existing on the date hereof and identified on Schedule 7.17 (but shall apply to
any amendment or modification expanding the scope of, or any extension or
renewal of, any such restriction or condition), (iii) the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating
to the sale of a Subsidiary or assets or property of the Company or any
Subsidiary pending such sale, provided that such restrictions and conditions
apply only to the Subsidiary or assets or property that is to

 

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be sold and such sale is permitted hereunder, (iv) the foregoing shall not apply
to restrictions that are not more restrictive than those contained in this
Agreement contained in any documents governing any Indebtedness permitted by
this Agreement, (v) clause (a) of this Section shall not apply to restrictions
or conditions imposed by any agreement relating to secured Indebtedness
(including Capitalized Lease Liabilities and Purchase Money Debt) permitted by
this Agreement if such restrictions or conditions apply only to the collateral
securing such Indebtedness and (vi) clause (a) of this Section shall not apply
to customary provisions in leases or licenses or other contracts and agreements
restricting the assignment, subletting or sublicensing thereof.

Section 7.18. Holding Company Activities.

The Company shall not, and shall not permit CDOC to, engage in any business or
activity except owning all the outstanding shares of Capital Stock of their
respective Subsidiaries and activities related or incidental thereto. The
Company shall not permit CDOC to own or acquire any assets (except assets owned
by it on the Effective Date and shares of Capital Stock of its Subsidiaries and
cash and Cash Equivalents owned by it from time to time) or incur any
liabilities (except liabilities under the Loan Documents and the Senior Secured
Notes Documents, liabilities imposed by law, including tax liabilities,
liabilities in existence on the Effective Date and other liabilities incidental
to its existence and permitted business and activities).

Section 7.19. Changes in Accounting Policies; Fiscal Year.

The Company shall not, and shall not permit any of its Subsidiaries to, (a) make
any change to its accounting policies or reporting practices, except as required
or permitted by GAAP or (b) change the last day of its fiscal year from
December 31 of each year.

ARTICLE 8

EVENTS OF DEFAULT

Section 8.01. Events of Default.

Each of the following shall constitute an “Event of Default”:

(a) Non-Payment. The Company fails to pay (i) when and as required to be paid
herein, whether at the due date thereof or at a date fixed for prepayment
thereof or otherwise, any amount of principal of any Loan, or (ii) within five
days after the same becomes due, any interest, fee or any other amount payable
hereunder or under any other Loan Document; or

(b) Representation or Warranty. Any representation or warranty by the Company or
any of its Subsidiaries made or deemed made herein or in connection with any
other Loan Document or any amendment or modification hereof or thereof or waiver
hereunder or thereunder, or contained in any certificate, document or financial
or other statement by the Company, any Subsidiary or any Responsible Officer,
furnished at any time in connection with this Agreement or in connection with
any other Loan Document or any amendment or modification hereof or thereof or
waiver hereunder or thereunder, is incorrect in any material respect on or as of
the date made or deemed made; or

(c) Specific Defaults. The Company fails to perform or observe any term,
covenant or agreement contained in any of (i) Section 6.03(a), Section 6.04(a)
(with respect to the Company’s corporate existence) or Article 7 (other than
Section 7.16) or (ii) Section 7.16 and, in the case of clause (ii), such default
shall continue unremedied for a period of 30-days (it being understood

 

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that if the Company takes any action during such 30 day period which action, if
it had been taken on or prior to the relevant date on which compliance with
Section 7.16, as applicable, was tested, would have resulted in the Company
being in compliance with such Section on such test date, such default shall be
deemed to have been remedied on the date on which such action was taken); or

(d) Other Defaults. The Company or any of its Subsidiaries fails to perform or
observe any other term or covenant contained in this Agreement or any other Loan
Document, and such default shall continue unremedied for a period of 30 days
after the date upon which written notice thereof is given to the Company by the
Agent or any Lender; or

(e) Cross-Default. (i) The Company or any Subsidiary (A) fails to make any
payment in respect of any Indebtedness or Contingent Obligation (other than in
respect of Swap Contracts), having an aggregate principal amount of more than
$50,000,000 (in the aggregate for all such Indebtedness and Contingent
Obligations), when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise); or (B) fails to perform or observe any
other condition or covenant, or any other event shall occur or condition exist,
under any agreement or instrument relating to any such Indebtedness (and, solely
in the case of a failure to comply with any financial statement or other
information delivery or reporting requirement or in the case of the entry of any
judgment or decree, so long as such judgment or decree constitutes a Default but
not an Event of Default under Section 8.01(i), such failure or event continues
after the applicable grace or notice period, if any, specified in the relevant
document on the date of such failure or event) if the effect of such failure,
event or condition is to cause, or to permit (or, with the giving of notice or
lapse of time or both, would permit) the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause, such
Indebtedness to be declared to be due and payable prior to its stated maturity,
or, in the case of any such Indebtedness consisting of Contingent Obligations,
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 (x) any event of default under such Swap
Contract as to which the Company or any Subsidiary is the Defaulting Party (as
defined in such Swap Contract) or (y) any Termination Event (as so defined) as
to which the Company or any Subsidiary is an Affected Party (as so defined),
and, in either event, the Swap Termination Value owed by the Company or such
Subsidiary as a result thereof is greater than $50,000,000 (in the aggregate for
all such Swap Contracts); or

(f) Insolvency; Voluntary Proceedings. The Company or any Subsidiary (other than
an Immaterial Subsidiary) (i) ceases or fails to be solvent, or generally fails
to pay, or admits in writing its inability to pay, its debts as they become due,
subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) voluntarily ceases to conduct its business in the ordinary
course; (iii) commences any Insolvency Proceeding with respect to itself;
(iv) applies for or consents to the appointment of a receiver, trustee,
custodian, conservator, liquidator, mortgagee in possession (or agent therefor),
or other similar Person for itself or for a substantial part of its assets, or
(v) takes any action to effectuate or authorize any of the foregoing; or

(g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is
commenced or filed against the Company or any Subsidiary (other than an
Immaterial Subsidiary), or any writ, judgment, warrant of attachment, execution
or similar process, is issued or levied against a substantial part of the
Company’s or any Subsidiary’s (other than an Immaterial Subsidiary’s)
properties, and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not be
released, vacated or

 

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fully bonded within 60 days after commencement, filing or levy; (ii) the Company
or any Subsidiary (other than an Immaterial Subsidiary) admits the material
allegations of a petition against it in any Insolvency Proceeding, or an order
for relief (or similar order under non-U.S. law) is ordered in any Insolvency
Proceeding; (iii) the Company or any Subsidiary (other than an Immaterial
Subsidiary) acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its property or business;
or (iv) any Subsidiary (other than an Immaterial Subsidiary) shall become
subject to any conservation, rehabilitation or liquidation order, directive or
mandate issued by any Governmental Authority; or

(h) Pension Plans and Welfare Plans. With respect to any Single Employer Pension
Plan as to which the Company, any of its Subsidiaries or any other ERISA
Affiliate may have any liability, there shall exist an Unfunded Pension
Liability of more than $25,000,000 in the aggregate as to the Company, any of
its Subsidiaries or any ERISA Affiliate, and steps are undertaken to terminate
such plan or such Pension Plan is terminated or the Company, any of its
Subsidiaries or any other ERISA Affiliate withdraws from or institutes steps to
withdraw from such Pension Plan, or the Company has knowledge that steps have
been taken to terminate any Multiemployer Plan and such termination may result
in liability to the Company, any of its Subsidiaries or any ERISA Affiliate in
excess of $25,000,000 in the aggregate or any ERISA Event has occurred that
could result in the incurrence of liability by the Company, any of its
Subsidiaries or any ERISA Affiliate in excess of $25,000,000 in the aggregate or
steps are taken to terminate any Multiemployer Plan and such termination may
result in any liability of the Company, any of its Subsidiaries or any ERISA
Affiliate in excess of $30,000,000 in the aggregate; or

(i) Material Judgments. One or more judgments or decrees shall be entered
against the Company or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance as to which the relevant
insurance company has not denied coverage) of $50,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 30 days from the entry thereof, or any action shall be
taken by a judgment creditor to attach or levy upon any asset of the Company or
any of its Subsidiaries to enforce any such judgment or decree; or

(j) Material Regulatory Matters. At any time either (x) the Debt to Total
Capitalization Ratio is greater than 20% or (y) the Financial Strength Rating
Condition is not satisfied, (i) any Insurance Subsidiary shall not make a
scheduled payment of interest or principal on any surplus note or similar form
of indebtedness (due to actions of any Governmental Authority or otherwise),
(ii) any Insurance Subsidiary’s ability to pay fees to its Affiliates under
existing agreements (or extensions of existing agreements) shall be restricted
(due to actions of any Governmental Authority or otherwise) or (iii) in any
Fiscal Year, an Insurance Subsidiary’s ability to pay dividends to its
stockholders is restricted in any manner (due to actions of any Governmental
Authority or otherwise), other than by restrictions relating to dividends that
apply generally to other insurance companies domiciled in the Insurance
Subsidiary’s state of domicile under the insurance law of the state, and (1) in
the cases of clauses (i) through (iii) above, such event or condition, together
with all other such events or conditions, could reasonably be expected to have a
Material Adverse Effect and (2) in each case, such event or condition was not in
effect as of the date hereof; or

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

 

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

(m) Liens. Any Lien purported to be created under any Security Document shall
cease to be, or shall be asserted by the Company or any Subsidiary of the
Company not to be, a valid and perfected Lien on any Collateral covered thereby,
with the priority required by the applicable Security Document (except as a
result of a sale or other disposition of the applicable Collateral in a
transaction permitted under the Loan Documents or as a result of the Agent’s
failure to maintain possession of any stock certificates, promissory notes or
other documents or possessory collateral delivered to it under the Security
Agreement), except to the extent that such cessation would not, together with
all other such cessations, be with respect to Collateral having a fair market
value in excess of $25,000,000.

Section 8.02. Remedies.

If any Event of Default shall have occurred and be continuing, the Agent shall,
at the request of, or may, with the consent of, the Required Lenders,

(a) declare the obligation of each Lender to make extensions or conversions of
the Loans to be terminated;

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

(c) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable law;

provided that upon the occurrence of any event specified in Section 8.01(f) or
Section 8.01(g) (upon the expiration of the 60-day period mentioned therein, if
applicable), the obligation of each Lender to make Loans shall automatically
terminate and the unpaid principal amount of all outstanding Loans and all
interest and other amounts as aforesaid shall automatically become due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Company.

Section 8.03. Rights Not Exclusive.

The rights provided for in this Agreement and the other Loan Documents are
cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document
or agreement now existing or hereafter arising.

 

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ARTICLE 9

THE AGENT

Section 9.01. Appointment and Authority.

Each of the Lenders hereby irrevocably appoints MSSF to act on its behalf as the
Agent hereunder and under the other Loan Documents and authorizes the Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Agent by the terms hereof or thereof, together with such actions and powers
as are reasonably incidental thereto. The provisions of this Article are solely
for the benefit of the Agent and the Lenders, and neither the Company nor any
other Obligor shall have rights as a third party beneficiary of any of such
provisions.

Section 9.02. Rights as a Lender.

The Person serving as the 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 Agent and the term “Lender” or “Lenders” shall, unless
otherwise expressly indicated or unless the context otherwise requires, include
the Person serving as the 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 Company or any Subsidiary or other Affiliate
thereof as if such Person were not the Agent hereunder and without any duty to
account therefor to the Lenders.

Section 9.03. Exculpatory Provisions.

The Agent shall not have any duties or obligations except those expressly set
forth herein and in the other Loan Documents. Without limiting the generality of
the foregoing, the Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Agent is required to
exercise as directed in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be expressly provided for herein or in the
other Loan Documents), provided that the Agent shall not be required to take any
action that, in its opinion or the opinion of its counsel, may expose the Agent
to liability or that is contrary to any Loan Document or applicable law; and

(c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Company or any of its Affiliates that
is communicated to or obtained by the Person serving as the Agent or any of its
Affiliates in any capacity.

The 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 Agent shall believe
in good faith shall be necessary, under the circumstances as provided in
Sections 8.02 and 10.01) or (ii) in the absence of its own gross negligence or
willful misconduct. The Agent shall be deemed not to have knowledge of any
Default unless and until notice describing such Default is given to the Agent by
the Company or a Lender.

 

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The Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with
this Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein
or the occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document or (v) the satisfaction of any condition
set forth in Article 4 or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to the Agent.

Section 9.04. Reliance by Agent.

The 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
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 Agent may presume that such condition is
satisfactory to such Lender unless the Agent shall have received notice to the
contrary from such Lender prior to the making of such Loan. The Agent may
consult with legal counsel (who may be counsel for the Company), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

Section 9.05. Delegation of Duties.

The Agent may perform any and all of its duties and exercise its rights and
powers hereunder or under any other Loan Document by or through any one or more
sub-agents appointed by the Agent. The 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 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 Agent.

Section 9.06. Resignation of Agent.

The Agent may at any time give notice of its resignation to the Lenders and the
Company. Upon receipt of any such notice of resignation, the Required Lenders
shall have the right, in consultation with the Company, 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 Agent gives notice of its
resignation, then the retiring Agent may on behalf of the Lenders, appoint a
successor Agent meeting the qualifications set forth above; provided that if the
Agent shall notify the Company 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 Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any collateral security held by the Agent
on behalf of the Lenders under any of the Loan Documents, the retiring Agent
shall continue to hold such collateral security until such time as a successor
Agent is appointed) and (2) all payments, communications and determinations
provided to be made by, to or through the Agent shall instead be made by or to
each Lender directly, until such time as the Required Lenders appoint a
successor Agent, in consultation with the Company, as provided for above in this
Section.

 

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Upon the acceptance of a successor’s appointment as Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Agent, and the retiring Agent
shall be discharged from all of its duties and obligations hereunder or under
the other Loan Documents (if not already discharged therefrom as provided above
in this Section). The fees payable by the Company to a successor Agent shall be
the same as those payable to its predecessor unless otherwise agreed between the
Company and such successor. After the retiring Agent’s resignation hereunder and
under the other Loan Documents, the provisions of this Article and
Sections 10.04 and 10.05 shall continue in effect for the benefit of such
retiring 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
Agent was acting as Agent.

Section 9.07. Non-Reliance on Agent and Other Lenders.

Each Lender acknowledges that it has, independently and without reliance upon
the 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 Agent or
any other Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.

Section 9.08. No Other Duties, Etc.

Anything herein to the contrary notwithstanding, none of the joint lead
arrangers, joint bookrunners, syndication agents or documentation agents listed
on the cover page hereof shall have any powers, duties or responsibilities under
this Agreement or any of the other Loan Documents, except in its capacity, as
applicable, as the Agent or a Lender hereunder.

Section 9.09. Agent May File Proofs of Claim.

In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Obligor, the Agent (irrespective of whether
the principal of any Loan shall then be due and payable as herein expressed or
by declaration or otherwise and irrespective of whether the Agent shall have
made any demand on the Company) shall be entitled and empowered, by intervention
in such proceeding or otherwise

(a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans and all other Obligations that are
owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Lenders and the Agent (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Lenders and the Agent and their respective agents and counsel and all
other amounts due the Lenders and the Agent under Sections 2.10, 10.04 and
10.05) allowed in such judicial proceeding; and

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Agent and, in the event that the Agent
shall consent to the making of such payments directly to the Lenders, to pay to
the Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Agent and its agents and counsel, and any
other amounts due the Agent under Sections 2.10, 10.04 and 10.05.

 

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

Section 9.10. Collateral and Guaranty Matters.

The Lenders irrevocably authorize the Agent, at its option and in its
discretion,

(a) to release any Lien on any property granted to or held by the Agent under
any Loan Document (i) upon payment in full of all Obligations (other than
unmatured, surviving contingent indemnification obligations), (ii) that is sold
or otherwise disposed of or to be sold or otherwise disposed of (other than to
the Company or a Subsidiary Guarantor) as part of or in connection with any sale
permitted hereunder or under any other Loan Document or (iii) subject to
Section 10.01, if approved, authorized or ratified in writing by the Required
Lenders;

(b) to subordinate any Lien on any property granted to or held by the Agent
under any Loan Document to the holder of any Lien on such property that is
permitted by Section 7.02(i); and

(c) to release any Subsidiary Guarantor from its obligations under the Secured
Guarantee if such Person (i) ceases to be a Subsidiary as a result of a
transaction permitted hereunder or (ii) becomes an Excluded Subsidiary or an
Insurance Subsidiary in accordance with the terms of this Agreement and the
other Loan Documents.

Upon request by the Agent at any time, the Required Lenders will confirm in
writing the Agent’s authority to release or subordinate its interest in
particular types or items of property, or to release any Subsidiary Guarantor
from its obligations under the Secured Guarantee pursuant to this Section 9.10.

Section 9.11. Indemnification of Agent.

Whether or not the transactions contemplated hereby are consummated, the Lenders
shall indemnify upon demand each Agent-Related Person (to the extent not
reimbursed by or on behalf of the Company and without limiting the obligation of
the Company to do so), ratably according to their respective portions of the
total Loans held on the date on which indemnification is sought, and hold
harmless each Agent-Related Person from and against any and all Indemnified
Liabilities incurred by it; provided that no Lender shall be liable for the
payment to any Agent-Related Person of any portion of such Indemnified
Liabilities to the extent determined in a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from such Agent-Related
Person’s own gross negligence or willful misconduct; and provided further that
no action taken in accordance with the directions of the Required Lenders shall
be deemed to constitute gross negligence or willful misconduct for purposes of
this Section. Without limitation of the foregoing, each Lender shall reimburse
the Agent upon demand for its ratable share of any costs or out-of-pocket
expenses (including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document or any document contemplated by or referred to herein,
to the extent that the Agent is not reimbursed for such expenses by or on behalf
of the Company. The undertaking in this Section shall survive the payment of all
other Obligations and the resignation of the Agent.

 

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Section 9.12. Withholding Tax.

To the extent required by any applicable law, the Agent shall withhold from any
payment to any Lender an amount equal to any applicable withholding Tax. If the
IRS or any Governmental Authority asserts a claim that the Agent did not
properly withhold Tax from any amount paid to or for the account of any Lender
for any reason (including because the appropriate form was not delivered or was
not properly executed, or because such Lender failed to notify the Agent of a
change in circumstances that rendered the exemption from, or reduction of,
withholding Tax ineffective), such Lender shall indemnify and hold harmless the
Agent (to the extent that the Agent has not already been reimbursed by the
Company and without limiting or expanding the obligation of the Company to do
so) for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including any penalties, additions to Tax or interest thereon,
together with all expenses incurred, including legal expenses and any
out-of-pocket expenses, whether or not such Tax was correctly or legally imposed
or asserted by the relevant Government Authority. A certificate as to the amount
of such payment or liability delivered to any Lender by the Agent shall be
conclusive absent manifest error. Each Lender hereby authorizes the Agent to set
off and apply any and all amounts at any time owing to such Lender under this
Agreement or any other Loan Document against any amount due to the Agent under
this Article IX. The agreements in this Article IX shall survive the resignation
and/or replacement of the Agent, any assignment of rights by, or the replacement
of, a Lender, the termination of the Loans and the repayment, satisfaction or
discharge of all obligations under this Agreement. Unless required by applicable
laws, at no time shall the Agent have any obligation to file for or otherwise
pursue on behalf of a Lender any refund of Taxes withheld or deducted from funds
paid for the account of such Lender.

ARTICLE 10

MISCELLANEOUS

Section 10.01. Amendments and Waivers.

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

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

(b) postpone or delay the maturity of the Loans, or any scheduled date of
payment of the principal amount of the Loans under Section 2.07, or any date for
the payment of any interest or fees due to the Lenders (or any of them)
hereunder or under any other Loan Document, or reduce the amount of, waive or
excuse any such payment, without the written consent of each Lender affected
thereby (other than as a result of waiving (i) an Event of Default in accordance
with the terms hereof or (ii) default interest hereunder to the extent a waiver
of the underlying default giving rise to such default interest does not require
a vote of all Lenders);

(c) change the percentage of the Commitments or of the aggregate unpaid
principal amount, in each case, under the Facility, of the Loans that is
required for the Lenders under the Facility or any of them to take any action
hereunder without the written consent of each Lender under the Facility;

 

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(d) amend the definition of “Interest Period” under the Facility to permit
Interest Periods under the Facility with a duration of longer than six months
without the written consent of each Lender under the Facility;

(e) release all or any substantial part of the Collateral from the Transaction
Liens (except as expressly permitted hereunder or in the Security Agreement)
without the written consent of each Lender;

(f) amend this Section 10.01 without the written consent of each Lender; or

(g) following any enforcement of remedies under this Agreement, change
Section 2.13 in a manner that would alter the pro rata sharing of payments
required thereby without the written consent of each Lender affected thereby;

and provided further that (i) no such agreement shall, unless in writing and
signed by the Agent in addition to the Required Lenders or all the Lenders, as
the case may be, affect the rights or duties of the Agent under this Agreement
or any other Loan Document (except with respect to the removal of the Agent) and
(ii) any fee agreement referred to in Section 2.10 may be amended, or rights or
privileges thereunder waived, in a writing executed by the parties thereto.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have
any right to approve or disapprove any amendment, waiver or consent hereunder,
except for any amendment, waiver or consent pursuant to Section 10.01(a), (b) or
(c).

Section 10.02. Notices.

(a) Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be in writing (including by
facsimile transmission). All such written notices shall be mailed, faxed or
delivered to the applicable address, facsimile number (provided that any matter
transmitted by the Company by facsimile (1) shall be immediately confirmed by a
telephone call to the recipient at the number specified on Schedule 10.02, and
(2) shall be followed promptly by delivery of a hard copy original thereof) or
(subject to subsection (c) below) electronic mail address, and all notices and
other communications expressly permitted hereunder to be given by telephone
shall be made to the applicable telephone number, as follows:

(i) if to the Company or the Agent, to the address, facsimile number, electronic
mail address or telephone number specified for such Person on Schedule 10.02 or
to such other address, facsimile number, electronic mail address or telephone
number as shall be designated by such party in a notice to the other parties;
and

(ii) if to any other Lender, to the address, facsimile number, electronic mail
address or telephone number specified in its administrative questionnaire or to
such other address, facsimile number, electronic mail address or telephone
number as shall be designated by such party in a notice to the Company and the
Agent.

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, four Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic
mail (which form of delivery is subject to the

 

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provisions of subsection (c) below), when delivered; provided that notices and
other communications to the Agent pursuant to Article 2 shall not be effective
until actually received by such Person. In no event shall a voicemail message be
effective as a notice, communication or confirmation hereunder.

(b) Loan Documents may be transmitted and/or signed by facsimile or Adobe PDF
delivered by electronic mail. The effectiveness of any such documents and
signatures shall, subject to applicable law, have the same force and effect as
manually-signed originals and shall be binding on all Obligors, the Agent and
the Lenders. The Agent may also require that any such documents and signatures
be confirmed by a manually-signed original thereof; provided that the failure to
request or deliver the same shall not limit the effectiveness of any facsimile
document or signature.

(c) Electronic mail and Internet and intranet websites may be used only to
distribute routine communications, such as financial statements and other
information as provided in Section 6.02, and to distribute Loan Documents for
execution by the parties thereto and may not be used for any other purpose.

(d) The Agent and the Lenders shall be entitled to rely and act upon any notices
purportedly given by or on behalf of the Company even if (i) such notices were
not made in a manner specified herein, were incomplete or were not preceded or
followed by any other form of notice specified herein or (ii) the terms thereof,
as understood by the recipient, varied from any confirmation thereof. The
Company shall indemnify each Agent-Related Person and each Lender from all
losses, costs, out-of-pocket expenses and liabilities resulting from the
reliance by such Person on each notice purportedly given by or on behalf of the
Company; provided that such indemnity shall not, as to any such Person, be
available to the extent that such losses, costs, expenses or liabilities 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 Person. All telephonic notices to and other communications with the Agent
may be recorded by the Agent, and each of the parties hereto hereby consents to
such recording.

Section 10.03. No Waiver; Cumulative Remedies.

No failure to exercise and no delay in exercising, on the part of the Agent or
any Lender, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.

Section 10.04. Costs and Expenses.

The Company agrees (a) to pay or reimburse the Agent for all reasonable costs
and out-of-pocket expenses incurred in connection with the development,
preparation, negotiation and execution of this Agreement and the other Loan
Documents and any amendment, waiver, consent or other modification of the
provisions hereof and thereof (whether or not the transactions contemplated
hereby or thereby are consummated) and the consummation and administration of
the transactions contemplated hereby and thereby, including all Attorney Costs,
and (b) to pay or reimburse the Agent and each Lender for all costs and expenses
incurred in connection with the enforcement, attempted enforcement or
preservation of any rights or remedies under this Agreement (including, but not
limited to this Section 10.04) or the other Loan Documents (including all such
costs and expenses incurred during any “workout” or restructuring in respect of
the Obligations and during any legal proceeding, including in any Insolvency
Proceeding or appellate proceeding), including all fees, expenses and
disbursements of any law firm or other external legal counsel and, without
duplication, the allocated cost of internal legal services and all expenses and
disbursements of internal counsel. The foregoing costs and expenses shall
include all search, filing, recording, title insurance and appraisal charges and
fees and taxes related thereto and other out-of-pocket

 

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expenses incurred by the Agent and the cost of independent public accountants
and other outside experts retained by the Agent or any Lender. All amounts due
under this Section shall be payable within ten Business Days after written
demand therefor together with, if requested by the Company, backup documentation
supporting such payment or reimbursement request. The agreements in this Section
shall survive the repayment of the Loans and the other Obligations.

Section 10.05. Company Indemnification; Damage Waiver.

(a) Whether or not the transactions contemplated hereby are consummated, the
Company shall indemnify and hold harmless each Agent-Related Person, each Lender
and their respective Affiliates, and the directors, officers, employees,
counsel, agents and attorneys-in-fact of such Persons and Affiliates involved
with the refinancing or the Transactions (collectively the “Indemnified
Persons”) from and against any and all liabilities, obligations, losses,
damages, penalties, claims, demands, actions, judgments, suits, charges and
reasonable costs, expenses and disbursements (including Attorney Costs) of any
kind or nature whatsoever (including those arising from or relating to any
environmental matters) that may at any time be imposed on, incurred by or
asserted against any such Indemnified Person by any third party or by the
Company or any other Obligor in any way relating to or arising out of or in
connection with (a) the execution, delivery, enforcement, performance or
administration of any Loan Document or any other agreement, letter or instrument
delivered in connection with the transactions contemplated thereby or the
consummation of the transactions contemplated thereby, (b) any Commitment or
Loan or the use or proposed use of the proceeds therefrom, (c) any Environmental
Liability related to the Company or any of its Subsidiaries or (d) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory (including
any investigation of, preparation for or defense of any pending or threatened
claim, investigation, litigation or proceeding) and regardless of whether any
Indemnified Person is a party thereto (all the foregoing, collectively, the
“Indemnified Liabilities”), in all cases, whether or not caused by or arising,
in whole or in part, out of the negligence of the Indemnified Person; provided
that such indemnity shall not, as to any Indemnified Person, be available to the
extent that such liabilities, obligations, losses, damages, penalties, claims,
demands, actions, judgments, suits, costs, expenses or disbursements 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 Indemnified Person. No Indemnified Person shall be liable for any damages
arising from the use by others of any information or other materials obtained
through IntraLinks or other similar information transmission systems in
connection with this Agreement, nor shall any Indemnified Person have any
liability for any indirect or consequential damages relating to this Agreement
or any other Loan Document or arising out of its activities in connection
herewith or therewith (whether before or after the Effective Date). All amounts
due under this Section shall be payable within thirty days after written demand
therefor together with, if requested by the Company, backup documentation
supporting such indemnification request. The agreements in this Section shall
survive the resignation of the Agent, the replacement of any Lender and the
repayment, satisfaction or discharge of all the other Obligations.

(b) To the extent permitted by applicable law, the Company shall not assert, and
hereby waives, any claim against any Indemnified Person, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with or as a result
of this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or the use of the proceeds. No Indemnified Person shall
be liable for any damages arising from the use by unintended recipients of any
information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby or
thereby.

 

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Section 10.06. Payments Set Aside.

To the extent that the Company makes a payment to the Agent or the Lenders, or
the Agent or the Lenders exercise their right of set-off, and such payment or
the proceeds of such set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Agent or such Lender in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred and (b) each Lender
severally agrees to pay to the Agent upon demand its pro rata share of any
amount so recovered from or repaid by the Agent.

Section 10.07. Assignments, Successors, Participations, Etc.

(a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that the Company may not assign
or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of the Agent and each Lender and no Lender may assign or
otherwise transfer any of its rights or obligations hereunder except (i) to an
Eligible Assignee in accordance with the provisions of Section 10.07(b), or
(ii) by way of participation in accordance with the provisions of
Section 10.07(d) (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 (as
defined below) to the extent provided in Section 10.07(d) and, to the extent
expressly contemplated hereby, the Related Parties of each of the Agent and the
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

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

(i) except in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and the Loans at the time owing to it or in the
case of an assignment to a Lender or an Affiliate of a Lender or an Approved
Fund with respect to a Lender, 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 Loan
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 Agent or, if “Trade Date” is specified in the Assignment and Assumption,
as of the Trade Date, shall not be less than $1,000,000, unless each of the
Agent and, so long as no Event of Default has occurred and is continuing, the
Company otherwise consents (each such consent not to be unreasonably withheld or
delayed); provided that the Company shall be deemed to have consented unless it
shall object thereto by written notice to the Agent within five (5) Business
Days after having received notice thereof;

(ii) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement
with respect to the Loans or the Commitment assigned under the Facility, except
that this clause (ii) shall prohibit any Lender from assigning all or a portion
of its rights and obligations under the Facility on a non-pro rata basis;

 

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(iii) [Reserved];

(iv) the parties to each assignment shall execute and deliver to the Agent an
Assignment and Assumption (such Assignment and Assumption to be
(A) electronically executed and delivered to the Agent via an electronic
settlement system then acceptable to the Agent (or, if previously agreed with
the Agent, manually), and (B) delivered together with a processing and
recordation fee of $3,500, unless waived or reduced by the Agent in its sole
discretion; and

(v) the Eligible Assignee, if it shall not be a Lender, shall deliver to the
Agent an administrative questionnaire, in the form prescribed by the Agent.

Subject to acceptance and recording thereof by the Agent pursuant to
Section 10.07(c), from and after the effective date specified in each Assignment
and Assumption, the Eligible 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,
(provided that, with respect to circumstances in effect on the effective date of
such Assignment and Assumption, an Eligible Assignee shall not be entitled to
receive any greater payment under Section 3.01 than the applicable Lender would
have been entitled to receive had the assignment not taken place) 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 3.01, 3.03, 3.04, 10.04 and 10.05 with respect to facts and
circumstances occurring prior to the effective date of such assignment). Upon
request, the Company (at its expense) shall execute and deliver a Note to the
assignee Lender. Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this subsection shall be treated
for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with Section 10.07(d).

(c) Register. The Agent, acting solely for this purpose as an agent of the
Company, shall maintain at the Agent’s Office a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitments of, and principal and interest
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 Company, the Agent and the Lenders shall treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Company and each Lender (with
respect to its own interests in the Facility only) at any reasonable time and
from time to time upon reasonable prior notice.

(d) Participations. Any Lender may at any time, without the consent of, or
notice to, the Company or the Agent, sell participations to any Person (other
than a natural person or the Company or any of the Company’s Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the owing to it); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Company, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
waiver or other modification described in the first proviso to Section 10.01
that directly affects such Participant.

 

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Except to the extent limited by Section 10.07(e), the Company agrees that each
Participant shall be entitled to the benefits of Sections 3.01, 3.03 and 3.04
(subject to the limitations and requirements of such Sections (including
Section 3.01(e) and Section 3.01(f)) and Section 3.07, as if such Participant
were a Lender) to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to Section 10.07(b). To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 10.09 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.13 as though it were a Lender.

Each Lender that sells a participation shall, acting solely for this purpose as
a non-fiduciary agent of the Company, maintain a register on which it enters the
name and address of each Participant and the principal amounts (and stated
interest) of each Participant’s interest in the Loans or other obligations under
this Agreement (the “Participant Register”). The entries in the Participant
Register shall be conclusive and such Lender shall treat each Person whose name
is recorded in the Participant Register as the owner of such participation for
all purposes of this Agreement notwithstanding any notice to the contrary.

(e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.01 or 3.03 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant; provided that this Section 10.07(e) shall not apply
(1) if the sale of the participation to such Participant is made with the
Company’s prior written consent or (2) to the extent the entitlement to a
greater payment results solely from a change in any Requirement of Law occurring
after such Participant became a Participant.

(f) Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including
under its Note, if any) to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

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

Section 10.08. Confidentiality.

Each Lender agrees to take and to cause its Affiliates to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all information provided to it by the Company or any Subsidiary, or by the Agent
on the Company’s or such Subsidiary’s behalf, under this Agreement or any other
Loan Document, and neither it nor any of its Affiliates shall use any such
information (x) other than in connection with or in enforcement of this
Agreement and the other Loan Documents or in connection with other business now
or hereafter existing or contemplated with the Company or any Subsidiary or
(y) in any manner that would constitute a violation of applicable laws, except,
in either case, to the extent such information (i) was or becomes generally
available to the public other than as a result of disclosure by the Lender, or
(ii) was or becomes available on a non-confidential basis from a source other
than the Company, provided that such source is not bound by a confidentiality
agreement with the Company known to the Lender; provided further that any Lender
may disclose such information (a) at the request or pursuant to any requirement
of any Governmental Authority to which the Lender is subject or in connection
with an examination of such Lender by any such authority; (b) pursuant to
subpoena or other court

 

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process; (c) when required to do so in accordance with the provisions of any
applicable Requirement of Law; (d) to the extent reasonably required in
connection with any litigation or proceeding to which the Agent or any Lender or
their respective Affiliates may be party; (e) to the extent reasonably required
in connection with the exercise of any remedy hereunder or under any other Loan
Document; (f) to such Lender’s independent auditors and other professional
advisors; (g) to any Participant or Eligible Assignee, actual or potential,
provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Lenders hereunder; (h) as to any
Lender or its Affiliate, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Company or any
Subsidiary is party with such Lender or such Affiliate; (i) to its Affiliates,
provided that such Affiliates are not insurance companies; (j) to any other
party to this Agreement; and (k) to any pledgee referred to in Section 10.07(f)
or any direct contractual counterparty or prospective counterparty (or such
counterparty’s or prospective counterparty’s professional advisor) to any credit
derivative transaction relating to obligations of the Company or any of its
Subsidiaries (so long as all parties, including all counterparties and advisors
agree to be bound by the provisions of this Section 10.08). In the case of
confidential information received from the Company or any Subsidiary after the
date hereof, such information shall be clearly identified at the time of
delivery as confidential.

Section 10.09. Set-off.

In addition to any rights and remedies of the Lenders provided by law, if an
Event of Default shall have occurred and be continuing, each Lender and each of
its Affiliates is authorized at any time and from time to time, without prior
notice to the Company, any such notice being waived by the Company, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Lender or Affiliate to or for
the credit or the account of the Company against any and all Obligations owing
to such Lender, now or hereafter existing, irrespective of whether or not the
Agent or such Lender shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured; provided
that neither any Lender nor any of its Affiliates shall be entitled to exercise
any such set off with respect to any trust, tax reserve or payroll account. Each
Lender agrees to promptly notify the Company and the Agent after any such
set-off and application made by such Lender; provided that the failure to give
such notice shall not affect the validity of such set-off and application.

Section 10.10. Notification of Addresses, Lending Offices, Etc.

Each Lender shall notify the Agent in writing of any changes in the address to
which notices to the Lender should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Agent shall
reasonably request.

Section 10.11. Counterparts.

This Agreement may be executed in any number of separate counterparts, each of
which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument.

Section 10.12. Survival of Representations and Warranties.

All representations and warranties made hereunder and in any other Loan Document
or other document delivered pursuant hereto or thereto or in connection herewith
or therewith shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied

 

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upon by the Agent and each Lender, regardless of any investigation made by the
Agent or any Lender or on their behalf, and shall continue in full force and
effect as long as any Loan or any other Obligation hereunder shall remain unpaid
or unsatisfied.

Section 10.13. Severability.

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

Section 10.14. Replacement of Defaulting Lenders and Non-Consenting Lenders.

If any Lender is a Defaulting Lender or a Non-Consenting Lender, then the
Company may, at its sole expense and effort, upon notice to such Lender and the
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in, and consents
required by, Section 10.07), all of its interests, rights and obligations under
this Agreement and the related Loan Documents to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts such
assignment), provided that:

(a) the Agent shall have received the assignment fee specified in
Section 10.07(b);

(b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Sections 3.01, 3.03 and 3.04) from the assignee (to
the extent of such outstanding principal and accrued interest and fees) or the
Company (in the case of all other amounts).

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 Company to require such assignment and delegation
cease to apply.

No action by or consent of a Defaulting Lender or a Non-Consenting Lender shall
be necessary in connection with such assignment, which shall be immediately and
automatically effective upon payment of such purchase price. In connection with
any such assignment the Company, Agent, such Defaulting Lender or such
Non-Consenting Lender and the replacement Lender shall otherwise comply with
this Section 10.14; provided, that if such Defaulting Lender or such
Non-Consenting Lender does not comply with this Section 10.14 within one
Business Day after the Company’s request, compliance with this Section 10.14
shall not be required to effect such assignment.

Section 10.15. Governing Law; Jurisdiction; Consent to Service of Process.

(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.

(b) The Company irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court 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 relevant appellate court,

 

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in any action or proceeding arising out of or relating to any Loan Document, or
for recognition or enforcement of any judgment, and each party hereto
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State court
or, to the extent permitted by law, in such Federal court. Each party hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in any Loan Document shall affect
any right that any Lender or the Agent may otherwise have to bring any action or
proceeding relating to any Loan Document against any Obligor or its properties
in the courts of any jurisdiction.

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

(d) Each party hereto irrevocably consents to service of process in the manner
provided for notices in Section 10.02. Nothing in any Loan Document will affect
the right of any party hereto to serve process in any other manner permitted by
law.

Section 10.16. Waiver of Jury Trial.

EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT
OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY TO THIS
AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.

Section 10.17. USA PATRIOT Act Notice.

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

 

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Section 10.18. Entire Agreement.

This Agreement, together with the other Loan Documents and any separate
agreements with respect to fees payable to the Agent, embodies the entire
agreement and understanding among the Company, the Lenders and the Agent and
supersedes all prior or contemporaneous agreements and understandings of such
Persons, verbal or written, relating to the subject matter hereof and thereof.

[SIGNATURE PAGES FOLLOW ON NEXT PAGE]

 

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

 

CNO FINANCIAL GROUP, INC. By:  

/s/ Scott L. Galovic

  Name: Scott L. Galovic   Title: Vice President and Treasurer

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MORGAN STANLEY SENIOR FUNDING, INC.,

as Agent and as Lender

By:  

/s/ Eric Jenkins

  Name: Eric Jenkins   Title: Authorized Signatory

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Schedule 2.01

Commitments

 

Lender

   Commitment      Percentage of Total
Commitments  

Morgan Stanley Senior Funding, Inc.

   $ 375,000,000         100 % 

 

1

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Schedule 5.05

Litigation

All as more fully described in the Company’s Form 10-Q for the fiscal quarter
ended September 30, 2010:

 

A. Securities Litigation

 

  1. Franz Schleicher, et al. v. Conseco, Inc., Gary Wendt, William Shea,
Charles Chokel and James Adams, et al., Case No. 02-CV-1332 DFH-TAB.

 

  2. Plumbers and Pipefitters Local Union No. 719 Pension Trust Fund, on behalf
of itself and all others similarly situated v. Conseco, Inc., et al., Case
No. 09-CIV-6966.

 

  3. William T. Carter, derivatively on behalf of CNO Financial Group, Inc. v.
R. Glenn Hilliard, Donna A. James, R. Keith Long, Debra J. Perry, C. James
Prieur, Neal C. Schneider, Michael T. Tokarz, John G. Turner, William Kirsch,
Eugene Bullis, Michael Dubes, James Hohmann, Edward Bonach, Ali Inanilan, and
John Wells, and CNO Financial Group, Inc., Cause No. 49D10 10 06 PL 024523.

 

B. Cost of Insurance Litigation

 

  1. AE Ventures for Archie Murakami, et al. v. Conseco, Inc., Conseco Life
Insurance Company; and Doe Defendants 1-100, Case No. CV05-00594.

 

  2. Clifford S. Arakaki et al. v. Conseco Life Insurance Company, Doe
Defendants 1-100, Case No. CV05-00026.

 

C. Other Litigation

 

  1. In re Conseco Insurance Co. Annuity Marketing & Sales Practices Litigation,
consolidating the following two cases (under the Hansen case number):

 

  a) Robert H. Hansen, an individual, and on behalf of all others similarly
situated v. Conseco Insurance Company, an Illinois corporation f/k/a Conseco
Annuity Assurance Company, Cause No. C0504726 and

 

  b) Friou P. Jones, on Behalf of Himself and All Others Similarly Situated v.
Conseco Insurance Company, an Illinois company f/k/a Conseco Annuity Assurance
Company, Cause No. C06-00537

 

2

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

 

  2. Celedonia X. Yue, M. D. on behalf of the class of all others similarly
situated, and on behalf of the General Public v. Conseco Life Insurance Company,
successor to Philadelphia Life Insurance Company and formerly known as
Massachusetts General Life Insurance Company, Cause No. CV08-01506 CAS.

 

  3. Sydelle Ruderman individually and on behalf of all other similarly situated
v. Washington National Insurance Company, Case No. 08-23401-CIV-Cohn/Selzer.

 

  4. Cedric Brady, et. al. individually and on behalf of all other similarly
situated v. Conseco, Inc. and Conseco Life Insurance Company Case
No. 3:08-cv-05746.

Bill W. McFarland, and all those similarly situated v. Conseco Life Insurance
Company, Case No. 3:09-cv-598-J-32MCR.

On February 3, 2010, the Judicial Panel on MDL ordered these two cases to be
consolidated for pretrial proceedings in the Northern District of California
Federal Court. On July 7, 2010, plaintiffs filed an amended motion for class
certification of a nationwide class and a California state class. The Company
filed its motion in opposition on July 21, 2010. On October 6, 2010, the court
granted the motion for certification of a nationwide class and denied the motion
for certification of a California state class.

 

  5. Samuel Rowe and Estella Rowe, individually and on behalf of themselves and
all others similarly situated v. Bankers Life & Casualty Company and Bankers
Life Insurance Company of Illinois, Case No. 09CV491.

 

  6. State of Minnesota, by its Pollution Control Agency and its Attorney
General Lori Swanson vs. Associated Medical Assurance Limited, Associated Health
Assurance Limited, Associated Hospital Assurance Limited, Federated Rural
Electric Insurance Exchange, Mt. McKinley Insurance Company, Munich Reinsurance
America Incorporated, North Star Reinsurance Corporation, Northwestern National
Insurance Company of Milwaukee, Wisconsin, Stonebridge Life Insurance Company,
and United Insurance Company, Cause no. 27-cv-08-1912.

 

3

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

Schedule 5.07

ERISA

None.

 

4

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

Schedule 5.13

Investment Companies

None.

 

5

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

Schedule 5.14

Subsidiaries

Key

G = Subsidiary Guarantor

IM = Immaterial Subsidiary

F = Foreign Subsidiary

INS = Insurance Subsidiary

SIS = Subsidiary of Insurance Subsidiary

 

Company

(Place of Incorporation)

   Subsidiary
Type   

Direct Beneficial Owner(s)

(Place of Incorporation)

3037953 Nova Scotia Company (NS) (Calgary)

   F, IM    ResortPort Holding of Delaware, Inc. (DE)

40|86 Advisors, Inc. (DE)

   G    CNO Financial Group, Inc. (DE)

40|86 Mortgage Capital, Inc. (DE)

   G    CDOC, Inc. (DE)

American Life and Casualty Marketing Division Co. (IA)

   G    CDOC, Inc. (DE)

Association Management Corporation (IL)

   IM    CDOC, Inc. (DE)

Bankers Conseco Life Insurance Company (NY)

   INS    Conseco Life Insurance Company of Texas (TX)

Bankers Life and Casualty Company (IL)

   INS    Conseco Life Insurance Company of Texas (TX)

BLC Financial Services, Inc. (IL)

   SIS    Bankers Life and Casualty Company (IL)

C.P. Real Estate Services Corp. (NJ)

   SIS    Colonial Penn Life Insurance Company (PA)

CDOC, Inc. (DE)

   G    CNO Financial Group, Inc. (DE) Beneficial ownership (Pfd. Stock) held by
Bankers Life and Casualty Company, Washington National Insurance Company,
Conseco Life Insurance Company

CNO IT Services (India) Private Limited

   F, IM    CDOC, Inc. (DE) – 99.996%, CNO Financial Group, Inc. (DE) - 0.004%

CNO Management Services Company (TX)

   G    CDOC, Inc. (DE)

CNO Services, LLC (IN)

   G    CDOC, Inc. (DE) – 89.1%, CNO Financial Group, Inc. (DE) – 9.9%, CNO
Management Services Company (TX) – 1%

 

6

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

Company

(Place of Incorporation)

   Subsidiary
Type   

Direct Beneficial Owner(s)

(Place of Incorporation)

Codelinks, LLC (IN)

   IM   

CDOC, Inc. (DE)

Colonial Penn Life Insurance Company (PA)

   INS   

Conseco Life Insurance Company of Texas (TX)

Conseco Health Services, Inc. (PA)

   IM   

CDOC, Inc. (DE)

Conseco Life Insurance Company (IN)

   INS   

CDOC, Inc. (DE)

Conseco Life Insurance Company of Texas (TX)

   INS   

CDOC, Inc. (DE)

Conseco Marketing, L.L.C. (IN)

   IM    CNO Services, LLC (IN) – 90%, CNO Financial Group, Inc. (DE) – 9%, CNO
Management Services Company (TX) – 1%

Conseco Securities, Inc. (DE)

   IM   

CDOC, Inc. (DE)

Design Benefit Plans, Inc. (IL)

   IM   

CNO Financial Group, Inc. (DE)

Hawthorne Advertising Agency Incorporated (PA)

   IM   

CDOC, Inc. (DE)

K.F. Agency, Inc. (IL)

   IM   

CDOC, Inc. (DE)

K.F. Insurance Agency of Massachusetts, Inc. (MA)

   IM   

CDOC, Inc. (DE)

NAL Financial Group, Inc. (DE)

   IM   

Conseco, Inc. (DE)

Performance Matters Associates of Texas, Inc. (TX)

   G   

Performance Matters Associates, Inc. (DE)

Performance Matters Associates, Inc. (DE)

   G   

CDOC, Inc. (DE)

ResortPort Holding of Delaware, Inc. (DE)

   IM   

CDOC, Inc. (DE)

Washington National Insurance Company (IL)

   INS   

CDOC, Inc. (DE))

 

7

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

Schedule 6.15

Post Closing Matters

1. The Company shall use commercially reasonable efforts to terminate, or cause
to be terminated, the lien described below as promptly as practicable following
the Effective Date.

 

Debtor

  

Jurisdiction

  

Type

   Amount     

Secured

Party of
Record

   Original
File Date      Original
File Number  

40|86 Advisors, Inc.

   Hamilton County, Indiana    Federal Tax Lien    $ 23,879.93       Internal
Revenue Service      12/07/2009         2009070129   

2. The Company shall, within 60 days of the Effective Date, deliver to the Agent
one or more certificates representing 65% of the outstanding Voting Stock of CNO
IT Services (India) Private Limited, accompanied by duly executed instruments of
transfer or assignment in blank.

 

8

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

Schedule 7.01

Existing Indebtedness

 

1. Existing intercompany indebtedness involving Excluded Subsidiaries set forth
on Attachment 1.

 

2. Bankers Life and Casualty Company guarantee of retirement benefits for former
President and CEO pursuant to an employment agreement.

 

3. Conseco Life Insurance Company of Texas guarantee of retirement benefits for
former President and CEO pursuant to employment agreement.

 

4. 6% Senior Note due November 12, 2013 of Conseco, Inc. dated as of
November 12, 2008 ($75,000,000 aggregate principal amount outstanding as of the
Effective Date).

 

5. Existing Convertible Debentures.

 

9

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

Attachment 1 to SCHEDULE 7.01

Intercompany Indebtedness Involving Excluded Subsidiaries

as of 9/30/10

 

Debtor

  

Owed to

   Amount ($)  

Association Management Corporation

   CNO Services, LLC    $ 80   

Bankers Life & Casualty

   BLC Financial Services, Inc.      84,800   

CDOC

   CNO IT Services India Private Limited      15,959   

CNO Services, LLC

   Conseco Health Services, Inc.      85   

Conseco Marketing, L.L.C.

   CNO Services, LLC      1,649,831   

Conseco Securities, Inc.

   CDOC      1,294,209   

Conseco Securities, Inc.

   CNO Services, LLC      39,947   

Design Benefit Plans, Inc.

   CNO Financial Group, Inc.      45,114   

K.F. Agency, Inc.

   Bankers Life & Casualty      15,199          $ 3,145,224   

 

10

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

Schedule 7.02

Existing Liens

 

Debtor

  Jurisdiction  

Type of

filing found

  Secured
Party   Collateral   Original
File Date   Original
File
Number   Amdt.
File Date   Amdt.
File
Number

40|861 Advisors, Inc.

  Indiana   Federal Tax Lien   IRS
($23,879.93)   N/A   12/07/2009   2009070129   N/A   N/A

Conseco Services, LLC

  Indiana   UCC-1   Oce North
America,
Inc.   Specified
Equipment   12/10/2004   200400011482698   N/A   N/A

Conseco Services, LLC

  Indiana   UCC-1   OCE
Financial
Services,
Inc. & OCE
North
America,
Inc.   Specified
Equipment   01/20/2005   200500000708466   N/A   N/A

Conseco Services, LLC

  Indiana   UCC-1   Oce North
America,
Inc.   Specified
Equipment   04/19/2007   200700003823368   N/A   N/A

Conseco Services, LLC

  Indiana   UCC-1   Ricoh
Americas
Corporation   Specified
Equipment   06/01/2009   200900004546333   N/A   N/A

Conseco Services, LLC

  Indiana   UCC-1   Logicalis,
Inc.   Specified
Equipment   02/01/2010   201000000995117   N/A   N/A

  

 

1 This lien is to be discharged as described in Schedule 6.15.

 

11

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

Debtor

  Jurisdiction  

Type of

filing found

  Secured
Party   Collateral   Original
File Date   Original
File
Number   Amdt.
File Date   Amdt.
File Number

Conseco Services, LLC

  Indiana   UCC-1   North America
Communications
Resource, Inc.   Specified
Equipment   03/01/2010   201000001740792   N/A   N/A

Conseco Services, LLC

  Indiana   UCC-1   North America
Communications
Resource, Inc.   Specified
Equipment   03/01/2010   201000001741713   N/A   N/A

Conseco Services, LLC

  Indiana   UCC-1   Oce North
America, Inc.   Specified
Equipment   03/11/2010   201000002079667   N/A   N/A

Conseco, Inc.

  Delaware   UCC-1   TCF Equipment
Finance, Inc.   Specified
Equipment   05/28/2009   2009 1773594   N/A   N/A

 

12

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

Schedule 7.09

Existing and Committed Investments

Existing Investments:

Equity investments in Excluded Subsidiaries existing on the date hereof.

Committed Investments:

None.

 

13

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

Schedule 7.17

Restrictive Agreements

None.

 

14

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

Schedule 10.02

Addresses for Notices

CNO FINANCIAL GROUP, INC.

CNO Financial Group, Inc.

11825 North Pennsylvania Street

Carmel, Indiana 46032

Attention: Scott L. Galovic

Telephone: (317) 817-3228

Facsimile: (317) 817-3772

Electronic Mail: scott.galovic@cnoinc.com

with a copy to:

CNO Financial Group, Inc.

11825 North Pennsylvania Street

Carmel, Indiana 46032

Attention: Karl Kindig

Telephone: (317) 817-6708

Facsimile: (317) 817-5828

Electronic Mail: karl.kindig@cnoinc.com

MORGAN STANLEY SENIOR FUNDING, INC., as Agent

Legal Address:

Morgan Stanley Senior Funding, Inc.

1 Pierrepont Plaza, 7th Floor

Brooklyn, NY 11201

Servicing Contact:

(Paydowns, Interest, rollover notices, etc.):

Morgan Stanley Senior Funding, Inc.

Attention: Agency Team

1 Pierrepont Plaza, 7th Floor

Brooklyn, NY 11201

Telephone: 718-754-2712

Telecopier: 212-507-8080

Electronic Mail: msagency@morganstanley.com

 

15

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

Other Notices as Administrative Agent:

Morgan Stanley Senior Funding, Inc.

Documentation Team

Attention: Carrie D Johnson

One Utah Center, 201 South Main Street, 5th Floor

Salt Lake City, Utah 84111

Telephone: 801-236-3655

Telecopier: 212-507-5040

Electronic Mail: docs4loans@ms.com, ms4loans@ms.com

 

16

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

EXHIBIT A

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date:                     

 

To:    Morgan Stanley Senior Funding, Inc., as Agent

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement dated as of December 21, 2010
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement”; the terms defined therein being used herein
as therein defined), by and among CNO Financial Group, Inc., a Delaware
corporation (the “Company”), the Lenders from time to time party thereto, and
Morgan Stanley Senior Funding, Inc., as Agent.

The undersigned Responsible Officer of the Company hereby certifies, solely as a
Responsible Officer of the Company and not in his/her individual capacity, as of
the date hereof that he/she is the [                                ] of the
Company, and that, as such, he/she is authorized to execute and deliver this
Compliance Certificate to the Agent on behalf of the Company, and that:

[Use following paragraph 1 for fiscal year-end financial statements]

1. (i) Attached hereto as Schedule 1 are the year-end audited financial
statements required by Section 6.01(a) of the Agreement for the fiscal year of
the Company ended as of the above date, together with the report and opinion of
an independent certified public accountant required by such section and
(ii) attached hereto as Schedule 2 is the certificate prepared by such
independent certified public accountant with respect to such financial
statements, as required by Section 6.02(b) of the Agreement.

[Use following paragraph 1 for fiscal quarter-end financial statements]

1. Attached hereto as Schedule 1 are the unaudited financial statements required
by Section 6.01(b) of the Agreement for the fiscal quarter of the Company ended
as of the above date. Such financial statements fairly present in all material
respects, in accordance with GAAP (subject to the absence of footnotes and
year-end audit adjustments), the financial position, the results of operations
and cash flows of the Company and its Subsidiaries as at such date and for such
period.

2. The undersigned has reviewed and is familiar with the terms of the Agreement
and has made, or has caused to be made under his/her supervision, a detailed
review of the transactions and condition (financial or otherwise) of the Company
during the accounting period covered by the attached financial statements.

3. A review of the activities of the Company during such fiscal period has been
made under the supervision of the undersigned with a view to determining whether
during such fiscal period the Company performed and observed all its obligations
under the Loan Documents, and

[select one:]

[during such fiscal period, to the best knowledge of the undersigned, the
Company performed and observed each covenant and condition of the Loan Documents
applicable to it and no Default has occurred and is continuing.]

 

A-1

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

—or—

[the following covenants or conditions have not been performed or observed and
the following is a list of each such Default and its nature and status:]

4. The financial covenant analyses and information set forth on Schedule 3
attached hereto are true and accurate on and as of the date of this Compliance
Certificate.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

A-2

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

IN WITNESS WHEREOF, the undersigned has executed this Compliance Certificate in
his/her capacity as Responsible Officer of the Company as of
                    ,             .

 

CNO FINANCIAL GROUP, INC. By:  

 

Name:   Title:  

 

A-3

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

SCHEDULE 1

TO THE COMPLIANCE CERTIFICATE

 

A-4

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

SCHEDULE 2

TO THE COMPLIANCE CERTIFICATE

 

A-5

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

SCHEDULE 3

TO THE COMPLIANCE CERTIFICATE1

For the Fiscal Quarter/Year ended                      (“Statement Date”)

Section 7.01 — Limitation on Indebtedness; Certain Capital Stock

 

Item

  

Maximum
Permitted
(at any time
outstanding)

  

Actual
(measured
as of the

Statement Date)

(a)

  Aggregate principal amount of Capitalized Lease Liabilities, Purchase Money
Debt, and Refinancing Indebtedness thereof (but disregarding the requirements of
clauses (b) through (h) of the definition thereof):    $50,000,000   
$            

(b)

  Aggregate principal amount of Indebtedness owed by any Excluded Subsidiary to
the Company or any other Subsidiary:    $30,000,000    $            

(c)

  Aggregate principal amount of other secured Indebtedness under
Section 7.01(a)(xiii) of the Agreement (including Indebtedness described in Item
(e) below):    $50,000,000    $            

(d)

  Aggregate principal amount of other unsecured Indebtedness under
Section 7.01(a)(xiv) of the Agreement (including Indebtedness described in Item
(e) below):    $75,000,000    $            

(e)

  Aggregate principal amount of other secured or unsecured Indebtedness of
Subsidiaries that are not Obligors under Section 7.01(a)(xiii) and
Section 7.01(a)(xiv) of the Agreement:    $25,000,000    $            

 

1

In case of any inconsistency between the provisions of this Schedule and the
provisions of the Agreement, the Agreement shall prevail.

 

A-6

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

Section 7.02 — Liens

 

        

Maximum
Permitted
(at any time
outstanding)

  

Actual
(measured
as of the
Statement Date)

(a)   Aggregate amount of collateral consisting of cash or Cash Equivalents1
securing Permitted Swap Obligations under Section 7.02(c) of the Agreement:   
$60,000,000    $             (b)   Aggregate amount of collateral consisting of
cash or Cash Equivalents securing letters of credit issued in respect of
obligations to insurers under Section 7.02(f) of the Agreement:    $20,000,000
   $              (c)   Aggregate amount of Cash Management Obligations
permitted by Section 7.01(a)(xiii) of the Agreement secured by Liens under
Section 7.02(o) of the Agreement:    $10,000,000    $             Section 7.03 —
Disposition of Assets               

Maximum
Permitted
(for the period
indicated)

  

Actual
(measured
as indicated)

(a)   Aggregate amount of Dispositions to Excluded Subsidiaries under Section
7.03(d) of the Agreement:    $30,000,000    $                    

through the

Statement Date

(b)   Aggregate statutory profit and/or gains on insurance policy sales or other
portfolio transfers resulting from all Dispositions pursuant to a Reinsurance
Agreement consummated after the Effective Date under clause (ii) of Section
7.03(e) of the Agreement, subject to the provisos in clauses (x) and (y) of such
Section:   

$400,000,000

during the term

of the

Agreement

 

$150,000,000

in any

Fiscal Year

  

$            

through the Statement Date

 

 

$            

for the

Fiscal Year through the Statement Date

 

1

For purposes of this Item (a), in the case of Cash Equivalents described in
clauses (a), (b), (e) and (f) of the definition thereof, the one year (or
twelve-month, as applicable) maturity limitation set forth in such clauses shall
be disregarded.

 

A-7

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

Section 7.08 — Restricted Payments

 

        

Maximum
Permitted
(for the period
indicated)

  

Actual
(measured
as indicated)

(a)   Aggregate amount of Restricted Payments under Section 7.08(d) of the
Agreement, together with the aggregate amount of payments made pursuant to
Section 7.10(a)(iv) of the Agreement that could have been made as Restricted
Payments under Section 7.10(d) of the Agreement at the time made:   

Pro forma Debt

to Total Capitalization Ratio

is equal to or less than 20%

  

$            

through the Statement Date

(b)   Aggregate amount of Restricted Payments under Section 7.08(e) of the
Agreement, together with the aggregate amount of payments made pursuant to
Section 7.10(a)(iv) of the Agreement (except to the extent that any such payment
could have been made as a Restricted Payment under Section 7.10(d) of the
Agreement at the time made):   

$75,000,000

 

 

  

$            

through the Statement Date

Section 7.09 — Investments and Acquisitions               

Maximum
Permitted
(for the period
indicated)

  

Actual
(measured
as indicated)

(a)   Aggregate amount expended for Investments in Excluded Subsidiaries in the
ordinary course of business under Section 7.09(h) of the Agreement, together
with the aggregate principal amount of Indebtedness outstanding owing to any
Excluded Subsidiaries pursuant to the Tax Sharing Agreement (as described in
Section 7.01(a)(xviii) of the Agreement):   

$30,000,000

 

 

  

$            

through the Statement Date

(b)   Aggregate amount expended for Acquisitions (other than Acquisitions that
constitute Investments permitted by Section 7.09(f) or 7.09(m) of the Agreement)
under Section 7.09(l)(i) of the Agreement, subject to the requirements of such
Section:   

$400,000,000

during the term

of the

Agreement

 

$200,000,000
in any
Fiscal Year

 

  

$            

through the Statement Date

 

$            

for the
Fiscal Year through the Statement Date

 

A-8

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

 

        

Maximum
Permitted
(for the period
indicated)

  

Actual
(measured
as indicated)

(c)   Aggregate amount expended for Acquisitions (other than Acquisitions that
constitute Investments permitted by Section 7.09(f) or 7.09(m) of the Agreement)
under Section 7.09(l)(ii) of the Agreement, subject to the requirements of such
Section:   

 

$600,000,000
during the term
of the
Agreement

 

$300,000,000
in any
Fiscal Year

 

  

$            

through the Statement Date

 

$            

for the
Fiscal Year through the Statement Date

(d)   Aggregate amount expended for Investments under Section 7.09(m) of the
Agreement:   

$75,000,000

 

 

  

$            

through the Statement Date

 

A-9

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

Section 7.11 — Debt to Total Capitalization Ratio

 

(a)   Maximum permitted:      30.0 %  (b)   Actual (measured as of the Statement
Date):      (i)    the principal amount of and accrued but unpaid interest on
all Indebtedness of the Company outstanding on such date:    $                  
   (A)    Indebtedness owing to any Subsidiary Guarantor:    $                  
   (B)    the liabilities (if any) of the Company in respect of Swap Contracts
as determined by reference to the Swap Termination Value thereof:    $
                     (C)    sum of (b)(i)(A) + (b)(i)(B):    $                  
   (D)    (b)(i) minus (b)(i)(C):    $                   (ii)    Total
Capitalization:         (A)    Total Shareholders’ Equity of the Company:    $
                     (B)    sum of (b)(i)(D) + (b)(ii)(A):    $                
(c)   Ratio of (b)(i)(D) to (b)(ii)(B):                     

 

A-10

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

Section 7.12 — Interest Coverage Ratio

Calculation Period: [Four] Fiscal Quarters ended                     ,       

 

(a)   Minimum required:      2.00:1.0      (b)   Actual CNO Available Cash Flow
for the Calculation Period, without duplication:      (i)    dividends paid in
cash to the Company by any Subsidiary:    $                   (ii)    interest
paid in cash to the Company by any Subsidiary pursuant to any Indebtedness owing
by such Subsidiary to the Company:    $                   (iii)    interest or
principal paid in cash to the Company with respect to any Surplus Debenture:   
$                   (iv)    amounts paid in cash to the Company under the Tax
Sharing Agreement:    $                   (v)    management and other similar
fees received by the Company under servicing agreements or otherwise from any
Subsidiary:    $                   (vi)    amounts paid in cash to the Company
pursuant to a loan made to it by any Subsidiary:    $                   (vii)   
the Company’s Investment Income received in cash:    $                   (viii)
   non-recurring cash and non-cash charges (not to exceed $40,000,000 in the
aggregate (of which up to $25,000,000 may be cash charges) for all Calculation
Periods) related to restructuring, consolidation, severance or discontinuance of
any portion of the operations, employees and/or management of the Company:    $
                  (ix)    sum of (b)(i) through (b)(viii):    $                
  (x)    cash operating expenses of the Company:    $                   (xi)   
Capital Expenditures of the Company made in cash:    $                   (xii)
   amounts, if any, paid by the Company in respect of interest on or in
repayment of any loan made to it by any Subsidiary:    $                  
(xiii)    amounts paid in cash by the Company to any Insurance Subsidiary in
respect of any overpayment by such Insurance Subsidiary of amounts required to
be paid by such Insurance Subsidiary to the Company under the Tax Sharing
Agreement:    $                   (xiv)    sum of (b)(x) through (b)(xiii):    $
               

 

A-11

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

  (xv)    difference of (b)(ix) minus (b)(xv):    $                   (xvi)   
amounts, if any, received by the Company or any of its Subsidiaries and required
to be applied to prepay the Borrowings pursuant to Section 2.08(b) (other than
pursuant to Section 2.08(b)(iv)) of the Agreement, to the extent otherwise
included in CNO Available Cash Flow for any Calculation Period:    $
                  (xvii)    difference of (b)(xv) minus (b)(xvi):    $
                (c)   Actual Cash Interest Expense for the Calculation Period:
     (i)    total interest expense, to the extent paid or payable in cash, of
the Company and its Subsidiaries determined on a consolidated basis in
accordance with GAAP, excluding interest paid or, without duplication, accrued
but unpaid by any Insurance Subsidiary to the extent otherwise included in total
interest expense in this item for such Calculation Period:    $                
  (ii)    total dividends paid or payable in cash on any preferred stock issued
by the Company to the extent the terms of such preferred stock require payment
of cash dividends; provided, that, following the conversion of any such
preferred stock into common stock, any cash dividends paid on such preferred
stock during such Calculation Period shall, on a Pro Forma Basis, as if the
conversion was completed on the first day of such Calculation Period, be
excluded from calculations of Cash Interest Expense for such Calculation Period:
   $                   (iii)    sum of (c)(i) plus (c)(ii):    $                
(d)   Ratio of (b)(xvii) to (c)(iii):                     

 

A-12

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

Section 7.14 — Aggregate RBC Ratio

 

(a)   Minimum required:     
 
 

 

 
 

225%, on
or prior to
12/31/2011

 

250%,
thereafter

  
  
  

 

  
  

(b)   Actual (measured as of the Statement Date):      (i)    aggregate Total
Adjusted Capital (as defined by each relevant Insurance Subsidiary’s Department)
for all Insurance Subsidiaries taken as a whole:    $                   (ii)   
aggregate Authorized Control Level Risk-Based Capital (as defined by each
relevant Insurance Subsidiary’s Department) for all Insurance Subsidiaries taken
as a whole:    $                   (iii)    ratio of (b)(i) to (b)(ii)
(expressed as a percentage):                   %  (c)   One half of the ratio in
(b)(iii) (expressed as a percentage):                   % 

Section 7.15 — Combined Statutory Capital and Surplus Level

 

(a)   Minimum required:    $ 1,200,000,000   

(b)      Combined Statutory Capital and Surplus (measured as of the Statement
Date):         (i)    amount shown on the Combined Statutory Statement of the
Insurance Subsidiaries on p. 3, line 38:    $                      (ii)   
amount shown on the Combined Statutory Statement of the Insurance Subsidiaries
on p. 3, line 24.1:    $                 (c)      Sum of (b)(i) and (b)(ii):   
$                

 

A-13

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Section 7.16 — Investment Portfolio Requirement

Measured as of the Statement Date:                     

 

(a)   Aggregate fair market value of all Investments held by the Insurance
Subsidiaries:    $                 (b)   Aggregate fair market value of all
Investments of the Insurance Subsidiaries that are not Investment Grade Assets
(exclusive of the Investments referred to in Items (c), (d) and (e) hereof and
policy loans as specified on page 2, line 6 of the Company’s Annual Statements):
   $                   (i)    maximum permitted ratio of (b) to (a) (expressed
as a percentage):      10 %    (ii)    actual ratio of (b) to (a) (expressed as
a percentage):                   %  (c)   Aggregate fair market value of all
Investments of the Insurance Subsidiaries that are non-NAIC rated (exclusive of
the Investments referred to in Items (b), (d) and (e) hereof and policy loans as
specified on page 2, line 6 of the Company’s Annual Statement):    $
                  (i)    maximum permitted ratio of (c) to (a) (expressed as a
percentage):      6 %    (ii)    actual ratio of (c) to (a) (expressed as a
percentage):                   %  (d)   Aggregate fair market value of all
Investments of the Insurance Subsidiaries in real property mortgage loans
classified on Schedule B-Part 1 of the Annual Statement (exclusive of
Investments referred to in Items (b), (c) and (e) hereof):    $                
  (i)    maximum permitted ratio of (d) to (a) (expressed as a percentage):     
12 %    (ii)    actual ratio of (d) to (a) (expressed as a percentage):     
             %  (e)   Aggregate fair market value of all Investments of the
Insurance Subsidiaries in Capital Stock (exclusive of Investments referred to in
Items (b), (c) and (d) hereof):    $                   (i)    maximum permitted
ratio of (e) to (a) (expressed as a percentage):      1 %    (ii)    actual
ratio of (e) to (a) (expressed as a percentage):                   % 

 

A-14

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EXHIBIT B

FORM OF NOTE

                    , 20[    ]

FOR VALUE RECEIVED, the undersigned (the “Company”) hereby promises to pay to
                                 or registered assigns (the “Lender”), in
accordance with the provisions of the Agreement (as hereinafter defined), the
principal amount of each Loan from time to time made by the Lender to the
Company under that certain Credit Agreement, dated as of December 21, 2010 (as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the “Agreement”; the terms defined therein being used herein as
therein defined), among the Company, the Lenders from time to time party thereto
and Morgan Stanley Senior Funding, Inc., as Agent.

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

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

The Company, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.

 

B-1

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

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

 

CNO FINANCIAL GROUP, INC. By:  

 

Name:  

 

Title:  

 

 

B-2

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date

  

Interest

Type of

Loan Made

  

Amount of

Loan Made

  

End of Interest
Period

  

Amount of

Principal or

Interest Paid

This Date

  

Outstanding

Principal

Balance This

Date

  

Notation Made by

                                                                                
                                                                                
                                                                                
                                                                                

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

EXHIBIT C

FORM OF LOAN NOTICE

Date:                     , 20[    ]

To: Morgan Stanley Senior Funding, Inc., as Agent

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, to be dated as of
December 21, 2010 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement”; the terms defined
therein being used herein as therein defined), among CNO Financial Group, Inc.,
a Delaware corporation (the “Company”), the Lenders from time to time party
thereto and Morgan Stanley Senior Funding, Inc., as Agent.

The undersigned hereby requests (select one):

 

  ¨ A Borrowing of Loans

 

  ¨ A conversion or continuation of Loans

 

  1. On                                          (a Business Day)

 

  2. In the amount of $                     

 

  3. Comprised of                                              

                [Interest Type of Loan requested]

 

  4. For Eurodollar Rate Loans: with an Interest Period of      months.

[Upon acceptance of any or all of the Loans offered by the Lenders in response
to this request, the Company shall be deemed to have represented and warranted
that the conditions specified in Sections 4.02(a) and 4.02(b) of the Agreement
have been satisfied on and as of the date of the applicable Borrowing.]1

[The Company hereby agrees that if it fails to borrow the Eurodollar Rate Loans
requested hereby (including as a result of the failure of the Agreement to
become effective), the Company shall, after receipt of a written request by any
Lender (which request shall set forth in reasonable detail the basis for
requesting such amount), pay to the Agent for the account of such Lender any
amounts required to compensate such Lender for any losses, costs or expenses
that such Lender may reasonably incur as a result of such failure, including any
loss, cost or expense (excluding loss of anticipated profits) actually incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund such Eurodollar Rate Loan.]2

 

1

Do not use for conversion of Loans to other Interest Type or a continuation of
Eurodollar Rate Loans.

2

Applicable with respect to Borrowing of Eurodollar Rate Loans on the Effective
Date only.

 

C-1

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

 

CNO FINANCIAL GROUP, INC. By:  

 

Name:  

 

Title:  

 

 

C-2

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

EXHIBIT D

FORM OF ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between
[the][each]1 Assignor identified in item 1 below ([the][each, an] “Assignor”)
and [the][each]2 Assignee identified in item 2 below ([the][each, an]
“Assignee”). [It is understood and agreed that the rights and obligations of
[the Assignors][the Assignees]3 hereunder are several and not joint.]4
Capitalized terms used but not defined herein shall have the meanings given to
them in the Credit Agreement identified below (as amended, the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by [the][each]
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees], and [the][each] Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the Agent as
contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights
and obligations in [its capacity as a Lender][their respective capacities as
Lenders] under the Credit Agreement and any other documents or instruments
delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding rights and obligations of
[the Assignor][the respective Assignors] under the respective facilities
identified below and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of [the
Assignor (in its capacity as a Lender)][the respective Assignors (in their
respective capacities as Lenders)] against any Person, whether known or unknown,
arising under or in connection with the Credit Agreement, any other documents or
instruments delivered pursuant thereto or the loan transactions governed thereby
or in any way based on or related to any of the foregoing, including, but not
limited to, contract claims, tort claims, malpractice claims, statutory claims
and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and obligations sold
and assigned by [the][any] Assignor to [the][any] Assignee

 

1

For bracketed language here and elsewhere in this form relating to the
Assignor(s), if the assignment is from a single Assignor, choose the first
bracketed language. If the assignment is from multiple Assignors, choose the
second bracketed language.

2

For bracketed language here and elsewhere in this form relating to the
Assignee(s), if the assignment is to a single Assignee, choose the first
bracketed language. If the assignment is to multiple Assignees, choose the
second bracketed language

3

Select as appropriate.

4

Include bracketed language if there are either multiple Assignors or multiple
Assignees.

 

D-1

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

pursuant to clauses (i) and (ii) above being referred to herein collectively as
[the][an] “Assigned Interest”). Each such sale and assignment is without
recourse to [the][any] Assignor and, except as expressly provided in this
Assignment and Assumption, without representation or warranty by [the][any]
Assignor.

 

1.    Assignor[s]:   

 

        

 

   2.    Assignee[s]:   

 

        

 

      [for each Assignee, indicate [Affiliate][Approved Fund] of [identify
Lender]] 3.    Company: CNO Financial Group, Inc. 4.    Agent: Morgan Stanley
Senior Funding, Inc., as the administrative agent under the Credit Agreement 5.
   Credit Agreement: Credit Agreement, dated as of December 21, 2010, among CNO
Financial Group, Inc., the Lenders from time to time party thereto and Morgan
Stanley Senior Funding, Inc., as Agent. 6.    Assigned Interest[s]:

 

Assignor[s]1

   Assignee[s]2      Facility
Assigned3    Aggregate
Amount of
Commitment/
Loans
for All Lenders4    Amount of
Commitment/
Loans
Assigned    Percentage
Assigned of
Commitment/
Loans5     CUSIP
Number                         $                        $                       
                       %                          $                       
$                                               %                         
$                        $                                               %   

 

[7.    Trade Date:                         ]6

 

1

List each Assignor, as appropriate.

2

List each Assignee, as appropriate.

3

Fill in the appropriate terminology for the types of facilities under the Credit
Agreement that are being assigned under this Assignment (e.g. “Commitment,”).

4

Amounts in this column and in the column immediately to the right to be adjusted
by the counterparties to take into account any payments or prepayments made
between the Trade Date and the Effective Date.

5

Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

6

To be completed if the Assignor(s) and the Assignee(s) intend that the minimum
assignment amount is to be determined as of the Trade Date.

 

D-2

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

Effective Date:                                 , 20     [TO BE INSERTED BY
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR [NAME OF ASSIGNOR][S] By:  

 

  Title: ASSIGNEE [NAME OF ASSIGNEE][S] By:  

 

  Title:

[Consented to and]1 Accepted:

 

MORGAN STANLEY SENIOR FUNDING, INC., as Agent

By:  

 

  Title: [Consented to:]2 [CNO FINANCIAL GROUP, INC., as Company By:  

 

  Title:]

 

1

To be added only if the consent of the Agent is required by the terms of the
Credit Agreement.

2

To be added only if the consent of the Company is required by the terms of the
Credit Agreement.

 

D-3

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

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1. Assignor[s]. [The][Each] Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of [the][the relevant] Assigned Interest,
(ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Company, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or
observance by the Company, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document.

1.2. Assignee[s]. [The][Each] Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all the requirements of an Eligible Assignee under the Credit Agreement
(subject to such consents, if any, as may be required under the Credit
Agreement), (iii) from and after the Effective Date, it shall be bound by the
provisions of the Credit Agreement as a Lender thereunder and, to the extent of
[the][the relevant] Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it is sophisticated with respect to decisions to acquire assets
of the type represented by [the][such] Assigned Interest and either it, or the
Person exercising discretion in making its decision to acquire [the][such]
Assigned Interest, is experienced in acquiring assets of such type, (v) it has
received a copy of the Credit Agreement, and has received or has been accorded
the opportunity to receive copies of the most recent financial statements
delivered pursuant to Section 6.01 thereof, as applicable, and such other
documents and information as it deems appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase [the][such] Assigned Interest, (vi) it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase
[the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached
hereto is any documentation required to be delivered by it pursuant to the terms
of the Credit Agreement, duly completed and executed by [the][such] Assignee;
and (b) agrees that (i) it will, independently and without reliance upon the
Agent, [the][any] Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, and
(ii) it will perform in accordance with their terms all of the obligations which
by the terms of the Loan Documents are required to be performed by it as a
Lender.

2. Payments. From and after the Effective Date, the Agent shall make all
payments in respect of [the][each] Assigned Interest (including payments of
principal, interest, fees and other amounts) to [the][the relevant] Assignor for
amounts which have accrued to but excluding the Effective Date and to [the][the
relevant] Assignee for amounts which have accrued from and after the Effective
Date.

 

D-4

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

3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.

 

D-5

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

EXHIBIT E

EURODOLLAR RATE FUNDING LOSS

DETERMINATION METHODOLOGY

(COFO – COFBD) x P x D

360

 

COFO    =    COST OF FUNDS AT ORIGINATION (AS QUOTED BY THE AGENT) COFBD    =   
COST OF FUNDS AT BREAK DATE FOR THE DAYS REMAINING IN THE ORIGINAL INTEREST
PERIOD (AS QUOTED BY THE AGENT) P    =    PRINCIPAL D    =    NUMBER OF DAYS
LEFT IN ORIGINAL INTEREST PERIOD

 

E-1

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

EXHIBIT F

FORM OF SECURITY AGREEMENT

[See Attached]

 

F-1

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

EXHIBIT G-1

FORM OF

UNITED STATES TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

Reference is made to the Credit Agreement dated as of December 21, 2010 (the
“Credit Agreement”), among CNO Financial Group, Inc., a Delaware corporation
(the “Company”), each lender from time to time party hereto (collectively, the
“Lenders”; individually, each a “Lender”) and MORGAN STANLEY SENIOR FUNDING,
INC., as Agent. Capitalized terms used herein but not otherwise defined shall
have the meaning given to such term in the Credit Agreement.

Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of
which it is providing this certificate, (ii) it is not a “bank” within the
meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent
shareholder of the Company within the meaning of Section 881(c)(3)(B) of the
Code, (iv) it is not a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the Code, and (v) no payments in connection with any
Loan Document are effectively connected with a United States trade or business
conducted by the undersigned.

The undersigned has furnished Agent and the Company with a certificate of its
non-U.S. person status on Internal Revenue Service Form W-8BEN. By executing
this certificate, the undersigned agrees that (1) if the information provided on
this certificate changes, the undersigned shall promptly so inform the Company
and the Agent in writing and (2) the undersigned shall furnish the Company and
the Agent a properly completed and currently effective certificate and Form
W-8BEN in either the calendar year in which payment is to be made by the Company
or the Agent to the undersigned, or in either of the two calendar years
preceding such payment.

[Signature Page Follows]

 

G-1-1

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

 

[Lender] By:  

 

  Name:     Title:   [Address]

Dated:                     , 20[    ]

 

G-1-2

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

EXHIBIT G-2

FORM OF

UNITED STATES TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is made to the Credit Agreement dated as of December 21, 2010 (the
“Credit Agreement”), among CNO Financial Group, Inc., a Delaware corporation
(the “Company”), each lender from time to time party hereto (collectively, the
“Lenders”; individually, each a “Lender”) and MORGAN STANLEY SENIOR FUNDING,
INC., as Agent. Capitalized terms used herein but not otherwise defined shall
have the meaning given to such term in the Credit Agreement.

Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the Loan(s)
(as well as any Note(s) evidencing such Loan(s)) in respect of which it is
providing this certificate, (ii) its partners/members are the sole beneficial
owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)),
(iii) neither the undersigned nor any of its partners/members is a bank within
the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its
partners/members is a ten percent shareholder of the Company within the meaning
of Section 881(c)(3)(B) of the Code, (v) none of its partners/members is a
“controlled foreign corporation” described in Section 881(c)(3)(C) of the Code,
and (vi) no payments in connection with any Loan Document are effectively
connected with a United States trade or business conducted by the undersigned or
its partners/members.

The undersigned has furnished the Agent and the Company with Internal Revenue
Service Form W-8IMY accompanied by an Internal Revenue Service Form W-8BEN from
each of its partners/members claiming the portfolio interest exemption; provided
that, for the avoidance of doubt, the foregoing shall not limit the obligation
of the Lender to provide, in the case of a partner/member not claiming the
portfolio interest exemption, a Form W-8ECI, Form W-9 or Form W-8IMY (including
appropriate underlying certificates from each interest holder of such
partner/member), in each case establishing such partner/member’s available
exemption from U.S. federal withholding tax. By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform the Company and the Agent and
(2) the undersigned shall have at all times furnished the Company and the Agent
in writing with a properly completed and currently effective certificate and
Form W-8IMY and accompanying Forms W-8BEN in either the calendar year in which
payment is to be made by the Company or the Agent to the undersigned, or in
either of the two calendar years preceding such payment.

[Signature Page Follows]

 

G-2-1

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

 

[Lender] By:  

 

  Name:     Title:   [Address]

Dated:                     , 20[    ]

 

G-2-2

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

EXHIBIT G-3

FORM OF

UNITED STATES TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

Reference is made to the Credit Agreement dated as of December 21, 2010 (the
“Credit Agreement”), among CNO Financial Group, Inc., a Delaware corporation
(the “Company”), each lender from time to time party hereto (collectively, the
“Lenders”; individually, each a “Lender”) and MORGAN STANLEY SENIOR FUNDING,
INC., as Agent. Capitalized terms used herein but not otherwise defined shall
have the meaning given to such term in the Credit Agreement.

Pursuant to the provisions of Section 3.01(e) and 10.07(d) of the Credit
Agreement, the undersigned hereby certifies that (i) it is the sole record and
beneficial owner of the participation in respect of which it is providing this
certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of
the Code, (iii) it is not a ten percent shareholder of the Company within the
meaning of Section 881(c)(3)(B) of the Code, (iv) it is not a “controlled
foreign corporation” described in Section 881(c)(3)(C) of the Code, and (v) no
payments in connection with any Loan Document are effectively connected with a
United States trade or business conducted by the undersigned.

The undersigned has furnished its participating Foreign Lender with a
certificate of its non-U.S. person status on Internal Revenue Service Form
W-8BEN. By executing this certificate, the undersigned agrees that (1) if the
information provided on this certificate changes, the undersigned shall promptly
so inform such Foreign Lender in writing and (2) the undersigned shall have at
all times furnished such Foreign Lender with a properly completed and currently
effective certificate and Form W-8BEN in either the calendar year in which
payment is to be made to the undersigned, or in either of the two calendar years
preceding such payment.

[Signature Page Follows]

 

G-3-1

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

 

[Participant]

By:

 

 

 

Name:

   

Title:

 

[Address]

Dated:                     , 20[    ]

 

G-3-2

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

EXHIBIT G-4

FORM OF

UNITED STATES TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)

Reference is made to the Credit Agreement dated as of December 21, 2010 (the
“Credit Agreement”), among CNO Financial Group, Inc., a Delaware corporation
(the “Company”), each lender from time to time party hereto (collectively, the
“Lenders”; individually, each a “Lender”) and MORGAN STANLEY SENIOR FUNDING,
INC., as Agent. Capitalized terms used herein but not otherwise defined shall
have the meaning given to such term in the Credit Agreement.

Pursuant to the provisions of Section 3.01(e) and 10.07(d) of the Credit
Agreement, the undersigned hereby certifies that (i) it is the sole record owner
of the participation in respect of which it is providing this certificate,
(ii) its partners/members are the sole beneficial owners of such participation,
(iii) neither the undersigned nor any of its partners/members is a bank within
the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its
partners/members is a ten percent shareholder of the Company within the meaning
of Section 881(c)(3)(B) of the Code, (v) none of its partners/members is a
“controlled foreign corporation” described in Section 881(c)(3)(C) of the Code,
and (vi) no payments in connection with any Loan Document are effectively
connected with a United States trade or business conducted by the undersigned or
its partners/members.

The undersigned has furnished its participating Foreign Lender with Internal
Revenue Service Form W-8IMY accompanied by an Internal Revenue Service Form
W-8BEN from each of its partners/members claiming the portfolio interest
exemption; provided that, for the avoidance of doubt, the foregoing shall not
limit the obligation of the undersigned to provide, in the case of a
partner/member not claiming the portfolio interest exemption, a Form W-8ECI,
Form W-9 or Form W-8IMY (including appropriate underlying certificates from each
interest holder of such partner/member), in each case establishing such
partner/member’s available exemption from U.S. federal withholding tax. By
executing this certificate, the undersigned agrees that (1) if the information
provided on this certificate changes, the undersigned shall promptly so inform
such Foreign Lender in writing and (2) the undersigned shall have at all times
furnished such Foreign Lender with a properly completed and currently effective
certificate and Form W-8IMY and accompanying Forms W-8BEN in either the calendar
year in which payment is to be made to the under-signed, or in either of the two
calendar years preceding such payment.

[Signature Page Follows]

 

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[Participant] By:  

 

  Name:   Title: [Address]

Dated:                     , 20[    ]

 

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EXHIBIT H-1

FORM OF OPINION OF DEWEY & LEBOEUF LLP

(New York, Delaware and Texas)

[See Attached]

 

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EXHIBIT H-2

FORM OF OPINION OF KARL KINDIG

[See Attached]

 

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EXHIBIT H-3

FORM OF OPINION OF BAKER & DANIELS LLP

(Indiana)

[See Attached]

 

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EXHIBIT I

FORM OF SOLVENCY CERTIFICATE

December 21, 2010

The undersigned,                                         , the Chief Financial
Officer of CNO Financial Group, Inc., a Delaware corporation (“CNO”), is
familiar with the properties, businesses, assets and liabilities of CNO and its
Subsidiaries and is duly authorized to execute this certificate (this “Solvency
Certificate”) on behalf of CNO.

This Solvency Certificate is delivered pursuant to Section 4.01(h)(ii) of the
Credit Agreement dated as of December 21, 2010 (the “Credit Agreement”; terms
defined therein unless otherwise defined herein being used herein as therein
defined) among CNO, each Lender from time to time party thereto and Morgan
Stanley Senior Funding, Inc., as Agent and the other parties thereto. As used
herein, “Company” means CNO and its Subsidiaries on a consolidated basis.

1. The undersigned certifies, on behalf of CNO and not in his individual
capacity, that he has made such investigation and inquiries as to the financial
condition of CNO and its Subsidiaries as the undersigned deems necessary and
prudent for the purposes of providing this Solvency Certificate.

2. The undersigned certifies, on behalf of CNO and not in his individual
capacity, that (a) the financial information, projections and assumptions which
underlie and form the basis for the representations made in this Solvency
Certificate were made in good faith and were based on assumptions reasonably
believed by CNO to be fair in light of the circumstances existing at the time
made and continue to be fair as of the date hereof; and (b) for purposes of
providing this Solvency Certificate, the amount of contingent liabilities has
been computed as the amount that, in the light of all the facts and
circumstances existing as of the date hereof, represents the amount that can
reasonably be expected to become an actual or matured liability.

BASED ON THE FOREGOING, the undersigned certifies, on behalf of CNO and not in
his individual capacity, that, on the date hereof, before and after giving
effect to the Transactions (and the Loans made or to be made and other
obligations incurred or to be incurred on the date hereof):

(i) the fair value of the property of the Company is greater than the total
amount of its debts and liabilities, subordinated, contingent or otherwise;

(ii) the present fair salable value of the assets of the Company is greater than
the amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities mature;

(iii) the Company is able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities mature in the ordinary
course of business; and

(iv) the Company does not have unreasonably small capital with which to conduct
the business in which it is engaged as such business is now conducted and is
proposed to be conducted following the date hereof.

 

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IN WITNESS WHEREOF, the undersigned has executed this Solvency Certificate as of
the first date written above, solely in his capacity as the Chief Financial
Officer of CNO and not in his individual capacity.

 

 

Name:   Title:   Chief Financial Officer

 

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EXHIBIT J

FORM OF PARI PASSU INTERCREDITOR AGREEMENT

[See Attached]

 

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