Exhibit 10.1

 

EXECUTION COPY

 

AMENDED AND RESTATED LETTER OF CREDIT

REIMBURSEMENT AND PLEDGE AGREEMENT

 

Dated as of May 27, 2004

 

among

 

MONTPELIER REINSURANCE LTD.,

 

MONTPELIER RE HOLDINGS LTD.

 

THE LENDERS PARTY HERETO

 

and

 

BANK OF AMERICA, N.A.,

as Administrative Agent for itself and the

other lending institutions party hereto

 

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Banc of America Securities LLC

and

Banc One Capital Markets, Inc.,

as Joint Lead Arrangers and Book Managers

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TABLE OF CONTENTS

 

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1.

  DEFINITIONS AND RULES OF INTERPRETATION    1     1.1   Definitions    1    
1.2   Rules of Interpretation    16     1.3   Exchange Rates    17     1.4  
Times of Day    17

2.

  COMMITMENTS, LOANS, LETTERS OF CREDIT    17     2.1   Commitments    17    
2.2   Procedures for Issuance and Amendment of Letters of Credit    21     2.3  
Reliance by Issuing Bank    26     2.4   Borrowings and Payments of Loans    26
    2.5   Payments    27     2.6   Repayment of Loans    28     2.7   Fees;
Interest    28

3.

  CERTAIN GENERAL PROVISIONS    30     3.1   Payments    30     3.2   Taxes, etc
   33     3.3   Additional Costs, etc    33     3.4   Compensation for Losses   
34     3.5   Capital Adequacy    35     3.6   Certificate    35     3.7   Change
of Location of Lending Office; Replacement of Lender    35

4.

  COLLATERAL SECURITY    36     4.1   Security of Mont Re    36     4.2  
Deposit Account    36     4.3   Security Interest    36     4.4   Additional
Obligations    37     4.5   Certain Rights and Duties of Administrative Agent
and Lenders    38     4.6   Power of Attorney, Etc    38     4.7   Release of
Collateral    38

 

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TABLE OF CONTENTS

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5.   REPRESENTATIONS AND WARRANTIES    39     5.1   Corporate Authority    39  
  5.2   Governmental Approvals    40     5.3   Financial Statements    40    
5.4   No Material Adverse Changes, etc    41     5.5   Franchises, Patents,
Copyrights, etc    41     5.6   Litigation    41     5.7   No Materially Adverse
Contracts, etc    41     5.8   Compliance with Other Instruments, Laws, etc   
41     5.9   Tax Status    41     5.10   No Event of Default    41     5.11  
Investment Company Acts    42     5.12   Absence of Financing Statements, etc   
42     5.13   Perfection of Security Interest    42     5.14   Use of Proceeds
   42     5.15   Subsidiaries, etc    42     5.16   Disclosure    43     5.17  
Foreign Assets Control Regulations, Etc    43 6.   AFFIRMATIVE COVENANTS    43  
  6.1   Punctual Payment    43     6.2   Maintenance of Office    43     6.3  
Records and Accounts    44     6.4   Financial Statements, Certificates and
Information    44     6.5   Notices    46     6.6   Legal Existence; Maintenance
of Properties    46     6.7   Taxes    46     6.8   Collateral Coverage    47  
  6.9   Inspection of Properties and Books, etc    47     6.10   Compliance with
Laws, Contracts, Licenses, and Permits    48     6.11   Use of Proceeds    48  
  6.12   Further Assurances    48

 

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TABLE OF CONTENTS

(continued)

 

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7.   CERTAIN NEGATIVE COVENANTS    48     7.1   Business Activities    48    
7.2   Fiscal Year    49     7.3   Transactions with Affiliates    49     7.4  
Disposition of Assets    49     7.5   Mergers, Consolidations and Sales    49  
  7.6   Liens    49 8.   FINANCIAL COVENANTS    50     8.1   Leverage Ratio   
50     8.2   A.M. Best Rating    50 9.   CONDITIONS TO AMENDMENT EFFECTIVE DATE
   50     9.1   Reimbursement and Pledge Agreement    50     9.2   Certified
Copies of Governing Documents    50     9.3   Corporate or Other Action    50  
  9.4   Incumbency Certificate    50     9.5   Validity of Liens    50     9.6  
Lien Searches    51     9.7   Control Agreement    51     9.8   Pledged
Collateral Certificate    51     9.9   Opinion of Counsel    51     9.10  
Payment of Fees and Expenses    51     9.11   No Material Adverse Change    51  
  9.12   Representations True; No Event of Default    51 10.   CONDITION TO ALL
CREDIT EXTENSIONS    52     10.1   Representations True; No Event of Default   
52     10.2   No Legal Impediment    52     10.3   Documents    52     10.4  
Pledged Collateral Certificate    52     10.5   Collateral Coverage Amount    52

 

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TABLE OF CONTENTS

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11.   EVENTS OF DEFAULT; ACCELERATION; ETC    52     11.1   Events of Default
and Acceleration    52 12.   THE ADMINISTRATIVE AGENT    56     12.1  
Authorization    56     12.2   Employees and Administrative Agents    56    
12.3   No Liability    57     12.4   No Representations    57     12.5  
Payments    58     12.6   Holders of Participations    58     12.7   Indemnity
   58     12.8   Administrative Agent as Lender    58     12.9   Resignation   
59     12.10   Administrative Agent May File Proofs of Claim    59     12.11  
Notification of Defaults and Events of Default    60     12.12   Duties in the
Case of Enforcement    60 13.   SUCCESSORS AND ASSIGNS    61     13.1   General
Conditions    61     13.2   Assignments    61     13.3   Register    62     13.4
  Participations    62     13.5   Payments to Participants    62     13.6  
Miscellaneous Assignment Provisions    62     13.7   Assignee or Participant
Affiliated with the Borrowers    63 14.   MONT RE GUARANTEE    63     14.1  
Unconditional Guarantee    63     14.2   Guarantee Absolute    63     14.3  
Waivers    64     14.4   Subrogation    65     14.5   Survival    65     14.6  
Severability    65

 

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TABLE OF CONTENTS

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15.   PROVISIONS OF GENERAL APPLICATIONS    66     15.1   Authorization to File
Financing Statements    66     15.2   Setoff    66     15.3   Expenses    66    
15.4   Indemnification    67     15.5   Payments by Borrowers with respect to
Indemnified Persons    67     15.6   Survival of Covenants, Etc    68     15.7  
Notices and Other Communications; Facsimile Copies.    69     15.8  
Miscellaneous    70     15.9   Successors and Assigns    70     15.10   Choice
of Law/Binding Effect    70     15.11   WAIVER OF JURY TRIAL    70     15.12  
Delivery of Additional Documents    71     15.13   Confidentiality    71    
15.14   Consents, Amendments, Waivers, Etc    71     15.15   Agent for Service
   73     15.16   Conversion    73     15.17   Counterparts    74     15.18  
Interest Rate Limitation    74     15.19   Integration    74     15.20  
Severability    74     15.21   Tax Forms    75

 

 

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Exhibits

Exhibit A   Form of Assignment and Assumption Exhibit B   Second Amended and
Restated Control Agreement Exhibit C   Form of Loan Notice Exhibit D   Form of
Compliance Certificate Exhibit E   Form of Pledged Collateral Certificate    

Schedules

Schedule 1   Commitments Schedule 2.1.1   Existing Letters of Credit to become
Tranche A Letters of Credit Schedule 2.1.2   Existing Letters of Credit to
become Tranche B Letters of Credit Schedule 4.1   Property Held in Securities
Account Schedule 5.6   Litigation Schedule 5.12   Financing Statements and
Registrations Schedule 5.15   Subsidiaries Schedule 15.7   Address for Notices

 

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AMENDED AND RESTATED LETTER OF CREDIT

REIMBURSEMENT AND PLEDGE AGREEMENT

 

This AMENDED AND RESTATED LETTER OF CREDIT REIMBURSEMENT AND PLEDGE AGREEMENT is
made as of May 27, 2004, by and among Montpelier Reinsurance Ltd. (“Mont Re”), a
limited liability company duly incorporated as an exempted company under the
laws of Bermuda, having its registered office at 8 Par-La-Ville Road, Hamilton,
HM 08, Bermuda, Montpelier Re Holdings Ltd., a Bermuda holding company (“Parent”
and, together with Mont Re, each a “Borrower” and collectively the “Borrowers”),
the lending institutions party hereto (the “Lenders”), Bank of America, N.A. a
national banking association as an issuing bank and as administrative agent for
itself and such other lending institutions (the “Administrative Agent”) and
Fleet National Bank as an issuing bank.

 

WHEREAS, Mont Re, Fleet National Bank (as predecessor administrative agent) and
certain financial institutions entered into that certain Letter of Credit
Reimbursement and Pledge Agreement dated as of June 20, 2003 (the “Existing
Agreement”);

 

WHEREAS, the parties have agreed to amend and restate the Existing Agreement on
the terms and conditions set forth herein it being the intention of the
Borrowers, the Lenders and the Administrative Agent that this Amended and
Restated Letter of Credit Reimbursement and Pledge Agreement and the Loan
Documents executed in connection herewith shall not effect the novation of the
obligations of Mont Re under the Existing Agreement but be merely a restatement
and, where applicable, an amendment of and substitution for the terms governing
such obligations hereafter; and

 

WHEREAS, the letters of credit outstanding immediately prior to the Amendment
Effective Date pursuant to the Existing Agreement (the “Existing Letters of
Credit”) shall be deemed to be issued and outstanding hereunder for all purposes
hereof and of the Loan Documents after giving effect to the Amendment Effective
Date.

 

NOW THEREFORE, in consideration of the mutual agreements set forth herein, the
parties hereto agree that the Existing Agreement is amended and restated in its
entirety as follows:

 

1. DEFINITIONS AND RULES OF INTERPRETATION.

 

1.1 Definitions.

 

The following terms shall have the meanings set forth in this §1 or elsewhere in
the provisions of this Reimbursement and Pledge Agreement referred to below:

 

Acceding Bank. See §2.1.3.

 

Administrative Agent. Bank of America, as successor administrative agent to
Fleet National Bank, acting as agent for the Lenders, and each other Person
appointed as the successor Administrative Agent in accordance with §12.9.

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Administrative Agent’s Office. The Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 15.7, or such other address as the
Administrative Agent may from time to time notify the Borrowers and the Lenders.

 

Administrative Agent’s Special Counsel. Mayer, Brown, Rowe & Maw LLP or such
other counsel as may be approved by the Administrative Agent.

 

Administrative Questionnaire. An Administrative Questionnaire in a form supplied
by the Administrative Agent.

 

Affiliate. Any Person that would be considered to be an affiliate of any other
Person under Rule 144(a) of the Rules and Regulations promulgated under the
Securities Act of 1933, as amended, if such Person were issuing securities or
any Person which, directly or indirectly, controls, is controlled by or is under
common control with such Person. “Control” of a Person means the power, directly
or indirectly, (a) to vote ten percent (10%) or more of the Capital Stock (on a
fully diluted basis) of such Person having ordinary voting power for the
election of directors, managing members or general partners (as applicable); or
(b) to direct or cause the direction of the management and policies of such
Person (whether by contract or otherwise).

 

Agent for Service. See §15.15.

 

Alternative Currency. Pounds Sterling and Canadian Dollars.

 

Alternative Currency Equivalent. At any time, with respect to any amount
denominated in Dollars, the equivalent amount thereof in the applicable
Alternative Currency as determined by the Administrative Agent or an Issuing
Bank, as the case may be, at such time on the basis of the Spot Rate (determined
in respect of the most recent Revaluation Date) for the purchase of such
Alternative Currency with Dollars.

 

A.M. Best Rating. The financial strength rating issued with respect to Mont Re
by A.M. Best Company.

 

Amendment Effective Date. The first date on which the conditions set forth in §9
have been satisfied.

 

Applicable Rate. In the case of Eurodollar Rate Loans, 0.275% and in the case of
Base Rate Loans, 0%.

 

Approved Fund. 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.

 

Arrangers. Banc of America Securities LLC and Banc One Capital Markets, Inc.

 

Assignment and Assumption. An assignment and assumption entered into by a Lender
and an Eligible Assignee (with the consent of any party whose consent is
required by §13.2), and accepted by the Administrative Agent, in substantially
the form of Exhibit A or any other form approved by the Administrative Agent.

 

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Balance Sheet Date. December 31, 2003.

 

Bank of America. Bank of America, N.A. and its successors.

 

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

 

Base Rate Loan. A Loan that bears interest at a rate based on the Base Rate.

 

Borrower and Borrowers. As defined in the preamble hereto.

 

Borrowing. A borrowing consisting of simultaneous Loans of the same type, and,
in the case of Eurocurrency Rate Loans, having the same Interest Period, made by
each of the Tranche B Lenders pursuant to §2.1.2.

 

Borrower Reinsurance Agreement. Any arrangement whereby Mont Re or any other
Insurance Subsidiary, as reinsurer, agrees to indemnify any other insurance or
reinsurance company against all or a portion of the insurance or reinsurance
risks underwritten by such insurance or reinsurance company under any insurance
or reinsurance policy.

 

Business Day. Any day other than a Saturday, Sunday or other day on which
commercial banks are authorized or permitted to close under the laws of, or are
in fact closed in, Bermuda or the state where the Administrative Agent’s Office
with respect to Obligations denominated in Dollars is located and if such day
relates to any interest rate settings as to a Eurocurrency Rate Loan, any
fundings, disbursements, settlements and payments in respect of any such
Eurocurrency Rate Loan, or any other dealings in Dollars to be carried out
pursuant to this Reimbursement and Pledge Agreement in respect of any such
Eurocurrency Rate Loan, means any such day on which dealings in deposits in
Dollars are conducted by and between banks in the London interbank eurodollar
market.

 

Canadian Dollars or C$. The lawful currency of Canada.

 

Capital Lease Obligation. As to any Person, the obligations of such Person to
pay rent or other amounts under any lease which is required to be classified and
accounted for as a capital lease on a balance sheet of such Person in accordance
with GAAP. For purposes of this Reimbursement and Pledge Agreement, the amount
of such Capital Lease Obligation shall be the capitalized amount thereof
determined in accordance with GAAP.

 

Capital Stock. Any and all shares, interests, share capital, participations or
other equivalents (however designated) of capital stock of a corporation or
company, any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase any of the
foregoing.

 

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Change in Control. Any of (a) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all, or substantially
all, of the assets of a Borrower occurs; (b) any “person” as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the
“Exchange Act”) other than the Parent or White Mountains Insurance Group Ltd.,
is or becomes, directly or indirectly, the “beneficial owner,” as defined in
Rule 13d-3 under the Exchange Act, of securities of Mont Re that represent 51%
or more of the combined voting power of Mont Re’s then outstanding securities;
(c) during any period of two consecutive years, individuals who at the beginning
of such period constituted the Board of Directors of a Borrower (together with
any new or replacement directors whose election by the Board of Directors or
whose nomination by the stockholders of such Borrower was approved by a vote of
a majority of the Directors of such Borrower then still in office who are either
directors or replacement directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of such Borrower’s Board of Directors then in
office; (d) the Parent ceases to (x) be the single largest shareholder of Mont
Re or (y) be directly or indirectly, the “beneficial owner,” as defined in Rule
13d-3 under the Exchange Act, of securities of Mont Re that represent 10% or
more of the combined voting power of Mont Re’s then outstanding securities; or
(e) White Mountains Insurance Group Ltd. ceases to (x) be the single largest
shareholder of the Parent or (y) be directly or indirectly, the “beneficial
owner,” as defined in Rule 13d-3 under the Exchange Act, of securities of the
Parent that represent 10% or more of the combined voting power of the Parent’s
then outstanding securities.

 

Code. The Internal Revenue Code of 1986, as amended from time to time, and
regulations promulgated thereunder.

 

Collateral Coverage Amount. See §6.8.

 

Combined or combined. With reference to the accounts of the Parent and its
Subsidiaries, combined in accordance with GAAP.

 

Commitment. With respect to each Lender, such Lender’s Tranche A Commitment
and/or Tranche B Commitment, as the case may be.

 

Commitment Fee. See §2.7.1.

 

Commitment Increase Notice. See §2.1.3.

 

Commitment Percentage. With respect to each Lender, such Lender’s Tranche A
Commitment Percentage and/or Tranche B Commitment Percentage, as the case may
be.

 

Commitment Termination Date. The Tranche A Commitment Termination Date and/or
the Tranche B Commitment Termination Date, as the case may be.

 

Commitment Termination Event. The earliest to occur of (a) the date of
termination of the Total Commitment pursuant to §2.1.4 and (b) the date of
termination of the Commitment of each Lender to make Loans and of the obligation
of the Issuing Banks to issue Letters of Credit pursuant to §11.1.

 

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Compliance Certificate. See §6.4(d).

 

Consolidated Debt. The consolidated Debt (excluding Hedging Obligations) of the
Parent and its Subsidiaries.

 

Consolidated Net Worth. The Net Worth of the Parent and its Subsidiaries on a
consolidated basis.

 

Contingent Liability. Any agreement, undertaking or arrangement by which any
Person (outside the ordinary course of business) guarantees, endorses, acts as
surety for or otherwise becomes or is contingently liable for (by direct or
indirect agreement, contingent or otherwise, to provide funds for payment by, 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 for the payment of dividends or other distribution upon the shares of any
other Person or undertakes or agrees (contingently or otherwise) to purchase,
repurchase, or otherwise acquire or become responsible for any Debt, obligation
or liability or any security therefor, or to provide funds for the payment or
discharge thereof (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise) or to maintain solvency, assets, level of
income, or other financial condition of any other Person, or to make payment or
transfer property to any other Person other than for fair value received;
provided, however, that obligations of each of Mont Re and the Insurance
Subsidiaries under Primary Policies or Borrower Reinsurance Agreements which are
entered into in the ordinary course of business (including security posted by
Mont Re and each of the Insurance Subsidiaries in the ordinary course of its
business to secure obligations thereunder) shall not be deemed to be Contingent
Liabilities of such Insurance Subsidiary or Mont Re for the purposes of this
Reimbursement and Pledge Agreement. The amount of any Person’s obligation under
any Contingent Liability shall (subject to any limitation set forth therein) be
deemed to be the lesser of (i) the outstanding principal amount (or maximum
permitted principal amount, if larger) of the Debt, obligation or other
liability guaranteed or supported thereby or (ii) the maximum stated amount so
guaranteed or supported.

 

Control Agreement. That certain Second Amended and Restated Control Agreement,
dated as of May 27, 2004 among the Administrative Agent, Mont Re and the
Custodian and attached hereto as Exhibit B.

 

Consolidated or consolidated. With reference to the accounts of the Parent and
its Subsidiaries, consolidated in accordance with GAAP.

 

Credit Extension. Each of the following (a) a Borrowing and (b) the issuance,
extension, amendment or renewal of a Letter of Credit.

 

Cure Contribution. Capital contributions or other equity infusions to the Parent
made on or before the 30th day after the date the Borrowers have failed to
comply with the covenant set forth in §8.1, which cures such default.

 

Custodial Lien and Set-off Rights. See §5.13.

 

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Custodian. The Bank of New York or any successor custodian approved by the
Administrative Agent.

 

Debt. With respect to any Person, at any date, without duplication, (a) all
obligations of such Person for borrowed money or in respect of loans or
advances; (b) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments; (c) all obligations in respect of letters of
credit which have been drawn but not reimbursed by the Person for whose account
such letter of credit was issued within the later of (x) three (3) Business Days
and (y) the applicable cure period and bankers’ acceptances issued for the
account of such Person; (d) all Capital Lease Obligations of such Person; (e)
all Hedging Obligations of such Person; (f) to the extent required to be
included as liabilities in accordance with GAAP, all obligations of such Person
to pay the deferred purchase price of property or services; (g) Debt of such
Person secured by a Lien on property owned or being purchased by such Person
(including Debt arising under conditional sales or other title retention
agreements) whether or not such Debt is limited in recourse; (h) any Debt of
another Person secured by a Lien on any assets of such first Person, whether or
not such Debt is assumed by such first Person (it being understood that if such
Person has not assumed or otherwise become personally liable for any such Debt,
the amount of the Debt of such Person in connection therewith shall be limited
to the lesser of the face amount of such Debt and the fair market value of all
property of such Person securing such Debt); (i) any Debt of a partnership in
which such Person is a general partner unless such debt is nonrecourse to such
Person; and (j) all Contingent Liabilities of such Person in connection with the
foregoing; provided that, notwithstanding anything to contrary contained herein,
Debt shall not include (x) unsecured current liabilities incurred in the
ordinary course of business and paid within ninety (90) days after the due date
(unless contested diligently in good faith by appropriate proceedings and, if
requested by the Administrative Agent, reserved against in conformity with GAAP)
other than liabilities that are for money borrowed or are evidenced by bonds,
debentures, notes or other similar instruments or (y) any obligations of such
Person under any Borrower Reinsurance Agreement or any Primary Policy.

 

Default. Any event which would, with the giving of notice or the lapse of time,
constitute an Event of Default.

 

Default Rate. (a) When used with respect to Obligations other than Letter of
Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per annum;
provided, however, that with respect to a Eurocurrency Rate Loan, the Default
Rate shall be an interest rate equal to the interest rate (including any
Applicable Rate) otherwise applicable to such Loan plus 2% per annum and (b)
when used with respect to Letter of Credit Fees, a rate equal to the applicable
Letter of Credit Fee plus 2% per annum, in all cases to the fullest extent
permitted by applicable laws.

 

Delinquent Lender. See §12.5.3.

 

Deposit Account. Mont Re’s demand deposit account no. 251473 and any replacement
or successor account maintained with the Custodian and subject to the terms of
the Control Agreement.

 

Dollars or $. Dollars in lawful currency of the United States of America.

 

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Dollar Equivalent. At any time, (a) with respect to any amount denominated in
Dollars, such amount, and (b) with respect to any amount denominated in any
Alternative Currency, the equivalent amount thereof in Dollars as determined by
the Administrative Agent or an Issuing Bank, as the case may be, at such time on
the basis of the Spot Rate (determined in respect of the most recent Revaluation
Date) for the purchase of Dollars with such Alternative Currency.

 

Effective Commitment Amount. See §2.1.3.

 

Eligible Assignee. Any of (a) a Lender, (b) an Affiliate of a Lender or (c) a
financial institution having a senior unsecured debt rating of not less than
“A”, or its equivalent, by S&P and (d) any other Person (other than a natural
person) approved by (i) the Administrative Agent and the Issuing Banks and (ii)
unless a Default or an Event of Default has occurred and is continuing, Mont Re
(with each such approval not to be unreasonably withheld or delayed).

 

Eurocurrency Rate. Any Interest Period with respect to a Eurocurrency Rate Loan:

 

(a) the applicable Screen Rate for such Interest Period; or

 

(b) if the applicable Screen Rate shall not be available, the rate per annum
determined by the Administrative Agent as the rate of interest at which deposits
in the relevant currency for delivery on the first day of such Interest Period
in Same Day Funds in the approximate amount of the Eurocurrency Rate Loan being
made, continued or converted by Bank of America and with a term equivalent to
such Interest Period would be offered by Bank of America’s London Branch (or
other Bank of America branch or Affiliate) to major banks in the London or other
offshore interbank market for such currency at their request at approximately
4:00 p.m. (London time) two Business Days prior to the first day of such
Interest Period.

 

Eurocurrency Rate Loan. For any Loan that bears interest at a rate based on the
Eurocurrency Rate.

 

Event of Default. See §11.1.

 

Existing Agreement. As defined in the recitals hereto.

 

Existing Letters of Credit. As defined in the recitals hereto.

 

Extension. See §2.1.5.

 

Federal Agency. Any of the following agencies of the federal government of the
United States: (a) Government National Mortgage Association; (b) the
Export-Import Bank of the United States; (c) the Farmers Home Administration, an
agency of the United States Department of Agriculture; (d) the United States
General Services Administration; (e) the United States Maritime Administration;
(f) the United States Small Business Administration; (g) the Commodity Credit
Corporation; (h) the Rural Electrification Administration; (i) the Rural
Telephone Bank; (j) Washington Metropolitan Area Transit Authority; (k) the
Federal Home Loan Mortgage Corporation; (l) the Federal National Mortgage
Association; (m) the Federal Housing Finance Board; (n) the Federal Home Loan
Bank; and (o) such other federal agencies as are reasonably acceptable to the
Administrative Agent.

 

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Federal Agency Collateral. See §6.8.

 

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

 

Fee Letters. The fee letters dated as of April 29, 2004 among (a) the Borrowers,
the Administrative Agent and Banc of America Securities LLC and (b) the
Borrowers, Bank One, NA and Banc One Capital Markets, Inc.

 

Fees. The Letter of Credit Fee and the Commitment Fee.

 

Financial Affiliate. A Subsidiary of the bank holding company controlling any
Lender, which Subsidiary is engaging in any of the activities permitted by §4(e)
of the Bank Holding Company Act of 1956 (12 U.S.C. §1843).

 

Fleet. Fleet National Bank, its successors and assigns.

 

Freely Transferable. Securities which are freely transferable and traded in
established and recognized markets and as to which there are readily available
price quotations.

 

Fund. 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 or generally accepted accounting principles. (a) When used in §6, whether
directly or indirectly through reference to a capitalized term used therein,
means (i) principles that are consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, in
effect for the fiscal year ended on the Balance Sheet Date, and (ii) to the
extent consistent with such principles, the accounting practice of the Parent
reflected in its financial statements for the year ended on the Balance Sheet
Date, and (b) when used in general, other than as provided above, means
principles that are (i) consistent with the principles promulgated or adopted by
the Financial Accounting Standards Board and its predecessors, as in effect from
time to time, and (ii) consistently applied with past financial statements of
the Parent adopting the same principles, provided that in each case referred to
in this definition of “GAAP” a certified public accountant would, insofar as the
use of such accounting principles is pertinent, be in a position to deliver an
unqualified opinion (other than a qualification regarding changes in GAAP) as to
financial statements in which such principles have been properly applied.

 

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Governing Documents. With respect to any Person, its certificate or articles of
incorporation, memorandum of association, certificate of formation, or, as the
case may be, certificate of limited partnership, its by-laws, operating
agreement or, as the case may be, partnership agreement or other constitutive
documents and all shareholder agreements, voting trusts and similar arrangements
applicable to any of its Capital Stock.

 

Governmental Authority. Any foreign, federal, state, regional, local, municipal
or other government, or any department, commission, board, bureau, agency,
public authority or instrumentality thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government or any court or arbitrator.

 

Guaranteed Obligations. See §14.1.

 

Hedging Obligations. With respect to any Person, the liability of such Person
under any futures contract or options contract, interest rate swap agreements
and interest rate collar agreements and all other agreements or arrangements
(other than Retrocession Agreements), designed to protect such Person against
fluctuations in interest rates or currency exchange rates. Debt under a Hedging
Obligation shall be the amount of such Person’s net obligation, if any, under
each hedging agreement (determined on the mark-to-market value for such
agreement based upon a readily available quotation provided by a recognized
dealer in such type of hedging agreement).

 

Indemnified Persons. See §15.5(a)

 

Indemnitee. See §15.4

 

Individual Outstandings. As to any Lender, the sum of such Lender’s (a) Letter
of Credit Participations in Tranche A Letters of Credit, plus (b) Letter of
Credit Participations in Tranche B Letters of Credit, plus (c) Loans outstanding
as of such date.

 

Ineligible Securities. Securities which may not be underwritten or dealt in by
member banks of the Federal Reserve System under Section 16 of the Banking Act
of 1933 (12 U.S.C. §24, Seventh), as amended.

 

Insurance Subsidiary. Mont Re and any other Subsidiary of the Parent created
after the Amendment Effective Date which is licensed by any Governmental
Authority to engage in the insurance business.

 

Interest Payment Date. (a) As to any Eurocurrency Rate Loan, the last day of
each Interest Period applicable to such Loan and the Tranche B Commitment
Termination Date; and (b) as to any Base Rate Loan, the last Business Day of
each March, June, September and December and the Tranche B Commitment
Termination Date.

 

Interest Period. As to each Eurocurrency Rate Loan, the period commencing on the
date such Eurocurrency Rate Loan is disbursed or converted to or continued as a
Eurocurrency Rate Loan and ending on the date one, two or three months
thereafter, as selected by the Parent in its Loan Notice, provided that:

 

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

 

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

 

(iii) no Interest Period shall extend beyond the Tranche B Commitment
Termination Date.

 

Issuing Bank. Each of Bank of America and, prior to its merger with Bank of
America, Fleet.

 

Issuing Bank’s Office. With respect to an Issuing Bank, the address and, as
appropriate, account set forth for such Issuing Bank on Schedule 15.7, or such
other address as such Issuing Bank may from time to time notify the Borrowers
and the Lenders.

 

Lender Affiliate. With respect to any Lender, (a) an Affiliate of such Lender or
(b) any Approved Fund.

 

Lender Increase Notice. See §2.1.3.

 

Lenders. The lending institutions executing this Reimbursement and Pledge
Agreement as a Lender and any other Person who becomes an assignee of any rights
and obligations of a Lender pursuant to §13.

 

Letters of Credit. The Tranche A Letters of Credit and the Tranche B Letters of
Credit.

 

Letter of Credit Application. An application and agreement for the issuance and
amendment of a Letter of Credit in the form from time to time in use by the
Issuing Bank.

 

Letter of Credit Fee. See §2.7.2.

 

Letter of Credit Participation. See §2.2.3.

 

Leverage Ratio. The ratio, expressed as a percentage, of (a) Consolidated Debt
to (b) Consolidated Net Worth plus Consolidated Debt.

 

Lien. When used with respect to any Person, any interest in any real or personal
property, asset or other right held, owned or being purchased or acquired by
such Person for its own use, consumption or enjoyment which secures payment or
performance of any obligation and shall include any mortgage, lien, pledge,
encumbrance, charge, retained title of a conditional vendor or lessor, or other
security agreement, mortgage, deed of trust, chattel mortgage, assignment,
pledge, retention of title, financing or similar statement or notice, or other
encumbrance arising as a matter of law, judicial process or otherwise.

 

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Lloyd’s. Lloyd’s of London or members of its syndicate.

 

Loan. A revolving loan by a Tranche B Lender to the Parent pursuant to §2.1.2. A
Loan may be a Base Rate Loan or a Eurocurrency Rate Loan. All Loans shall be
denominated in Dollars.

 

Loan Notice. A notice of (a) a Borrowing, (b) a conversion of Loans from one
type to the other, or (c) a continuation of Eurocurrency Rate Loans, pursuant to
§2.4, which, if in writing, shall be substantially in the form of Exhibit C.

 

Loan Sublimit. $50,000,000.

 

Loan Documents. This Reimbursement and Pledge Agreement, the Letter of Credit
Applications, the Letters of Credit, the Fee Letters and the Control Agreement.

 

Material Adverse Effect. With respect to any event or occurrence of whatever
nature (including any adverse determination in any litigation, arbitration or
governmental investigation or proceeding) which results in:

 

(a) a material adverse effect on the business, properties, condition (financial
or otherwise), assets, operations or income of (i) Mont Re individually, (ii)
Mont Re and its Subsidiaries, taken as a whole or (iii) the Parent and its
Subsidiaries, taken as a whole;

 

(b) a material adverse effect on the ability of either Borrower to perform any
of its Obligations under any of the Loan Documents to which it is a party; or

 

(c) any impairment of the validity, binding effect or enforceability of this
Reimbursement and Pledge Agreement or any of the other Loan Documents (other
than a Letter of Credit), any impairment of the rights, remedies or benefits
available to the Administrative Agent or any Lender under any Loan Document or
any impairment of the attachment, perfection or priority of any lien of the
Administrative Agent under this Reimbursement and Pledge Agreement other than
(i) liens arising by operation of law, so long as the aggregate obligations
secured thereby do not exceed $1,000,000 and (ii) the Custodial Lien and Set-Off
Rights.

 

In determining whether any individual event has a Material Adverse Effect,
notwithstanding that such event does not of itself have such effect, a Material
Adverse Effect shall be deemed to have occurred if the cumulative effect of such
event and all other then existing events results in a Material Adverse Effect.

 

Material Party. Each of (a) the Parent, (b) Mont Re, (c) any Insurance
Subsidiary of a Borrower, and (d) any Subsidiary of either Borrower which is not
an Insurance Subsidiary whose (i) total assets are 15% or more of the total
assets of Mont Re and its consolidated Subsidiaries (including such Subsidiary)
in each case as set forth on the most recent fiscal year end balance sheet of
such Subsidiary and Mont Re and its consolidated Subsidiaries, respectively, and
computed in accordance with GAAP, and (ii) total revenues are 15% or more of the
total revenues of Mont Re and its consolidated Subsidiaries (including such
Subsidiary), in each case as set forth on the most recent fiscal year-end income
statements of such Subsidiary and Mont Re and its consolidated Subsidiaries,
respectively, and computed in accordance with GAAP.

 

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Net Worth. With respect to any Person, the consolidated net worth of such Person
calculated in accordance with GAAP.

 

Notice of Exclusive Control. A written notice, in the form attached to the
Control Agreement as Exhibit B, given by the Administrative Agent to the
Custodian upon an Event of Default that the Administrative Agent is exercising
sole and exclusive control of the Securities Account and the Pledged Collateral
credited thereto.

 

Obligations. All indebtedness, obligations and liabilities of the Borrowers to
any of the Lenders, the Issuing Banks and the Administrative Agent, individually
or collectively, existing on the date of this Reimbursement and Pledge Agreement
or arising thereafter, direct or indirect, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured, arising or incurred
under this Reimbursement and Pledge Agreement or any of the other Loan Documents
or in respect of any Reimbursement Obligations incurred under any Letter of
Credit or other instrument at any time evidencing any thereof and arising by
contract, operation of law or otherwise.

 

Participant. See §13.4.

 

Parent. As defined in the preamble hereto.

 

Person. Any individual, corporation, limited liability company partnership,
limited liability partnership, firm, trust, joint venture, joint stock company,
other unincorporated association, or other legal entity, and any Governmental
Authority, each whether acting in an individual, fiduciary or other capacity.

 

Pledged Collateral. See §4.1.

 

Pledged Collateral Certificate. See §6.4(e).

 

Pounds Sterling or £. The lawful currency of the United Kingdom of Great Britain
and Northern Ireland.

 

Primary Policies. Any insurance policies issued by Mont Re or any other
Insurance Subsidiary.

 

Qualified Securities. See §6.8.

 

Register. See §13.3.

 

Release Amount. See §4.7.

 

Reimbursement and Pledge Agreement. This Amended and Restated Letter of Credit
Reimbursement and Pledge Agreement.

 

Reimbursement Obligation. Mont Re’s obligation to reimburse the applicable
Issuing Bank and the Lenders on account of any drawing under any Letter of
Credit as provided in §2.2.

 

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Related Parties. With respect to any specified Person, such Person’s Affiliates
and the respective directors, officers, employees, agents and advisors of such
Person and such Person’s Affiliates.

 

Required Lenders. As of any date, the Lenders whose aggregate Commitments
constitutes at least fifty-one percent (51%) of the Total Commitment or, if the
Commitments have been terminated, the Lenders whose Individual Outstandings
constitute at least fifty-one percent (51%) of the Total Outstandings, provided
that the Commitment of, and the Individual Outstandings held or deemed held by,
any Delinquent Lender shall be excluded for purposes of making a determination
of Required Lenders.

 

Replacement Lender. See §2.1.5.

 

Responsible Officer. The president, chief executive officer, chief financial
officer, chief operating officer, treasurer, controller or any vice-president of
a Borrower.

 

Retrocession Agreements. Any agreement, treaty, certificate or other arrangement
whereby Mont Re or any other Insurance Subsidiary cedes to another insurer all
or part of Mont Re’s or such Insurance Subsidiary’s liability under a policy or
policies of insurance reinsured by Mont Re or such Insurance Subsidiary.

 

Revaluation Date. With respect to any Letter of Credit, each of the following:
(i) each date of issuance or extension or renewal of a Letter of Credit
denominated in an Alternative Currency, (ii) each date of an amendment of any
such Letter of Credit having the effect of increasing the amount thereof (solely
with respect to the increased amount), (iii) each date of any payment by an
Issuing Bank under any Letter of Credit denominated in an Alternative Currency,
(iv) in the case of the Existing Letters of Credit, the Amendment Effective
Date, (v) the last Business Day of each month and (vi) such additional dates as
the Administrative Agent or an Issuing Bank shall determine or the Required
Lenders shall require.

 

S&P. Standard & Poor’s Ratings Group.

 

Same Day Funds. (a) With respect to disbursements and payments in Dollars,
immediately available funds, and (b) with respect to disbursements and payments
in an Alternative Currency, same day or other funds as may be determined by the
Administrative Agent or an Issuing Bank, as the case may be, to be customary in
the place of disbursement or payment for the settlement of international banking
transactions in the relevant Alternative Currency.

 

Screen Rate. For any Interest Period:

 

(a) the rate per annum equal to the rate determined by the Administrative Agent
to be the offered rate that appears on the page of the Telerate screen (or any
successor thereto) that displays an average British Bankers Association Interest
Settlement Rate for deposits in the relevant currency (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

 

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(b) if the rate referenced in the preceding clause (a) does not appear on such
page or service or such page or service shall cease to be available, the rate
per annum equal to the rate determined by the Administrative 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 the
relevant currency (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.

 

Securities Account. Mont Re’s custodial account fund no. 251471 maintained with
the Custodian and any replacement or successor account maintained with the
Custodian and subject to the terms of the Control Agreement.

 

Spot Rate. For a currency, the rate determined by the Administrative Agent or an
Issuing Bank, as applicable, to be the rate quoted by the Person acting in such
capacity as the spot rate for the purchase by such Person of such currency with
another currency through its principal foreign exchange trading office at
approximately 11:00 a.m. on the date two Business Days prior to the date as of
which the foreign exchange computation is made; provided that the Administrative
Agent or an Issuing Bank may obtain such spot rate from another financial
institution designated by the Administrative Agent or an Issuing Bank if the
Person acting in such capacity does not have as of the date of determination a
spot buying rate for any such currency; and provided further that an Issuing
Bank may use such spot rate quoted on the date as of which the foreign exchange
computation is made in the case of any Letter of Credit denominated in an
Alternative Currency.

 

Subsidiary. Any corporation, association, trust, or other business entity of
which the designated parent shall at any time own directly or indirectly through
a Subsidiary or Subsidiaries at least a majority (by number of votes) of the
outstanding Voting Stock.

 

Total Commitment. The sum of the Commitments of the Lenders, as in effect from
time to time.

 

Total Outstandings. The sum of the Tranche A Outstanding Amount plus the Tranche
B Outstanding Amount.

 

Total Tranche A Commitment. The sum of the Tranche A Commitments of the Tranche
A Lenders, as in effect from time to time.

 

Total Tranche B Commitment. The sum of the Tranche B Commitments of the Tranche
B Lenders, as in effect from time to time.

 

Tranche A Commitment. With respect to each Tranche A Lender, the amount set
forth on Schedule 1 hereto or in the Assignment and Assumption pursuant to which
such Lender becomes a party hereto, as applicable as the amount of such Tranche
A Lender’s commitment to participate in the issuance, extension and renewal of
Tranche A Letters of Credit for the account of Mont Re, as the same may be
reduced from time to time; or if such commitment is terminated pursuant to the
provisions hereof, zero.

 

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Tranche A Commitment Percentage. With respect to each Tranche A Lender, the
percentage of the Total Tranche A Commitment represented by such Tranche A
Lender’s Tranche A Commitment.

 

Tranche A Commitment Termination Date. The earliest of (a) May 26, 2005, as such
date may be extended pursuant to §2.1.5 and (b) the occurrence of a Commitment
Termination Event.

 

Tranche A Lenders. The Lenders having a Tranche A Commitment, as set forth on
Schedule 1 hereto, along with their successors and assigns.

 

Tranche A Letters of Credit. See §2.1.1.

 

Tranche A Maximum Drawing Amount. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Tranche A Letters of
Credit, as such aggregate amount may be reduced from time to time pursuant to
the terms of the Tranche A Letters of Credit.

 

Tranche A Outstanding Amount. The sum of the Dollar Equivalent of the Tranche A
Maximum Drawing Amount plus the Dollar Equivalent of the total Unpaid
Reimbursement Obligation with respect to Tranche A Letters of Credit on such
date after giving effect to any Credit Extensions pursuant to §2.1.1 and
repayment of Reimbursement Obligations with respect to Tranche A Letters of
Credit on such date.

 

Tranche B Commitment. With respect to each Tranche B Lender, the amount set
forth on Schedule 1 hereto, or in the Assignment and Assumption pursuant to
which such Lender becomes a party hereto, as applicable, as the amount of such
Tranche B Lender’s commitment to make Loans to the Parent and to participate in
the issuance, extension and renewal of Tranche B Letters of Credit for the
account of Mont Re, as the same may be reduced from time to time; or if such
commitment is terminated pursuant to the provisions hereof, zero.

 

Tranche B Commitment Percentage. With respect to each Tranche B Lender, the
percentage of the Total Tranche B Commitment represented by such Tranche B
Lender’s Tranche B Commitment.

 

Tranche B Commitment Termination Date. The earliest of (a) May 27, 2007, as such
date may be extended pursuant to §2.1.5 and (b) the occurrence of a Commitment
Termination Event.

 

Tranche B Lenders. The Lenders having a Tranche B Commitment, as set forth on
Schedule 1 hereto, along with their successors and assigns.

 

Tranche B Letters of Credit. See §2.1.2.

 

Tranche B Maximum Drawing Amount. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Tranche B Letters of
Credit, as such aggregate amount may be reduced from time to time pursuant to
the terms of the Tranche B Letters of Credit.

 

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Tranche B Outstanding Amount. The sum of (a) with respect to Loans on any date,
the aggregate outstanding principal amount thereof after giving effect to any
Borrowings and prepayments or repayments of such Loans occurring on such date;
plus (b) the sum of the Dollar Equivalent of the Tranche B Maximum Drawing
Amount plus the Dollar Equivalent of the total Unpaid Reimbursement Obligations
with respect to Tranche B Letters of Credit on such date after giving effect to
any Credit Extension pursuant to §2.1.2 and repayment of Reimbursement
Obligations with respect to Tranche B Letters of Credit on such date.

 

Treasury Collateral. See §6.8.

 

Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which Mont Re
does not reimburse the relevant Issuing Bank and the Lenders on the date
specified in, and in accordance with, §2.2; provided however that solely for
purposes of calculating the Tranche A Outstanding Amount, the Tranche B
Outstanding Amount and the Total Outstandings and any component thereof,
Reimbursement Obligations which have been paid by application of proceeds of
Pledged Collateral by the Administrative Agent shall not constitute Unpaid
Reimbursement Obligations.

 

Voting Stock. Stock or similar interests, of any class or classes (however
designated), the holders of which are at the time entitled, as such holders, to
vote for the election of a majority of the directors (or persons performing
similar functions) of the corporation, association, trust or other business
entity involved, whether or not the right so to vote exists by reason of the
happening of a contingency.

 

1.2 Rules of Interpretation.

 

(a) A reference to any document or agreement shall include such document or
agreement as amended, modified or supplemented from time to time in accordance
with its terms or the terms of this Reimbursement and Pledge Agreement.

 

(b) The singular includes the plural and the plural includes the singular.

 

(c) A reference to any law includes any amendment or modification to such law.

 

(d) A reference to any Person includes its permitted successors and permitted
assigns.

 

(e) Accounting terms not otherwise defined herein have the meanings assigned to
them by GAAP applied on a consistent basis by the accounting entity to which
they refer.

 

(f) The words “include”, “includes” and “including” are not limiting.

 

(g) All terms not specifically defined herein or by GAAP, which terms are
defined in the Uniform Commercial Code as in effect in the State of New York,
have the meanings assigned to them therein, with the term “instrument” being
that defined under Article 9 of the Uniform Commercial Code.

 

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(h) Reference to a particular “§” refers to that section of this Reimbursement
and Pledge Agreement unless otherwise indicated.

 

(i) The words “herein”, “hereof”, “hereunder” and words of like import shall
refer to this Reimbursement and Pledge Agreement as a whole and not to any
particular section or subdivision of this Reimbursement and Pledge Agreement.

 

(j) Unless otherwise expressly indicated, 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.”

 

(k) This Reimbursement and Pledge Agreement may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are, however, cumulative and are to be
performed in accordance with the terms thereof.

 

(l) This Reimbursement and Pledge Agreement is the result of negotiation among,
and has been reviewed by counsel to, among others, the Administrative Agent and
the Borrowers and is the product of discussions and negotiations among all
parties. Accordingly, this Reimbursement and Pledge Agreement is not intended to
be construed against the Administrative Agent, the Borrowers, any Issuing Bank
or any of the Lenders merely on account of the Administrative Agent’s, the
Borrowers’, any Issuing Bank’s or any Lender’s involvement in the preparation of
such documents.

 

1.3 Exchange Rates. The Administrative Agent or an Issuing Bank, as applicable,
shall determine the Spot Rates as of each Revaluation Date to be used for
calculating Dollar Equivalent amounts of Credit Extensions and Total
Outstandings denominated in Alternative Currencies. Such Spot Rates shall become
effective as of such Revaluation Date and shall be the Spot Rates employed in
converting any amounts between the applicable currencies until the next
Revaluation Date to occur. Except for purposes of financial statements delivered
by the Borrowers hereunder or calculating financial covenants hereunder or
except as otherwise provided herein, the applicable amount of any currency
(other than Dollars) for purposes of the Loan Documents shall be such Dollar
Equivalent amount as so determined by the Administrative Agent or Issuing Bank,
as applicable.

 

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

 

2. COMMITMENTS, LOANS, LETTERS OF CREDIT.

 

2.1 Commitments.

 

2.1.1 Tranche A Commitment. On and subject to the terms and conditions of this
Reimbursement and Pledge Agreement, each Issuing Bank agrees to issue, extend
and renew for the account of Mont Re one or more standby letters of credit (a
“Tranche A Letter of Credit”), from time to time before the Tranche A Commitment
Termination Date and, as more fully set forth in §2.2, each Tranche A Lender
agrees to purchase a participation in such Tranche A

 

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Letters of Credit, provided, however, that after giving effect to any request
for such issuance, extension or renewal, (a) the Total Outstandings shall not
exceed the Total Commitment at any one time, (b) the sum of the Tranche A
Outstanding Amount shall not exceed the Total Tranche A Commitment at any one
time, and (c) the Total Outstandings shall not exceed the Collateral Coverage
Amount. The Borrowers, the Issuing Banks and the Lenders agree that the Existing
Letters of Credit listed on Schedule 2.1.1 shall be Tranche A Letters of Credit
hereunder.

 

2.1.2 Tranche B Commitments. On and subject to the terms and conditions of this
Reimbursement and Pledge Agreement, (a) each of the Tranche B Lenders, severally
and for, itself alone, agrees to make Loans in Dollars to the Parent on a
revolving basis from time to time before the Tranche B Commitment Termination
Date in such Tranche B Lender’s Tranche B Commitment Percentage of such
aggregate amounts, as the Parent may from time to time request, provided,
however, that after giving effect to the requested Loan the aggregate principal
amount of all Loans shall not exceed the Loan Sublimit, (b) each Issuing Bank
agrees to issue, extend and renew for the account of Mont Re one or more standby
letters of credit (a “Tranche B Letter of Credit”) from time to time before the
Tranche B Commitment Termination Date and (c) as more fully set forth in §2.2
each Tranche B Lender agrees to purchase a participation in each such Tranche B
Letter of Credit, provided however, that after giving effect to any Credit
Extension pursuant to this §2.1.2, (i) the sum of the Total Outstandings shall
not exceed the Total Commitment, (ii) the sum of the Tranche B Outstanding
Amount shall not exceed the Total Tranche B Commitment and (iii) the Total
Outstandings shall not exceed the Collateral Coverage Amount. The Borrowers, the
Issuing Banks and the Lenders agree that the Existing Letters of Credit listed
on Schedule 2.1.2 shall be Tranche B Letters of Credit hereunder.

 

2.1.3 Increase to Total Commitment. At any time, Mont Re may request that the
Total Commitment and its components be increased, provided that, without the
prior written consent of the Required Lenders, (i) the Total Commitment shall at
no time exceed $500,000,000 and the Loan Sublimit shall at no time exceed
$50,000,000 and (ii) each such request shall be in a minimum amount of at least
$1,000,000. Any increase in the Total Commitment may be allocated to the Total
Tranche A Commitment, the Total Tranche B Commitment or both in such amounts as
Mont Re may request. Such request shall be made in a written notice given to the
Administrative Agent and the Lenders by Mont Re not fewer than twenty (20)
Business Days prior to the proposed effective date of such increase, which
notice (a “Commitment Increase Notice”) shall specify the amount of the proposed
increase in the Total Commitment, the amount of such increase which is to be
allocated to the Total Tranche A Commitment and/or the Total Tranche B
Commitment and the proposed effective date of such increase. In the event of
such a Commitment Increase Notice, each of the Tranche A Lenders and/or Tranche
B Lenders, as applicable, shall be given the opportunity to participate in the
requested increase ratably in proportion that its Tranche A Commitment bears to
the Total Tranche A Commitment and/or its Tranche B Commitment bears to the
Total Tranche B Commitment under this Reimbursement and Pledge Agreement,
respectively. No Lender shall have any obligation to increase its Commitment
pursuant to a Commitment Increase Notice. On or prior to a date that is ten (10)
Business Days after receipt of the Commitment Increase Notice, each Lender shall
submit to the Administrative Agent a notice indicating the maximum amount, if
any, by which it is willing to increase its Tranche A Commitment and/or Tranche
B Commitment, as applicable, in connection with such Commitment Increase Notice
(any such notice to the Administrative Agent being herein a “Lender Increase
Notice”). Any Lender which does not submit a Lender Increase

 

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Notice to the Administrative Agent prior to the expiration of such ten (10)
Business Day period shall be deemed to have denied any increase in its
Commitment. In the event that the increases of Commitments set forth in the
Lender Increase Notices exceed the amount requested by Mont Re in the Commitment
Increase Notice, the Administrative Agent shall have the right, in consultation
with Mont Re, to allocate the amount of increases necessary to meet Mont Re’s
Commitment Increase Notice; provided that, no Lender shall be allocated an
amount less than its pro rata share of such increase based upon the proportion
its Tranche A Commitments bear to the Total Tranche A Commitment and/or Tranche
B Commitments bear to the Total Tranche B Commitment, as applicable, under this
Reimbursement and Pledge Agreement. In the event that the Lender Increase
Notices are less than the amount requested by Mont Re, no later than five (5)
Business Days prior to the proposed effective date Mont Re may notify the
Administrative Agent of any Eligible Assignee that shall have agreed to become a
“Lender” party hereto (an “Acceding Bank”) in connection with the Commitment
Increase Notice. If Mont Re shall not have arranged any Acceding Bank(s) to
commit to the shortfall from the Lender Increase Notices, then Mont Re shall be
deemed to have reduced the amount of its Commitment Increase Notice to the
aggregate amount set forth in the Lender Increase Notices. Based upon the Lender
Increase Notices, any allocations made in connection therewith and any notice
regarding any Acceding Bank, if applicable, the Administrative Agent shall
notify Mont Re and the Lenders on or before the Business Day immediately prior
to the proposed effective date of the amount of each Bank’s and Acceding Bank’s
Commitment (the “Effective Commitment Amount”) and the increased amount of the
Total Commitment and the Total Tranche A Commitment and/or Total Tranche B
Commitment, as applicable, which amounts shall be effective on the following
Business Day subject to the conditions set forth herein. Any increase in the
Total Commitment and any increase in the Total Tranche A Commitment and/or Total
Tranche B Commitment, as applicable, under this Reimbursement and Pledge
Agreement shall be subject to the following conditions precedent: (i) as of the
date of the Commitment Increase Notice and as of the proposed effective date of
the increase in the Total Commitment under this Reimbursement and Pledge
Agreement, all representations and warranties shall be true and correct in all
material respects as though made on such date (unless such representation and
warranty is made as of a specific date, in which case, such representation and
warranty shall be true and correct as of such date) and no event shall have
occurred and then be continuing which constitutes a Default or Event of Default
under this Reimbursement and Pledge Agreement; (ii) the Borrowers, the
Administrative Agent and each Acceding Bank which shall have agreed to provide a
“Commitment” in support of such increase in the Total Commitment under this
Reimbursement and Pledge Agreement, shall have executed and delivered an
“Instrument of Accession” in a form reasonably acceptable to the Administrative
Agent; (iii) to the extent reasonably required by the Administrative Agent,
counsel for the Borrowers shall have provided to the Administrative Agent a
supplemental opinion in form and substance reasonably satisfactory to the
Administrative Agent; (iv) the Acceding Bank(s) shall otherwise have executed
and delivered such other instruments and documents as the Administrative Agent
shall have reasonably requested in connection with such increase and (v) the
Borrowers shall have executed and delivered all corporate authority documents
that the Administrative Agent shall have reasonably requested in connection with
such increase. Upon satisfaction of the conditions precedent to any increase in
the Total Commitment and the Total Tranche A Commitment and/or Total Tranche B
Commitment, as applicable, under this Reimbursement and Pledge Agreement, the
Administrative Agent shall promptly advise the Borrowers and each Lender of the
effective date

 

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of such increase. Upon the effective date of any increase the Total Commitment
and the Total Tranche A Commitment and/or Total Tranche B Commitment, as
applicable, under this Reimbursement and Pledge Agreement that is supported by
an Acceding Bank, such Acceding Bank shall be a party to this Reimbursement and
Pledge Agreement as a Tranche A Lender and/or Tranche B Lender, as applicable,
and shall have the rights and obligations of a Lender hereunder and, on the
effective date of such increase if the Acceding Bank will be a Tranche B Lender
the Acceding Bank shall purchase Tranche B Loans from each other Tranche B
Lender, in such amounts as may be necessary so that each Tranche B Lender
(including the Acceding Bank) has its Tranche B Commitment Percentage of the
outstanding Loans. In addition, on the effective date, the Administrative Agent
shall replace the existing Schedule 1 attached hereto with the revised Schedule
1 reflecting such new Total Commitment, Total Tranche A Commitment and Total
Tranche B Commitment and each Lender’s Commitment. Nothing contained herein
shall constitute, or otherwise be deemed to be, a commitment on the part of any
Lender to increase its Commitment hereunder. It is understood that any increase
in the amount of the Commitments pursuant to this §2.1.3 shall not constitute an
amendment of this Reimbursement and Pledge Agreement.

 

2.1.4 Voluntary Commitment Reductions. Mont Re shall have the right at any time
and from time to time upon three (3) Business Days prior written notice to the
Administrative Agent to reduce by a minimum amount of $10,000,000 and in
multiples of $1,000,000 in excess thereof, or to terminate entirely, the Total
Commitment and, as applicable the Tranche A Commitment and/or the Tranche B
Commitment, whereupon the Commitments of the Tranche A Lenders and/or the
Tranche B Lenders, as the case may be, shall be reduced pro rata in accordance
with their respective Commitment Percentages of the amount specified in such
notice or, terminated as the case may be provided that (a) the Total Tranche A
Commitment may not be reduced to an amount below the Tranche A Outstanding
Amount, (b) the Total Tranche B Commitment may not be reduced to an amount below
the Tranche B Outstanding Amount and (c) the Total Commitment may not be reduced
to an amount below the Total Outstanding. Promptly after receiving any notice of
Mont Re delivered pursuant to this §2.1.4, the Administrative Agent will notify
the Lenders of the substance thereof. No reduction or termination of the
Commitments may be reinstated.

 

2.1.5 Extension of Commitment Termination Date; Replacement Lender. Mont Re may
request an extension of the Tranche A Commitment Termination Date for an
additional three-hundred sixty-four (364) day period and/or the Tranche B
Commitment Termination Date for an additional year (the “Extension”). Mont Re
must request the Extension in writing to the Administrative Agent and the
Lenders not less than sixty (60) nor more than ninety (90) days prior to the
applicable Commitment Termination Date. Each Lender may decide, in its sole
discretion, whether to participate in the Extension and shall notify the
Administrative Agent and Mont Re in writing of its decision within thirty (30)
days after receipt of Mont Re’s request, provided that no Lender shall give
formal notification of its approval of the Extension more than sixty (60) days
prior to the Commitment Maturity Date. Any Lender not responding to a request
for an Extension within thirty (30) days after receipt of Mont Re’s request
shall be deemed to have not consented to the Extension. If a Lender does not
approve the Extension by such date, Mont Re may, up until the fifteenth (15th)
day prior to the applicable Commitment Termination Date, (i) request that all or
a portion of the remaining Lenders acquire and assume all of the non-approving
Lender’s Commitment as provided herein, but none of such Lenders shall be under
an

 

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obligation to do so, (ii) designate a new Lender (a “Replacement Lender”) which
is an Eligible Assignee, and/or (iii) with the approval of the Administrative
Agent and each of the remaining Lenders, reduce the Tranche A Commitment or the
Tranche B Commitment, as the case may be, and, correspondingly, the Total
Commitment, by the amount of the non-approving Lender’s pro rata share. If any
Replacement Lender shall be obtained, and/or if any one or more of the existing
Lenders shall agree to acquire and assume all or any portion of the
non-approving Lender’s Commitment, then such non-approving Lender shall assign,
in accordance with §13, all of its Commitment, Letter of Credit Participations
and other rights and obligations under this Reimbursement and Pledge Agreement
and all other Loan Documents to such Replacement Lender or existing Lenders, as
the case may be; provided, however, that (A) such assignment shall be without
recourse, representation or warranty and shall be on terms and conditions
reasonably satisfactory to such non-approving Lender and such Replacement Lender
and/or existing Lenders, as the case may be, and (B) prior to any such
assignment, the Borrowers shall have paid to such non-approving Lender all
amounts properly demanded and unreimbursed. If all of the then Lenders have
agreed to the Extension on or before the fifteenth (15th) day prior to the
applicable Commitment Termination Date, then the Extension shall take effect.

 

2.2 Procedures for Issuance and Amendment of Letters of Credit.

 

2.2.1 Issuance Procedures. (a) Each Letter of Credit shall be issued or amended,
as the case may be, upon the request of Mont Re delivered to an Issuing Bank
(with a copy to the Administrative Agent) by hard copy or electronically in the
form of a Letter of Credit Application, appropriately completed and signed by a
Responsible Officer of Mont Re. Such Letter of Credit Application must be
received by an Issuing Bank and the Administrative Agent (i) not later than
11:00 a.m. at least two Business Days prior to the proposed issuance date or
date of amendment, as the case may be, of any Letter of Credit denominated in
Dollars, and (ii) not later than 11:00 a.m. at least four Business Days prior to
the proposed issuance date or date of amendment, as the case may be, of any
Letter of Credit denominated in an Alternative Currency; or in each case such
earlier date and time as the Administrative Agent and such Issuing Bank may
agree in a particular instance in their sole discretion. In the case of a
request for an initial issuance of a Letter of Credit, such Letter of Credit
Application shall specify in form and detail satisfactory to such Issuing Bank:
(A) the proposed issuance date of the requested Letter of Credit (which shall be
a Business Day); (B) the amount and currency thereof; (C) the expiry date
thereof; (D) the name and address of the beneficiary thereof; (E) the documents
to be presented by such beneficiary in case of any drawing thereunder; (F) the
full text of any certificate to be presented by such beneficiary in case of any
drawing thereunder; (G) whether such Letter of Credit is a Tranche A Letter of
Credit or a Tranche B Letter of Credit; and (H) such other matters as such
Issuing Bank may require. In the case of a request for an amendment of any
outstanding Letter of Credit, such Letter of Credit Application shall specify in
form and detail satisfactory to such Issuing Bank (w) the Letter of Credit to be
amended; (x) the proposed date of amendment thereof (which shall be a Business
Day); (y) the nature of the proposed amendment; and (z) such other matters as
such Issuing Bank may require. Additionally, Mont Re shall furnish to the
Issuing Bank and the Administrative Agent such other documents and information
pertaining to such requested Letter of Credit issuance or amendment as the
Issuing Bank or the Administrative Agent may require.

 

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(b) Promptly after receipt of any Letter of Credit Application, the applicable
Issuing Bank will confirm with the Administrative Agent (by telephone or in
writing) that the Administrative Agent has received a copy of such Letter of
Credit Application from Mont Re and, if not, such Issuing Bank will provide the
Administrative Agent with a copy thereof. Unless such Issuing Bank has received
written notice from any Lender, the Administrative Agent or Mont Re, at least
one Business Day prior to the requested date of issuance or amendment of the
applicable Letter of Credit, that one or more applicable conditions contained in
§10 shall not then be satisfied, then, subject to the terms and conditions
hereof, such Issuing Bank shall, on the requested date, issue a Letter of Credit
for the account of Mont Re or enter into the applicable amendment, as the case
may be, in each case in accordance with such Issuing Bank’s usual and customary
business practices.

 

(c) If Mont Re so requests in any applicable Letter of Credit Application, the
applicable Issuing Bank may, in its sole and absolute discretion, agree to issue
a Letter of Credit (other than a Letter of Credit issued to Lloyd’s) that has
automatic extension provisions (each, an “Auto-Extension Letter of Credit”);
provided that any such Auto-Extension Letter of Credit must permit such Issuing
Bank to prevent any such extension at least once in each twelve-month period
(commencing with the date of issuance of such Letter of Credit) by giving prior
notice to the beneficiary thereof not later than a day (the “Non-Extension
Notice Date”) in each such twelve-month period to be agreed upon at the time
such Letter of Credit is issued. Unless otherwise directed by such Issuing Bank,
Mont Re shall not be required to make a specific request to the Issuing Bank for
any such extension. Once an Auto-Extension Letter of Credit has been issued, the
Lenders shall be deemed to have authorized (but may not require) such Issuing
Bank to permit the extension of such Letter of Credit at any time to an expiry
date not later than one year after the applicable Commitment Termination Date;
provided, however, that such Issuing Bank shall not permit any such extension if
(A) such Issuing Bank has determined that it would not be permitted, or would
have no obligation, at such time to issue such Letter of Credit in its revised
form (as extended) under the terms hereof (by reason of the provisions of §2.2.2
or otherwise), or (B) it has received notice (which may be by telephone or in
writing) on or before the day that is five Business Days before the
Non-Extension Notice Date from the Administrative Agent, any Lender or Mont Re
that one or more of the applicable conditions specified in §10 is not then
satisfied, and in each such case directing the Issuing Bank not to permit such
extension.

 

(d) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, such Issuing Bank will also deliver to Mont Re and the Administrative
Agent a true and complete copy of such Letter of Credit or amendment.

 

2.2.2 Terms of Letters of Credit. (a) Each Letter of Credit issued, extended or
renewed hereunder shall, among other things, (i) provide for the payment of
sight drafts for honor thereunder when presented in accordance with the terms
thereof and when accompanied by the documents described therein, and (ii) (A)
with respect of Tranche A Letters of Credit issued to Lloyd’s, be issued in
Pounds Sterling and have an expiry date no later than the date which is four (4)
years from the date of issuance of such Letter of Credit, (B) with respect to
all other Tranche A Letters of Credit, be issued in Dollars and have an expiry
date no later than the date which is one (1) year from the date of issuance of
such Tranche A Letter of Credit, and (C)

 

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with respect to all Tranche B Letters of Credit, be issued in Dollars or
Canadian Dollars and have an expiry date no later than the date which is one (1)
year from the date of issuance of such Letter of Credit. Each Letter of Credit
so issued, extended or renewed shall be subject to the Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 or any successor version thereto adopted by the
Issuing Banks in the ordinary course of its business as a letter of credit
issuer and in effect at the time of issuance of such Letter of Credit (the
“Uniform Customs”) or the International Standby Practices (ISP98), International
Chamber of Commerce Publication No. 590, or any successor code of standby letter
of credit practices among banks adopted by the Issuing Banks in the ordinary
course of its business as standby letter of credit issuers and in effect at the
time of issuance of such Letter of Credit, in each case to the extent not
inconsistent with (x) in the case of Letters of Credit issued to Lloyds, English
law and, in the case of all other Letters of Credit, New York law. Letters of
Credit may be issued at any time prior to the applicable Commitment Termination
Date. In the event of any conflict between the terms of any Letter of Credit
Application and this Reimbursement and Pledge Agreement, the terms of this
Reimbursement and Pledge Agreement shall govern. Letters of Credit denominated
in Alternative Currencies, shall be issued in a minimum Alternative Currency
Equivalent of $100,000 and all Letters of Credit denominated in Dollars shall be
issued in a minimum face amount of $1,000.

 

(b) An Issuing Bank shall not be under any obligation to issue any Letter of
Credit if:

 

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

 

(ii) the issuance of such Letter of Credit would violate any laws or one or more
policies of such Issuing Bank;

 

(iii) a default of any Lender’s obligations to fund under §2.2.6 exists or any
Lender is at such time a Delinquent Lender hereunder, unless such Issuing Bank
has entered into satisfactory arrangements with Mont Re or such Lender to
eliminate the Issuing Bank’s risk with respect to such Lender.

 

(c) An Issuing Bank shall be under no obligation to amend any Letter of Credit
if (i) such Issuing Bank would have no obligation at such time to issue such
Letter of Credit in its amended form under the terms hereof, or (ii) the
beneficiary of such Letter of Credit does not accept the proposed amendment to
such Letter of Credit.

 

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2.2.3 Reimbursement Obligations of Lenders. Each Tranche A Lender and each
Tranche B Lender severally agrees that it shall be absolutely liable, without
regard to the occurrence of any Default or Event of Default or any other
condition precedent whatsoever, to the extent of such Lender’s Tranche A
Commitment Percentage or Tranche B Commitment Percentage, as the case may be, to
reimburse the Issuing Bank on demand for the amount of each draft paid by such
Issuing Bank under each Letter of Credit, required to be funded by it, to the
extent that such amount is not reimbursed by Mont Re pursuant to §2.2.5 (such
agreement for a Lender being called herein the “Letter of Credit Participation”
of such Lender).

 

2.2.4 Participations of Lenders. Each such payment made by a Lender shall be
treated as the purchase by such Lender of a participating interest in Mont Re’s
Reimbursement Obligation under §2.2.5 in an amount equal to such payment. Each
Lender shall share in accordance with its participating interest in any interest
which accrues pursuant to §2.2.6.

 

2.2.5 Reimbursement Obligation of Mont Re. In order to induce each Issuing Bank
to issue, extend and renew each Letter of Credit and the Lenders to participate
therein, Mont Re hereby agrees:

 

(a) to reimburse or pay to the applicable Issuing Bank, for the account of such
Issuing Bank or (as the case may be) the applicable Lenders, with respect to
each Letter of Credit issued, extended or renewed by an Issuing Bank hereunder,
on each date that any draft presented under such Letter of Credit is honored by
an Issuing Bank, the Dollar Equivalent as of the date and for the amount paid by
such Issuing Bank under or with respect to such Letter of Credit, provided,
that, the failure of Mont Re to immediately reimburse such Issuing Bank for
amounts due pursuant to this §2.2.5(a) shall be an Event of Default and upon the
occurrence of such Event of Default, the Administrative Agent may issue a Notice
of Exclusive Control and apply all or any portion of the Pledged Collateral
towards the payment obligations described herein, and

 

(b) that the Administrative Agent may, upon the acceleration of the Obligations
in accordance with §11, exercise all rights and remedies in respect of the
Pledged Collateral and any proceeds thereof, to collect an amount equal to the
Dollar Equivalent of the then outstanding Obligations.

 

Each payment contemplated by §2.2.5(a) shall be made to such Issuing Bank at
such Issuing Bank’s Office in immediately available funds. Interest on any and
all amounts remaining unpaid by Mont Re under this §2.2.5 at any time from the
date such amounts become due and payable (whether as stated in this §2.2.5, by
acceleration or otherwise) until payment in full (whether before or after
judgment) shall be payable to the Administrative Agent on demand at the rate
specified in 2.2.6. Any Pledged Collateral or proceeds thereof collected by the
Administrative Agent may be, at the Administrative Agent’s sole discretion,
converted into the applicable Alternative Currency, with any such conversion
costs being considered a collection expense and added to the Obligations. All
payments of Fees, interest and Reimbursement Obligations to the Lenders shall be
made in Dollars even if the underlying Letter of Credit is denominated in an
Alternative Currency.

 

2.2.6 Letter of Credit Payments. (a) If any draft shall be presented or other
demand for payment shall be made under any Letter of Credit, the relevant
Issuing Bank shall

 

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notify Mont Re of the date and amount of the draft presented or demand for
payment and of the date and time when it expects to pay such draft or honor such
demand for payment. If Mont Re fails to reimburse the Issuing Bank as provided
in §2.2.5 or if the Administrative Agent is unable to effect such reimbursement
through the application of the Pledged Collateral, on the date that such draft
is paid or other payment is made by such Issuing Bank, the Issuing Bank may at
any time thereafter notify the Tranche A Lenders or the Tranche B Lenders, as
the case may be, of the amount of any such Unpaid Reimbursement Obligation. No
later than 3:00 p.m. on the Business Day next following the receipt of such
notice, each Tranche A Lender or Tranche B Lender, as the case may be, shall
make available to the Issuing Bank, in Dollars, at the Administrative Agent’s
Office, in immediately available funds, such Lender’s Commitment Percentage of
such Unpaid Reimbursement Obligation. The responsibility of the Issuing Bank to
Mont Re and the Lenders shall be only to determine that the documents (including
each draft) delivered under each Letter of Credit in connection with such
presentment shall be in conformity in all material respects with such Letter of
Credit.

 

(b) Each Lender’s obligation to reimburse the Issuing Bank for amounts drawn
under Letters of Credit, as contemplated by this §2.2.6, shall be absolute and
unconditional and shall not be affected by any circumstance, including (i) any
set-off, counterclaim, recoupment, defense or other right which such Lender may
have against the Issuing Bank, Mont Re, the Parent or any other Person for any
reason whatsoever; (ii) the occurrence or continuance of a Default, or (iii) any
other occurrence, event or condition, whether or not similar to any of the
foregoing. No such payment by a Lender shall relieve or otherwise impair the
obligation of Mont Re to reimburse the Issuing Bank for the amount of any
payment made by the Issuing Bank under any Letter of Credit, together with
interest as provided herein.

 

(c) If any Lender fails to make available to the Administrative Agent for the
account of the Issuing Bank any amount required to be paid by such Lender
pursuant to the foregoing provisions of this §2.2.6 by the time specified, the
Issuing Bank shall be entitled to recover from such Lender (acting through the
Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the Issuing Bank at a rate per annum equal to the
applicable Federal Funds Rate from time to time in effect. A certificate of the
Issuing Bank submitted to any Lender (through the Administrative Agent) with
respect to any amounts owing under this clause (c) shall be conclusive absent
manifest error.

 

(d) Repayment of Participations.

 

(i) At any time after the Issuing Bank has made a payment under any Letter of
Credit and has received from any Lender such Lender’s payment in accordance with
§2.2.6(a), if the Administrative Agent receives for the account of the Issuing
Bank any payment in respect of the related Unpaid Reimbursement Obligation or
interest thereon (whether directly from Mont Re or otherwise, including proceeds
of Pledged Collateral applied thereto by the Administrative Agent), the
Administrative Agent will distribute to such Lender its applicable percentage
thereof (appropriately adjusted, in the case of interest payments, to reflect
the period of time such Lender’s payment was outstanding) in Dollars and in the
same funds as those received by the Administrative Agent.

 

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(ii) If any payment received by the Administrative Agent for the account of the
Issuing Bank is required to be returned under any of the circumstances described
in §3.1.3 or otherwise (including pursuant to any settlement entered into by the
Issuing Bank in its discretion), each Lender shall pay to the Administrative
Agent for the account of the Issuing Bank its applicable percentage thereof on
demand of the Administrative Agent, plus interest thereon from the date of such
demand to the date such amount is returned by such Lender, at a rate per annum
equal to the applicable Federal Funds Rate from time to time in effect.

 

2.2.7 Obligations Absolute. (a) Mont Re’s obligations under this §2.2 shall be
absolute and unconditional under any and all circumstances and irrespective of
the occurrence of any Default or Event of Default or any condition precedent
whatsoever or any set-off, counterclaim or defense to payment which Mont Re may
have or have had against an Issuing Bank, the Administrative Agent, any Lender
or any beneficiary of a Letter of Credit. Mont Re further agrees with the
Issuing Banks and the Lenders that the Issuing Banks and the other Lenders shall
not be responsible for, and the Mont Re’s Reimbursement Obligations under §2.2.5
shall not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even if such documents should in fact
prove to be in any or all respects invalid, fraudulent or forged, or any dispute
between or among Mont Re, the beneficiary of any Letter of Credit or any
financing institution or other party to which any Letter of Credit may be
transferred or any claims or defenses whatsoever of Mont Re against the
beneficiary of any Letter of Credit or any such transferee. The Issuing Banks
and the Lenders shall not be liable for any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit. Mont Re agrees that any
action taken or omitted by an Issuing Bank or any Lender under or in connection
with each Letter of Credit and the related drafts and documents, if done in good
faith and in the absence of gross negligence and willful misconduct, shall be
binding upon Mont Re and shall not result in any liability on the part of an
Issuing Bank or any Lender to Mont Re.

 

2.3 Reliance by Issuing Bank. To the extent not inconsistent with §2.2.6, the
Issuing Bank shall be entitled to rely, and shall be fully protected in relying
upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Issuing Banks. Each Issuing Bank shall be fully
justified in failing or refusing to take any action under this Reimbursement and
Pledge Agreement unless it shall first have received such advice or concurrence
of the Required Lenders as it reasonably deems appropriate or it shall first be
indemnified to its reasonable satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Issuing Banks shall in all cases be
fully protected in acting, or in refraining from acting, under this
Reimbursement and Pledge Agreement in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon the Lenders and all future holders of a Letter of
Credit Participation.

 

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2.4 Borrowings and Payments of Loans.

 

(a) Each Borrowing, each conversion of Loans from one type to the other, and
each continuation of Eurocurrency Rate Loans shall be made upon the Parent’s
irrevocable notice to the Administrative Agent, which may be given by telephone.
Each such notice must be received by the Administrative Agent not later than
11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing
of, conversion to or continuation of Eurocurrency Rate Loans or of any
conversion of Eurocurrency Rate Loans to Base Rate Loans, and (ii) on the
requested date of any Borrowing of Base Rate Loans. Each telephonic notice by
the Parent pursuant to this §2.4(a) must be confirmed promptly by delivery to
the Administrative Agent of a written Loan Notice, appropriately completed and
signed by a Responsible Officer of the Parent. Each Borrowing of, conversion to
or continuation of Eurocurrency Rate Loans shall be in a principal amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof. Each Borrowing
of or conversion to Base Rate Loans shall be in a principal amount of $500,000
or a whole multiple of $100,000 in excess thereof. Each Loan Notice (whether
telephonic or written) shall specify (i) whether the Parent is requesting a
Borrowing, a conversion of Loans from one type to the other, or a continuation
of Eurocurrency 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 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. If the
Parent fails to specify a type of Loan in a Loan Notice or if the Parent fails
to give a timely notice requesting a conversion or continuation, then the
applicable Loans shall be made as, or converted to, Base Rate Loans. Any
automatic conversion to Base Rate Loans shall be effective as of the last day of
the Interest Period then in effect with respect to the applicable Eurocurrency
Rate Loans. If the Parent requests a Borrowing of, conversion to, or
continuation of Eurocurrency 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.

 

(b) Following receipt of a Loan Notice, the Administrative Agent shall promptly
notify each Tranche B Lender of the amount of its Tranche B Commitment
Percentage of the applicable Loans, and if no timely notice of a conversion or
continuation is provided by the Parent, the Administrative Agent shall notify
each Tranche B Lender of the details of any automatic conversion to Base Rate
Loans. In the case of a Borrowing, each Tranche B Lender shall make the amount
of its Loan available to the Administrative Agent in Same Day Funds at the
Administrative Agent’s Office for the applicable currency not later than 1:00
p.m., in each case on the Business Day specified in the applicable Loan Notice.
Upon satisfaction of the applicable conditions set forth in §10, the
Administrative Agent shall make all funds so received available to the Parent in
like funds as received by the Administrative Agent either by (i) crediting the
account of the Parent on the books of Bank of America with the amount of such
funds or (ii) wire transfer of such funds, in each case in accordance with
instructions provided to (and reasonably acceptable to) the Administrative Agent
by the Parent.

 

(c) Except as otherwise provided herein, a Eurocurrency Rate Loan may be
continued or converted only on the last day of an Interest Period for such
Eurocurrency Rate Loan. During the existence of a Default, no Loans may be
requested as, converted to or continued as Eurocurrency Rate Loans.

 

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(d) The Administrative Agent shall promptly notify the Parent and the Tranche B
Lenders of the interest rate applicable to any Interest Period for Eurocurrency
Rate Loans upon determination of such interest rate. The determination of the
Eurocurrency Rate by the Administrative Agent shall be conclusive in the absence
of manifest error. At any time that Base Rate Loans are outstanding, the
Administrative Agent shall notify the Parent and the Tranche B Lenders of any
change in Bank of America’s prime rate used in determining the Base Rate
promptly following the public announcement of such change.

 

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

 

2.5 Payments. (a) The Parent may, upon notice to the Administrative Agent, at
any time or from time to time voluntarily prepay Loans in whole or in part
without premium or penalty; provided that (i) such notice must be received by
the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior
to any date of prepayment of Eurocurrency Rate Loans and (B) on the date of
prepayment of Base Rate Loans; (ii) any prepayment of Eurocurrency Rate Loans
shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000
in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof
or, in each case, if less, the entire principal amount thereof then outstanding.
Each such notice shall specify the date and amount of such prepayment and the
type(s) of Loans to be prepaid and, if Eurocurrency Rate Loans are to be
prepaid, the Interest Period(s) of such Loans. The Administrative Agent will
promptly notify each Tranche B Lender of its receipt of each such notice, and of
the amount of such Lender’s Tranche B Commitment Percentage of such prepayment.
Any prepayment of a Eurocurrency Rate Loan shall be accompanied by all accrued
interest on the amount prepaid, together with any additional amounts required
pursuant to §3. Each such prepayment shall be applied to the Loans of the
Tranche B Lenders in accordance with their respective Tranche B Commitment
Percentage.

 

2.6 Repayment of Loans. The Parent shall repay to the Lenders on the Tranche B
Commitment Termination Date the aggregate principal amount of Loans outstanding
on such date.

 

2.7 Fees; Interest.

 

2.7.1 Commitment Fees. Mont Re agrees to pay to the Administrative Agent for the
accounts of the Lenders in accordance with their respective Commitment
Percentages a commitment fee (the “Commitment Fee”) equal to .075% per annum
times the actual daily amount by which the Total Tranche A Commitment exceeds
the Tranche A Outstanding Amount and (b) 0.10% per annum times the actual daily
amount by which the Total Tranche B Commitment exceeds the Tranche B Outstanding
Amount. The Commitment Fee shall accrue at all times from the Amendment
Effective Date through the Commitment Termination Date for the relevant tranche,
including at any time during which one or more of the conditions in §10 is not
met, and shall be due and payable quarterly in arrears on the last business day
of each March, June, September and December, commencing with the first such date
to occur after the Amendment Effective Date, with a final payment (a) to the
Tranche A Lenders on the Tranche A Commitment Termination Date and (b) to the
Tranche B Lenders on the date on the Tranche B Commitment Termination Date.

 

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2.7.2 Letter of Credit Fee. Mont Re agrees to pay to the Administrative Agent
for the accounts of the Lenders in accordance with their respective Commitment
Percentages a Letter of Credit Fee (the “Letter of Credit Fee”) calculated based
on the face amount of each outstanding Letter of Credit at a rate equal to (a)
with respect to the Tranche A Letters of Credit issued to Lloyds, thirty-two and
one-half one-hundredths of one percent (.325%) per annum and (b) with respect to
all other Tranche A Letters of Credit and all Tranche B Letters of Credit,
twenty-seven and one-half one hundredths of one percent (.275%) per annum, in
each case times the Dollar Equivalent of the actual daily maximum amount
available to be drawn under such Letter of Credit. Letter of Credit Fee shall be
(i) computed on a quarterly basis in arrears and (ii) due and payable on the
last business day of each March, June, September and December, commencing with
the first such date to occur after the Amendment Effective Date, on the
applicable Commitment Termination Date and thereafter on demand. Mont Re shall
also pay to each Issuing Bank, for its own account, such Issuing Bank’s
customary or scheduled costs of issuance and usual and customary costs of,
amendment, negotiation or document examination with respect to the Letters of
Credit and such other amount as may be set forth in the applicable Fee Letter.

 

2.7.3 Fees Payable Pursuant to the Fee Letter. The Borrowers agree to pay to the
Administrative Agent, and the Arrangers the fees set forth in the Fee Letters.

 

2.7.4 Fees Under Existing Agreement. All outstanding Fees (as defined in the
Existing Agreement) and other amounts due Fleet under the Existing Agreement
shall be paid in full on the Amendment Effective Date.

 

2.7.5 Interest. (a) Subject to the provisions of subsection (b) below, (i) each
Eurocurrency Rate Loan shall bear interest on the outstanding principal amount
thereof for each Interest Period at a rate per annum equal to the Eurocurrency
Rate for such Interest Period plus the Applicable Rate and; (ii) each Base Rate
Loan shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus the
Applicable Rate, if any.

 

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

 

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

 

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(iii) Upon the request of the Required Lenders, while any Event of Default
exists, (A) the Borrowers shall pay interest on the principal amount of all
outstanding Loans and Reimbursement Obligations hereunder at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable laws and (B) the Letter of Credit Fees shall
accrue at the Default Rate.

 

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

 

(c) Interest on each Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified
herein. Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding referred to in §11.1(m).

 

(d) Interest on Reimbursement Obligations shall be payable upon the date of
repayment and upon demand.

 

2.7.6 Computation of Interest and Fees. All computations of interest for Base
Rate Loans when the Base Rate is determined by the Administrative Agent’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 fees or interest, as applicable, being paid than if computed on the basis
of a 365-day year). Interest shall accrue on each Loan for the day on which the
Loan is made, and shall not accrue on a Loan, or any portion thereof, for the
day on which the Loan or such portion is paid, provided that any Loan that is
repaid on the same day on which it is made shall bear interest for one day.

 

3. CERTAIN GENERAL PROVISIONS.

 

3.1 Payments.

 

3.1.1 Payments Generally. (a) All payments to be made by the Borrowers under any
Loan Document shall be made without condition or deduction for any counterclaim,
defense, recoupment or set-off. Except as otherwise expressly provided herein,
all payments by the Borrowers hereunder shall be made to the Administrative
Agent, for the account of the respective Lenders to which such payment is owed,
at the Administrative Agent’s Office in Dollars and in Same Day Funds not later
than 2:00 p.m. on the date specified herein.

 

(b) If any payment to be made by a Borrower shall come due on a day other than a
Business Day, payment shall be made on the next following Business Day, and such
extension of time shall be reflected in computing interest or fees, as the case
may be.

 

(c) Unless a Borrower or any Lender has notified the Administrative Agent, prior
to the date any payment is required to be made by it to the Administrative Agent
hereunder, that such Borrower or such Lender, as the case may be, will not make
such payment, the Administrative Agent may assume that such Borrower 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

 

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available a corresponding amount to the Person entitled thereto. If and to the
extent that such payment was not in fact made to the Administrative Agent in
Same Day Funds, then:

 

(i) if a Borrower failed to make such payment, each Lender shall forthwith on
demand repay to the Administrative Agent the portion of such assumed payment
that was made available to such Lender in Same Day Funds, together with interest
thereon in respect of each day from and including the date such amount was made
available by the Administrative Agent to such Lender to the date such amount is
repaid to the Administrative Agent in Same Day Funds at the applicable 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 Administrative Agent the amount thereof in Same Day Funds,
together with interest thereon for the period from the date such amount was made
available by the Administrative Agent to a Borrower to the date such amount is
recovered by the Administrative Agent (the “Compensation Period”) at a rate per
annum equal to the applicable Federal Funds Rate from time to time in effect. If
such Lender pays such amount to the Administrative Agent, then, in the case of
payment with respect to a Loan, such amount shall constitute such Lender’s Loan
included in the applicable Borrowing. If such Lender does not pay such amount
forthwith upon the Administrative Agent’s demand therefor, the Administrative
Agent may make a demand therefor upon the applicable Borrower, and such Borrower
shall pay such amount to the Administrative 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 which the Administrative Agent or any Borrower may have
against any Lender as a result of any default by such Lender hereunder.

 

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

 

(d) If any Lender makes available to the Administrative Agent funds for any Loan
to be made by such Lender to any Borrower as provided in the foregoing
provisions of this §3.1.1, and such funds are not made available to such
Borrower by the Administrative Agent because the conditions to the applicable
Credit Extension set forth in §10 are not satisfied or waived in accordance with
the terms hereof, the Administrative 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 and to fund Letter of
Credit Participations are several and not joint. The failure of any Lender to
make any Loan or to fund any such Letter of Credit Participation 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 or purchase its Letter of Credit
Participation.

 

(f) Nothing herein shall be deemed to obligate any Lender to obtain the funds
for any Loan or Letter of Credit Participation 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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3.1.2 Sharing of Payments. If, other than as expressly provided elsewhere
herein, any Lender shall obtain on account of the Loans made by it, or the
Letter of Credit Participation held by it, any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its ratable share (or other share contemplated hereunder) thereof,
such Lender shall immediately (a) notify the Administrative Agent of such fact,
and (b) purchase from the other Lenders such participations in the Loans made by
them and/or such subparticipations in the Letter of Credit Participations held
by them, as the case may be, as shall be necessary to cause such purchasing
Lender to share the excess payment in respect of such Loans or such Letter of
Credit Participations, as the case may be, pro rata with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from the purchasing Lender under any of the circumstances described in
§3.1.3 (including pursuant to any settlement entered into by the purchasing
Lender in its discretion), such purchase shall to that extent be rescinded and
each other Lender shall repay to the purchasing Lender the purchase price paid
therefor, together with an amount equal to such paying Lender’s ratable share
(according to the proportion of (i) the amount of such paying Lender’s required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered, without further interest thereon. Each
Borrower agrees that any Lender so purchasing a participation from another
Lender may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off, but subject to §15.2) with respect to
such participation as fully as if such Lender were the direct creditor of such
Borrower in the amount of such participation. The Administrative Agent will keep
records (which shall be conclusive and binding in the absence of manifest error)
of participations purchased under this Section and will in each case notify the
Lenders following any such purchases or repayments. Each Lender that purchases a
participation pursuant to this Section shall from and after such purchase have
the right to give all notices, requests, demands, directions and other
communications under this Reimbursement and Pledge Agreement with respect to the
portion of the Obligations purchased to the same extent as though the purchasing
Lender were the original owner of the Obligations purchased.

 

3.1.3 Payments Set Aside. To the extent that any payment by or on behalf of any
Borrower (including payments from the Pledged Collateral) is made to the
Administrative Agent, an Issuing Bank or any Lender, or the Administrative
Agent, an Issuing Bank or any Lender exercises its right of set-off, and such
payment or the proceeds of such set-off or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent,
such Issuing Bank or such Lender in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any proceeding under any
insolvency, bankruptcy or receivership 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 Administrative Agent or such Issuing Bank, as the
case may be, upon demand its applicable share of any amount so recovered from or
repaid by the Administrative Agent or such Issuing Bank, as the case may be,
plus interest thereon from the date of such demand to the date such payment is
made at a rate per annum equal to the applicable Federal Funds Rate from time to
time in effect, in the applicable currency of such recovery or payment.

 

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3.2 Taxes, etc. All payments by the Borrowers hereunder and under any of the
other Loan Documents shall be made free and clear of and without deduction for
any taxes, levies, imposts, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or hereafter
imposed or levied by any jurisdiction or any political subdivision thereof or
taxing or other authority therein unless such Borrower is compelled by law to
make such deduction or withholding. If any such obligation is imposed upon such
Borrower with respect to any amount payable by it hereunder or under any of the
other Loan Documents, such Borrower will pay to the Administrative Agent, for
the account of the Lenders or the Administrative Agent, as the case may be, on
the date on which such amount is due and payable hereunder or under such other
Loan Document, such additional amount in Dollars as shall be necessary to enable
the Lenders or the Administrative Agent to receive the same net amount which the
Lenders or the Administrative Agent would have received on such due date had no
such obligation been imposed upon such Borrower. Such Borrower will deliver
promptly to the Administrative Agent certificates or other valid vouchers for
all taxes or other charges deducted from or paid with respect to payments made
by such Borrower hereunder or under such other Loan Document.

 

3.3 Additional Costs, etc. If any introduction of, or change in or in the
interpretation of any applicable law (which expression, as used herein, includes
statutes, rules and regulations thereunder and interpretations thereof by any
competent court or by any governmental or other regulatory body or official
charged with the administration or the interpretation thereof and requests,
directives, instructions and notices at any time or from time to time hereafter
made upon or otherwise issued to any Lender, any Issuing Bank or the
Administrative Agent by any central bank or other fiscal, monetary or other
authority (whether or not having the force of law)), shall:

 

(a) subject any Lender, any Issuing Bank or the Administrative Agent to any tax,
levy, impost, duty, charge, fee, deduction or withholding of any nature with
respect to this Reimbursement and Pledge Agreement, the other Loan Documents,
Loans or such Lender’s Commitment (other than taxes based upon or measured by
the income or profits of such Lender, such Issuing Bank or the Administrative
Agent and taxes covered by § 3.2), or

 

(b) materially change the basis of taxation (except for changes in taxes on
income or profits) of payments to any Lender, any Issuing Bank or the
Administrative Agent of the fees or interest in respect of the Letters of
Credit, Loans or any other amounts payable to any Lender, any Issuing Bank or
the Administrative Agent under this Reimbursement and Pledge Agreement or any of
the other Loan Documents, or

 

(c) impose or increase or render applicable (other than to the extent
specifically provided for elsewhere in this Reimbursement and Pledge Agreement)
any special deposit, reserve, assessment, liquidity, capital adequacy or other
similar requirements (whether or not having the force of law) against assets
held by, or deposits in or for the account of, or loans by, or letters of credit
issued by, or commitments of an office of any Lender, any Issuing Bank or the
Administrative Agent, or

 

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(d) impose on any Lender, any Issuing Bank or the Administrative Agent any other
conditions or requirements with respect to this Reimbursement and Pledge
Agreement, the other Loan Documents, any Letters of Credit, any Loans, such
Lender’s Commitment, or any loans, letters of credit or commitments of which
such Lender’s Commitment forms a part, and the result of any of the foregoing is

 

(i) to increase the cost to any Lender of making, funding, issuing, renewing,
extending or maintaining such Lender’s Commitment or any Loan or Letter of
Credit, or

 

(ii) to reduce the amount of interest, Reimbursement Obligation or other amount
payable to such Lender, any Issuing Bank or the Administrative Agent hereunder
on account of such Lender’s Commitment or any Loan or Letter of Credit, or

 

(iii) to require such Lender, any Issuing Bank or the Administrative Agent to
make any payment or to forego any interest or principal or Reimbursement
Obligation or other sum payable hereunder, the amount of which payment or
foregone interest or principal or Reimbursement Obligation or other sum is
calculated by reference to the gross amount of any sum receivable or deemed
received by such Lender, any Issuing Bank or the Administrative Agent from the
Borrowers hereunder,

 

then, and in each such case, each Borrower will, upon demand made by such
Lender, such Issuing Bank or the Administrative Agent (as the case may be) at
any time and from time to time and as often as the occasion therefor may arise,
pay to such Lender, such Issuing Bank or the Administrative Agent such
additional amounts as will be sufficient to compensate such Lender, such Issuing
Bank or the Administrative Agent for such additional cost, reduction, payment or
foregone interest or Reimbursement Obligation or other sum, provided, that the
Borrowers shall not be obligated to pay any additional amounts which were
incurred by any of the Lenders, such Issuing Bank or the Administrative Agent
more than forty-five (45) days prior to the date on which such Lender, such
Issuing Bank or the Administrative Agent, as the case may be, had knowledge of
such additional amounts. The Lender, such Issuing Bank or the Administrative
Agent shall present a certificate setting forth a reasonable calculation of the
amount of such increased costs as per §3.6 hereof.

 

3.4 Compensation for Losses. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Parent shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

 

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

 

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

 

(c) any assignment of a Eurocurrency Rate Loan on a day other than the last day
of the Interest Period therefor as a result of a request by the Parent pursuant
to §3.7 or pursuant to §2.1.3;

 

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including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan,
from fees payable to terminate the deposits from which such funds were obtained
or from the performance of any foreign exchange contract. The Parent shall also
pay any customary administrative fees charged by such Lender in connection with
the foregoing.

 

For purposes of calculating amounts payable by the Parent to the Lenders under
this §3.4, each Lender shall be deemed to have funded each Eurocurrency Rate
Loan made by it at the Eurocurrency Rate for such Loan by a matching deposit or
other borrowing in the offshore interbank market for such currency for a
comparable amount and for a comparable period, whether or not such Eurocurrency
Rate Loan was in fact so funded.

 

3.5 Capital Adequacy. If after the date hereof any Lender, Issuing Bank or the
Administrative Agent determines that (a) the adoption of or change in any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) regarding capital requirements for bank holding
companies or any change in the interpretation or application thereof by a
Governmental Authority with appropriate jurisdiction, or (b) compliance by such
Lender, Issuing Bank or the Administrative Agent or any corporation controlling
such Lender, Issuing Bank or the Administrative Agent with any law, governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) of any such entity regarding capital adequacy, has the effect of
reducing the return on such Lender’s, Issuing Bank’s or the Administrative
Agent’s commitment with respect to any Loan or Reimbursement Obligations to a
level below that which such Lender, Issuing Bank or the Administrative Agent
could have achieved but for such adoption, change or compliance (taking into
consideration such Lender’s, Issuing Bank’s or the Administrative Agent’s then
existing policies with respect to capital adequacy and assuming full utilization
of such entity’s capital) by any amount deemed by such Lender, Issuing Bank or
the Administrative Agent (as the case may be) to be material, then such Lender,
Issuing Bank or the Administrative Agent may notify the Borrowers of such fact.
Each Borrower agrees to pay such Lender, Issuing Bank or the Administrative
Agent (as the case may be) for the amount of such reduction in the return on
capital as and when such reduction is determined upon presentation by such
Lender, Issuing Bank or the Administrative Agent (as the case may be) of a
certificate in accordance with §3.6 hereof; provided, that the Borrowers shall
not be obligated to pay any additional amounts which were incurred by any of the
Lenders, Issuing Bank or the Administrative Agent more than forty-five (45) days
prior to the date on which such Lender, Issuing Bank or the Administrative
Agent, as the case may be, had knowledge of such additional amounts. Each Lender
shall allocate such cost increases among its customers in good faith and on an
equitable basis.

 

3.6 Certificate. A certificate setting forth any additional amounts payable
pursuant to §§3.3, 3.4 and 3.5 and a brief explanation of such amounts which are
due, submitted by any Lender, Issuing Bank or the Administrative Agent to the
Borrowers, shall be conclusive, absent manifest error, that such amounts are due
and owing.

 

3.7 Change of Location of Lending Office; Replacement of Lender. If a Borrower
shall, as a result of the requirements of §§3.3, 3.4 or 3.5, be required to pay
any Lender the additional costs referred to in such Sections and such Borrower,
in its reasonable discretion, shall deem such additional amounts to be material,
such Borrower shall have the right to (a) request in

 

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writing to such Lender which has certified additional costs to such Borrower,
with copy to the Administrative Agent, that such Lender change the location of
its lending office in order to mitigate such additional costs and (b) if (i)
such Lender does not change the location of its lending office within sixty (60)
days of receipt of such request, or (ii) such Borrower determines, in its
reasonable discretion, after such change in the location of such lending office
that any remaining additional costs are still material, substitute another
Lender who is an Eligible Assignee for such Lender which has certified the
additional costs to such Borrower. Any such substitution shall take place in
accordance with §13.2 and shall otherwise be on terms and conditions reasonably
satisfactory to the Administrative Agent, and until such time as such
substitution shall be consummated, such Borrower shall continue to pay such
additional costs. Upon any such substitution, such Borrower shall pay or cause
to be paid to the Lender that is being replaced all amounts properly demanded
and unreimbursed and such Lender will be released from liability hereunder.

 

4. COLLATERAL SECURITY.

 

4.1 Security of Mont Re. The Obligations shall be secured by a perfected first
priority security interest (subject only to (i) liens arising by operation of
law, so long as the aggregate obligations secured thereby do not exceed
$1,000,000 and (ii) the Custodial Lien and Set-Off Rights) in the following: (a)
the Securities Account and all property held therein or any replacement or
successor account and/or any and all substitutions, additions and accessions
thereto, which shall include, but not be limited to, cash, investment property,
securities, security entitlements, securities accounts and any and all financial
assets credited to and held in the Securities Account or any replacement or
successor account, including, without limitation, the property described on
Schedule 4.1 attached hereto and made a part hereof, as such property may be
released or substituted pursuant to the terms hereof; (b) the Deposit Account
and all of the property from time to time held therein, and (c) to the extent
not already included in clauses (a) or (b) above, dividends, distributions,
income, interest and all proceeds of the foregoing, including, without
limitation, the roll-over or reinvested proceeds of the foregoing, whether now
existing or hereafter arising (collectively, the “Pledged Collateral”). Any
delivery or transfer of any of the Pledged Collateral to the Custodian and
credited to the Securities Account or the Deposit Account shall be deemed a
delivery or transfer to the Administrative Agent.

 

4.2 Deposit Account. Mont Re or any other person on behalf of Mont Re, including
the Custodian, may from time to time deposit cash sums denominated in Dollars
into the Deposit Account. Interest earned on the amounts held or credited to the
Deposit Account shall remain in the Deposit Account. Mont Re may from time to
time request, and the Administrative Agent agrees to, effect transfers of cash
from the Deposit Account to the Securities Account for the sole purpose of
allowing Mont Re to purchase Qualified Securities to be held in or credited to
the Securities Account; provided that (a) any such transfer request shall
involve a minimum amount of $500,000 or integral multiples of $100,000 in excess
thereof, (b) after giving effect to such transfer request, Mont Re remains in
compliance with the covenant contained in §6.8 and (c) no Event of Default has
occurred and is continuing hereunder.

 

4.3 Security Interest. For and in consideration of the sum of ten Dollars
($10.00) and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and for and in consideration of the
Issuing Banks’ agreement to issue the Letters

 

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of Credit and the Lenders’ agreement to purchase Letter of Credit Participations
therein, and the Tranche B Lenders agreement to make Loans to the Parent, Mont
Re hereby pledges, hypothecates, and impresses the Pledged Collateral with a
lien in favor of the Administrative Agent, on behalf of the Issuing Banks and
the Lenders, and grants to the Administrative Agent a security interest in the
Pledged Collateral, in each case to secure the punctual payment and performance
of all the Obligations. Mont Re covenants and agrees that (i) with respect to
the Pledged Collateral consisting of the Securities Account, the property held
therein and any and all proceeds thereof, the Administrative Agent has control
and, from and after the issuance of a Notice of Exclusive Control, which notice
shall not be given unless an Event of Default has occurred and is continuing
hereunder, the Administrative Agent shall have sole and exclusive control over
such Pledged Collateral and that it shall take all such steps as may be
necessary to cause the Administrative Agent to have sole and exclusive control
over such Pledged Collateral; (ii) with respect to the Pledged Collateral
consisting of the Deposit Account, the property held therein and any and all
proceeds thereof, except as expressly permitted in §4.2 above, the
Administrative Agent has sole and exclusive control over such Pledged Collateral
and Mont Re shall take all such steps as may be necessary to cause the
Administrative Agent to have sole and exclusive control over such Pledged
Collateral and Mont Re shall have no rights to withdraw or direct the transfer
of any or all credit balances at any time in the Deposit Account for so long as
any Obligations remain outstanding under or in respect of the Loan Documents;
(iii) it shall not sell, transfer, assign, or otherwise dispose of any of the
Pledged Collateral without the prior written consent of the Administrative Agent
except in connection with substitutions, roll-overs or reinvestments of Pledged
Collateral permitted pursuant to §4.7(b) and provided that, after giving effect
to such substitutions, Mont Re is in compliance with the covenant contained in
§6.8; (iv) it shall do or cause to be done all things necessary to preserve and
keep in full force and effect the perfected first priority security interest in
the Pledged Collateral granted to the Administrative Agent hereunder (subject to
laws affecting creditor’s rights, generally); (v) it shall not create or permit
the existence of liens or security interests in the Pledged Collateral in favor
of third parties other than (i) liens arising by operation of law, so long as
the aggregate obligations secured thereby do not exceed $1,000,000 and (ii) the
Custodial Lien and Set-Off Rights; (vi) it shall not take any action or omit to
take any action that would result in the termination of the Control Agreement
without the prior consent of the Administrative Agent and it shall otherwise
comply in all respects with the provisions of the Control Agreement; and (vii)
with respect to the Deposit Account and the Securities Account, it shall not
give instructions or entitlement orders to the Custodian that would require the
Custodian to advance any margin or other credit to or for the benefit of Mont
Re.

 

4.4 Additional Obligations. Mont Re agrees that: (1) any distribution in kind
received by Mont Re from any party for or on account of the Pledged Collateral,
including distributions of stock as a dividend or split of any of the Pledged
Collateral, shall be promptly delivered to the Administrative Agent, for the
account of the Lenders, in the form received with any required endorsement; (2)
additional collateral in form and kind satisfactory to the Administrative Agent
will be deposited by Mont Re with the Administrative Agent, for the account of
the Lenders, in accordance with §6.8; and (3) any note or other instrument
executed and delivered to Mont Re by any party to evidence any obligation of
such party with respect to the Pledged Collateral shall be promptly delivered
with any required endorsement to the Administrative Agent. All such items shall
be held by the Administrative Agent in accordance with the terms of this
Reimbursement and Pledge Agreement.

 

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4.5 Certain Rights and Duties of Administrative Agent and Lenders. Mont Re
acknowledges that the Administrative Agent and the Lenders have no duty of any
type with respect to the Pledged Collateral except for the use of due care in
safekeeping any of the Pledged Collateral actually in the physical custody of
the Administrative Agent or the Lenders; prior to the occurrence of any Event of
Default the Administrative Agent’s and the Lenders’ rights with respect to the
Pledged Collateral shall be limited to the Administrative Agent’s and the
Lenders’ rights as secured party and pledgee and the right to perfect their
security interest, preserve, enforce and protect the lien granted hereunder and
their interest in the Pledged Collateral. Prior to the occurrence and
continuance of any Event of Default, Mont Re shall be entitled to vote any
Pledged Collateral constituting securities or capital stock and to give
consents, waivers and ratifications in respect thereof; provided, however, that
no vote shall be cast or consent, waiver or ratification given by Mont Re if the
effect thereof would impair any of the Pledged Collateral or be inconsistent
with or result in any violation of any of the provisions of this Reimbursement
and Pledge Agreement. All such rights of Mont Re to vote and give consents,
waivers and ratifications with respect to the Pledged Collateral shall cease
upon the occurrence and continuance of an Event of Default.

 

4.6 Power of Attorney, Etc. Mont Re hereby irrevocably constitutes and appoints
the Administrative Agent the true and lawful attorney-in-fact for and on behalf
of Mont Re with full power of substitution and revocation in its own name or in
the name of Mont Re to make, execute, deliver and record, as the case may be,
any and all financing statements, continuation statements, notices of exclusive
control, assignments, proofs of claim, powers of attorney, leases, discharges or
other instruments or agreements which the Administrative Agent in its sole
discretion may deem necessary or advisable to perfect, preserve, or protect
(and, after the occurrence and during the continuance of an Event of Default, to
enforce) the lien granted hereunder and the Administrative Agent’s, the Issuing
Banks’ and the Lenders’ interest in the Pledged Collateral and to carry out the
purposes of this Reimbursement and Pledge Agreement, including but without
limiting the generality of the foregoing, any and all proofs of claim in
bankruptcy or other insolvency proceedings of Mont Re, with the right, upon the
occurrence and during the continuance of an Event of Default, to collect and
apply to the Obligations all distributions and dividends made on account of the
Pledged Collateral. The rights and powers conferred on the Administrative Agent
by Mont Re are expressly declared to be coupled with an interest and shall be
irrevocable until all the Obligations are paid and performed in full. A carbon,
photographic, or other reproduction of a security agreement (including this
Reimbursement and Pledge Agreement) or a financing statement is sufficient as a
financing statement to the extent permitted by applicable law.

 

4.7 Release of Collateral. The Administrative Agent shall grant a release of its
lien on the Pledged Collateral:

 

(a) In the event that the Collateral Coverage Amount exceeds the Total
Outstandings (such excess being referred to herein as the “Release Amount”)
then, so long as no Event of Default has occurred and is continuing, the
Administrative Agent shall, at the request and expense of Mont Re, release such
portions of the Pledged Collateral designated by Mont Re with a fair market
value equal to the Release Amount (or such smaller amount as may be requested by
Mont Re); provided, that in no event shall the Administrative Agent be required
to release any Pledged Collateral after the occurrence and during the
continuance of an Event of

 

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Default or in an aggregate amount that is less than five hundred thousand
dollars ($500,000). In connection with any such partial release of the Pledged
Collateral, the Administrative Agent shall give such consents as may be
necessary to permit the Custodian to allow Mont Re to withdraw the Release
Amount from the Securities Account and/or the Deposit Account, as the case may
be. Mont Re agrees to reimburse the Administrative Agent on demand for any and
all out-of-pocket costs and expenses incurred by the Administrative Agent in
connection with any such partial release of the Pledged Collateral, including,
without limitation, reasonable attorney’s fees.

 

(b) So long as the Collateral Coverage Amount exceeds the Total Outstandings,
and so long as no Event of Default has occurred and is continuing, Mont Re may
make substitutions of equal or greater value for the Pledged Collateral;
provided that such Pledged Collateral shall at all times consist of cash and
Qualified Securities and in connection therewith the Administrative Agent shall,
at the expense of Mont Re, release the Pledged Collateral for which Mont Re is
making a substitution. In the event that any amounts are paid or due to be paid
in respect of the Pledged Collateral (whether at scheduled maturity or
otherwise), Mont Re may give instructions to roll-over or reinvest such amounts
in Qualified Securities, all of which shall remain Pledged Collateral hereunder.

 

(c) In the event that (i) any and all Letters of Credit are fully drawn or
expire or are returned to the Administrative Agent for cancellation, (ii) all
Reimbursement Obligations with respect to any drawings of Letters of Credit have
been fully satisfied pursuant to the provisions of this Reimbursement and Pledge
Agreement and the other Loan Documents, (iii) there are no outstanding Loans,
(iv) no other Obligations, whether contingent or otherwise, are then outstanding
and (v) the Total Commitments have been terminated, the Administrative Agent
agrees that it shall, after request by Mont Re and at Mont Re’s sole cost and
expense, release the Pledged Collateral from the security interest and lien
created by this Reimbursement and Pledge Agreement and shall execute, or cause
to be executed, such instruments of release and discharge as may be reasonably
requested by Mont Re.

 

5. REPRESENTATIONS AND WARRANTIES.

 

Each Borrower represents and warrants to the Lenders, the Issuing Banks and the
Administrative Agent as follows:

 

5.1 Corporate Authority.

 

5.1.1 Incorporation; Good Standing. Each of the Borrowers (a) is a company duly
organized, validly existing and in good standing under the laws of Bermuda, (b)
has all requisite corporate (or the equivalent company) power to own its
property and conduct its business as now conducted and as presently
contemplated, and (c) is in good standing as a foreign corporation (or similar
business entity) and is duly authorized to do business in each jurisdiction
where such qualification is necessary except where a failure to be so qualified
would not have a Material Adverse Effect.

 

5.1.2 Authorization. The execution, delivery and performance of this
Reimbursement and Pledge Agreement and the other Loan Documents to which each
Borrower

 

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is, or is to become, a party and the transactions contemplated hereby and
thereby (a) are within the corporate (or the equivalent company) authority of
such Borrower, (b) have been duly authorized by all necessary corporate (or the
equivalent company) proceedings, (c) do not and will not conflict with or result
in any breach or contravention of any provision of law, statute, rule or
regulation to which each Borrower is subject or any judgment, order, writ,
injunction, license or permit applicable to each Borrower and (d) do not
conflict with any provision of the Governing Documents of, or any agreement or
other instrument binding upon, each Borrower.

 

5.1.3 Enforceability. The execution and delivery of this Reimbursement and
Pledge Agreement and the other Loan Documents to which such Borrower is or is to
become a party will result in valid and legally binding obligations of such
Borrower enforceable against it in accordance with the respective terms and
provisions hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors’ rights or by the application
of equitable principles relating to enforceability (regardless of whether
considered in a proceeding in equity or at law) including, without limitation,
(i) the possible unavailability of specific performance injunctive relief or any
equitable remedy and (ii) concepts of materiality, reasonableness, good faith
and fair dealings; provided that such Borrower assumes for the purposes of this
§5.1.3 that this Reimbursement and Pledge Agreement and the other Loan Documents
have been validly executed and delivered by each of the parties thereto other
than such Borrower.

 

5.2 Governmental Approvals. The execution, delivery and performance by the
Borrowers of this Reimbursement and Pledge Agreement and the other Loan
Documents to which the Borrowers are or are to become a party and the
transactions contemplated hereby and thereby do not require the approval or
consent of, or filing with, any governmental agency or authority other than
those already obtained.

 

5.3 Financial Statements.

 

5.3.1 Fiscal Year. The Parent and each of its Subsidiaries has a fiscal (or
financial) year which is the twelve months ending on December 31 of each
calendar year.

 

5.3.2 Financial Statements. There are no Contingent Liabilities of the Borrowers
as of such date involving material amounts, known to the officers of the
Borrowers, which were not disclosed in such balance sheet and the notes related
thereto. There has been furnished to each of the Lenders a consolidated balance
sheet of the Parent and its Subsidiaries as at the Balance Sheet Date, and a
consolidated statement of income of the Parent and its Subsidiaries for the
fiscal year then ended, certified by a Responsible Officer. Such balance sheet
and statement of income have been prepared in accordance with GAAP and fairly
present the financial condition of the Parent as at the close of business on the
date thereof and the results of operations for the fiscal year then ended. There
are no Contingent Liabilities of the Parent or any of its Subsidiaries as of
such date involving material amounts, known to the officers of the Parent, which
were not disclosed in such balance sheet and the notes related thereto. In the
event that GAAP requires that the financial statements be presented on a
combined basis, the Borrowers shall have furnished a combined balance sheet and
a combined statement of income for the Parent and its Subsidiaries.

 

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5.4 No Material Adverse Changes, etc. Since the Balance Sheet Date there has
been no event or occurrence which has had a Material Adverse Effect.

 

5.5 Franchises, Patents, Copyrights, etc. The Borrowers possess all franchises,
patents, copyrights, trademarks, trade names, licenses and permits, and rights
in respect of the foregoing, adequate for the conduct of its business
substantially as now conducted without known conflict with any rights of others.

 

5.6 Litigation. Except as set forth in Schedule 5.6 hereto, there are no
actions, suits, proceedings or investigations of any kind pending or threatened
against the Parent or any of its Subsidiaries before any Governmental Authority,
(a) that, if adversely determined, might, either in any case or in the
aggregate, (i) have a Material Adverse Effect or (ii) materially impair the
right of the Parent and its Subsidiaries to carry on business substantially as
now conducted by them, or result in any substantial liability not adequately
covered by insurance, or for which adequate reserves are not maintained on the
consolidated balance sheet of the Parent and its Subsidiaries or, in the event
that GAAP requires the financial statements to be presented on a combined basis,
the combined balance sheet or (b) which question the validity of this
Reimbursement and Pledge Agreement.

 

5.7 No Materially Adverse Contracts, etc. Neither of the Borrowers nor any of
their Subsidiaries is subject to any Governing Document or other legal
restriction, or any judgment, decree, order, law, statute, rule or regulation
that has or, to the knowledge of the Responsible Officers, is expected in the
future to have a Material Adverse Effect. Neither of the Borrowers nor any of
their Subsidiaries is a party to any contract or agreement that has or is
expected, in the judgment of the Responsible Officers, to have any Material
Adverse Effect.

 

5.8 Compliance with Other Instruments, Laws, etc. Neither of the Borrowers nor
any of their Subsidiaries is in violation of any provision of its Governing
Documents, or any agreement or instrument to which it may be subject or by which
it or any of its properties may be bound or any decree, order, judgment,
statute, license, rule or regulation, in any of the foregoing cases in a manner
that could result in the imposition of substantial penalties or have a Material
Adverse Effect.

 

5.9 Tax Status. The Parent and its Subsidiaries (a) have made or filed all
federal, state and foreign income and all other tax returns, reports and
declarations required by any jurisdiction to which any of them is subject,
except those which the failure to file would not have a Material Adverse Effect,
(b) have paid all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and by appropriate proceedings or those which the
failure to pay would not have a Material Adverse Effect and (c) have set aside
on their books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and none of the Responsible Officers of
the Borrowers know of any basis for any such claim.

 

5.10 No Event of Default. No Default or Event of Default has occurred and is
continuing.

 

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5.11 Investment Company Acts. Neither the Parent nor any of its Subsidiaries is
an “investment company”, or an “affiliated company” or a “principal underwriter”
of an “investment company”, as such terms are defined in the Investment Company
Act of 1940, as amended. Neither Borrower is engaged in the “investment
business” as defined in The Investment Business Act 2003 of Bermuda.

 

5.12 Absence of Financing Statements, etc. Except as set forth on Schedule 5.12,
there is no financing statement, security agreement, chattel mortgage, real
estate mortgage or other document filed or recorded with any filing records,
registry or other public office, that purports to cover, affect or give notice
of any present or possible future lien on any of the Pledged Collateral.

 

5.13 Perfection of Security Interest. All filings (other than filings to reflect
the replacement of Fleet as Administrative Agent by Bank of America),
assignments, pledges and deposits of documents or instruments have been made and
all other actions have been taken that are necessary or advisable, under
applicable law, to establish and perfect the Administrative Agent’s security
interest in the Pledged Collateral. The Administrative Agent and the Lenders
acknowledge and agree that the Pledged Collateral is subject to liens and
set-off rights in favor of the Custodian pursuant to Article V, Section 10 of
the Control Agreement (the “Custodial Lien and Set-off Rights”). The Pledged
Collateral and the Administrative Agent’s rights with respect to the Pledged
Collateral are not subject to any set-off, claims, withholdings or other
defenses other than the Custodial Lien and Set-off Rights. Mont Re is the owner
of the Pledged Collateral free from any lien, encumbrance or security interest,
other than (i) liens arising by operation of law, so long as the aggregate
obligations secured thereby do not exceed $1,000,000, (ii) the Custodial Lien
and Set-Off Rights and (iii) those granted hereby.

 

5.14 Use of Proceeds.

 

5.14.1 General. Mont Re will obtain Letters of Credit to be issued in the
ordinary course of Mont Re’s business. The Parent will use proceeds from Loans
for general corporate purposes.

 

5.14.2 Regulations U and X. No portion of any Letter of Credit is to be obtained
and no portion of the proceeds of any Loan shall be used, for the purpose of
purchasing or carrying any “margin security” or “margin stock” as such terms are
used in Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. Parts 221 and 224.

 

5.14.3 Ineligible Securities. No portion of any Letter of Credit is to be
obtained and no portion of the proceeds of any Loan shall be used, for the
purpose of knowingly purchasing, or providing credit support for the purchase
of, during the underwriting or placement period or within thirty (30) days
thereafter, any Ineligible Securities underwritten or privately placed by a
Financial Affiliate.

 

5.15 Subsidiaries, etc. Montpelier Marketing Services (UK) Limited and
Montpelier Holdings (Barbados) SRL are the only Subsidiaries of Mont Re. Mont Re
is the only direct Subsidiary of the Parent. Except as set forth on Schedule
5.15 hereto, neither the Parent nor any Subsidiary of the Parent is engaged in
any joint venture or partnership with any other Person. The jurisdiction of the
registered office of each Subsidiary of Mont Re is listed on Schedule 5.15
hereto.

 

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5.16 Disclosure. None of this Reimbursement and Pledge Agreement or any of the
other Loan Documents to which a Borrower is a party contains any untrue
statement of a material fact or omits to state a material fact known to the
Borrowers necessary in order to make the statements herein or therein, taken as
a whole not misleading as of the date hereof or thereof. There is no fact known
to the Borrowers or any of their Subsidiaries as of the date hereof which has a
Material Adverse Effect, or which is reasonably likely in the future to have a
Material Adverse Effect, exclusive of effects resulting from changes in general
economic conditions, legal standards or regulatory conditions.

 

5.17 Foreign Assets Control Regulations, Etc. None of the requesting or
issuance, extension or renewal of any Letters of Credit or Loans or the use of
the proceeds of any thereof will violate the Trading With the Enemy Act (50
U.S.C. § 1 et seq., as amended) (the “Trading With the Enemy Act”) or any of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) (the “Foreign Assets Control
Regulations”) or any enabling legislation or executive order relating thereto
(which for the avoidance of doubt shall include, but shall not be limited to (a)
Executive Order 13224 of September 21, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b) the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Public Law 107-56)). Furthermore, neither the
Borrowers nor any of their Subsidiaries (x) is or will become a “blocked person”
as described in the Executive Order, the Trading With the Enemy Act or the
Foreign Assets Control Regulations or (y) engages or will engage in any dealings
or transactions, or be otherwise associated, with any such “blocked person”.

 

6. AFFIRMATIVE COVENANTS.

 

Each of the Borrowers covenants and agrees that, until both the Tranche A
Commitment Termination Date and the Tranche B Commitment Termination Date have
occurred and all Obligations have been paid in full:

 

6.1 Punctual Payment. The Borrowers will duly and punctually pay or cause to be
paid the interest on all Loans and Reimbursement Obligations, Fees and all other
amounts provided for in this Reimbursement and Pledge Agreement and the other
Loan Documents to which the Borrowers or any of their Subsidiaries are a party,
all in accordance with the terms of this Reimbursement and Pledge Agreement and
such other Loan Documents.

 

6.2 Maintenance of Office. The Borrowers will maintain their registered office
at 8 Par-La-Ville Road, Hamilton, HM 08, Bermuda, or at such other place as the
Borrowers shall designate upon written notice to the Administrative Agent, where
notices, presentations and demands to or upon the Borrowers in respect of the
Loan Documents to which the Borrowers are a party may be given or made.

 

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6.3 Records and Accounts. Each Borrower will (a) keep, and cause each of its
Subsidiaries to keep, true and accurate records and books of account in which
full, true and correct entries will be made in accordance with GAAP, (b)
maintain adequate accounts and reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence and amortization of its properties and the
properties of its Subsidiaries, contingencies, and other reserves, and (c) at
all times engage PricewaterhouseCoopers or other independent certified public
accountants satisfactory to the Administrative Agent as the independent
certified public accountants of the Parent and its Subsidiaries and will not
permit more than thirty (30) days to elapse between the cessation of such firm’s
(or any successor firm’s) engagement as the independent certified public
accountants of the Parent and its Subsidiaries and the appointment in such
capacity of a successor firm as shall be satisfactory to the Administrative
Agent.

 

6.4 Financial Statements, Certificates and Information. The Borrowers will
deliver to each of the Lenders:

 

(a) as soon as practicable, but in any event not later than ninety (90) days
after the end of each fiscal year of the Parent, (i) the consolidated balance
sheet of the Parent and its Subsidiaries and the consolidating balance sheet of
the Parent and its Subsidiaries, each as at the end of such year, and the
related consolidated statement of income and consolidated statement of cash flow
and consolidating statement of income and consolidating statement of cash flow
for such year, each setting forth in comparative form the figures for the
previous fiscal year and all such consolidated and consolidating statements to
be in reasonable detail, prepared in accordance with GAAP, and, in the case of
the consolidated balance sheet and related consolidated statement of income and
consolidated statement of cash flow, certified, without qualification and
without an expression of uncertainty as to the ability of the Parent, Mont Re or
any of their Subsidiaries to continue as going concerns, by
PricewaterhouseCoopers or any other independent certified public accountant
engaged pursuant to §6.3(c) and (ii); the consolidated balance sheet of the Mont
Re and its Subsidiaries and the consolidating balance sheet of the Mont Re and
its Subsidiaries, each as at the end of such year, and the related consolidated
statement of income and consolidated statement of cash flow and consolidating
statement of income and consolidating statement of cash flow for such year, each
setting forth in comparative form the figures for the previous fiscal year and
all such consolidated and consolidating statements to be in reasonable detail,
prepared in accordance with GAAP, and, in the case of the consolidated balance
sheet and related consolidated statement of income and consolidated statement of
cash flow, certified, without qualification;

 

(b) as soon as practicable, but in any event not later than forty-five (45) days
after the end of each of the fiscal quarters of the Parent, (i) copies of the
unaudited consolidated balance sheet of the Parent and its Subsidiaries and the
unaudited consolidating balance sheet of the Parent and its Subsidiaries, each
as at the end of such quarter, and the related consolidated statement of income
and consolidated statement of cash flow and consolidating statement of income
and consolidating statement of cash flow for the portion of the Parent’s fiscal
year then elapsed, all in reasonable detail and prepared in accordance with
GAAP, together with a certification by the principal financial or accounting
officer of the Parent that the information contained in such financial
statements fairly presents the financial position of the Parent and its
Subsidiaries on the date thereof (subject to year-end adjustments); and (ii)
copies of the unaudited consolidated balance sheet of the Mont Re and its
Subsidiaries and the unaudited

 

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consolidating balance sheet of the Mont Re and its Subsidiaries, each as at the
end of such quarter, and the related consolidated statement of income and
consolidated statement of cash flow and consolidating statement of income and
consolidating statement of cash flow for the portion of the Mont Re’s fiscal
year then elapsed, all in reasonable detail and prepared in accordance with
GAAP, together with a certification by the principal financial or accounting
officer of the Mont Re that the information contained in such financial
statements fairly presents the financial position of the Mont Re and its
Subsidiaries on the date thereof (subject to year-end adjustments);

 

(c) Within thirty (30) days of receipt of any audit committee report prepared by
the Borrowers’ accountants, if there are any reportable events resulting in any
discussion in the sections of such report entitled “Errors or Irregularities”,
“Illegal Acts” and “Misstatements Due to Fraud”, the Borrowers will provide
copies of such sections to the Administrative Agent;

 

(d) simultaneously with the delivery of the financial statements referred to in
subsections (a) and (b) above, a statement certified by the principal financial
or accounting officer of the Parent in substantially the form of Exhibit D
hereto (a “Compliance Certificate”) and setting forth in reasonable detail
computations evidencing compliance with the covenants contained in §8 and (if
applicable) reconciliations to reflect changes in GAAP since the Balance Sheet
Date;

 

(e) no later than the tenth (10th) Business Day of each month, or, following the
occurrence and during the continuance of an Event of Default, at such other
times as the Administrative Agent may request, a certificate (the “Pledged
Collateral Certificate”) substantially in the form of Exhibit E attached hereto,
signed by an officer of Mont Re, certifying compliance with the collateral
coverage requirement set forth in §6.8 and demonstrating, in detail satisfactory
to the Administrative Agent, the fair market value (as valued by Bloomberg or,
if Bloomberg is not available, another quotation service reasonably acceptable
to the Administrative Agent) of the Qualified Securities and the amount of cash
on deposit in the Deposit Account as of the last Business Day of the immediately
preceding month;

 

(f) five days after the date filed with the relevant Governmental Authority for
each of its Fiscal Years, but in any event within 125 days after the end of each
Fiscal Year of Mont Re and each other Insurance Subsidiary, a copy of the annual
financial statements required to be filed with the Minister of Finance of
Bermuda or such other appropriate Governmental Authority of the jurisdiction of
domicile of any Insurance Subsidiary;

 

(g) contemporaneously with the filing or mailing thereof, copies of all material
of a financial nature filed with the Securities and Exchange Commission or sent
to the stockholders of the Borrowers;

 

(h) from time to time such other financial data and information as the
Administrative Agent or any Lender may reasonably request;

 

In the event that GAAP requires the financial statements required under clauses
(a) and (b) above to be presented on a combined basis, the Borrowers shall
deliver such combined and combining statements in lieu of the required
consolidated and consolidating financial statements.

 

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6.5 Notices.

 

6.5.1 Defaults. As soon as practicable after Responsible Officer of a Borrower
knows of the existence of any Default or Event of Default, such Borrower will
notify the Administrative Agent, in writing, of the occurrence of such Default
or Event of Default, together with a reasonably detailed description thereof,
and the actions such Borrower proposes to take with respect thereto.

 

6.5.2 Notification of Claim against Pledged Collateral. Mont Re will,
immediately upon becoming aware thereof, notify the Administrative Agent, in
writing, of any set-off, claims, withholdings or other defenses to which any of
the Pledged Collateral, or the Administrative Agent’s rights with respect to the
Pledged Collateral, are subject other than with respect to the Custodial Lien
and Set-off Rights, provided, that Mont Re will notify the Administrative Agent
hereunder of any set-off exercised by the Custodian pursuant to the Custodial
Lien and Set-off Rights.

 

6.5.3 Notice of Litigation and Judgments. The Borrowers will, and will cause
each of their Subsidiaries to, give notice to the Administrative Agent and each
of the Lenders in writing within thirty (30) days of becoming aware of any
litigation or proceedings threatened in writing or any pending litigation and
proceedings affecting a Borrower or any of its Subsidiaries or to which a
Borrower or any of its Subsidiaries is or becomes a party involving an uninsured
claim against a Borrower or any of its Subsidiaries that could reasonably be
expected to have a Material Adverse Effect on such Borrower or any of its
Subsidiaries and stating the nature and status of such litigation or
proceedings. Each Borrower will give notice to the Administrative Agent, in
writing, in form and detail satisfactory to the Administrative Agent, within ten
(10) days of any final judgment not covered by insurance, against such Borrower
or any of its Subsidiaries in an amount in excess of $5,000,000.

 

6.6 Legal Existence; Maintenance of Properties. Each Borrower will do or cause
to be done all things necessary to preserve and keep in full force and effect
its legal existence, rights and franchises and those of its Subsidiaries. It (i)
will cause all of its properties and those of its Subsidiaries used or useful in
the conduct of its business or the business of its Subsidiaries to be maintained
and kept in good condition, repair and working order and supplied with all
necessary equipment, (ii) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
such Borrower may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times, and (iii)
will continue to engage primarily in the businesses now conducted by them and in
related businesses; provided that nothing in this §6.6 shall prevent such
Borrower from discontinuing the operation of any Subsidiary (other than Mont Re)
or the operation and maintenance of any of its properties or any of those of its
Subsidiaries (other than Mont Re) if such discontinuance is, in the judgment of
such Borrower, desirable in the conduct of its or their business and that do not
in the aggregate have a Material Adverse Effect.

 

6.7 Taxes. The Parent will, and will cause each of its Subsidiaries to, duly pay
and discharge, or cause to be paid and discharged, before the same shall become
overdue, all taxes, assessments and other governmental charges imposed upon it
and its real estate, sales and

 

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activities, or any part thereof, or upon the income or profits therefrom, other
than where failure to pay such taxes would not result in a Material Adverse
Effect; provided, that any such tax, assessment, charge, levy or claim need not
be paid if the validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if the Parent or such Subsidiary shall have
set aside on its books adequate reserves with respect thereto; and provided,
further that the Parent and each Subsidiary will pay all such taxes,
assessments, charges, levies or claims forthwith upon the commencement of
proceedings to foreclose any lien that may have attached to the Pledged
Collateral as security therefor.

 

6.8 Collateral Coverage. Mont Re hereby covenants and agrees that the Collateral
Coverage Amount (as hereinafter defined) must at all times be equal to or
greater than the Total Outstandings. As used herein, the “Collateral Coverage
Amount” means the sum of (a) the fair market value (as calculated by the
Administrative Agent in its reasonable discretion) of the Pledged Collateral
consisting of cash multiplied by 1.0 plus (b) the fair market value (as
calculated by the Administrative Agent by reference to Bloomberg or, if
Bloomberg is not available, another quotation service reasonably acceptable to
the Administrative Agent) of the Pledged Collateral consisting of Freely
Transferable debt obligations issued by the U.S. Treasury Department or backed
by the full faith and credit of the United States of America (the “Treasury
Collateral”) multiplied by .90 plus (c) the fair market value (as calculated by
the Administrative Agent by reference to Bloomberg or, if Bloomberg is not
available, another quotation service reasonably acceptable to the Administrative
Agent) of the Pledged Collateral consisting of Freely Transferable debt
obligations issued by Federal Agencies other than the U.S. Treasury Department
(the “Federal Agency Collateral”) multiplied by .80. The Federal Agency
Collateral together with the Treasury Collateral, shall be referred to
collectively as the “Qualified Securities”. If either (i) Mont Re’s A.M. Best
Rating falls below the rating of “A”-, or (ii) there is a default in the
performance of the covenant in §8.1 and a Cure Contribution has not been made,
(x) the multiplier “1.0” contained in clause (a) above shall be decreased to
“.90”, (y) the multiplier “.90” contained in clause (b) above shall be decreased
to “.80” and (z) the multiplier “.80” contained in clause (c) above shall be
decreased to .70. If at any time the Collateral Coverage Amount is less than the
Total Outstandings, then Mont Re shall promptly provide to the Administrative
Agent and pledge hereunder such additional cash or Qualified Securities as may
be necessary to satisfy the foregoing Collateral Coverage Amount. Failure to do
so within two (2) Business Days shall constitute an immediate and automatic
Event of Default under the terms and conditions of this Reimbursement and Pledge
Agreement. Notwithstanding the monthly reporting obligations set forth in
§6.4(e), the covenant contained herein shall be tested at all times.

 

6.9 Inspection of Properties and Books, etc.

 

6.9.1 General. The Borrowers shall permit the Administrative Agent, upon
reasonable prior notice and at reasonable times to visit and inspect any of the
properties of each Borrower or any of its Subsidiaries, to examine the books of
account of each Borrower and its Subsidiaries (and to make copies thereof and
extracts therefrom), and to discuss the affairs, finances and accounts of each
Borrower and its Subsidiaries with, and to be advised as to the same by, its and
their officers. Following the occurrence and during the continuance of an Event
of Default, any of the Lenders and any of the Administrative Agent’s or any of
the Lenders’ employees, agents, consultants or attorneys, may accompany the
Administrative Agent on such visits, inspections or discussions.

 

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6.9.2 Communications with Accountants. The Borrowers authorize the
Administrative Agent to communicate directly with the Borrowers’ independent
certified public accountants and authorizes such accountants to disclose to the
Administrative Agent and the Lenders any and all financial statements and other
supporting financial documents and schedules with respect to the business,
financial condition and other affairs of each Borrower or any of its
Subsidiaries. Following the occurrence and during the continuance of an Event of
Default, any of the Lenders and any of the Administrative Agent’s or any of the
Lenders’ employees, agents, consultants or attorneys, may participate in such
communications. At the request of the Administrative Agent, the Borrowers shall
deliver a letter addressed to such accountants instructing them to comply with
the provisions of this §6.9.2.

 

6.10 Compliance with Laws, Contracts, Licenses, and Permits. Each Borrower will,
and will cause each of its Subsidiaries to, comply with (a) the applicable laws
and regulations wherever its business is conducted, including all environmental
laws, except where failure to do so would not have a Material Adverse Effect,
(b) the provisions of its Governing Documents, (c) all agreements and
instruments by which it or any of its properties may be bound, except where
failure to do so would not have a Material Adverse Effect, and (d) all
applicable decrees, orders, and judgments, except where failure to do so would
not have a Material Adverse Effect. If any authorization, consent, approval,
permit or license from any officer, agency or instrumentality of any competent
government shall become necessary or required in order that a Borrower fulfill
any of its obligations hereunder or any of the other Loan Documents to which
such Borrower is a party, such Borrower will immediately take or cause to be
taken all reasonable steps within the power of such Borrower to obtain such
authorization, consent, approval, permit or license and furnish the
Administrative Agent and the Lenders with evidence thereof.

 

6.11 Use of Proceeds. Mont Re will obtain Letters of Credit solely for the
purposes set forth in §5.14.1. The Parent will only use the proceeds of Loans
for general corporate purposes.

 

6.12 Further Assurances. Each Borrower will, and will cause each of its
Subsidiaries to, cooperate with the Lenders and the Administrative Agent and
execute such further instruments and documents as the Lenders or the
Administrative Agent shall reasonably request to carry out to their satisfaction
the transactions contemplated by this Reimbursement and Pledge Agreement and the
other Loan Documents.

 

7. CERTAIN NEGATIVE COVENANTS.

 

Each Borrower covenants and agrees that, until the Tranche A Commitment
Termination Date and the Tranche B Commitment Termination Date have occurred and
all Obligations have been paid in full:

 

7.1 Business Activities. The Borrowers will not engage directly or indirectly
(whether through Subsidiaries or otherwise), as its primary business, in any
type of business other than the businesses conducted by them on the Amendment
Effective Date and in related businesses.

 

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7.2 Fiscal Year. The Borrowers will not, and will not permit any of it
Subsidiaries to, change the date of the end of its fiscal or financial year from
that set forth in §5.3.1.

 

7.3 Transactions with Affiliates. The Borrowers will not, and will not permit
any of their Subsidiaries to, engage in any transaction with any Affiliate
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any such Affiliate or, to the
knowledge of the Borrowers, any corporation, partnership, trust or other entity
in which any such Affiliate has a substantial interest or is an officer,
director, trustee or partner, on terms more favorable to such Person than would
have been obtainable on an arm’s-length basis in the ordinary course of business
provided that transactions between the Parent and any wholly-owned Subsidiary of
the Parent or between any wholly-owned Subsidiaries of the Parent shall be
excluded from the restrictions set forth in this §7.3.

 

7.4 Disposition of Assets. Neither Borrower shall, nor permit any of its
Insurance Subsidiaries to, sell, transfer, convey or lease all or substantially
all of its assets or sell or assign with or without recourse any receivables,
other than any sale, transfer, conveyance or lease in the ordinary course of
business, except for (x) any sale, transfer, lease or disposition of an asset by
a Subsidiary of a Borrower to a Subsidiary of a Borrower and (y) any such sale,
transfer, conveyance, lease or assignment by any wholly owned Subsidiary of the
Parent (other than Mont Re) to Mont Re or any other wholly owned Subsidiary of
the Parent, provided in each case no Default or Event of Default has occurred
and is continuing or would result therefrom.

 

7.5 Mergers, Consolidations and Sales. Neither Borrower shall, nor permit any
other Material Party to, merge or consolidate except for (i) any wholly-owned
Subsidiary of a Borrower may merge with any other wholly-owned Subsidiary of
such Borrower and (ii) Mont Re may merge with any other wholly-owned Subsidiary
of the Parent provided Mont Re is the surviving corporation, provided in each
case no Default or Event of Default has occurred and is continuing or would
result therefrom.

 

7.6 Liens. The Parent will not, and will not permit any of its Subsidiaries to,
create, assume, incur, guarantee or otherwise to permit any Debt secured by any
Lien upon any shares of Capital Stock of any Material Party (whether such shares
of Capital Stock are now owned or hereafter acquired) without effectively
providing concurrently that the Obligations (and, if the Borrowers so elect, any
other Debt of the Borrowers that is not subordinate to the Obligations and with
respect to which the governing instruments require, or pursuant to which a
Borrower is otherwise obligated, to provide such security) shall be secured
equally and ratably with such Debt for at least the time period such other Debt
is so secured.

 

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8. FINANCIAL COVENANTS.

 

The Borrowers covenant and agree that, until the occurrence of the Tranche A
Commitment Termination Date and the Tranche B Commitment Termination Date and
until all Obligations are paid in full, it shall:

 

8.1 Leverage Ratio. The Parent will not permit the Leverage Ratio to be more
than thirty percent (30%).

 

8.2 A.M. Best Rating. Mont Re will not permit its A.M. Best Rating to fall below
the rating of “A-”; provided, however, that in the event the A.M. Best Rating is
below “A-” but is at least “B++”, no Event of Default or Default shall result
from such downgrade unless such rating remains below “A-” on the date which is
60 days from the date of such downgrade.

 

9. CONDITIONS TO AMENDMENT EFFECTIVE DATE.

 

This Reimbursement and Pledge Agreement shall be and become effective on the
date that the following conditions precedent have been satisfied:

 

9.1 Reimbursement and Pledge Agreement. The Reimbursement and Pledge Agreement
shall have been duly executed and delivered by the respective parties thereto,
shall be in full force and effect and shall be in form and substance
satisfactory to the Administrative Agent and the Administrative Agent shall have
received a fully executed copy of each such document.

 

9.2 Certified Copies of Governing Documents. The Administrative Agent shall have
received from each Borrower a copy, certified by a duly authorized officer of
such Borrower to be true and complete on the Amendment Effective Date, of each
of its Governing Documents (other than shareholder agreements, voting trusts and
similar arrangements applicable to any of the Parent’s Capital Stock) as in
effect on such date of certification.

 

9.3 Corporate or Other Action. All corporate (or other) action necessary for the
valid execution, delivery and performance by each Borrower of this Reimbursement
and Pledge Agreement and the other Loan Documents to which it is or is to become
a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Administrative Agent shall have been provided to the
Administrative Agent.

 

9.4 Incumbency Certificate. The Administrative Agent shall have received from
each Borrower an incumbency certificate, dated as of the Amendment Effective
Date, signed by a duly authorized officer of such Borrower and giving the name
and bearing a specimen signature of each individual who shall be authorized: (a)
to sign, in the name and on behalf of such Borrower, each of the Loan Documents
to which such Borrower is or is to become a party; (b) to apply for Letters of
Credit or Loans, as the case may be; and (c) to give notices and to take other
action on its behalf under the Loan Documents.

 

9.5 Validity of Liens. This Reimbursement and Pledge Agreement and the Control
Agreement shall be effective to create in favor of the Administrative Agent a
legal, valid and enforceable first security interest in and lien upon the
Pledged Collateral (subject to (i) liens

 

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arising by operation of law, so long as the aggregate obligations secured
thereby do not exceed $1,000,000 and (ii) the Custodial Lien and Set-Off
Rights). All filings, recordings, deliveries of instruments and other actions
necessary or desirable in the opinion of the Administrative Agent to protect and
preserve such security interests shall have been duly effected. The
Administrative Agent shall have received evidence thereof in form and substance
satisfactory to the Administrative Agent.

 

9.6 Lien Searches. The Administrative Agent shall have received the results of
collateral searches with respect to the Pledged Collateral, indicating no liens,
encumbrances or security interest other those granted hereby and otherwise in
form and substance satisfactory to the Administrative Agent, it being understood
that current liens in favor of Fleet National Bank under the Existing Agreement,
will be evidenced on such collateral searches.

 

9.7 Control Agreement. The Administrative Agent shall have executed, and shall
have received a fully-executed copy of, the Control Agreement, in form and
substance satisfactory to the Administrative Agent.

 

9.8 Pledged Collateral Certificate. The Administrative Agent shall have received
from Mont Re a Pledged Collateral Certificate dated as of the Amendment
Effective Date.

 

9.9 Opinion of Counsel. Each of the Lenders and the Administrative Agent shall
have received a favorable legal opinion addressed to the Lenders and the
Administrative Agent, dated as of the Amendment Effective Date, in form and
substance satisfactory to the Administrative Agent, from New York and Bermuda
counsel to the Borrowers.

 

9.10 Payment of Fees and Expenses. The Borrowers shall have paid to the Lenders,
the Administrative Agent, or the Arrangers as appropriate, all amounts due and
owing under the Existing Agreement, and all fees required to be paid pursuant to
the Fee Letters and any and all other fees and expenses incurred by the
Administrative Agent in connection with this Reimbursement and Pledge Agreement
and the other Loan Documents, including, without limitation, legal fees and
expenses.

 

9.11 No Material Adverse Change. There shall not occur a material adverse change
since December 31, 2003 in the business, properties, condition (financial or
otherwise), assets, operations, income or prospects of the Parent and its
Subsidiaries taken as a whole, Mont Re individually or Mont Re and its
Subsidiaries taken as a whole or in the facts and information regarding such
entities as represented to date.

 

9.12 Representations True; No Event of Default. The representations and
warranties set forth in §5 shall be true and correct as of the Amendment
Effective Date and no Default or Event of Default shall have occurred and be
continuing. The Administrative Agent shall have received a certificate of the
Borrowers signed by a Responsible Officer of the Borrowers to that effect.

 

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10. CONDITION TO ALL CREDIT EXTENSIONS.

 

The obligation of each Lender and of each Issuing Bank to make a Credit
Extension, in each case whether on or after the Amendment Effective Date, shall
also be subject to the satisfaction of the following conditions precedent:

 

10.1 Representations True; No Event of Default. Each of the representations and
warranties of the Borrowers contained in this Reimbursement and Pledge Agreement
(other than §5.4), the other Loan Documents to which a Borrower is a party or in
any document or instrument delivered by the Borrowers pursuant to or in
connection with this Reimbursement and Pledge Agreement shall be true as of the
date as of which they were made and shall also be true at and as of the time of
the issuance, extension or renewal of such Letter of Credit, with the same
effect as if made at and as of that time (except to the extent of changes
resulting from transactions contemplated or permitted by this Reimbursement and
Pledge Agreement and the other Loan Documents and changes occurring in the
ordinary course of business that singly or in the aggregate do not have a
Material Adverse Effect, and to the extent that such representations and
warranties relate expressly to an earlier date) and no Default or Event of
Default shall have occurred and be continuing. The Administrative Agent shall
have received a certificate of the Borrowers signed by a Responsible Officer of
the Borrowers to such effect.

 

10.2 No Legal Impediment. No change shall have occurred in any applicable law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of the Issuing Bank would make it illegal for the Issuing Bank to issue, extend
or renew such Letter of Credit.

 

10.3 Documents. All documents in connection with the transactions contemplated
by this Reimbursement and Pledge Agreement, the other Loan Documents and all
other documents incident thereto shall be satisfactory in substance and in form
to the Lenders and to the Administrative Agent and the Administrative Agent’s
Special Counsel, and the Lenders, the Administrative Agent and such counsel
shall have received all information and such counterpart originals or certified
or other copies of such documents as the Administrative Agent may reasonably
request.

 

10.4 Pledged Collateral Certificate. The Administrative Agent shall have
received the most recent Pledged Collateral Certificate required to be delivered
to the Administrative Agent in accordance with §6.4(e) and, if requested by the
Administrative Agent, a Pledged Collateral Certificate dated within three (3)
days of the issuance, extension or renewal of such Letter of Credit.

 

10.5 Collateral Coverage Amount. The Total Outstandings shall not exceed the
Collateral Coverage Amount.

 

11. EVENTS OF DEFAULT; ACCELERATION; ETC.

 

11.1 Events of Default and Acceleration. Upon the occurrence and continuance of
any of the following events of default (each an “Event of Default”):

 

(a) default in the payment of any of the Obligations consisting of Reimbursement
Obligations or the principal amount of the Loans;

 

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(b) default in the payment of any Obligations (other than those specified in
clause (a) above) under any of the Loan Documents, including, without
limitation, default in the payment of Fees and interest, which shall continue
for more than three (3) Business Days;

 

(c) default in the performance of any of the agreements or covenants of the
Borrowers set forth in §§6.5, 6.6, 6.8, 6.11, 7.1, 7.4, 7.5 or §8.2 after the
date upon which any applicable grace or cure periods that are expressly herein
provided shall have elapsed;

 

(d) default in the performance of any of the agreements or covenants of Mont Re
set forth in §6.4(e) and continuance of such default for a period of 10 days
after the date upon which any applicable grace or cure periods that are
expressly herein provided shall have elapsed;

 

(e) default in the performance of any of the agreements or covenants of the
Borrowers set forth in §8.1 and continuance of such default for a period of 30
days unless a Cure Contribution is made during such 30 days;

 

(f) the A.M. Best Rating of Mont Re shall be lower than B++;

 

(g) default in the performance of any of the agreements or covenants of the
Borrowers under this Reimbursement and Pledge Agreement or any other Loan
Document (other than those specified in §§11.1(a), (b), (c), (d), (e) or (f)
above) and continuance of such default for a period of 30 days after the date
upon which (x) any Responsible Officer had actual knowledge of such default or
(y) any applicable grace or cure periods that are expressly herein provided
shall have elapsed;

 

(h) the Control Agreement is terminated by any party thereto and Mont Re, the
Administrative Agent and another securities intermediary satisfactory to the
Administrative Agent have not, as of the date that is three (3) Business Days
prior to the effective date of such termination, entered into a control
agreement in form and substance reasonably satisfactory to the Administrative
Agent, such that the Administrative Agent’s first priority lien and security
interest in the Pledged Collateral is preserved unimpaired;

 

(i) the Administrative Agent’s security interest in the Pledged Collateral shall
cease to be a first priority perfected security interest, otherwise than in
accordance with the terms hereof or in connection with (i) liens arising by
operation of law, so long as the aggregate obligations secured thereby do not
exceed $1,000,000 or (ii) in connection with the Custodial Lien and Set-Off
Rights; or any action at law, suit or in equity or other legal proceeding to
cancel, revoke or rescind this Reimbursement and Pledge Agreement or any other
Loan Document shall be commenced by or on behalf of a Borrower or any of its
shareholders, or any court or any other governmental or regulatory authority or
agency of competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, this Reimbursement and
Pledge Agreement or any one or more of the other Loan Documents is illegal,
invalid or unenforceable in accordance with the terms thereof;

 

(j) a Borrower shall be enjoined, restrained or in any way prevented by the
order of any court or any administrative or regulatory agency from conducting
any material part of its business and such order shall continue in effect for
more than thirty (30) days;

 

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(k) a Material Party admits in writing that it is generally unable to pay debts
as they mature or become due;

 

(l) a Material Party makes a general assignment for the benefit of creditors;

 

(m) any of the Pledged Collateral is subject to any lien or encumbrance or any
claim or demand, other than (i) liens arising by operation of law, so long as
the aggregate obligations secured thereby do not exceed $1,000,000 and (ii) the
Custodial Lien and Set-Off Rights, that if unpaid might by law or upon
bankruptcy, insolvency or otherwise, be given any priority whatsoever over Mont
Re’s general creditors with respect to the Pledged Collateral or is transferred
for the purposes of the payment of indebtedness not arising hereunder or is
taken by attachment, execution or any other form of legal process and/or the
commencement of a proceeding by or against a Material Party under the federal
Bankruptcy Code or the equivalent under Bermuda law, or any other federal, state
or Bermuda laws seeking to adjudicate a Material Party as bankrupt or insolvent,
or seeking the liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of a Material Party or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator, debtor in possession,
examiner or other similar official for a Material Party, the Pledged Collateral
or any substantial part of a Material Party’s property, with or without consent
of such Material Party, for any purpose whatsoever and, in the case of any such
proceeding instituted against a Material Party (but not instituted by it),
either such proceeding shall remain unstayed and undismissed for a period of
sixty (60) days; or any of the following actions sought in such proceeding shall
occur: the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, a Material Party,
the Pledged Collateral or for any substantial part of its property;

 

(n) the assertion of any levy, seizure or attachment on the Pledged Collateral,
other than with respect to the Custodial Lien and Set-Off Rights, or the taking
of any action by a regulatory authority to obtain control of a Borrower, a
substantial part of its assets (which shall not have been vacated, discharged or
stayed or bonded pending appeal within sixty (60) days from the entry thereof),
or any part of the Pledged Collateral, other than with respect to the Custodial
Lien and Set-Off Rights;

 

(o) a Change in Control shall occur;

 

(p) there shall occur any (i) default in the payment when due (subject to any
applicable grace period), whether by acceleration or otherwise, of any other
Debt of a Material Party if the aggregate amount of Debt of a Borrower and/or
any other Material Parties which is accelerated or due and payable, or which
(subject to any applicable grace period) may be accelerated or otherwise become
due and payable, by reason of such default or defaults is $25,000,000 or more,
(ii) default in the performance or observance of any obligation or condition
with respect to any such other Debt of, or guaranteed by, a Material Party if
the effect of such default or defaults is to accelerate the maturity (subject to
any applicable grace period) of any such Debt of $25,000,000 or more in the
aggregate or to permit the holder or holders of such indebtedness of $25,000,000
or more in the aggregate, or any trustee or agent for such holders, to cause
such Debt to become due and payable prior to its expressed maturity, (iii) a
final judgment

 

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or judgments which exceed an aggregate of $25,000,000 (excluding any portion
thereof which is covered by insurance so long as the insurer is reasonably
likely to be able to pay and is not denying coverage in writing) shall be
rendered against a Material Party and shall not have been discharged or vacated
or had execution thereof stayed pending appeal within 60 days after entry or
filing of such judgment(s);

 

If any Event of Default shall have occurred and be continuing, the
Administrative Agent may and, upon the request of the Required Lenders, shall,
by notice to the Borrowers, terminate the unused portion of the credit
hereunder, and upon such notice being given such unused portion of the credit
hereunder shall terminate immediately and the Administrative Agent shall be
relieved of all further obligations to issue, extend or renew Letters of Credit
or make Loans. No termination of the credit hereunder shall relieve the
Borrowers or any of their Subsidiaries of any of the Obligations.
Notwithstanding anything to the contrary contained herein, no notice given or
declaration by the Administrative Agent pursuant to this §11 shall affect (i)
the obligation of the Lenders or the Administrative Agent to make any payment
under any Letter of Credit in accordance with the terms of such Letter of Credit
or (ii) the obligations of each Lender in respect of each Letter of Credit.

 

If any Event of Default shall occur and be continuing, the Administrative Agent
may or at the request of the Required Lenders, shall, with or without prior
notice to the Borrowers, and without demand for additional collateral, (a)
transfer, or cause the Custodian to transfer any or all of the Pledged
Collateral and/or the Securities Account and/or the Deposit Account into the
name of the Administrative Agent or its nominee (including, without limitation,
having the Pledged Collateral debited from the Securities Account and/or the
Deposit Account and credited to an account designated by the Administrative
Agent) and vote any Pledged Collateral constituting securities or closely held
Capital Stock; (b) require Mont Re to provide additional Collateral if the
Collateral Coverage Amount is not equal to or greater than the Total
Outstandings at any time, (c) sell at public or private sale any or all of the
Pledged Collateral; (d) apply to, or set off against, the Obligations of the
Borrowers all or any portion of the Pledged Collateral, securities or other
property of the Borrowers in the possession of the Administrative Agent; (e)
convert any of the Pledged Collateral or any proceeds thereof into Alternative
Currencies, with any such conversion costs being considered a collection expense
and added to the Obligations; and (f) at its discretion in its own name or in
the name of Mont Re take any action for the collection of the Pledged
Collateral, including the filing of a proof of claim in insolvency proceedings,
and may receive the proceeds thereof and execute releases therefor. After
deducting its expenses, including reasonable out-of-pocket attorney’s fees,
incurred in the sale or collection of the Pledged Collateral, the Administrative
Agent shall apply the proceeds to the Obligations and shall account to Mont Re
for any surplus. The Borrowers agree that the Administrative Agent has no
obligation to sell or otherwise liquidate the Pledged Collateral in any
particular order or to apply the proceeds thereof to any particular portion of
the Obligations. The Borrowers further agree that after the occurrence and
during the continuance of an Event of Default, to the extent that any voting
rights exist, the Administrative Agent shall have no obligation to vote any
Pledged Collateral constituting securities or closely held Capital Stock but
shall have the right to do so in its sole discretion.

 

In connection with any secured party’s sale, the Administrative Agent is
authorized, if it deems it advisable to do so, in order to comply with any
applicable securities laws, to restrict the

 

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prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Pledged Collateral for their own account for investment,
and not with a view to the distribution or re-sale thereof. Sales made subject
to such restriction shall be deemed to have been made in a commercially
reasonable manner.

 

12. THE ADMINISTRATIVE AGENT.

 

12.1 Authorization.

 

(a) Bank of America shall replace Fleet as Administrative Agent on the Amendment
Effective Date. The Administrative Agent is authorized to take such action on
behalf of each of the Lenders and to exercise all such powers as are hereunder
and under any of the other Loan Documents and any related documents delegated to
the Administrative Agent, together with such powers as are reasonably incident
thereto, including the authority, without the necessity of any notice to or
further consent of the Lenders, from time to time to take any action with
respect to any Pledged Collateral which may be necessary to perfect, maintain
perfected or insure the priority of the security interest in and liens upon the
Pledged Collateral, provided, that no duties or responsibilities not expressly
assumed herein or therein shall be implied to have been assumed by the
Administrative Agent.

 

(b) The relationship between the Administrative Agent and each of the Lenders is
that of an independent contractor. The use of the term “Administrative Agent” is
for convenience only and is used to describe, as a form of convention, the
independent contractual relationship between the Administrative Agent and each
of the Lenders. Nothing contained in this Reimbursement and Pledge Agreement nor
the other Loan Documents shall be construed to create an agency, trust or other
fiduciary relationship between the Administrative Agent and any of the Lenders.

 

(c) As an independent contractor empowered by the Lenders to exercise certain
rights and perform certain duties and responsibilities hereunder and under the
other Loan Documents, the Administrative Agent is nevertheless a
“representative” of the Lenders, as that term is defined in Article 1 of the
Uniform Commercial Code, for purposes of actions for the benefit of the Lenders
and the Administrative Agent with respect to all collateral security and
guaranties contemplated by the Loan Documents. Such actions include the
designation of the Administrative Agent as “secured party”, “mortgagee” or the
like on all financing statements and other documents and instruments, whether
recorded or otherwise, relating to the attachment, perfection, priority or
enforcement of any security interests, mortgages or deeds of trust in collateral
security intended to secure the payment or performance of any of the
Obligations, all for the benefit of the Lenders and the Administrative Agent.

 

12.2 Employees and Administrative Agents. The Administrative Agent may exercise
its powers and execute its duties by or through employees or agents and shall be
entitled to take, and to rely on, advice of counsel concerning all matters
pertaining to its rights and duties under this Reimbursement and Pledge
Agreement and the other Loan Documents. The Administrative Agent may utilize the
services of such Persons as the Administrative Agent in its sole discretion may
reasonably determine.

 

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12.3 No Liability. Neither the Administrative Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Administrative Agent
or such other Person, as the case may be, shall be liable for losses due to its
willful misconduct or gross negligence.

 

12.4 No Representations.

 

12.4.1 General. The Administrative Agent shall not be responsible for the
execution or validity or enforceability of this Reimbursement and Pledge
Agreement, the Letters of Credit, any of the other Loan Documents or any
instrument at any time constituting, or intended to constitute, collateral
security for the Obligations, or for the value of any such collateral security
or for the validity, enforceability or collectibility of any such amounts owing
with respect to any of the Obligations, or for any recitals or statements,
warranties or representations made herein or in any of the other Loan Documents
or in any certificate or instrument hereafter furnished to it by or on behalf of
the Borrowers or any of their Subsidiaries, or be bound to ascertain or inquire
as to the performance or observance of any of the terms, conditions, covenants
or agreements herein or in any instrument at any time constituting, or intended
to constitute, collateral security for the Obligations or to inspect any of the
properties, books or records of the Borrowers or any of their Subsidiaries. The
Administrative Agent shall not be bound to ascertain whether any notice,
consent, waiver or request delivered to it by either Borrower or any Lender
shall have been duly authorized or is true, accurate and complete. The
Administrative Agent has not made nor does it now make any representations or
warranties, express or implied, nor does it assume any liability to the Lenders,
with respect to the credit worthiness or financial conditions of either Borrower
or any of its Subsidiaries. Each Lender acknowledges that it has, independently
and without reliance upon the Administrative Agent or any other Lender, and
based upon such information and documents as it has deemed appropriate, made its
own credit analysis and decision to enter into this Reimbursement and Pledge
Agreement.

 

12.4.2 Closing Documentation, etc. For purposes of determining compliance with
the conditions set forth in §9, each Lender that has executed this Reimbursement
and Pledge Agreement shall be deemed to have consented to, approved or accepted,
or to be satisfied with, each document and matter either sent, or made
available, by the Administrative Agent or the Arranger to such Lender for
consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to such Lender, unless
an officer of the Administrative Agent or the Arranger acting upon the
Borrowers’ account shall have received notice from such Lender not less than two
(2) days prior to the Amendment Effective Date specifying such Lender’s
objection thereto and such objection shall not have been withdrawn by notice to
the Administrative Agent or the Arranger to such effect on or prior to the
Amendment Effective Date.

 

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12.5 Payments.

 

12.5.1 Payments to Administrative Agent. A payment by a Borrower to the
Administrative Agent hereunder or any of the other Loan Documents for the
account of any Lender shall constitute a payment to such Lender. The
Administrative Agent agrees promptly to distribute to each Lender such Lender’s
pro rata share of payments received by the Administrative Agent for the account
of the Lenders except as otherwise expressly provided herein or in any of the
other Loan Documents.

 

12.5.2 Distribution by Administrative Agent. If in the opinion of the
Administrative Agent the distribution of any amount received by it in such
capacity hereunder or under any of the other Loan Documents might involve it in
liability, it may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent jurisdiction.
If a court of competent jurisdiction shall adjudge that any amount received and
distributed by the Administrative Agent is to be repaid, each Person to whom any
such distribution shall have been made shall either repay to the Administrative
Agent its proportionate share of the amount so adjudged to be repaid or shall
pay over the same in such manner and to such Persons as shall be determined by
such court.

 

12.5.3 Delinquent Lenders. Notwithstanding anything to the contrary contained in
this Reimbursement and Pledge Agreement or any of the other Loan Documents, any
Lender that (a) fails (i) to fund a Loan or purchase any Letter of Credit
Participation (ii) to comply with the provisions of §15.2 with respect to making
dispositions and arrangements with the other Lenders, where such Lender’s share
of any payment received, whether by set-off or otherwise, is in excess of its
pro rata share of such payments due and payable to all of the Lenders, in each
case as, when and to the full extent required by the provisions of this
Reimbursement and Pledge Agreement, or (b) has been deemed insolvent or become
the subject of a bankruptcy or insolvency proceeding, shall be deemed delinquent
(a “Delinquent Lender”) and shall be deemed a Delinquent Lender until such time
as such delinquency is satisfied.

 

12.6 Holders of Participations. The Administrative Agent may deem and treat the
purchaser of any Letter of Credit Participation as the absolute owner or
purchaser thereof for all purposes hereof until it shall have been furnished in
writing with a different name by such purchaser or by a subsequent holder,
assignee or transferee.

 

12.7 Indemnity. The Lenders ratably agree hereby to indemnify and hold harmless
the Administrative Agent and its Affiliates from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Administrative Agent or such
Affiliate has not been reimbursed by the Borrowers as required by §15.3), and
liabilities of every nature and character arising out of or related to this
Reimbursement and Pledge Agreement or any of the other Loan Documents (including
without limitation, the Administrative Agent’s indemnity obligations under the
Control Agreement), or the transactions contemplated or evidenced hereby or
thereby, or the Administrative Agent’s actions taken hereunder or thereunder,
except to the extent that any of the same shall be directly caused by the
Administrative Agent’s willful misconduct or gross negligence.

 

12.8 Administrative Agent as Lender. In its individual capacity, Bank of America
shall have the same obligations and the same rights, powers and privileges in
respect to its Commitment and as the purchaser of any Letter of Credit
Participations, as it would have were it not also the Administrative Agent.

 

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12.9 Resignation. The Administrative Agent may resign at any time by giving
sixty (60) days prior written notice thereof to the Lenders and the Borrowers;
provided that any such resignation by Bank of America shall also constitute its
resignation as Issuing Bank (except as to Letters of Credit issued by it and
then outstanding). Upon any such resignation, the Required Lenders shall have
the right to appoint a successor Administrative Agent. Unless a Default or Event
of Default shall have occurred and be continuing, such successor Administrative
Agent shall be reasonably acceptable to the Borrowers. If no successor
Administrative Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty (30) days after the retiring
Administrative Agent’s giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be a financial institution (a) having a senior
unsecured debt rating of not less than “A+” or its equivalent by S&P and (b) so
long as no Default or Event of Default has occurred, approved by the Borrowers
in their reasonable discretion. If no successor shall have been so appointed and
accepted within sixty (60) days after the retiring Administrative Agent’s giving
of notice of resignation, then the retiring Administrative Agent’s resignation
shall nonetheless become effective and (1) the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder and (2) the
Required Lenders shall perform the duties of the Administrative Agent (and all
payments and communications provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender directly) until
such time as the Required Lenders appoint a successor Administrative Agent as
provided for above in this paragraph. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. After any retiring Administrative Agent’s
resignation, the provisions of this Reimbursement and Pledge Agreement and the
other Loan Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Administrative
Agent.

 

12.10 Administrative Agent May File Proofs of Claim.

 

(a) In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial, administrative or like proceeding or any assignment for the benefit of
creditors relative to a Borrower or any of its Subsidiaries, the Administrative
Agent (irrespective of whether the principal of any Reimbursement Obligation or
Unpaid Reimbursement Obligation shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on such Borrower) shall be
entitled and empowered, by intervention in such proceeding, under any such
assignment or otherwise:

 

(i) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Obligations that are owing and unpaid and to
file such other documents as may be necessary or advisable in order to have the
claims of the Lenders and the Administrative Agent (including any claim for the
reasonable

 

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compensation, expenses, disbursements and advances of the Lenders and the
Administrative Agent and their respective agents and counsel and all other
amounts due the Lenders and the Administrative Agent under this Reimbursement
and Pledge Agreement) allowed in such proceeding or under any such assignment;
and

 

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

 

(b) Any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such proceeding or under any such assignment is
hereby authorized by each Lender to make such payments to the Administrative
Agent and, in the event that the Administrative Agent shall consent to the
making of such payments directly to the Lenders, nevertheless to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under this
Reimbursement and Pledge Agreement.

 

(c) Nothing contained herein shall authorize the Administrative Agent to consent
to or accept or adopt on behalf of any Lender any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations owed to such
Lender or the rights of any Lender or to authorize the Administrative Agent to
vote in respect of the claim of any Lender in any such proceeding or under any
such assignment.

 

12.11 Notification of Defaults and Events of Default. Each Lender hereby agrees
that, upon learning of the existence of a Default or an Event of Default, it
shall promptly notify the Administrative Agent thereof. The Administrative Agent
hereby agrees that upon receipt of any notice under this §12.11 it shall
promptly notify the other Lenders of the existence of such Default or Event of
Default.

 

12.12 Duties in the Case of Enforcement. In case one of more Events of Default
have occurred and shall be continuing, and whether or not acceleration of the
Obligations shall have occurred, the Administrative Agent shall, if (a) so
requested by the Required Lenders and (b) the Lenders have provided to the
Administrative Agent such additional indemnities and assurances against expenses
and liabilities as the Administrative Agent may reasonably request, proceed to
enforce the provisions of this Reimbursement and Pledge Agreement and the other
Loan Documents authorizing the sale or other disposition of all or any part of
the Pledged Collateral and exercise all or any such other legal and equitable
and other rights or remedies as it may have in respect of such Pledged
Collateral. The Required Lenders may direct the Administrative Agent in writing
as to the method and the extent of any such sale or other disposition, the
Lenders hereby agreeing to indemnify and hold the Administrative Agent, harmless
from all liabilities incurred in respect of all actions taken or omitted in
accordance with such directions, provided that the Administrative Agent need not
comply with any such direction to the extent that the Administrative Agent
reasonably believes the Administrative Agent’s compliance with such direction to
be unlawful or commercially unreasonable in any applicable jurisdiction.

 

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13. SUCCESSORS AND ASSIGNS.

 

13.1 General Conditions. The provisions of this Reimbursement and Pledge
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that
neither Borrower may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender and no
Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (a) to an Eligible Assignee in accordance with the provisions
of §13.2, or (b) by way of participation in accordance with the provisions of
§13.4 or (c) by way of pledge or assignment of a security interest subject to
the restrictions of §13.6 (and any other attempted assignment or transfer by any
party hereto shall be null and void). Nothing in this Reimbursement and Pledge
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in §13.4 and, to the
extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Reimbursement and Pledge Agreement or any of
the other Loan Documents.

 

13.2 Assignments. Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this
Reimbursement and Pledge Agreement (including all or a portion of its
Commitments); provided, that (a) except in the cases of an assignment of the
entire remaining amount of the assigning Lender’s Commitments or, of an
assignment to a Lender or a Lender Affiliate, the aggregate amount of the
Commitments being assigned shall not be less than $5,000,000 unless each of the
Administrative Agent and, so long as no Default or Event of Default has occurred
and is continuing, the Borrowers, otherwise consent (each such consent not to be
unreasonably withheld or delayed); (b) each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Reimbursement and Pledge Agreement with respect the
Commitment assigned, it being understood that non-pro rata assignments of or
among any of the Commitments and the Loans and Reimbursement Obligations are not
permitted; (c) any assignment of a Commitment must be approved by the
Administrative Agent, the Issuing Banks and so long as no Default or Event of
Default has occurred and is continuing, the Borrowers, (such approval of the
Borrowers not to be unreasonably withheld), unless the Person that is the
proposed assignee is itself a Lender with a Commitment; and (d) the parties to
each assignment shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and recordation fee of
$3,500 (provided, that such processing and recordation fee may be waived by the
Administrative Agent, in its sole discretion) and the Eligible Assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire. Subject to acceptance and recording thereof by the
Administrative Agent pursuant to §13.3, from and after the effective date
specified in each Assignment and Assumption, the Eligible Assignee thereunder
shall be a party to this Reimbursement and Pledge Agreement and, to the extent
of the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Reimbursement and Pledge Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this
Reimbursement and Pledge Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Reimbursement and Pledge Agreement, such Lender shall cease to be

 

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a party hereto) but shall continue to be entitled to the benefits of §§15.3 and
15.4 with respect to facts and circumstances occurring prior to the effective
date of such assignment. Any assignment or transfer by a Lender of rights or
obligations under this Reimbursement and Pledge Agreement that does not comply
with this paragraph shall be treated for purposes of this Reimbursement and
Pledge Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with §13.4.

 

13.3 Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrowers, shall maintain at the Administrative Agent’s Office a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of
each Lender pursuant to the terms hereof from time to time (the “Register”). The
entries in the Register shall be conclusive, and the Borrowers, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Reimbursement and Pledge Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.

 

13.4 Participations. Any Lender may at any time, without the consent of, or
notice to, the Borrowers or the Administrative Agent, sell participations to any
Person (other than a natural person) (each, a “Participant”) in all or a portion
of such Lender’s rights and/or obligations under this Reimbursement and Pledge
Agreement (including all or a portion of its Commitment); provided, that (a)
such Lender’s obligations under this Reimbursement and Pledge Agreement shall
remain unchanged, (b) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (c) the Borrowers,
the Administrative Agent 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 Reimbursement and Pledge 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 Reimbursement and
Pledge Agreement and to approve any amendment, modification or waiver of any
provision of this Reimbursement and Pledge Agreement; provided, that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver that
would extend the term or increase the amount of the Commitment of such Lender as
it relates to such Participant, reduce the amount of any Letter of Credit Fee to
which such Participant is entitled or extend any regularly scheduled payment
date for principal or interest. Subject to §13.5, each Borrower agrees that each
Participant shall be entitled to the benefits of §§3.3, 3.4 and 3.5 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to §13.2. To the extent permitted by law, each Participant also shall
be entitled to the benefits of §15.2 as though it were a Lender, provided such
Participant agrees to be subject to §15.2 as though it were a Lender.

 

13.5 Payments to Participants. A Participant shall not be entitled to receive
any greater payment under §§3.3, 3.4 and 3.5 than the applicable Lender would
have been entitled to receive with respect to the participation sold to such
Participant.

 

13.6 Miscellaneous Assignment Provisions. A Lender may at any time grant a
security interest in all or any portion of its rights under this Reimbursement
and Pledge Agreement to

 

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secure obligations of such Lender, in connection with any pledge or assignment
to secure obligations to any of the twelve Federal Reserve Administrative Agents
organized under §4 of the Federal Reserve Act, 12 U.S.C. §341; provided that no
such grant shall release such Lender from any of its obligations hereunder,
provide any voting rights hereunder to the secured party thereof, substitute any
such secured party for such Lender as a party hereto or affect any rights or
obligations of either Borrower or the Administrative Agent hereunder.

 

13.7 Assignee or Participant Affiliated with the Borrowers. If any assignee
Lender is an Affiliate of the Borrowers, then any such assignee Lender shall
have no right to vote as a Lender hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Administrative Agent pursuant to §11, and
the determination of the Required Lenders shall for all purposes of this
Reimbursement and Pledge Agreement and the other Loan Documents be made without
regard to such assignee Lender’s interest in any of the Reimbursement
Obligations. If any Lender sells a participating interest in any of the
Reimbursement Obligations to a Participant, and such Participant is a Borrower
or an Affiliate of the Borrowers, then such transferor Lender shall promptly
notify the Administrative Agent of the sale of such participation. A transferor
Lender shall have no right to vote as a Lender hereunder or under any of the
other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or modifications to any of the Loan Documents
or for purposes of making requests to the Administrative Agent pursuant to §11
to the extent that such participation is beneficially owned by a Borrower or any
Affiliate of a Borrower, and the determination of the Required Lenders shall for
all purposes of this Reimbursement and Pledge Agreement and the other Loan
Documents be made without regard to the interest of such transferor Lender in
the Reimbursement Obligations to the extent of such participation.

 

14. MONT RE GUARANTEE

 

14.1 Unconditional Guarantee. For valuable consideration, receipt whereof is
hereby acknowledged, and to induce each Lender to make Loans to and on account
of the Parent and to induce the Administrative Agent to act hereunder, Mont Re
hereby unconditionally and irrevocably guarantees to each Lender and the
Administrative Agent the punctual payment when due, whether at stated maturity,
by acceleration or otherwise, of all Obligations of Parent, whether for
principal, interest, fees, expenses, indemnification or otherwise, whether
direct or indirect, absolute or contingent or now existing or hereafter arising
(such Obligations being the “Guaranteed Obligations”). Without limiting the
generality of the foregoing, Mont Re’s liability shall extend to all amounts
that constitute part of the Guaranteed Obligations and would be owed by the
Parent to the Administrative Agent or any other Lender under this Reimbursement
and Pledge Agreement but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Parent. This is a guarantee of payment and not of
collection merely.

 

14.2 Guarantee Absolute. Mont Re guarantees that the Guaranteed Obligations will
be paid strictly in accordance with the terms of this Reimbursement and Pledge
Agreement, regardless of any law or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of any Lender or the
Administrative Agent with respect thereto. The

 

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Obligations of Mont Re under this §14 are independent of the Guaranteed
Obligations, and a separate action or actions may be brought and prosecuted
against Mont Re to enforce this §14, irrespective of whether any action is
brought against the Parent or whether the Parent is joined in any such action or
actions. The liability of Mont Re under this guarantee shall be irrevocable,
absolute and unconditional irrespective of, and Mont Re hereby irrevocably
waives any defense it may now or hereafter have in any way relating to, any or
all of the following:

 

(a) any lack of validity or enforceability of this Reimbursement and Pledge
Agreement or any other agreement or instrument relating thereto;

 

(b) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Guaranteed Obligations, or any other amendment or waiver
of or any consent to departure from this Reimbursement and Pledge Agreement
(other than this §14);

 

(c) any taking, exchange, release or non-perfection of any collateral or any
taking, release or amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Guaranteed Obligations;

 

(d) any change, restructuring or termination of the corporate structure or
existence of the Parent or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Parent or any of its assets or any resulting
release or discharge of any obligation of the Parent under this Reimbursement
Agreement and Pledge Agreement; or

 

(e) any other circumstance (including, without limitation, any statute of
limitations to the fullest extent permitted by applicable law) which might
otherwise constitute a defense available to, or a legal or equitable discharge
of, Mont Re, or the Parent (other than a discharge arising from the payment in
full of the Guaranteed Obligations).

 

This guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by any Lender or the Administrative Agent upon the
insolvency, bankruptcy or reorganization of the Parent or otherwise, all as
though such payment had not been made.

 

14.3 Waivers. Mont Re hereby expressly waives promptness, diligence, notice of
acceptance, presentment, demand for payment, protest, any requirement that any
right or power be exhausted or any action be taken against the Parent or against
any other guarantor of all or any portion of the Total Outstandings, and all
other notices and demands whatsoever.

 

(a) Mont Re hereby waives any right to revoke this guaranty, and acknowledges
that this guaranty is continuing in nature and applies to all Guaranteed
Obligations, whether existing now or in the future and regardless of whether
Total Outstandings are reduced to zero at any time or from time to time.

 

(b) Mont Re acknowledges that it will receive substantial direct and indirect
benefits from the financing arrangements contemplated herein and that the
waivers set forth in this §14 are knowingly made in contemplation of such
benefits.

 

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14.4 Subrogation. Mont Re will not exercise any rights that it may now or
hereafter acquire against the Parent or any other insider guarantor that arise
from the existence, payment, performance or enforcement of the Guaranteed
Obligations under this Reimbursement and Pledge Agreement, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of the
Administrative Agent or any other Lender against the Parent or any other insider
guarantor or any collateral, whether or not such claim, remedy or right arises
in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from the Parent or any other insider
guarantor, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim, remedy or right,
unless and until all of the Guaranteed Obligations and all other amounts payable
under this guaranty shall have been paid in full in cash and the Commitments
shall have terminated. If any amount shall be paid to Mont Re in violation of
the preceding sentence at any time prior to the later of the payment in full in
cash of the Guaranteed Obligations and all other amounts payable under this
guaranty and the termination of the Commitments, such amount shall be held in
trust for the benefit of the Administrative Agent and the other Lenders and
shall forthwith be paid to the Administrative Agent to be credited and applied
to the Guaranteed Obligations and all other amounts payable under this guaranty,
whether matured or unmatured, in accordance with the terms of this Reimbursement
and Pledge Agreement, or to be held as collateral for any Guaranteed Obligations
or other amounts payable under this guaranty thereafter arising. Mont Re
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by this Reimbursement and Pledge Agreement
and that the waiver set forth in this section is knowingly made in contemplation
on such benefits.

 

14.5 Survival. This guaranty is a continuing guarantee and shall (a) remain in
full force and effect until payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this guaranty and the
termination of the Commitments, (b) be binding upon Mont Re, its successors and
assigns, (c) inure to the benefit of and be enforceable by each Lender
(including each assignee Lender pursuant to §13) and the Administrative Agent
and their respective successors, transferees and assigns and (d) shall be
reinstated if at any time any payment to a Lender or the Administrative Agent
hereunder is required to be restored by such Lender or the Administrative Agent.

 

14.6 Severability. Notwithstanding any other provision of this §14 to the
contrary, in the event that any action is brought seeking to invalidate Mont
Re’s obligations under this §14 under any fraudulent conveyance or fraudulent
transfer theory, Mont Re shall be liable under this §14 only for an amount equal
to the maximum amount of liability that could have been incurred under
applicable law by Mont Re under any guarantee of the Obligations of the Parent
(or any portion thereof) at the time of the execution and delivery of this
Reimbursement and Pledge Agreement (or, if such date is determined not to be the
appropriate date for determining the enforceability of Mont Re’s obligations
under this §14 for fraudulent conveyance or transfer purposes, on the date
determined to be so appropriate) without rendering such a hypothetical guarantee
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer (the “Maximum Guaranteed Obligations”) and not for any greater amount,
as if the stated amount of the Guaranteed Obligations had instead been the
Maximum Guaranteed Obligations.

 

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15. PROVISIONS OF GENERAL APPLICATIONS.

 

15.1 Authorization to File Financing Statements. The Administrative Agent is
hereby authorized to file (a) in any Uniform Commercial Code filing office a
financing statement naming Mont Re as the debtor and indicating the collateral
as the Pledged Collateral, including, the Securities Account and the Deposit
Account and all property held therein and any and all proceeds of any thereof,
whether now or hereafter existing or arising and (b) any registration of the
Lien in Bermuda the Administrative Agent deems appropriate.

 

15.2 Setoff. Each Borrower hereby grants to the Administrative Agent and each of
the Lenders a continuing lien, security interest and right of set-off as
security for all liabilities and obligations to the Administrative Agent and
each Lender, whether now existing or hereafter arising, upon and against all
deposits, credits, collateral and property, now or hereafter in the possession,
custody, safekeeping or control of the Administrative Agent or such Lender or
any Lender Affiliate and their successors and assigns or in transit to any of
them. Regardless of the adequacy of any collateral, if any of the Obligations
are due and payable and have not been paid or any Event of Default shall have
occurred, any deposits or other sums credited by or due from any of the Lenders
to such Borrower and any securities or other property of such Borrower in the
possession of such Lender may be applied to or set off by such Lender against
the payment of Obligations of such Borrower and any and all other liabilities,
direct, or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, of such Borrower to such Lender. ANY AND ALL RIGHTS TO
REQUIRE ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWERS
ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

15.3 Expenses. The Borrowers jointly and severally agree to pay (a) the
reasonable costs of producing and reproducing this Reimbursement and Pledge
Agreement, the other Loan Documents and the other agreements and instruments
mentioned herein, (b) the reasonable fees, expenses and disbursements of the
Administrative Agent’s Special Counsel or any local counsel to the
Administrative Agent incurred in connection with the preparation, syndication,
administration or interpretation of the Loan Documents and other instruments
mentioned herein, each closing hereunder, any amendments, modifications,
approvals, consents or waivers hereto or hereunder, or the cancellation of any
Loan Document upon payment in full of all of the Obligations or pursuant to any
terms of such Loan Document for providing for such cancellation, (c) the fees,
expenses and disbursements of the Administrative Agent and the Arrangers
incurred by the Administrative Agent or the Arrangers in connection with the
preparation, syndication, administration or interpretation of the Loan Documents
and other instruments mentioned herein, (d) all reasonable out-of-pocket
expenses (including without limitation reasonable attorneys’ fees and costs,
which attorneys may be employees of any Lender or the Administrative Agent, and
reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges so long as the engagement of such professionals is
reasonable) incurred by any Lender or the Administrative Agent in connection
with (i) the enforcement of or preservation of rights under any of the Loan
Documents against either Borrower or any of its Subsidiaries or the
administration thereof after the occurrence of a Default or Event of Default and
(ii) any litigation

 

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or proceeding arising hereunder or related hereto or in any way related to any
Lender’s or the Administrative Agent’s relationship hereunder with either
Borrower or any of its Subsidiaries and (e) all reasonable fees, expenses and
disbursements of any Lender or the Administrative Agent incurred in connection
with UCC searches or UCC filings. The covenants contained in this §15.3 shall
survive payment or satisfaction in full of all other obligations.

 

15.4 Indemnification. Each Borrower jointly and severally agrees to indemnify
and hold harmless the Administrative Agent, the Issuing Banks, its Affiliates
and the Lenders and their respective Affiliates, directors, officers, employees,
agents and advisors (collectively, the “Indemnitees”) from and against any and
all claims, actions and suits whether groundless or otherwise, and from and
against any and all liabilities, losses, damages and expenses of every nature
and character arising out of this Reimbursement and Pledge Agreement or any of
the other Loan Documents or the transactions contemplated hereby including,
without limitation, (a) any actual or proposed use by either Borrower or any of
its Subsidiaries of the Letters of Credit or Loans, (b) any payments to the
Custodian or in connection with the Pledged Collateral or (c) the Borrowers
entering into or performing this Reimbursement and Pledge Agreement or any of
the other Loan Documents, in each case including, without limitation, the
reasonable fees and disbursements of counsel and allocated costs of internal
counsel incurred in connection with any such investigation, litigation or other
proceeding; provided however that the Borrowers shall have no obligation to
indemnify any Indemnitee for any liability, losses, damages or expenses
resulting solely from the gross negligence or willful misconduct of such
Indemnitee. No Indemnitee 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
Reimbursement and Pledge Agreement, nor shall any Indemnitee have any liability
for any indirect or consequential damages relating to this Reimbursement and
Pledge Agreement or any other Loan Document or arising out of its activities in
connection herewith or therewith (whether before or after the Amendment
Effective Date). Subject to §15.5 below, in litigation, or the preparation
therefor, the Indemnitees shall be entitled to select their own counsel and, in
addition to the foregoing indemnity, the Borrowers agree to pay promptly the
reasonable fees and expenses of such counsel. If, and to the extent that the
obligations of the Borrowers under this §15.4 are unenforceable for any reason,
the Borrowers hereby agree to make the maximum contribution to the payment in
satisfaction of such obligations which is permissible under applicable law. The
covenants contained in this §15.4 shall survive payment or satisfaction in full
of all other Obligations.

 

15.5 Payments by Borrowers with respect to Indemnified Persons.

 

(a) Any Person entitled to reimbursement for expenses pursuant to §15.3 or
indemnification pursuant to §15.4 (an “Indemnified Person”) shall promptly
notify the Borrowers in writing as to any action, claim, suit, proceeding or
investigation for which indemnity may be sought. After such notice to the
Borrowers, so long as the position of the Borrowers is not adverse to that of
the Indemnified Person, the Borrowers shall be entitled to participate in, and
to the extent that it shall elect by written notice delivered to such
Indemnified Person promptly after receiving the aforesaid notice of such
Indemnified Person, to assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Person to represent such Indemnified Person in
such action, claim, suit, proceeding or investigation and shall pay as incurred
the reasonable fees and expenses of such counsel related to such action, claim,
suit, proceeding or investigation.

 

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(b) In any action, claim, suit, proceeding or investigation, any Indemnified
Person shall have the right to retain its own separate counsel at such
Indemnified Person’s own expense and not subject to reimbursement by either
Borrower; provided, however, that the Borrowers shall pay as incurred the
reasonable fees and expenses of such counsel incurred in connection with
investigating, preparing, defending, paying, settling or compromising any
action, claim, suit, proceeding or investigation if (i) the parties to such
action, claim, suit, proceeding or investigation include both the Indemnified
Person and the Borrowers and there may be legal defenses available to such
Indemnified Person which are different from or additional to those available to
the Borrowers; (ii) the use of counsel chosen by the Borrowers to represent both
the Borrowers and such Indemnified Person would present such counsel with an
actual or potential conflict of interest; (iii) the Borrowers shall not have
employed satisfactory counsel to represent the Indemnified Person within a
reasonable time after notice of the institution of such action, claim, suit,
proceeding or investigation; (iv) the Borrowers have not provided the
Indemnified Person with adequate assurance of its acceptance of its liability
for the underlying claim pursuant to §15.4 and of its financial capacity to pay
the full amount of such underlying claim or (v) the Borrowers shall authorize
the Indemnified Person to employ separate counsel (in addition to any local
counsel) at the expense of the Borrowers. The Borrowers shall not, in connection
with any action, claim, suit, proceeding or investigation, be liable for the
fees and expenses of more than one separate firm of legal counsel for all
Indemnified Parties, except to the extent the use of one counsel to represent
all Indemnified Persons would present such counsel with an actual or potential
conflict of interest, and in the event that separate counsel is to be retained
to represent one or more Indemnified Parties, such separate counsel shall be
chosen by Administrative Agent.

 

(c) Each Indemnified Person agrees that, unless the Borrowers are unable to
comply with the provisions set forth in §15.5(a) above, without the Borrowers’
prior written consent (not to be unreasonably withheld), it will not settle,
compromise or consent to the entry of any judgment in or otherwise seek to
terminate any claim, action, suit, proceeding or investigation in respect of
which indemnification could be sought hereunder unless such settlement,
compromise, consent or termination includes an unconditional release of the
Borrowers and the Indemnified Person from all liabilities arising out of such
claim, action, suit, proceeding or investigation.

 

15.6 Survival of Covenants, Etc. All covenants, agreements, representations and
warranties made herein, in any of the other Loan Documents to which a Borrower
is a party or in any documents or other papers delivered by or on behalf of a
Borrower or any of its Subsidiaries pursuant hereto shall be deemed to have been
relied upon by the Lenders and the Administrative Agent, notwithstanding any
investigation heretofore or hereafter made by any of them, and shall survive the
issuance, extension or renewal of any Letters of Credit or Loans, as herein
contemplated, and shall continue in full force and effect so long as any Letter
of Credit or Loan or any amount due under this Reimbursement and Pledge
Agreement or any of the other Loan Documents remains outstanding or the
Administrative Agent has any obligation to issue, extend or renew any Letter of
Credit or Loan, and for such further time as may be otherwise expressly
specified in this Reimbursement and Pledge Agreement. All statements contained
in any Letter of Credit Application, Compliance Certificate or Pledged
Collateral Certificate delivered to any Lender or the Administrative Agent at
any time by or on behalf of the Borrowers shall constitute representations and
warranties by the Borrowers hereunder.

 

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15.7 Notices and Other Communications; Facsimile Copies.

 

(a) General. 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 certified or
registered mail, faxed or delivered to the applicable address, facsimile number
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 Borrowers, the Administrative Agent, or Issuing Banks, to the
address, facsimile number, electronic mail address or telephone number specified
for such Person on Schedule 15.7 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 Borrowers, the
Administrative Agent and the Issuing Banks.

 

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by facsimile shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in subsection (b) below, shall be effective as provided in such
subsection (b).

 

(b) Electronic Communications. Notices and other communications to the Lenders
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by the
Administrative Agent, provided that the foregoing shall not apply to notices to
any Lender pursuant to §2 if such Lender has notified the Administrative Agent
that it is incapable of receiving notices under such Article by electronic
communication. The Administrative Agent or the Borrowers may, in its discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or communications.

 

(c) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile. 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 the Borrowers, the
Administrative Agent, the Issuing Banks and the Lenders. The Administrative
Agent may also require that any such documents and signatures be confirmed by a
manually-signed original thereof; provided, however, that the failure to request
or deliver the same shall not limit the effectiveness of any facsimile document
or signature.

 

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(d) Reliance by Administrative Agent and Lenders. The Administrative Agent, the
Issuing Banks and the Lenders shall be entitled to rely and act upon any notices
purportedly given by or on behalf of any Borrower 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 Borrowers shall indemnify the Administrative Agent, each Issuing Bank and
each Lender from all losses, costs, expenses and liabilities resulting from the
reliance by such Person on each notice purportedly given by or on behalf of any
Borrower. All telephonic notices to and other communications with the
Administrative Agent may be recorded by the Administrative Agent, and each of
the parties hereto hereby consents to such recording.

 

15.8 Miscellaneous. This Reimbursement and Pledge Agreement and the Pledged
Collateral shall not be in any way affected by the extension of time or renewal
of any of the Obligations, the modification in any manner or the taking or
release in whole or in part of any security therefor or the obligations of the
Borrowers or any endorsers, sureties, guarantors or other parties or the
granting of any other indulgences to the Borrowers. No termination of this
Reimbursement and Pledge Agreement shall be effective until the Obligations of
the Borrowers secured by this Reimbursement and Pledge Agreement have been
satisfied in full.

 

15.9 Successors and Assigns. This Reimbursement and Pledge Agreement shall inure
to the benefit of the Administrative Agent, the Issuing Banks and the Lenders
and its and their successors and assigns and shall bind the Borrowers and the
successors, representatives, legal representatives and/or heirs and assigns of
the Borrowers.

 

15.10 Choice of Law/Binding Effect. This Reimbursement and Pledge Agreement and
the rights and obligations of the parties hereunder shall be construed and
interpreted in accordance with the laws of the State of New York, excluding the
laws applicable to conflicts or choice of law (other than Section 5-1401 of the
New York General Obligations Law). Regardless of any provision in any other
agreement, for purposes of Article 9 of the uniform commercial code as in effect
in the State of New York, New York shall be deemed to be the Administrative
Agent’s, the Issuing Bank’s and the Lenders’ jurisdiction.

 

15.11 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RIGHT
TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE
IN CONNECTION WITH THIS REIMBURSEMENT AND PLEDGE AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY,
INCLUDING ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF
ANY OF THE PARTIES HERETO RELATING TO ENFORCEMENT OF THE LOAN DOCUMENTS AND
AGREES THAT IT WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. Except as
prohibited by law, each of the Borrowers, the Issuing Banks the Lenders and the
Administrative Agent hereby waives any right it may have to claim or recover in
any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than,

 

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or in addition to, actual damages. Each of the Borrowers (a) certifies that no
representative, agent or attorney of any Lender, the Issuing Banks or the
Administrative Agent has represented, expressly or otherwise, that such Lender,
the Issuing Banks or the Administrative Agent would not, in the event of
litigation, seek to enforce the foregoing waivers and (b) acknowledges that the
Administrative Agent, the Issuing Banks and the Lenders have been induced to
enter into this Reimbursement and Pledge Agreement, the other Loan Documents to
which it is a party by, among other things, the waivers and certifications
contained herein.

 

15.12 Delivery of Additional Documents. Each of the Borrowers agree to execute
and deliver to the Administrative Agent and/or third parties designated by the
Administrative Agent such additional documents, notices, requests and other
instruments as the Administrative Agent deems reasonably necessary or advisable
to protect the Administrative Agent’s rights under this Reimbursement and Pledge
Agreement.

 

15.13 Confidentiality. Each Lender agrees to maintain and to cause its
Affiliates to maintain the confidentiality of all information provided to it by
the Borrowers or any Subsidiary of the Borrowers, or by the Administrative Agent
on behalf of the Borrowers or any Subsidiary of either of them, under this
Reimbursement and Pledge Agreement or any other Loan Document, and neither it
nor any of its Affiliates shall use any such information other than in
connection with or in enforcement of this Reimbursement and Pledge Agreement and
the other Loan Documents or in connection with other business now or hereafter
existing or contemplated directly with the Borrowers or any Subsidiary; except
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 its Affiliates or
in violation of any applicable confidentiality agreement known to the Lender, or
(ii) was or becomes available on a non-confidential basis from a source other
than the Borrowers, provided that such source is not bound by a confidentiality
agreement with the Borrowers and/or with any restrictions on its use known to
the Lender; provided, however, 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; provided that the Lender makes reasonable efforts to
request confidential treatment of such information to the extent permitted by
law; (B) pursuant to subpoena or other court process; (C) as may be required (in
such Lender’s reasonable judgment) 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 Administrative Agent,
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 who agree to the confidentiality provisions hereof;
and (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.

 

15.14 Consents, Amendments, Waivers, Etc. Any consent or approval required or
permitted by this Reimbursement and Pledge Agreement to be given by the Lenders
may be given, and any term of this Reimbursement and Pledge Agreement, the other
Loan Documents or any other instrument related hereto or mentioned herein may be
amended, and the performance or observance by a Borrower or any of its
Subsidiaries of any terms of this Reimbursement and Pledge Agreement, the other
Loan Documents or such other instrument or the continuance of any

 

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Default or Event of Default may be waived (either generally or in a particular
instance and either retroactively or prospectively) with, but only with, the
written consent of the Borrowers and the written consent of the Required
Lenders. Notwithstanding the foregoing, no amendment, modification or waiver
shall:

 

(a) without the written consent of the Borrowers and each Lender directly
affected thereby:

 

(i) reduce or forgive the principal amount of any Loan or Reimbursement
Obligations, or reduce the Letter of Credit Fee, the Commitment Fee or interest
on amounts due hereunder or under the other Loan Documents (other than interest
accruing pursuant to §2.7.5 following the effective date of any waiver by the
Required Lenders of the Default or Event of Default relating thereto);

 

(ii) increase the amount of such Lender’s Commitment or extend the expiration
date of such Lender’s Commitment;

 

(iii) postpone or extend either Commitment Termination Date or any other
regularly scheduled dates for payments of the Loans or Reimbursement Obligations
or any Fees or other amounts payable to such Lender (it being understood that
(A) a waiver of the application of the Default Rate and (B) any vote to rescind
any exercise of remedies made pursuant to §11 of amounts owing with respect to
the Obligations shall require only the approval of the Required Lenders); and

 

(iv) other than pursuant to a transaction permitted by the terms of this
Reimbursement and Pledge Agreement, release all or substantially all of the
Pledged Collateral (excluding, if a Borrower or any Subsidiary of a Borrower
becomes a debtor under the federal Bankruptcy Code, the release of “cash
collateral”, as defined in Section 363(a) of the federal Bankruptcy Code
pursuant to a cash collateral stipulation with the debtor approved by the
Required Lenders) or amend the multipliers set forth in §6.8;

 

(b) without the written consent of all of the Lenders, amend or waive this
§15.14 or the definition of Required Lenders;

 

(c) without the written consent of the Administrative Agent, amend or waive §12,
the amount or time of payment of any fees or expenses payable to the
Administrative Agent or any other provision applicable to the Administrative
Agent;

 

(d) Without the written consent of the Issuing Banks, the rights or duties of
the Issuing Banks under this Reimbursement and Pledge Agreement or any Letter of
Credit Application relating to any Letter of Credit issued or to be issued by
it.

 

No waiver shall extend to or affect any obligation not expressly waived or
impair any right consequent thereon. No course of dealing or delay or omission
on the part of the Administrative Agent or any Lender in exercising any right
shall operate as a waiver thereof or otherwise be prejudicial thereto. No notice
to or demand upon the Borrowers shall entitle the Borrowers to other or further
notice or demand in similar or other circumstances. The Fee Letters may be
amended, or rights or privileges thereunder waived, in a writing executed only
by the parties

 

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thereto. Notwithstanding anything to the contrary herein, no Delinquent Lender
shall have any right to approve or disapprove any amendment, waiver or consent
hereunder, except that the Commitment of such Lender may not be increased or
extended without the consent of such Lender.

 

15.15 Agent for Service. The Borrowers have irrevocably designated, appointed,
and empowered CT Corporation System, with an office on the date hereof at 111
Eighth Avenue, New York, New York 10011 as its designee, appointee and agent to
receive and accept for and on its behalf, service of any and all legal process,
summons, notices and documents which may be served in any action, suit or
proceedings brought against the Borrowers in any United States or State of New
York court. If for any reason such designee, appointee and agent hereunder shall
cease to be available to act as such, the Borrowers agree to designate a new
designee, appointee and agent in the Borough of Manhattan, The City of New York
on the terms and for the purposes of this §15.15 satisfactory to the
Administrative Agent. Each Borrower further hereby irrevocably consents and
agrees to the service of any and all legal process, summons, notices and
documents in any action, suit or proceeding against each Borrower by serving a
copy thereof upon the relevant agent for service of process referred to in this
§15.15 (whether or not the appointment of such agent shall for any reason prove
to be ineffective or such agent shall accept or acknowledge such service) or by
mailing copies thereof by registered or certified air mail, postage prepaid, to
such Borrower at its address specified in §15.7 hereof. Each Borrower agrees
that the failure of any such designee, appointee and agent to give any notice of
such service to it shall not impair or affect in any way the validity of such
service or any judgment rendered in any action or proceeding based thereon.
Nothing herein shall in any way be deemed to limit the ability of the Lenders or
the Administrative Agent to serve any such legal process, summons, notices and
documents in any other manner permitted by applicable law or to obtain
jurisdiction over the Borrowers or bring actions, suits or proceedings against
the Borrowers in such other jurisdictions, and in such manner, as may be
permitted by applicable law. Each of the Borrowers, the Administrative Agent and
the Lenders irrevocably and unconditionally waives, to the fullest extent
permitted by law, any objection which they may now or hereafter have to the
laying of venue of any of the aforesaid actions, suits or proceedings arising
out of or in connection with this Reimbursement and Pledge Agreement or any
other Loan Document brought in the United States Federal courts located in the
Borough of Manhattan, The City of New York or the courts of the State of New
York and hereby further irrevocably and unconditionally waive and agree not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum. The
Borrowers, the Administrative Agent and the Lenders each waive personal service
of any summons, complaint or other process and irrevocably consent to the
service of process by registered mail, postage prepaid, or by any other means
permitted by New York or federal law.

 

15.16 Conversion. If, for the purpose of obtaining judgment in any court or
obtaining an order enforcing a judgment, it becomes necessary to convert any
amount due under this Reimbursement and Pledge Agreement in Dollars into any
other currency (hereinafter in this §15.16 called the “second currency”), then
the conversion shall be made at the rate of exchange used by the Administrative
Agent prevailing on the Business Day preceding the day on which the judgment is
given or (as the case may be) the order is made. In the event that there is a
difference between the rate of exchange on the basis of which the amount of such
judgment or order is determined and the rate of exchange prevailing on the date
of payment, then the rate of

 

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exchange prevailing on the date of payment shall govern the amount owing
hereafter, and each Borrower agrees to pay such amount as may be necessary to
ensure that the amount paid on such date in the second currency is the amount in
such second currency which, when converted at the rate of exchange for buying
Dollars with the second currency prevailing on the date of payment, is the
amount which was due under this Reimbursement and Pledge Agreement in Dollars
before such judgment was obtained or made. Any amount due from a Borrower to the
Administrative Agent and/or the Lenders under the second sentence of this §15.16
will be due as a separate debt of such Borrower to the Administrative Agent
and/or the Lenders, shall constitute an Obligation hereunder and shall not be
affected by judgment or order being obtained for any other sum due under or in
respect of this Reimbursement and Pledge Agreement. The covenants contained in
this §15.16 shall survive the payment in full of all of the other Obligations of
the Borrowers under this Reimbursement and Pledge Agreement.

 

15.17 Counterparts. This Reimbursement and Pledge Agreement and any amendment
hereof may be executed in several counterparts and by each party on a separate
counterpart, each of which when executed and delivered shall be an original, and
all of which together shall constitute one instrument. Delivery by facsimile by
any of the parties hereto of an executed counterpart hereof or of any amendment
or waiver hereto shall be as effective as an original executed counterpart
hereof or of such amendment or waiver and shall be considered a representation
that an original executed counterpart hereof or such amendment or waiver, as the
case may be, will be delivered.

 

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

 

15.19 Integration. This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
on such subject matter. In the event of any conflict between the provisions of
this Reimbursement and Pledge Agreement and those of any other Loan Document,
the provisions of this Reimbursement and Pledge Agreement shall control;
provided that the inclusion of supplemental rights or remedies in favor of the
Administrative Agent or the Lenders in any other Loan Document shall not be
deemed a conflict with this Reimbursement and Pledge Agreement.

 

15.20 Severability. If any provision of this Reimbursement and Pledge Agreement
or the other Loan Documents is held to be illegal, invalid or unenforceable, (a)
the legality, validity and enforceability of the remaining provisions of this
Reimbursement and Pledge Agreement and

 

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

 

15.21 Tax Forms. (a) Each Lender that is not a “United States person” within the
meaning of Section 7701(a)(30) of the Code (a “Foreign Lender”) shall deliver to
the Administrative Agent, prior to receipt of any payment subject to withholding
under the Code (or upon accepting an assignment of an interest herein), two duly
signed completed copies of either IRS Form W-8BEN or any successor thereto
(relating to such Foreign Lender and entitling it to an exemption from, or
reduction of, withholding tax on all payments to be made to such Foreign Lender
by the Borrowers pursuant to this Reimbursement and Pledge Agreement) or IRS
Form W-8ECI or any successor thereto (relating to all payments to be made to
such Foreign Lender by the Borrowers pursuant to this Reimbursement and Pledge
Agreement) or such other evidence satisfactory to the Company and the
Administrative Agent that such Foreign Lender is entitled to an exemption from,
or reduction of, U.S. withholding tax, including any exemption pursuant to
Section 881(c) of the Code. Thereafter and from time to time, each such Foreign
Lender shall (A) promptly submit to the Administrative Agent such additional
duly completed and signed copies of one of such forms (or such successor forms
as shall be adopted from time to time by the relevant United States taxing
authorities) as may then be available under then current United States laws and
regulations to avoid, or such evidence as is satisfactory to the Borrowers and
the Administrative Agent of any available exemption from or reduction of, United
States withholding taxes in respect of all payments to be made to such Foreign
Lender by the Borrowers pursuant to this Reimbursement and Pledge Agreement, (B)
promptly notify the Administrative Agent of any change in circumstances which
would modify or render invalid any claimed exemption or reduction, and (C) take
such steps as shall not be materially disadvantageous to it, in the reasonable
judgment of such Lender, and as may be reasonably necessary (including the
re-designation of its lending office) to avoid any requirement of applicable
laws that any Borrower make any deduction or withholding for taxes from amounts
payable to such Foreign Lender.

 

(b) Each Foreign Lender, to the extent it does not act or ceases to act for its
own account with respect to any portion of any sums paid or payable to such
Lender under any of the Loan Documents (for example, in the case of a typical
participation by such Lender), shall deliver to the Administrative Agent on the
date when such Foreign Lender ceases to act for its own account with respect to
any portion of any such sums paid or payable, and at such other times as may be
necessary in the determination of the Administrative Agent (in the reasonable
exercise of its discretion), (A) two duly signed completed copies of the forms
or statements required to be provided by such Lender as set forth above, to
establish the portion of any such sums paid or payable with respect to which
such Lender acts for its own account that is not subject to United States
withholding tax, and (B) two duly signed completed copies of IRS Form W-8IMY (or
any successor thereto), together with any information such Lender chooses to
transmit with such form, and any other certificate or statement of exemption
required under the Code, to establish that such Lender is not acting for its own
account with respect to a portion of any such sums payable to such Lender.

 

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IN WITNESS WHEREOF, the undersigned have duly executed this Amended and Restated
Letter of Credit Reimbursement and Pledge Agreement as a sealed instrument and
as a deed as of the date first set forth above.

 

MONTPELIER REINSURANCE LTD.

By:

 

/s/ Neil McCanachie

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

Name:

  Neil McCanachie

Title:

  Chief Accounting Officer and Treasurer

MONTPELIER RE HOLDINGS LTD.

By:

 

/s/ Neil McCanachie

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

Name:

  Neil McCanachie

Title:

  Chief Accounting Officer and Treasurer

 

S-1

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

BANK OF AMERICA, N.A., individually as

Administrative Agent and as Issuing Bank

By:

 

/s/ Debra Basler

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

Name:

 

Debra Basler

Title:

 

Principal

 

S-2

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

FLEET NATIONAL BANK, as Issuing Bank

By:

 

/s/ Debra Basler

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

Name:

 

Debra Basler

Title:

 

Principal

 

S-3

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

THE BANK OF NEW YORK

By:

 

/s/ Scott Schaffer

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

Name:

 

Scott Schaffer

Title:

 

Vice President

 

S-4

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

BANK ONE, NA

By:

 

/s/ Gerard P. Fogarty

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

Name:

 

Gerard P. Fogarty

Title:

 

Director

 

S-5

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

BARCLAYS BANK PLC

By:

 

/s/ Drew Burnett

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

Name:

 

Drew Burnett

Title:

 

Manager

 

 

 

S-6

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

CREDIT SUISSE FIRST BOSTON, ACTING

THROUGH ITS CAYMAN ISLANDS BRANCH

By:

 

/s/ Jay Chall

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

Name:

 

Jay Chall

Title:

 

Director

 

By:

 

/s/ Barbara Wang

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

Name:

 

Barbara Wang

Title:

 

Associate

 

S-7

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

HSBC BANK USA

By:

 

/s/ Anthony C. Vaugncourt

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

Name:

 

Anthony C. Vaugncourt

Title:

 

Managing Director

 

S-8

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

ING BANK N.V., LONDON BRANCH

By:

 

/s/ Nick Marchant

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

Name:

 

Nick Marchant

Title:

 

Director

By:

 

/s/ Mike Sharman

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

Name:

 

Mike Sharman

Title:

 

Managing Director

 

 

S-9

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

ROYAL BANK OF SCOTLAND PLC

By:

 

/s/ Jan Bowring

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

Name:

 

Jan Bowring

Title:

 

Relationship Director

 

S-10

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

EXHIBIT B

 

SECOND AMENDED AND RESTATED CONTROL AGREEMENT

 

This Second Amended and Restated Control Agreement is dated as of May 27, 2004,
among Montpelier Reinsurance Ltd. (the “Customer”), Bank of America, N.A., as
Administrative Agent (the “Agent”) for itself and the other lending institutions
party to the Amended and Restated Letter of Credit Reimbursement and Pledge
Agreement dated as of May 27, 2004 (as amended, supplemented and restated from
time to time, the “Amended Letter of Credit Agreement”), and The Bank of New
York (the “Custodian”).

 

WITNESSETH:

 

WHEREAS, pursuant to a Global Custody Agreement between Custodian and the
Customer (the “Custodian Agreement”), Custodian acts as custodian for the
Customer’s assets;

 

WHEREAS, the Customer, the Custodian and Fleet National Bank (“Fleet”) as
administration agent (the “Existing Agent”) are parties to that certain Letter
of Credit Reimbursement and Pledge Agreement dated as of June 20, 2003, (the
“Existing Letter of Credit Agreement”);

 

WHEREAS, in connection with the Existing Letter of Credit Agreement, the
Customer, the Custodian and the Existing Agent are parties to an Amended and
Restated Control Agreement, dated as of June 20, 2003 (the “Existing Control
Agreement”);

 

WHEREAS, the Agent, various lending institutions and the Customer have agreed to
amend and restate the Existing Letter of Credit Agreement, it being the
intention of the Customer and the Agent that the Amended Letter of Credit
Agreement shall not effect the novation of the obligations of the Customer under
the Existing Letter of Credit Agreement, including, without limitation, the
pledge of the Collateral Accounts (as defined below);

 

WHEREAS, in connection therewith as of May 27, 2004 the Agent has replaced the
Existing Agent as the “Agent” under the Existing Control Agreement and the
parties hereto wish to amend and restate the Existing Control Agreement as set
forth herein;

 

WHEREAS, pursuant to the terms of the Amended Letter of Credit Agreement, the
Customer will from time to time pledge certain assets specified by the Customer
and identified to Custodian as Collateral (as defined below) to secure the
Customer’s obligations under the Amended Letter of Credit Agreement; and

 

WHEREAS, the Agent, the Customer and Custodian are entering into this Agreement
to continue to provide for the control of the Collateral and the Collateral
Accounts (as defined below);

 

NOW THEREFORE, in consideration of the mutual promises set forth hereafter, the
parties hereto agree as follows:

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

ARTICLE I

DEFINITIONS

 

Whenever used in this Agreement, the following words shall have the meanings set
forth below:

 

1. “Authorized Person” shall be any person, whether or not an officer or
employee of the Agent or the Customer, duly authorized by the Agent or the
Customer, respectively, to give Written Instructions on behalf of the Agent or
the Customer, respectively, such persons to be designated in a Certificate of
Authorized Persons, in the form attached hereto as Exhibit A, which contains a
specimen signature of such person.

 

2. “Collateral” shall have the meaning set forth in Article II, paragraph l.

 

3. “Collateral Accounts” shall mean the Securities Account and the Deposit
Account described in Article II, paragraph 1 hereof.

 

4. “Depository” shall mean the Treasury/Reserve Automated Debt Entry System
maintained at The Federal Reserve Bank of New York for receiving and delivering
securities, The Depository Trust Company and any other clearing corporation
within the meaning of Section 8-102 of the UCC or otherwise authorized to act as
a securities depository or clearing agency, and their respective successors and
nominees.

 

5. “Federal Agencies” shall mean any of the following agencies of the federal
government of the United States: (a) Government National Mortgage Association;
(b) the Export-Import Bank of the United States; (c) the Farmers Home
Administration, an agency of the United States Department of Agriculture; (d)
the United States General Services Administration; (e) the United States
Maritime Administration; (f) the United States Small Business Administration;
(g) the Commodity Credit Corporation; (h) the Rural Electrification
Administration; (i) the Rural Telephone Bank; (j) Washington Metropolitan Area
Transit Authority; (k) Federal Home Loan Mortgage Corporation; (1) Federal
National Mortgage Association; (m) Federal Housing Finance Board; (n) Federal
Home Loan Bank; and (o) such other federal agencies as are reasonably acceptable
to the Agent.

 

6. “Identified Securities” shall have the meaning set forth in Article V,
paragraph 3.

 

7. “Notice of Exclusive Control” shall mean a written notice, in the form
attached hereto as Exhibit B, given by the Agent to the Custodian that the Agent
is exercising sole and exclusive control of the Securities Account and the
Collateral credited thereto.

 

8. “UCC” shall mean the Uniform Commercial Code as in effect in the State of New
York.

 

9. “Written Instructions” shall mean written communications delivered to the
Custodian via S.W.I.F.T., tested telex, letter, facsimile transmission, or other
method or system specified by the Custodian as available for use in connection
with this Agreement.

 

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The terms “bank”, “deposit account”, “entitlement holder”, “entitlement order”,
“financial asset”, “investment property”, “proceeds”, “security”, “security
entitlement” and “securities intermediary” shall have the meanings set forth in
Articles 8 and 9 of the UCC.

 

ARTICLE II

COLLATERAL ACCOUNTS

 

1. Collateral Accounts. The Customer, from time to time, shall provide Written
Instructions to Custodian to segregate certain cash, U.S. Government securities,
securities issued by Federal Agencies or other securities acceptable to the
Agent and the proceeds of any of the foregoing (the “Collateral”) for the
benefit of the Agent. Such Collateral (other than cash Collateral) shall be
identified and segregated in a separate account on Custodian’s books and records
under the name “Montpelier FBO Fleet Securities A/C,” account number 251471 (the
“Securities Account”). Custodian shall hold such Collateral as financial assets.
Custodian shall identify and segregate in a separate deposit account (as defined
in Section 9-102 of the UCC) any cash Collateral and hold it under the name
“Montpelier FBO Fleet Cash Dep. A/C,” account number 251473 (the “Deposit
Account” and, together with the Securities Account, the “Collateral Accounts”).
Custodian shall have no responsibility for determining the adequacy of any
Collateral required hereunder or under the Amended Letter of Credit Agreement,
nor will it assume responsibility for any calculations related to any Collateral
requirements under the Amended Letter of Credit Agreement.

 

2. Status of the Custodian. Custodian agrees that it is acting as a securities
intermediary, as defined in Section 8-102 of the UCC with respect to the
Collateral in the Securities Account, except Identified Securities. Custodian
agrees, with respect to the Deposit Account, that it is acting as a “bank” as
such term is used in Section 9-102(a)(8) of the UCC. The parties hereto agree
that (i) the Deposit Account constitutes a “deposit account” within the meaning
of Article 9 of the UCC, (ii) the Securities Account constitutes a “securities
account” within the meaning of Article 8 of the UCC, and (iii) all Collateral
other than cash now or hereafter held, credited or carried by, in or to the
credit of Securities Account shall be treated as “financial assets” within the
meaning of Article 8 of the UCC.

 

ARTICLE III

ACCOUNT CONTROL

 

1. Security Interest. This Agreement is intended by the Agent and the Customer
to grant “control” of the Collateral Accounts and the Collateral to the Agent
for purposes of perfection of the Agent’s security interest in such Collateral
pursuant to Article 8 and Article 9 of the UCC, and Custodian hereby
acknowledges that it has been advised of the Customer’s grant to the Agent of a
security interest in the Collateral Accounts and the Collateral. Notwithstanding
the foregoing, Custodian makes no representation or warranty with respect to the
creation or enforceability of any security interest in the Collateral Accounts.
The Agent and the Customer each agree to provide Custodian with a Certificate of
Authorized Persons in the form of Exhibit A attached hereto (as may be amended
from time to time).

 

-3-

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2. Control of the Securities Account.

 

(a) The Custodian shall comply with the entitlement orders originated by the
Agent with respect to the Securities Account and the Collateral therein without
further consent of the Customer or any other person or entity. In addition,
unless and until Custodian receives a Notice of Exclusive Control or if all
previous Notices of Exclusive Control have been revoked or rescinded in writing
by the Agent, Custodian shall comply with entitlement orders from the Customer
and take actions with respect to the Securities Account and the Collateral
therein upon the instructions of the Customer; provided, however, that Custodian
shall not comply with entitlement orders or instructions from the Customer
directing Custodian to make free deliveries to the Customer or withdrawals from
the Securities Account or deliver any financial assets to the Customer without
the prior written consent of the Agent. Custodian shall have no responsibility
or liability to the Agent or the Customer for actions taken in accordance with
the instructions set forth in this paragraph, except for Custodian’s bad faith,
negligence or willful misconduct in carrying out (or failing to carry out) such
instructions. Notwithstanding the foregoing, the Agent shall not withhold any
instructions requested by the Customer pursuant to and in accordance with
Section 4.7 of the Amended Letter of Credit Agreement.

 

(b) Upon receipt by Custodian of a Notice of Exclusive Control, Custodian shall
thereafter follow only the instructions of the Agent with respect to the
Securities Account and shall comply with any entitlement order received from the
Agent, without further consent of the Customer or any other person, and
Custodian will not comply with entitlement orders or instructions concerning the
Collateral originated by the Customer.

 

(c) The Agent represents and warrants to, and agrees with, the Customer that the
Agent will only issue to Custodian a Notice of Exclusive Control if an “Event of
Default” has occurred under and as defined in the Amended Letter of Credit
Agreement which entitles Agent to exercise its rights as a secured party with
respect to the Collateral in the Securities Account.

 

3. Control by the Agent of the Deposit Account. From and after the date hereof,
until termination of this Agreement, (i) Custodian shall take actions with
respect to the Collateral in the Deposit Account solely upon the instructions of
the Agent, without further consent of the Customer, (ii) unless otherwise
instructed by the Agent, Custodian will not permit the Customer or any other
person or entity to withdraw funds from the Deposit Account and (iii) the
Customer acknowledges that it has no right to make withdrawals or direct
transfers from the Deposit Account by direct instruction to Custodian, but that
such withdrawals or transfers shall be effected only by instructions from Agent
to Custodian, the Agent agreeing to give such instructions to Custodian from
time to time in accordance with Section 4.2 of the Amended Letter of Credit
Agreement.

 

4. Distributions. Custodian shall, without further action by the Customer or the
Agent, credit to the Deposit Account or the Securities Account, as applicable,
all interest, dividends, proceeds, and other income (whether in cash or in kind)
received or collected by Custodian with respect to the Collateral. Interest,
dividends, proceeds, and other income shall be considered Collateral.

 

-4-

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

ARTICLE IV

COLLATERAL SERVICES

 

1. Use of Depositories. The Agent and the Customer hereby authorize the
Custodian to utilize Depositories to the extent possible in connection with its
performance hereunder. Collateral held by the Custodian in a Depository will be
held subject to the rules, terms and conditions of such Depository. Where
Collateral is held in a Depository, the Custodian shall identify on its records
as belonging to the Customer and pledged to the Agent a quantity of securities
as part of a fungible bulk of securities held in the Custodian’s account at such
Depository. Securities deposited in a Depository will be represented in accounts
which include only assets held by the Custodian for its customers.

 

2. Release of Collateral. Under certain limited circumstances specified in the
Amended Letter of Credit Agreement and otherwise if there are no outstanding
Obligations (as such term is defined in the Amended Letter of Credit Agreement)
and the Agent’s commitment to advance credit to the Customer has been
terminated, the Customer may request the Agent to instruct Custodian to release
all Collateral held in the Collateral Accounts. Custodian will effect such
release as soon as reasonably practicable after receiving instructions from the
Agent and the Customer.

 

3. Release of Security Interest. The Agent agrees to notify Custodian promptly
in writing when all Obligations of the Customer to the Agent have been fully
paid and satisfied (and any commitment of the Agent and the Lenders (as defined
in the Amended Letter of Credit Agreement) to advance further amounts or credit
under the Amended Letter of Credit Agreement or any of the other Loan Documents
(as defined in the Amended Letter of Credit Agreement) has been terminated) or
the Agent otherwise no longer claims any interest in the Collateral in the
Collateral Accounts, whichever is sooner; at which time Custodian shall release
such Collateral to the Customer and execute such documents and instruments of
release as reasonably requested by the Agent and the Customer and thereafter
shall have no further liabilities or responsibilities hereunder and Custodian’s
obligations under this Agreement shall terminate.

 

4. Statements. The Custodian shall furnish the Customer and the Agent with
advices of transactions affecting the Collateral Accounts and monthly statements
for the Collateral Accounts. Each of the Customer and the Agent may elect to
receive advices and statements electronically through the Internet to an email
address specified by it for such purpose. By electing to use the Internet for
this purpose, each of the Customer and the Agent acknowledges that such
transmissions are not encrypted and therefore are insecure. Each of the Customer
and the Agent further acknowledges that there are other risks inherent in
communicating through the Internet such as the possibility of virus
contamination and disruptions in service, and agrees that the Custodian shall
not be responsible for any loss, damage or expense suffered or incurred by the
Customer, the Agent, or any person claiming by or through the Customer or the
Agent as a result of the use of such methods.

 

5. Notice of Adverse Claims. Upon receipt of notice of any lien, encumbrance or
adverse claim against any Collateral Account or any portion of the Collateral
carried therein, the Custodian shall use reasonable efforts to notify the Agent
and the Customer as promptly as practicable under the circumstances.

 

-5-

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ARTICLE V

GENERAL TERMS AND CONDITIONS

 

1. Standard of Care: Indemnification. (a) Except as otherwise expressly provided
herein, the Custodian shall not be liable for any costs, expenses, damages,
liabilities or claims, including reasonable attorneys’ fees (“Losses”) incurred
by or asserted against the Customer or the Agent, except those Losses arising
out of the negligence or willful misconduct of the Custodian. The Custodian
shall have no liability whatsoever for the action or inaction of any Depository.
In no event shall the Custodian be liable for special, indirect or consequential
damages, or lost profits or loss of business, arising in connection with this
Agreement.

 

(b) (i) Prior to the issuance of a Notice of Exclusive Control, the Agent and
the Customer shall indemnify and hold Custodian harmless with regard to any
Losses imposed on or incurred by Custodian arising out of any action or omission
of Custodian in accordance with any notice, instruction, or entitlement order
given by the Agent or the Customer under this Agreement, except to the extent
such Losses have arisen from the negligence or willful misconduct of the
Custodian, provided that the Agent’s liability under this clause (i) shall be
limited to those amounts for which Custodian has not been reimbursed by the
Customer within 30 days after Custodian’s having made written demand on the
Customer therefor.

 

(ii) After a Notice of Exclusive Control has been issued, the Agent shall
indemnify and hold Custodian harmless with regard to any Losses imposed on or
incurred by Custodian arising out of any action or omission of Custodian in
accordance with any notice, instruction, or entitlement order given by the Agent
under this Agreement, except to the extent such Losses have arisen from the
negligence or willful misconduct of the Custodian.

 

2. No Obligation Regarding Quality of Collateral. Without limiting the
generality of the foregoing, the Custodian shall be under no obligation to
inquire into, and shall not be liable for, any Losses incurred by the Customer,
the Agent or any other person as a result of the receipt or acceptance of
fraudulent, forged or invalid Collateral, or Collateral which otherwise is not
freely transferable or deliverable without encumbrance in any relevant market.

 

3. Identified Securities. The parties hereto acknowledge that no security
entitlement under the UCC shall exist with respect to any financial asset held
in the Securities Account which is registered in the name of the Customer,
payable to the order of the Customer, or specially indorsed to the Customer or
any third party (each such asset an “Identified Security”), except to the extent
such Identified Security has been specially indorsed by the Customer to
Custodian or in blank. The Customer covenants and agrees that it shall not
instruct the Custodian to credit Collateral (except cash) to the Securities
Account unless such Collateral is registered in the name of the Custodian,
indorsed to the Custodian or in blank or credited to another securities account
maintained in the name of the Custodian and that in no case will any Collateral
or underlying financial asset credited to the Securities Account be registered
in the name of the Customer, payable to the order of the Customer or specially
indorsed to the Customer, except to the extent such Collateral has been further
indorsed to the Custodian or in blank. The parties acknowledge and agree that if
any Identified Securities are received by the Custodian and credited to the
Securities Account from time to time, such Identified Securities

 

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shall (so long as so credited to the Securities Account and so long as this
Agreement remains in effect) be held by Custodian for the benefit of the Agent,
not in its capacity as a securities intermediary, but in its capacity as a
collateral agent under and subject to the terms of this Agreement.

 

4. Foreign Securities. The Agent hereby acknowledges that any Collateral in the
Securities Account issued outside the United States which may be held by
Custodian, a sub-custodian within Custodian’s network of sub-custodians or a
Depository or book-entry system for the central handling of securities and other
financial assets in which Custodian or a sub-custodian are participants may not
permit the Customer to have a security entitlement with respect to such
Collateral (and such property shall be deemed for purposes of this Agreement not
to be a financial asset held within the Securities Account). The parties hereby
further acknowledge that Custodian gives no assurance that a security
entitlement is created under the UCC with respect to the Customer’s assets held
in Euroclear or Clearstream or their successors.

 

5. No Duty of Oversight. The Custodian is not at any time under any duty to
supervise the investment of, or to advise or make any recommendation for the
purchase, sale, retention or disposition of any Collateral.

 

6. Advice of Counsel. The Custodian may, with respect to questions of law,
obtain the advice of counsel selected by Custodian with due care and shall be
fully protected with respect to anything done or omitted by it in good faith in
conformity with such advice.

 

7. No Collection Obligations. The Custodian shall be under no obligation to take
action to collect any amount payable on Collateral in default, or if payment is
refused after due demand and presentment.

 

8. Fees and Expenses. The Customer agrees to pay to the Custodian the fees as
may be agreed upon from time to time. The Customer shall reimburse the Custodian
for all customary and reasonable costs associated with transfers of Collateral
to the Custodian and records kept in connection with this Agreement. The
Customer shall also reimburse the Custodian for reasonable out-of-pocket
expenses which are a normal incident of the services provided hereunder.

 

9. Custodian Representations and Agreements. Custodian agrees and confirms, as
of the date hereof, and at all times until the termination of this Agreement,
that it has not entered into, and until the termination of this Agreement will
not enter into, any agreement (other than this Agreement and the Custodian
Agreement) with any other person or entity relating to the Collateral or the
Collateral Accounts under which it agrees to comply with entitlement orders of
such other person or entity.

 

10. Advances by the Custodian. It is hereby expressly acknowledged and agreed by
the parties that the Custodian shall not be obligated to advance any margin or
other credit to the Customer and the Customer agrees that it shall not instruct
the Custodian to advance any margin or credit to, for, or on its behalf;
provided, however, that Custodian may advance payment to the Collateral Accounts
for any purpose (including, but not limited to, failed securities settlements,
foreign exchange contracts, assumed settlements or short-term account
overdrafts). Custodian

 

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agrees that it shall have no lien, encumbrance, claim or right of set-off
against the Collateral Accounts or the Collateral carried therein and hereby
waives its right (by contract or statute) to any such lien, encumbrance, claim
or right of set-off except, that in connection with any charges/debits to the
Collateral Accounts for short-term account overdrafts resulting from failed
settlement of entitlement orders initiated by the Customer or the Agent,
Custodian shall have a lien, encumbrance, claim and right of set-off against the
Collateral Account and the Collateral carried therein to the extent of the
amount of such short-term account overdrafts and such lien, encumbrance, claim
and right of set-off shall be senior to and have priority over any right or
claim of the Agent therein until such time as the Customer has reimbursed
Custodian for such amounts or such overdrafts.

 

11. Effectiveness of Instructions; Reliance; Risk Acknowledgements; Additional
Terms. (a) Subject to the terms below, the Custodian shall be entitled to rely
upon any Written Instructions delivered to the Custodian in accordance with this
Agreement and reasonably believed by the Custodian to be duly authorized and
delivered.

 

(b) If the Custodian receives Written Instructions which appear on their face to
have been transmitted via (i) computer facsimile, email, the Internet or other
insecure electronic method, or (ii) secure electronic transmission containing
applicable authorization codes, passwords and/or authentication keys, the Agent
and the Customer each understands and agrees that the Custodian cannot determine
the identity of the actual sender of such Written Instructions and that the
Custodian shall conclusively presume that such Written Instructions have been
sent by an Authorized Person. The Agent and the Customer shall be responsible
for ensuring that only its Authorized Persons transmit such Written Instructions
to the Custodian and that all of its Authorized Persons treat applicable user
and authorization codes, passwords and/or authentication keys with extreme care.

 

(c) The Agent and the Customer each acknowledges and agrees that it is fully
informed of the protections and risks associated with the various methods of
transmitting Written Instructions to the Custodian and that there may be more
secure methods of transmitting Written Instructions than the method(s) selected
by it. The Agent and the Customer each agrees that the security procedures (if
any) to be followed in connection with its transmission of Written Instructions
provide to it a commercially reasonable degree of protection in light of its
particular needs and circumstances.

 

(d) If the Agent or the Customer elects to transmit Written Instructions through
an on-line communication system offered by the Custodian, its use thereof shall
be subject to the Terms and Conditions attached hereto as Exhibit C. If the
Agent or the Customer elects (with the Custodian’s prior consent) to transmit
Written Instructions through an on-line communications service owned or operated
by a third party, it agrees that the Custodian shall not be responsible or
liable for the reliability or availability of any such service.

 

12. Inspection. Upon reasonable request and provided the Custodian shall suffer
no significant disruption of its normal activities, the Agent or the Customer
shall have access to the Custodian’s books and records relating to the
Collateral Account during the Custodian’s normal business hours. Upon reasonable
request, copies of any such books and records shall be provided to the Agent or
the Customer at its expense.

 

-8-

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13. Account Disclosure. The Custodian is authorized to supply any information
regarding the Account which is required by any law or governmental regulation
now or hereafter in effect.

 

14. Force Majeure. The Custodian shall not be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control, including without limitation, acts of God; earthquakes;
fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots;
interruptions, loss or malfunctions of utilities, computer (hardware or
software) or communications service; accidents; labor disputes; acts of civil or
military authority; governmental actions; inability to obtain labor, material,
equipment or transportation.

 

15. No Implied Duties. The Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set forth
in this Agreement and the Custodian Agreement, and no covenant or obligation
shall be implied against the Custodian in connection with this Agreement except
to the extent set forth in this Agreement and the Custodian Agreement. The
Custodian shall not be liable or responsible for anything done or omitted to be
done by it in good faith and in the absence of negligence and willful misconduct
and may rely and shall be protected in acting upon any notice, instruction
entitlement order or other communication which it reasonably believes to be
genuine and authorized.

 

ARTICLE VI

MISCELLANEOUS

 

1. Termination. This Agreement shall continue in effect until the Agent has
notified Custodian in writing that this Agreement is to be terminated. Upon
receipt of such notice, the Agent shall have no further right to originate
entitlement orders concerning the Collateral Accounts and the Customer shall be
entitled to originate entitlement orders concerning the Collateral for any
purpose and without limitation except as may be provided in the Custodian
Agreement. This Agreement may also be terminated by Custodian, the Agent or the
Customer, and shall terminate in the event of the termination of the Custodian
Agreement, following thirty (30) days’ prior written notice to the other parties
hereto. Upon termination of this Agreement by any party, all Collateral in the
Collateral Accounts that has not been released by the Agent shall be
transferred, within 30 days of such termination, to a successor custodian
designated in writing by the Customer and acceptable to the Agent. In the event
no successor is agreed upon, Custodian shall be entitled to petition a court of
competent jurisdiction to appoint a successor custodian and shall be indemnified
by the Customer for any costs and expenses (including, without limitation,
attorneys’ fees) relating thereto.

 

2. Certificates of Authorized Persons. The Agent and the Customer agree to
furnish to the Custodian a new Certificate of Authorized Persons in the event of
any change in the then present Authorized Persons. Until such new Certificate is
received, the Custodian shall be fully protected in acting upon Written
Instructions of such present Authorized Persons.

 

3. Notices. (a) Any notice or other communication given hereunder shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy. Such notice or communication shall be
deemed to have been received: (i) if sent by

 

-9-

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telecopy, upon receipt of confirmation of error-free transmission; (ii) in the
case of notice given by hand, on the day of actual delivery; (iii) if sent by
overnight courier service, on the next Business Day and (iv) if sent via
certified or registered mail, on the third Business Day following the day on
which it was dispatched postage prepaid; provided that a notice given in
accordance with the above but received on a day which is not a Business Day or
after normal business hours in the place of receipt shall be deemed to have been
received on the next Business Day.

 

(b) Any notice or other instrument in writing, authorized or required by this
Agreement to be given to the Custodian, shall be sufficiently given if addressed
to the Custodian and received by it at its offices at One Wall Street, New York,
New York 10286, Attention: Mayra Sacco, Group RM Custody, Telephone: (212)
635-4604, Telecopy: (212) 635-7420, or at such other place as the Custodian may
from time to time designate in writing

 

(c) Any notice or other instrument in writing, authorized or required by this
Agreement to be given to the Agent shall be sufficiently given if addressed to
the Agent and received by it at its offices at 1850 Gateway Boulevard,
CA4-706-0509, Concord, California, 94520, Attention: Gale Robin, Telephone:
(925-675-8439), Telecopy: (888-969-2621)1 or at such other place as the Agent
may from time to time designate in writing.

 

(d) Any notice or other instrument in writing, authorized or required by this
Agreement to be given to the Customer shall be sufficiently given if addressed
to the Customer and received by it at its offices at Mintflower Place, 8
Par-la-Ville Road, PO Box HM 2079, Pembroke HM HX Bermuda, Attention: Thomas
Busher, COO, Telephone: 441-296-5550, Telecopy: 441-296-5551 or at such other
place as the Customer may from time to time designate in writing.

 

4. Cumulative Rights; No Waiver. Each and every right granted to any party
hereunder or under any other document delivered hereunder or in connection
herewith, or allowed it by law or equity, shall be cumulative and may be
exercised from time to time. No failure on the part of such party to exercise,
and no delay in exercising, any right will operate as a waiver thereof, nor will
any single or partial exercise by such party of any right preclude any other
future exercise thereof or the exercise of any other right.

 

5. Severability; Amendments; Assignment. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected thereby. This Agreement may not be
amended or modified in any manner except by a written agreement executed by each
of the parties hereto. This Agreement shall extend to and shall be binding upon
the parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by any party without the
written consent of the other parties.

 

6. Governing Law; Jurisdiction; Waiver of Immunity; Jury Trial Waiver. This
Agreement and the Collateral Accounts shall be governed by and construed in
accordance with the substantive laws of the State of New York, without regard to
conflicts of laws principles

 

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-10-

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thereof. The State of New York shall be deemed to be the jurisdiction of the
Custodian as securities intermediary. The Custodian shall notify the Agent of
its intention to amend the governing law provisions of the Custodian Agreement.
The Agent, the Customer and the Custodian hereby consent to the jurisdiction of
a state or federal court situated in New York City, New York in connection with
any dispute arising hereunder. To the extent that in any jurisdiction the Agent
or the Customer may now or hereafter be entitled to claim, for itself or its
assets, immunity from suit, execution, attachment (before or after judgment) or
other legal process, the Agent and the Customer each irrevocably agrees not to
claim, and hereby waives, such immunity to the extent permitted by law. The
Agent, the Customer and the Custodian each hereby irrevocably waives any and all
rights to trial by jury in any legal proceeding arising out of or relating to
this Agreement.

 

7. No Third Party Beneficiaries. In performing hereunder, the Custodian is
acting solely on behalf of the Agent and the Customer and no contractual or
service relationship shall be deemed to be established hereby between the
Custodian and any other person.

 

8. Headings. Section headings are included in this Agreement for convenience
only and shall have no substantive effect on its interpretation.

 

9. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.

 

10. Conflicts. In the event of a conflict between this Agreement and any other
agreement between the Customer and the Custodian, including, without limitation,
the Custodian Agreement, the terms of this Agreement shall prevail. The Existing
Control Agreement shall be superceded in its entirety by this Agreement and the
Existing Agent shall have no further authority under the Existing Control
Agreement to originate entitlement orders, issue a Notice of Exclusive Control
or direct or instruct the Custodian with regard to the Securities Account, the
Deposit Account or any of the Collateral.

 

[The remainder of this page is intentionally left blank]

 

-11-

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

 

MONTPELIER REINSURANCE LTD. By:        

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

Name:

   

Title:

    BANK OF AMERICA, N.A., as Agent By:        

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Name:

   

Title:

    THE BANK OF NEW YORK By:        

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Name:

   

Title:

   

 

Consented and Agreed to:

FLEET NATIONAL BANK,

    as Existing Agent

By:        

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

   

Name:

       

Title:

       

Date:

   

 

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EXHIBIT A

 

CERTIFICATE OF AUTHORIZED PERSONS

(Customer—Oral and Written Instructions)

 

The undersigned hereby certifies that he/she is the duly elected and acting
                             of                          (the “Customer”), and
further certifies that the following officers or employees of the Customer have
been duly authorized in conformity with the Customer’s Articles of Incorporation
and By-Laws to deliver oral and Written Instructions to The Bank of New York
(“BNY”) pursuant to the Second Amended and Restated Control Agreement among the
Customer, Bank of America, N.A., as Agent and BNY, dated as of May 27, 2004, and
that the signatures appearing opposite their names are true and correct:

 

         

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Name

  Title   Signature          

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Name

  Title   Signature          

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Name

  Title   Signature          

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Name

  Title   Signature          

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Name

  Title   Signature          

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Name

  Title   Signature          

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Name

  Title   Signature          

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Name

  Title   Signature          

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Name

  Title   Signature

 

This certificate supersedes any certificate of authorized individuals you may
currently have on file.

[corporate seal]

               

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Title:

           

Date:

   

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EXHIBIT B

 

TO SECOND AMENDED AND RESTATED CONTROL AGREEMENT AMONG

BANK OF AMERICA, N.A., AS AGENT,

MONTPELIER REINSURANCE LTD. AND THE BANK OF NEW YORK

 

[Letterhead of Bank of America, N.A.]

 

[Date]

 

The Bank of New York

One Wall Street

New York, New York 10286

 

Attention:

 

NOTICE OF EXCLUSIVE CONTROL

 

We hereby instruct you pursuant to the terms of that certain Second Amended and
Restated Control Agreement, dated as of May 27, 2004 (as from time to time
amended and supplemented, the “Control Agreement”), among the undersigned,
Montpelier Reinsurance Ltd. and you, as Custodian, that you (i) shall not follow
any entitlement orders of the Customer with respect to the Securities Account or
the Collateral from time to time credited thereto held by you for the Customer,
and (ii) unless and until otherwise expressly instructed by the undersigned,
shall exclusively follow the entitlement orders of the undersigned with respect
to such Securities Account and Collateral Terms used but not defined herein
shall have the meanings assigned to such terms in the Control Agreement.

 

Very truly yours,

 

BANK OF AMERICA, N.A., AS AGENT

By:        

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    Authorized Signatory

 

cc:

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EXHIBIT C

 

THE BANK OF NEW YORK

ON-LINE COMMUNICATIONS SYSTEM (THE “SYSTEM”)

 

TERMS AND CONDITIONS

 

1. License; Use. (a) This Exhibit C shall govern Customer’s use of the System
and any computer software provided by BNY to Customer in connection herewith
(collectively, the “Software”). In the event of any conflict between the terms
of this Exhibit C and the main body of this Agreement with respect to Customer’s
use of the System, the terms of this Exhibit C shall control.

 

(b) Upon delivery to Customer of Software and/or System access codes, Custodian
grants to Customer a personal, nontransferable and nonexclusive license to use
the Software and the System solely for the purpose of transmitting Written
Instructions, receiving reports, making inquiries or otherwise communicating
with Custodian in connection with the Account(s). Customer shall use the
Software and the System solely for its own internal and proper business purposes
and not in the operation of a service bureau. Except as set forth herein, no
license or right of any kind is granted to Customer with respect to the Software
or the System. Customer acknowledges that Custodian and its suppliers retain and
have title and exclusive proprietary rights to the Software and the System,
including any trade secrets or other ideas, concepts, know-how, methodologies,
or information incorporated therein and the exclusive rights to any copyrights,
trademarks and patents (including registrations and applications for
registration of either), or other statutory or legal protections available in
respect thereof. Customer further acknowledges that all or a part of the
Software or the System may be copyrighted or trademarked (or a registration or
claim made therefor) by Custodian or its suppliers. Customer shall not take any
action with respect to the Software or the System inconsistent with the
foregoing acknowledgments, nor shall Customer attempt to decompile, reverse
engineer or modify the Software. Customer may not copy, sell, lease or provide,
directly or indirectly, any of the Software or any portion thereof to any other
person or entity without Custodian’s prior written consent. Customer may not
remove any statutory copyright notice or other notice included in the Software
or on any media containing the Software. Customer shall reproduce any such
notice on any reproduction of the Software and shall add any statutory copyright
notice or other notice to the Software or media upon Custodian’s request.

 

(c) If Customer subscribes to any database service provided by Custodian in
connection with its use of the System, delivery of such database to Customer
shall constitute the granting by Custodian to Customer of a non-exclusive,
non-transferable license to use such database for so long as this Exhibit C is
in effect. It is understood and agreed that any database supplied by Custodian
is derived from sources which Custodian believes to be reliable but Custodian
does not, and cannot for the fees charged, guarantee or warrant that the data is
correct, complete or current. All such databases are provided as an
accommodation by Custodian to its customers and are compiled without any
independent investigation by Custodian. However, Custodian will endeavor to
update and revise each database on a periodic basis as Custodian, in its
discretion, deems necessary and appropriate. Customer also agrees that Customer
will

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promptly install all updates and revisions to each database which Custodian
provides and that Custodian cannot bear any responsibility whatsoever for
Customer’s failure to do so. CUSTODIAN IS NOT RESPONSIBLE FOR ANY RESULTS
OBTAINED BY CUSTOMER FROM USE OF DATABASE SERVICES PROVIDED BY CUSTODIAN.

 

2. Equipment. Customer shall obtain and maintain at its own cost and expense all
equipment and services, including but not limited to communications services,
necessary for it to utilize the Software and obtain access to the System, and
Custodian shall not be responsible for the reliability or availability of any
such equipment or services.

 

3. Proprietary Information. The Software, any data base and any proprietary
data, processes, information and documentation made available to Customer (other
than which are or become part of the public domain or are legally required to be
made available to the public) (collectively, the “Information”), are the
exclusive and confidential property of Custodian or its suppliers. However, for
the avoidance of doubt, reports generated by Customer containing information
relating to the Account(s) are not deemed to be within the meaning of the term
“Information”. Customer shall keep the Information confidential by using the
same care and discretion that Customer uses with respect to its own confidential
property and trade secrets, but not less than reasonable care. Upon termination
of the Agreement or the licenses granted herein for any reason, Customer shall
return to Custodian any and all copies of the Information which are in its
possession or under its control. The provisions of this Section 3 shall not
affect the copyright status of any of the Information which may be copyrighted
and shall apply to all information whether or not copyrighted.

 

4. Modifications. Custodian reserves the right to modify the Software from time
to time and Customer shall install new releases of the Software as Custodian may
direct. Customer agrees not to modify or attempt to modify the Software without
Custodian’s prior written consent. Customer acknowledges that any modifications
to the Software, whether by Customer or Custodian and whether with or without
Custodian’s consent, shall become the property of Custodian.

 

5. NO REPRESENTATIONS OR WARRANTIES. CUSTODIAN AND ITS MANUFACTURERS AND
SUPPLIERS MAKE NO WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE SOFTWARE,
THE SYSTEM, ANY SERVICES OR ANY DATABASE, EXPRESS OR IMPLIED, IN FACT OR IN LAW,
INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. CUSTOMER ACKNOWLEDGES THAT THE SOFTWARE, THE SYSTEM, ANY
SERVICES AND ANY DATABASE ARE PROVIDED “AS IS.” TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, IN NO EVENT SHALL CUSTODIAN OR ANY SUPPLIER BE LIABLE FOR ANY
DAMAGES, WHETHER DIRECT, INDIRECT SPECIAL, OR CONSEQUENTIAL, WHICH CUSTOMER MAY
INCUR IN CONNECTION WITH THE SOFTWARE, SERVICES OR ANY DATABASE, EVEN IF
CUSTODIAN OR SUCH SUPPLIER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
IN NO EVENT SHALL CUSTODIAN OR ANY SUPPLIER BE LIABLE FOR ACTS OF GOD, MACHINE
OR COMPUTER BREAKDOWN OR MALFUNCTION, INTERRUPTION OR MALFUNCTION OF
COMMUNICATION

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FACILITIES, LABOR DIFFICULTIES OR ANY OTHER SIMILAR OR DISSIMILAR CAUSE BEYOND
THEIR REASONABLE CONTROL.

 

6. Security; Reliance; Unauthorized Use. Custodian will establish security
procedures to be followed in connection with the System. Customer understands
and agrees that the security procedures are intended to determine whether
instructions received by Custodian through the System are authorized but are not
(unless otherwise specified in writing) intended to detect any errors contained
in such instructions. Customer will cause all persons utilizing the Software and
the System to treat all applicable user and authorization codes, passwords and
authentication keys with the highest degree of care and confidentiality.
Custodian is hereby irrevocably authorized to comply with and rely upon on
Written Instructions, whether or not authorized, received by it through the
System in accordance with the security procedures. Customer acknowledges that it
is its sole responsibility to assure that only Authorized Persons use the System
and that to the fullest extent permitted by applicable law Custodian shall not
be responsible nor liable for any unauthorized use thereof or for any losses
sustained by Customer arising from or in connection with the use of the System
or Custodian’s reliance upon and compliance with Written Instructions received
through the System.

 

7. Stern Acknowledgments. Custodian shall acknowledge through the System its
receipt of each transmission communicated through the System, and in the absence
of such acknowledgment Custodian shall not be liable for any failure to act in
accordance with such transmission and Customer may not claim that such
transmission was received by Custodian.

 

8. EXPORT RESTRICTIONS. EXPORT OF THE SOFTWARE IS PROHIBITED BY UNITED STATES
LAW. CUSTOMER MAY NOT UNDER ANY CIRCUMSTANCES RESELL, DIVERT, TRANSFER,
TRANSSHIP OR OTHERWISE DISPOSE OF THE SOFTWARE (IN ANY FORM) IN OR TO ANY OTHER
COUNTRY. IF CUSTODIAN DELIVERED THE SOFTWARE TO CUSTOMER OUTSIDE OF THE UNITED
STATES, THE SOFTWARE WAS EXPORTED FROM THE UNITED STATES IN ACCORDANCE WITH THE
EXPORT ADMINISTRATION REGULATIONS. DIVERSION CONTRARY TO U.S. LAW IS PROHIBITED.
Customer hereby authorizes Custodian to report its name and address to
government agencies to which Custodian is required to provide such information
by law.

 

9. Encryption. Customer acknowledges and agrees that encryption may not be
available for every communication through the System, or for all data. Customer
agrees that Custodian may deactivate any encryption features at any time,
without notice or liability to Customer, for the purpose of maintaining,
repairing or troubleshooting the System or the Software.

 

10. On-Line Inquiry and Modification of Records. In connection with Customer’s
use of the System, Custodian may, at Customer’s request, permit Customer to
enter data directly into a Custodian database for the purpose of modifying
certain information maintained by Custodian’s systems, including, but not
limited to, change of address information. To the extent that Customer is
granted such access, Customer agrees to indemnify and hold Custodian harmless
from all loss, liability, cost, damage and expense (including attorney’s fees
and expenses) to which Custodian may be subjected or which may be incurred in
connection with

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any claim which may arise out of or as a result of changes to Custodian database
records initiated by Customer.